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National Mortgage Professional
Jun 05, 2005

Proposed "bright line" rule may threaten access to creditmortgagepress.comGSEs, legislation, bright line, automated underwriting systems, mortgage credit The National Association of Mortgage Brokers has joined a cross-section of housing, mortgage lending, mortgage brokering and real estate industry groups in warning that the legislative proposals to regulate the safety and soundness of the government-sponsored enterprises (GSEs) go too far. In fact, they could actually disrupt the mortgage delivery system they hope to safeguard and jeopardize the ability of consumers to secure affordable mortgage financing. "NAMB supports ensuring the safety and soundness of Fannie Mae and Freddie Mac so that they can continue to help more and more Americans become homeowners," said NAMB President Bob Armbruster, "But the 'bright line' proposal could actually increase the cost of mortgages to consumers by destroying today's competitive marketplace." In a letter to Sen. Richard C. Shelby from Alabama (chairman of the Committee on Banking, Housing and Urban Affairs) and Sen. Paul Sarbanes from Maryland (ranking member of the Committee on Banking, Housing and Urban Affairs), NAMB stated that the "bright line" proposal is "unnecessary and redundant with existing law because statutory language currently prohibits Fannie Mae and Freddie Mac from originating mortgages." If enacted, the provision will prohibit mortgage brokers from having direct access to the automated underwriting systems of the GSEs. Mortgage brokers rely on these systems to quickly assess a mortgage application and provide consumers with mortgage credit. Should the proposal become law, the competition in today's mortgage marketplace and the development of market-driven mortgage products and programs could be at risk. As a result, consumers may be denied the opportunity to secure affordable credit to purchase their homes. "Today, American homeownership is at an all-time high," said Armbruster. "Since mortgage brokers originate over 65 percent of residential mortgage loans, they have played a large part in many of our nation's families becoming homeowners. By denying mortgage brokers the ability to directly access the GSEs' automated underwriting system, the 'bright line' proposal threatens the current system that has allowed so many to enjoy the benefits of homeownership." For more information and a copy of the letter NAMB sent to Sens. Shelby and Sarbanes, visit
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