Financial institutions of all types need to get together and bring pressure on Federal legislators to reform the U.S. secondary mortgage market and do so in a way that keeps traditional mortgage lenders in the picture.

That is one of the recommendations included in Home Mortgage Secondary Market Sales Without Fannie and Freddie: Be Careful What You Wish For, a new impact note published by the Aite Group, a leading financial institution consultancy.

“Every U.S. bank and credit union has a stake in the final results,” the group wrote about secondary mortgage market reform. “It is well past time that the sniping stops and industry associations (such as the MBA, CBA, ABA, ICBA, CUNA) take the lead in “nudging” the legislators and regulators to look at the overall issue. No one understands the mortgage industry better than the traditional lenders—try a round-table effort to offer cohesive, constructive suggestions for moving forward with a better product.”

The organization also urged credit unions and other financial institutions to pay more attention to the mortgage market and process as a whole, not just their own part of it.

“Many institutions have lost sight of mortgage lending, relying on agencies like Fannie and Freddie to contribute to the institution's bottom line without any clear understanding of the larger picture,” the organization added. “Be prepared to make changes. For example: Will your institution have to hold all mortgages in-house, or are there other outlets available? Will your institution be responsible for servicing? Does it have the necessary resources to manage processing and risk?”