Fannie Mae President/CEO Tim Mayopoulos joined Layton during the general session panel discussion at the San Diego Convention Center, which was moderated by MBA Vice Chairman David Motley, president of the Fort Worth, Texas-based Colonial Savings. The event runs through Wednesday.

Mayopoulos said changing market dynamics helped small lenders gain market share. Major aggregators stepped away from the market after the financial downturn, which forced a lot of small and mid-sized lenders to work directly with Fannie and Freddie. Additionally, the GSEs leveled the playing field for all lenders, giving them the same price, which has helped them compete more effectively, he said.

He also said small lenders are very good at reaching first time homebuyers, millennials and communities of color, groups expected to produce the bulk of new household growth over the next 10 years.

"They can be more targeted in their efforts, so I think this is important when we talk about improving access to credit, which I think we all want to do," Mayopoulos said. "There is a role for the big players, but I think this great diversification of lenders makes it more likely that we can serve a full market and take advantage of a full credit box."

Motley asked both men to give their opinions regarding the MBA's Housing Demand Report, released in August. That research projected the creation of as many as 16 million new households by 2024.

"We do see strong household formation growth, but this is not your 1960s, Leave It to Beaver household market," Layton said. "It's more urban than used to be … more non-white than it used to be, more immigrant than it used to be, it's more single head of households and singles."

He said products like the 97% loan-to-value mortgage, which both GSEs made available earlier this year, were the first of several targeted products that will help lenders get into the nooks and crannies of the credit box.

Mayopoulos praised innovative products like Fannie Mae's new HomeReady mortgage, which has a 3% down payment requirement, offers flexibility on down payment sources and lenders to consider income from members of the household who are not on the note. He said the program would help meet the mortgage needs of millennials and minority families.

Despite initial criticism about the potential for risk, Mayopoulus said Fannie Mae has heard a lot of positive reaction from the marketplace about the product.

"Studies we've done have shown, not surprisingly, that when you have multiple incomes in a household, even if those members aren't actually on the note, they do contribute to the household income and it does produce a better outcome in terms of the mortgage. It not only allows access to credit more broadly but also a positive step forward from a safety and soundness perspective," he said.