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.
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. The list of rules and regulations goes on arid on, and will continue to do so.
Unfortunately, efforts designed to protect consumers may actually be preventing families from accessing homeownership or affordable rental opportunities. Qualified borrowers with marginal risk characteristics will be excluded from credit, which will impact housing in potentially disparate ways--especially for first-time homebuyers and demographic groups that may have been traditionally left out of economic opportunity.
All signs point toward further mortgage credit tightening from already very conservative loans originated during 2010 and 2011. We must therefore ask: At what point has the regulatory pendulum swung too far? At what point are we inhibiting community and economic growth in efforts to protect consumers?
As an industry, we need to embrace change, but we must also recognize that we are the leading association representing all aspects of the housing industry and we can truly speak for those we serve. By pursing clarity and transparency on the myriad laws and regulations, we can clear the muddy waters of confusion and uncertainty in the real estate finance system. We must work in collaboration with policymakers and help them understand that overweighting consumer protection at the expense of access to credit will impair the development of a vibrant marketplace.
Moving forward, we must remain vigilant and engaged on policies and regulations that unduly limit access to credit for qualified borrowers and that slow or even halt economic progress. Everyone who has an impact on housing policy--from Fed Chairman Ben Bernanke to Treasury Secretary Timothy Geithner, HUD Secretary Shaun Donovan to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, and our U.S. senators and representatives--agrees that one of the most significant factors impeding market stabilization and growth is access to affordable credit for qualified borrowers.
Changes that emerge from current and additional federal policies will affect generations to come; therefore everything we do to restore the real estate finance industry must be looked at through the lens of consumers. As leaders of this industry, it is our duty to be the voice for not only this generation but also the next generation. We must find solutions that create a better today and tomorrow for our industry and for the families we serve.
People want to buy homes. There is huge opportunity for a vibrant industry ahead. The echo boom generation, some 80 million strong, is going to need a place to live, whether it's rented or owned. Businesses will need places to operate. Our role is to be the voice of reason in a difficult storm of significant, structural changes to our industry.
The critical role we play right now cannot be underestimated. As we move forward in transforming our industry, we must lead by example. We can do so by finding new ways of doing business in both current and future circumstances. We can also find new efficiencies to help minimize the cost of doing business.
We can be proud of the work we do to help families across the nation. By working collaboratively as an industry and with policymakers and borrowers, we can find the appropriate balance of consumer protection and access to credit. We can work together to make the tough decisions to change our industry and continue down the pathway to sustainability and growth for the real estate finance market and our nation's economy.
These are indeed extraordinary times. And we have a once-in-a-generation opportunity to shape the future of our industry. You can play a role in that future. Not just within your company, but by joining with us to advocate for a strong, sustainable real estate finance system that ensures that the mistakes of the past are never repeated, and that future generations have access to safe, affordable housing opportunities.
David H. Stevens is president and chief executive officer of the Mortgage Bankers Association (MBA) in Washington, D.C.…
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Publication information: Article title: Serving the Next Generation. Contributors: Stevens, David H. - Author. Magazine title: Mortgage Banking. Volume: 73. Issue: 1 Publication date: October 2012. Page number: 24+. © 2009 Mortgage Bankers Association of America. COPYRIGHT 2012 Gale Group.
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