The GSE Debate.(Brief Article)

The relationship between mortgage lenders and the government-sponsored enterprises has always been complex. In recent months, it has seemed strained as mortgage insurers and some large lenders express concern about "charter creep." While much of the debate recently has focused on issues of greatest interest wholesale lenders and mortgage insurers, loan servicers have a stake in this debate as well.

Make no mistake about it. Fannie Mae and Freddie Mac provide enormous benefits to homebuyers. And lenders benefit as well from a system that makes financing a home purchase easier and cheaper in the U.S. than anywhere else in the world. The steady flow of credit that Fannie Mae and Freddie Mac facilitate for housing finance is a source of strength and stability for the entire mortgage industry.

But some industry leaders are worried about things Fannie Mae and Freddie Mac may do to grow their business. Lenders have long worried that automated underwriting will make it easier to bypass the "middleman" and go directly to consumers. Fannie Mae and Freddie Mac have denied this intent, and we see no reason to doubt them. The matter of mortgage brokers is a more tricky issue, however. As outlined in a front-page Wall Street Journal story on April 5, the GSEs have provided technology that is changing loan origination. A natural outgrowth of that may be to strengthen the hand of ...