MBA Asserts Path to GSE Reform Remains Muddled
On October 29, the Mortgage Bankers Association (MBA) published an article titled Path to GSE Reform Remains Muddled.
Path to GSE Reform Remains Muddled
WASHINGTON, D.C.–Five years into conservatorship of Fannie Mae and Freddie Mac, legislation has been introduced and talk of a path toward reform is building. The real question, Mortgage Bankers Association President David Stevens said, is what that path will be going forward.
“We need to be very careful about transitioning to a future state,” Stevens said here during a PoliticoPRO panel discussion here this morning at the Mortgage Bankers Association’s 100th Annual Convention & Expo. “We need certainty about a future state; and we need to preserve much of the mechanics in place going forward so that the market suffers as little disruption as possible.”
“When we talk about reform, whether it’s GSE reform, or FHA reform, we’re operating in a vacuum,” MBA Vice Chair Bill Emerson, president and CEO of Quicken Loans Inc. “Keeping Fannie Mae and Freddie Mac as they are is not part of the solution and access to credit remains a problem. But while these conversations are taking place, they’re not being done together. We have an opportunity; I think most [policymakers] are directionally on the same page, but we have to get out of each other’s way to get it done.”
Jim Parrott, senior fellow with the Urban Institute, said he is relatively optimistic that a comprehensive GSE reform bill could reach the Senate floor by next year. He said he was more “bearish” on prospects in the House, where Financial Services Committee Chairman Jeb Hensarling, R-Texas, has pushed through a partisan bill that has little, if any, Democratic support.
“There are a lot of people in the House who would prefer a more centrist path on legislation,” Parrot said. “They would much prefer something along the line of Corker-Warner [the Senate bill introduced by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va.]. The situation in the House is very volatile right now, and after the 2014 elections, all bets could be off.”
Additional uncertainty centers on an announcement in the Senate this morning that it would hold a floor vote for Rep. Mel Watt, D-N.C., who President Obama nominated to serve as the next director of the Federal Housing Finance Agency, despite concerns that he does not have enough votes for his nomination to clear. While Democrats support nomination, Senate Republicans have expressed concerns to the point where questions exist whether Watt has the six GOP votes needed to ensure confirmation.
“I served with Mel Watt in Congress,” said Kenneth Bentsen Jr., president of the Securities Industry and Financial Markets Association and a former Democratic representative from Texas. “He’s a good man and deserves to have his nomination move forward, and President Obama deserves to put in place the people he wants to run the government.”
Regardless of who runs FHFA, “We want to see a more comprehensive effort to bring private capital back into the market,” said Michael Stegman, counselor to the Treasury Secretary for housing finance policy. “You don’t just raise GSE guaranty fees and lower the conforming loan limit without it having some impact on how private capital looks at the market.”
Panelists expressed pessimism that private capital could immediately return to the housing market, regardless of legislation. “The reality is, the implicit guarantee of the GSEs always was an explicit guarantee,” Emerson said. “Clearly, we think private capital should come in at a first loss level; but the reality is, there has never been enough private capital to replace what the GSEs have provided.”
To view the online article, please click here.
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.