Serving the Next Generation

By Stevens, David H. | Mortgage Banking, October 2012 | Go to article overview

Serving the Next Generation


Stevens, David H., Mortgage Banking


These are truly extraordinary times for our economy, the real estate finance industry and, most of all, for the next generation of homebuyers. And as the industry that helps finance the places where Americans live, work and play, it is our responsibility to take the lead in shaping the future of real estate finance and restoring a vibrant marketplace that best serves families and communities across our nation.

Timing is critical, as the opportunity lies before us today, but so is the perspective in which we pursue positive change to the real estate finance system.

Collectively, our industry provides the ultimate service to families and communities--we help them achieve safe, affordable housing where their families can grow and prosper. We are involved in almost every real estate transaction whether bought, sold or rented, and we bring a unique understanding of how any change to the real estate finance system will affect homeowners, potential buyers and renters.

The housing industry has entered year five of the crisis and we are still a long way away from sustainable growth. However, we can see some signs of recovery beginning to emerge.

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Halfway through 2012, the inventory of existing homes for sale was down to 2.4 million compared with 3.2 million a year ago, and sales of existing homes are picking up pace. The inventory of new homes is at its lowest level in recorded 50-year history, at roughly 142,000.

While shadow inventories are decreasing, we are still at approximately 4 million distressed properties. Foreclosures are still impacting the economy, but we are seeing reductions in many states. Optimism is becoming apparent with record affordability for homes, jobs are slowly coming back and a recovering stock market has emerged.

These are positive signs of recovery, but are extremely fragile and can easily and quickly be reversed because the overall real estate finance market remains at risk. Uncertainty remains one of the biggest threats to sustainable market recovery. Uncertainty in the real estate finance industry and the overall economy will continue to undermine prospects for recovery until addressed. In our industry, credit remains too tight. And if rulemakings are not pursued with the right balance of consumer protection and access to credit, the situation will only get worse.

The Dodd-Frank Wall Street Reform and Consumer Protection Act required regulators to create consumer protections that ensure past mistakes will not happen again. Our industry agrees that we must protect consumers, but not pile on regulations that will dry up credit to those who need it most.

This is about the middle-class and first-time homeowners. We have seen a tidal wave of policies, rules and regulations, on top of unprecedented enforcement and concerns over repurchase demands or lawsuits--all of which are piling on top of each other, causing confusion, increasing costs and restricting credit.

In a six-week period, from July to August 2012, we saw proposed rulemakings on new consumer disclosures under the Real Estate Settlement Procedures Act (RESPA)/Truth in Lending Act (TILA), high-cost loans under the Home Ownership and Equity Protection Act (HOEPA), national servicing standards, loan officer compensation and qualification standards, appraisal disclosures and new appraisal requirements for high-cost mortgages.

Just last month, the Federal Housing Finance Agency (FHFA) also offered guidance on how the government-sponsored enterprises (GSEs) should handle repurchase demands. To complicate things even further, our industry is dealing with the Department of Housing and Urban Development's (HUD's) proposed disparate impact rule, proposed rules on Basel III from three regulators, and rules on risk retention and the Qualified Residential Mortgage from six different regulators.

And this represents just the most recent actions by regulators. …

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