Small Lenders Raise Concerns on GSE Reform

Small lenders expressed their concerns about potential GSE reform during a Senate Banking Committee hearing on Thursday, July 20th, as reported by American Banker. In the past, Fannie Mae and Freddie Mac have offered bulk discounts to large originators, a practice currently prohibited by the Federal Housing Finance Agency, and which small lenders fear may be revived as a result of GSE reform.

"It definitely put us at a competitive disadvantage," said Jack E. Hopkins, President and CEO of the $770 million-asset CorTrust Bank. The American Banker article states that "small lenders are particularly worried about big banks' ability to either own a guarantor or purchase a stake in one," and this concern resonated with legislators on both sides of the aisle.

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