The key to a viable, accessible mortgage market lays in the structure of the secondary market, according to opinions expressed by the Center for American Progress (CAP), a policy think tank, and the National Council of La Raza (NCLR), a Hispanic advocacy group, in a recent report, _Making the Mortgage Market Work for America's Families._
In their report, the two groups propose ways the secondary market can accomplish the goals of accessibility and affordability.
""Lenders prefer to make the types of mortgage loans that the secondary market will buy,"" the groups stated in their report.
""For this reason, one of the most effective ways to ensure a broad, accessible, and affordable primary mortgage market is by creating a secondary market that promotes these same principles,"" the report continued.
CAP and NCLR suggest it is the duty of the secondary market to encourage fair lending and broaden homeownership opportunities to underserved populations.
The groups assert the inevitability of government support for the housing market. As such, ""taxpayers deserve a market that serves the long-term interests of families and the economy as a whole,"" the groups said.
Recognizing the widespread goal of promoting private capital in the mortgage market, the groups express concern that without the housing goals enforced by the GSEs, market innovation ""may not evolve organically.""
To fill the gap left by the GSEs in this regard, the groups suggest creating a Market Access Fund.
The Market Access Fund would finance ""the development and testing of innovative, affordable products and services for approximately 1 million to 2 million households annually,"" the report stated.
The groups also advocate for an industry regulator in their report. The regulator would identify market gaps and evaluate all secondary market entities.
Participants in the secondary market would be required to submit strategic plans in which they designate specific market priorities they intend to address.
""As we proceed with our national conversation about how to reform the secondary market, we will spend much time discussing questions of structure, including the appropriate role of private capital, how to minimize risk to taxpayers, and the future of the 30-year fixed-rate mortgage,"" the report concludes. ""But we must also address questions of access and affordability.""