MBA Chair Believes US Should Back Mortgages

Industry Update: On October 26, National Mortgage News published an article entitled "The MBA's New Chair Believes U.S. Should Back Mortgages."

The MBA’s New Chair Believes U.S. Should Back Mortgages

It’s safe to say that Debra W. Still, the incoming chair of the Mortgage Bankers Association, is battle-tested. Not only does she work for a nonbank lender but the company is also owned by a homebuilder, Pulte.

Since the housing downturn began in earnest back in 2007 no other sectors of the U.S. economy have been as severely damaged as homebuilding and mortgage banking. But the good news is that both appear to be in a recovery mode with the dark days of the Great Recession hopefully a thing of the past.

For Still--only the second woman to ever hold the top annual post at the 99-year-old trade group--the issues at hand are numerous and daunting.

To even the casual observer, nothing short of the entire future of mortgage banking is at stake as the regulatory agencies (and Congress) begin to craft final rules that will govern everything from how loan officers are paid to what lies ahead for Fannie Mae and Freddie Mac.

The president and CEO of Pulte Home Mortgage of Englewood, Colo., is coming into the regulatory battle with her eyes wide open and is realistic about how long it might take for the government to replace Fannie and Freddie with a workable secondary market apparatus that serves both consumers and the industry.

“It could take five to seven years before a plan is in place,” Still said in a recent interview with National Mortgage News. “Some say it could take ten years.”

She is hopeful that the government will go slow and be “thoughtful” as it proceeds.

As for the secondary market, the MBA and Still are firm believers that the U.S. government needs to have some type of role in backstopping the mortgage market. “Those who say that the government should have no role in mortgages are not being practical,” she said.

As any mortgage professional knows, government backing results in lower mortgage rates for consumers, which in turn spurs housing and job creation. As a policy issue, some elected officials (Republicans especially) do not like the idea of Uncle Sam propping up the housing and mortgage markets or giving tax breaks for those with home mortgages.

MBA’s official stance on how to maintain a secondary market was unveiled three years ago and hasn’t changed much. Its plan (or hope) is to have a small number of privately owned but government-chartered (and regulated) GSEs or what it calls “mortgage credit-guarantor entities.”

The MCGEs would provide loan-level guarantees. A federal insurance fund would be created and funded through the payment of security level risk-based premiums. MBS covered under such a plan would have dual coverage: a federal guaranteed “wrap” similar to a GNMA bond, and private backing.

The MCGEs would have, in MBA’s words, “standard corporate powers to raise debt and equity.” (The idea, more or less, is to guarantee “A” paper loans, leaving the free market to handle the nonconforming stuff.)

For now, the MBA’s proposal is going nowhere. Then again, the entire issue of what to do with Fannie and Freddie is going nowhere as well, that is, until a new president and Congress are elected.

Still, who started in mortgage banking back in 1976, cut her teeth in the secondary market working for Suburban Coastal Savings in Wayne, N.J., and believes her experience there as well as at Pulte will prepare her for the year ahead.

Besides the GSEs, other key issues she will be working on include the qualified mortgage rule, ability-to-repay, RESPA-TILA, servicing standards and loan officer compensation. (Still actually never worked as an LO.) “There is so much out for comment now,” she said. “We need to get it right. We have seven to eight rules that will be implemented simultaneously over the next six to 18 months.”

And just as importantly, Still wants to make certain that the MBA represents all residential lenders—big and small, and bank and nonbank alike. “We want to have one strong voice to represent the entire residential finance community,” she said. “We want to put the consumer at the center of our focus” and cautions different factions of the industry against putting their self-interests first.

She believes that all lenders in residential finance today have more in common than what they don’t have in common. “If we have a vibrant market,” Still said, “it will be good for the consumer.”

Asked whether she would recommend that college graduates seek out a career in residential finance, she gave a thumb’s up. “I think we all agree that we’ve hit bottom” and the business is steadily improving. “It’s a wonderful time to get into the business,” Still said emphatically. “It’s a noble profession.”

To view the online article, please click here.

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Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees  and a handful of contractors performing services in the Midwest, to a national company with more than 1,600 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.

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