Panel Sees Changing Role for GSEs and Servicers.

WASHINGTON -- Fannie Mae and Freddie Mac are not likely to regain their former dominance over the secondary mortgage market, a blueprint for the future prepared by a blue-ribbon panel of lending industry leaders suggests.

The Council to Shape Change also believes that elimination of the mortgage interest tax deduction would have its major impact on people who already own homes but would not substantially alter the playing field for future homebuyers. "There would not be a fundamental change in the manner in which borrowers finance the purchase of a home," the committee says in a wide-ranging report entitled "Outlook for the Real Estate Industry" distributed last week to members of the Mortgage Bankers Association.

The 182-page tome is the product of six months of meetings, deliberations and free-wheeling debate among the 19 members of the council who were appointed last October by MBA chair Regina Lowrie to help prepare the association and its member-businesses for the changes they will be facing over the next five to 10 years.

"This is not a policy document. It has nothing to do with policy," said the council's leader Andrew Woodward, the retired chairman of Bank of America Mortgage and a former MBA chairman. "We are simply forecasting how things might shake out." Mortgages are no longer a standalone product but rather an important part of the financial services industry, the section in the Executive Summary called "Convergence" says.

"Borrowers increasingly will view their mortgage as one of a number of financial products they consume," it says. "Investors increasingly will view mortgages as one of a number of fixed-income investments they hold."

But because borrowers and investors both have access to a growing array of lenders and products - and "are more willing to choose innovative products and companies that match their needs" - the concept of "owning the customer" will prove to be a faulty premise, the report suggests. In addition, the council believes the private-label market for both residential and commercial mortgages will continue to grow significantly, regardless of what lies ahead for the GSEs.

Fannie and Freddie will continue to focus on long-term, fixed-rate products, and will rise to the occasion ...