Securitization and Housing Finance

SIFMA provides policy and market practice recommendations for securitized products – from the perspective of issuers, sponsors, and liquidity providers of securitization transactions – with the goal of increasing the efficiency, liquidity and resiliency of these markets.

The U.S. housing market is a critical piece of the general economy. It represents approximately one-fifth of U.S. GDP and 35% of all private, non-financial debt in the country.

On September 5, 2019, in response to a Presidential Memorandum that directed the U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) to conduct a broad review of our housing finance system, the Treasury and HUD released two documents outlining their views on necessary changes to the housing finance system. A summary of the Treasury document is available here.

The recommendations in the Treasury report include Congress establishing an explicit guarantee for MBS, as well as reforms to the size and scope of the operations of Fannie Mae and Freddie Mac. Notably, Treasury indicates that the GSEs should be put on a path to exiting conservatorship, and that the Administration should act and not simply wait for Congress to enact legislation.

SIFMA supports the U.S. Administration and Congress working together to identify a permanent solution. Moving the GSEs out of the conservatorship of their regulator, the Federal Housing Finance Agency (FHFA), is a goal that we support – but not without Congress taking the necessary action to address the need for an explicit government guarantee to ensure stability in the markets, including the TBA market, for the GSEs’ Mortgage-Backed Securities (MBS).

As outlined in our July 2019 letter to Treasury, HUD, and FHFA, SIFMA supports comprehensive housing finance reform that:

  • Preserves the broad availability of a 30-year mortgage
  • Facilitates the liquidity of the To-Be-Announced (TBA) market and its benefits to consumers
  • Enhances the protection of taxpayers and the resilience of the housing finance system

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