Secondary Mortgage Market Enhancement Act

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Secondary Mortgage Market Enhancement Act of 1984
Great Seal of the United States
Long titleAn Act To amend the Securities Exchange Act of 1934 with respect to the treatment of mortgage backed securities, to increase the authority of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, and for other purposes.
Acronyms (colloquial)SMMEA
Enacted bythe 98th United States Congress
Public lawPub.L. 98–440
Statutes at Large98 Stat. 1689
Legislative history

The Secondary Mortgage Market Enhancement Act of 1984 (SMMEA) was an Act of Congress intended to improve the marketability of private label mortgage-backed security passthroughs.[1]

It declared nationally recognized statistical rating organization (NRSRO) AA-rated mortgage-backed securities to be legal investments equivalent to Treasury securities and other federal government bonds for federally chartered banks (such as federal savings banks, federal savings associations, etc.), state-chartered financial institutions (such as depository banks and insurance companies) unless overridden by state law before October 1991 (of which 21 states did so),[2] and Department of Labor-regulated pension funds.[3] It is mentioned as a significant contributing factor in the subprime mortgage crisis.[4]


  1. ^ Fabozzi & Modigliani 1992, p. 31.
  2. ^ The 21 states that utilized the exemption provisions were Alaska, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Kansas, Maryland, Michigan, Missouri, Nebraska, New Hampshire, New York, North Carolina, Ohio, South Dakota, Utah, Virginia, and West Virginia.
  3. ^ Fabozzi & Modigliani 1992, p. 32.
  4. ^ Beer & Faulkner 2011, p. 50.
  • Fabozzi, Frank J.; Modigliani, Franco (1992). Mortgage and Mortgage-backed Securities Markets. Harvard Business School Press. ISBN 0-87584-322-0.
  • Beer, Andrew; Faulkner, Debbie (2011). Housing Transitions Through The Life Course: Aspirations, Needs and Policy. Policy Press. ISBN 978-1-847-42428-0.