Along with SMMEA
eligibility, CMBSs typically have been afforded favorable treatment under the capital reserve requirements developed by the National Association of Insurance Commissioners (NAIC).
All three, full committees held thorough hearings on the issues that ultimately became part of SMMEA. In the House, hearings were held on H.R.
A very compelling argument made by the private sector during the hearing process was the impact SMMEA legislation would have on home mortgage interest rates.
However, the changes proposed to the Fannie Mae and Freddie Mac Charter Acts were an important element in getting SMMEA passed.
Today's housing finance market strongly reflects the positive effects of SMMEA. In the six-and-a-half years since its passage, the mortgage securities market had grown to a healthy $1 trillion in 1991, heading toward the $1.6 trillion predicted during the legislative hearings in 1984.
Unfortunately, these positive effects may be diminished by actions being taken recently in many states to override provisions of the SMMEA statute.
New York's decision on SMMEA is critical for several reasons.
If the legislation that was passed by both houses in July is signed by the governor, then New York Assembly Bill 6753 will override SMMEA. While the bill does place new restrictions on MRS investments, it is being hailed by the insurance company investment community as an effective compromise.
One of the ways SMMEA assisted in creating a PMBS market is by making "mortgage-related securities" eligible for investment by federally regulated depository institutions.
The potential override of SMMEA state law pre-emption not only affects private label MBS, but Fannie Mae/Freddie Mac mortgage-related securities as well.
The pre-emption of state law by SMMEA paved the way for an expanded market for investment in PMBS.
This cursory view of statistics provides ample evidence that SMMEA, with its state law pre-emptions, was the catalyst for the growth and development of private mortgage-related securities by enhancing the market liquidity of these securities.