The Mortgage Bankers Association (MBA) has adopted a model sale and servicing agreement. The MBA anticipates that it will become the standard form for industry participants to use voluntarily for whole loan purchases and sales made with an eye towards potential securitisation. The agreement was adopted by MBA's Residential Board of Governors (RESBOG) as an MBA supported best practice.

The model agreement is part of an MBA initiative to help increase liquidity and efficiency in the non-conforming residential mortgage market. The agreement provides standard formatting and text for standard practices, reducing the time, effort and cost of legal and due diligence reviews. The agreement also includes standard formats for transaction-specific terms.

John Courson, MBA's president and ceo, says: "At the current time, there is virtually no private label MBS market to speak of. When the market begins to return, we expect it will start with whole loan transactions. This model agreement will provide consistency and transparency to help investors get a better understanding of the whole loans they are purchasing."