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

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

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

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

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