The Mortgage Bankers Association (MBA) made clear in letter Thursday that it opposes any proposed changes to the existing way mortgage servicers receive compensation.

The letter addresses recent moves by the Federal Housing Finance Agency (FHFA) to open up market share for servicers by reducing their risk, granting more flexibility to guarantors on non-performing loans, and shoring up liquidity in the to-be-announced market.

David Stevens, MBA’s president and CEO, said in a statement that the trade group “appreciates the interest of FHFA in ensuring that we collectively work to improve service to borrowers, reduce financial risk to servicers, ensure flexibility for guarantors to better manage non-performing

loans, promote market liquidity and enhance opportunities for competition in the origination as well as servicing markets.”

He added that “we believe that any change to the current servicing compensation model is unnecessary to accomplish these goals.”

The MBA highlighted the in-progress state of a standardized servicer guide with Fannie Mae and Freddie Mac, suggesting that it could offer substantive reform without undermining the market.

The trade group also nodded at liquidity in the current TBA market, calling it “fragile” and describing any changes to the major structure of it as some that could reduce overall liquidity.

The letter underscored stress that could result from a mortgage servicing fee, with Stevens saying that any changes could “have dramatic impacts not just on originators, servicers and investors, but also on borrowers in both the costs they pay to get a mortgage and the support they receive from their servicers.”

The MBA recommended a cash reserve structure in place of the compensation changes pursued by the FHFA, urging it as a way to cover servicing costs in destructive economic circumstances.

It billed the cash reserve structure as one that the MBA and members had developed over the past six months.