Secondary Mortgage Market Must Remain Impartial

In recent testimony for the Independent Community Bankers of America before a Congressional Committee Jack Hartings, President of The Peoples Bank Co. of Coldwater, told Congress that the secondary mortgage market must remain impartial and provide equitable access and pricing to all lenders, regardless of size or lending volume. I fully agree with this timely assertion. Rumblings heard from the mortgage reform debate indicate important functions of Fannie Mae and Freddie Mac might be transferred to a small group of megabanks – the same banks whose abusive loan terms, faulty underwriting and deceptive securitization contributed to the financial meltdown we have all experienced.

Home loans are a large part of a community bank’s business, and for a broad based recovery to take hold all lenders need to compete on a level playing field. The secondary market allows banks to meet our customers’ demand for fixed-rate mortgages while managing the interest rate risk these loans carry. Having a competitive secondary market allows our bank to better serve our customers in support of our community.

Community bank loans have performed better in all market cycles and contribute to the safety and soundness of the secondary market. Having mortgage loan servicing performed locally has given our customers the convenience of working with someone across the desk instead of by phone or email when problems arise.

These proposals to concentrate the mortgage industry in a small group of non-governmental megabanks will intensify the systemic risk and moral hazard through the further concentration of assets. This increased dangerous consolidation of the mortgage industry will result in less competitive rates and fees, and more limited access to home ownership options.


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