Statement for the Record before the Subcommittee on Housing and Insurance on Homeownership and the Role of the Secondary Mortgage Markets

Chairman Flood, Ranking Member Cleaver, and members of the Subcommittee, the American Bankers Association (ABA) appreciates the opportunity to provide our policy views for this hearing, Homeownership and the Role of the Secondary Mortgage Markets. The ABA is the voice of the nation’s $25.1 trillion banking industry, which is composed of small, regional and large banks that together employ over 2 million people, safeguard $19.7 trillion in deposits and extend $13.2 trillion in loans.

As Congress continues to examine the causes of rising housing costs and the barriers facing prospective homeowners, it is essential to recognize that while current affordability challenges are primarily driven by a lack of supply, affordability is also shaped by the structure and functioning of the nation’s secondary mortgage market. The performance of that market—where loans are funded, traded, and risk managed—directly influences mortgage rates, lender participation, and the availability of credit for families across the country.

For more than two decades, housing costs have grown faster than household incomes, creating growing affordability pressures in nearly every region of the United States. Policymakers are right to recognize that the root of this challenge lies in long term supply constraints, including limited land supply, land use barriers, regulatory delays, and construction labor shortages. Yet these supply challenges also interact with the conditions of the secondary mortgage market, where liquidity, pricing, and risk transfer determine whether lenders can confidently finance home purchases. A secondary market that is stable, liquid, and accessible lowers the cost of mortgage credit. One that is constrained or distorted increases costs and limits access to builders and borrowers alike.

At the center of this system are Fannie Mae and Freddie Mac, whose proper role is to support the primary mortgage market by purchasing loans, providing liquidity, and giving lenders of all sizes a reliable execution outlet for loans and loan servicing. It is crucial that the GSEs remain firmly and exclusively secondary market institutions, as outlined in the attached GSE reform principles developed by ABA in consultation with our members.

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