SIFMA Fires Shot, Excludes Mortgages in Localities that Adopt Condemnation From To-Be-Announced Market

On Monday, the financial services industry association (aka lobbying group) SIFMA said that it would exclude mortgages in localities that had condemned mortgages from the to-be-announced market, which is an important source of liquidity for new Fannie and Freddie loans. The promoters of the program, Mortgage Resolution Partners, issued a wounded-sounding response.

So what does this all mean? The short answer is that on the surface, this looks like a clever bit of banker thuggery. Despite MRP’s complaints, SIFMA has excluded other types of mortgages from TBA pools for similar-enough sounding reasons that it looks to be within its rights to do so here. But while this change is an effort at intimidation, its economic impact is trivial, although local homeowner/voters fooled into thinking otherwise. Ironically, Mortgage Resolution Partners is playing right into the SIFMA scare tactic via its close to hysterical response.

This is an interesting case of geekery meets gamesmanship. As much as I’d rather see the condemnation scheme move to the legal foodfight stage, the bankers have made it clear they are pulling out all stops to halt this plan before it gets that far.