Magazine article Mortgage Banking

Restructuring for the Next Generation

Magazine article Mortgage Banking

Restructuring for the Next Generation

Article excerpt

"Stabilize and stimulate" was the theme of congressional and executive-level response to the financial crisis in the first half of the year. Between January and June, the administration's Financial Stability Plan, the Homeowner Affordability and Stability Plan and the Public-Private Investment Program (PPIP) plans were all launched. In the same time frame, Congress passed a $787 billion stimulus bill--the American Recovery and Reinvestment Act of 2009--and the Helping Families Save Their Homes Act of 2009.

A third theme is emerging during the second half of the year--restructure. There are many unknowns at this point about the pace, reach and substance of the regulatory restructuring efforts under way, but this much is clear: The next several months of policy debate in Washington will determine the future of the real estate finance industry for at least the next generation.

Accordingly, the Mortgage Bankers Association (MBA) has undertaken an intensive effort to examine and respond to the many proposals, recognizing that anything less than a full-court effort could result in severe consequences for each of your companies as well as our entire industry in the coming years.

The administration released its recommendations for overhauling the regulatory framework of the nation's financial system in mid-June. The comprehensive proposal recommended, among other things, creating a Consumer Financial Protection Agency (CFPA), tapping the Federal Reserve as the systemic risk regulator, developing a plan for the future of the government-sponsored enterprises (GSEs) and reforming the securitization markets.

After the Independence Day recess, Rep. Barney Frank (D-Massachusetts) introduced a bill--H.R. 3126--adopting most of the administration's recommendations, including the establishment of the CFPA. In mid-July, MBA and several other industry representatives were invited to testify before the committee that Frank chairs--the House Financial Services Committee--about these reform proposals. I had the pleasure of representing MBA at this hearing, where I reminded legislators that today's financial regulatory system is already a patchwork of state and federal laws and warned them that establishing a new consumer-protection regulator could actually weaken consumer protection.

I was also able to recommend to legislators MBA's proposal for increasing consumer protections and improving the regulation of mortgage finance--the Mortgage Improvement and Regulation Act (MIRA). MIRA proposes the establishment of rigorous, uniform standards that will promote greater transparency, and newly regulates nondepository mortgage bankers and brokers.

Instead of adding duplicative regulation at the federal level, MIRA would fill in gaps and streamline regulation and enhance enforcement. MIRA could easily be part of a more comprehensive regulatory modernization effort. (You can read more about MIRA at

In July, MBA also assembled a group of members to serve on our Regulatory Reform Task Force, which will act as a brain trust as MBA responds to the various regulatory reform proposals. The task force, which held its organizing meeting on July 13, will be chaired by Michael Young, chairman of the board for Cenlar FSB, Ewing, New Jersey, and MBA's vice chair-elect. David A. Roberts, CMB, president and chief operating officer of Grand-bridge Real Estate Capital LLC, Charlotte, North Carolina, has agreed to serve as the vice chair. …

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