Magazine article Mortgage Banking

Uncertainty Breeds Contempt

Magazine article Mortgage Banking

Uncertainty Breeds Contempt

Article excerpt

There was perhaps no better way to excite the tsunami of an estimated 11,000 real estaters that hit Capitol Hill in May than the mere six words uttered by Gerardo Ascendo, president of the San Diego--based National Association of Hispanic Real Estate Professionals (NAHREP). "No one aspires to be a rented," Ascenio proclaimed at the Chicago-based National Association of Realtors[R]' (NAR's) Rally to Protect the American Dream, as he recounted how his immigrant parents waited to become owners until late in their lives, largely because they didn't understand the process.

Acenscio spoke at the base of the Washington Monument to a field of blue T-shirts emblazoned with the big, bold "R" logo shortly before the assembled Realtors swarmed the Capitol as well as House and Senate office buildings. Earlier in the week in Washington, at NAR's annual midyear meeting, Federal Reserve Governor Elizabeth Duke also roused the Realtor throng when she said it is time to make the hard choices necessary to spur a full-blown housing recovery."

"If I were to write a prescription for housing recovery," Duke said, her Rx would include maximum employment and stable home prices But most of all, said the former Virginia banker who chaired the American Bankers Association (ABA) in 2005, she would decide the fate of Fannie Mae and Freddie Mac and get on with it.

Urging policymakers to "move forward with the difficult decisions that will affect the future of the mortgage market," Duke said that "until these tough decisions are made, uncertainties will continue to hinder access to credit, the evolution of the mortgage finance system and the ultimate recovery of the housing market. I don't want to diminish the importance of any individual policy decision, but I do believe that the most important prescription for the housing market is for these decisions to he made and the path for the future of housing finance to he set. It's time to start choosing that path."

Certainty--or rather uncertainty--also was the word of the week at the Mortgage Bankers Association's (MBA's) National Secondary Market Conference in New York in May, where Raj Date, second in command at the Consumer Financial Protection Bureau (CFPB), said, "The mortgage market will recover when we have restored transparency, when we have restored fairness, and when we have restored financial incentives that actually reward people for making smart decisions."

Deputy Director Date promised to "find a common-sense and analytical answer" to protect consumers while fostering a thriving mortgage market. "We want to ensure that consumers are not sold mortgages they can't afford," he said. "We want to minimize compliance burden where possible. ... We want to ensure that, as the market stabilizes over time, every segment of prudent loans has the benefit of sufficient investor appetite and a competitive market. We want to avoid any inappropriate disincentive that would prevent lenders from making prudent, profitable loans. ... We want to encourage a competitive market that does what a market is supposed to do--calibrate risk and calibrate price. We want to craft a sensible rule that works for the market throughout the cycle, but we want to be attentive to just how fragile and risk-averse the market seems to be today."

The CFPB has until January to finalize the ability-to-repay Qualified Mortgage (QM) rule. But the fact that lawmakers have handed over that decision to the fledgling agency, which is not yet a year old, strikes fear into the heart of the man widely credited to be the father of the mortgage-backed security. …

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