History Will Be the Judge
Courson, John A., Mortgage Banking
History is written during times like these. As this is being written, the U.S. House of Representatives has just approved a massive and historic rewrite of the rules governing our industry. History, quite literally, is waiting on the doorstep of the mortgage industry as we move into the new year.
History has been our industry's friend many times in the past. In the wake of the Great Depression, bedrock mortgage industry institutions arose out of deep economic distress. The Federal Housing Administration (FHA) emerged to help Americans of modest means buy homes on affordable terms. The Veterans Administration (VA) home loan guaranty program emerged in 1944 after a world war shook our nation to the core and permanently redefined our place in history.
The foundational principle that our government relied on during those earlier challenging times was to adopt changes that would support expanded access to mortgage credit. And mortgage bankers played a critical role in opening that door wider for more Americans to access mortgage credit, expanding dramatically on what depository institutions could provide. And the federal government believed in this approach, and strongly enabled it.
So our industry knows that when history calls and is sitting on your doorstep, it can be a good thing.
But in today's embattled environment, policymakers seem to be moving in a different direction. Expanded access to credit has been replaced by distrust of credit providers and the innovations they have brought. The new mantra seems to be to dial back innovation and move forward with great caution.
Yet, how will history look back on this period if caution becomes the overriding goal in the delivery of mortgage credit?
Will qualified borrowers be deprived of the opportunity of homeownership because we opted for undue caution instead of supporting access to credit within prudent guidelines? Will the next generations of Americans look back on this moment as the time that housing policy shifted to a tighter rationing of mortgage credit, limiting the ability millions to achieve the American dream of sustainable homeownership?
As I sit here in Washington, D.C., I am determined to use all of the Mortgage Bankers Association's (MBA's) resources to help shape this historic change in a way that ensures access to sustainable credit. On my watch as MBA president and chief executive officer, your trade association will be at the table loudly defending all we have done to help deserving homeowners buy homes--and stay in their homes. And yes, we are committed to expanding the pool of homeowners, but not simply for some short-term gains in the homeownership rate. We strongly believe in expanding access to credit, but only when it is truly affordable and the terms are fair and right for that borrower. In other words, we believe in homeownership for life.
That brings us back to that bill that was approved in the House on Dec. 11. The Wall Street Reform and Consumer Protection Act of 2009 is sweeping--and historic--but unfortunately, it will not expand access to mortgage credit for future generations. It will, in fact, do the opposite. It will likely restrict access to mortgage credit through provisions such as a risk-retention requirement that unfairly punishes non-depository mortgage-credit providers. The legislation also fails to provide a uniform federal standard for mortgage lenders to comply with in all the states. Thankfully, House lawmakers sided with MBA and others by not imposing a risk-retention provision on the commercial mortgage-backed securities (CMBS) market.
During the run-up to the vote, MBA worked with members on both sides of the aisle, voicing its concerns about many aspects of the legislation (H.R. 4173). Yet, the House approved the bill with many of the flawed provisions still in it.
Our chairman, Rob E. Story Jr., CMB, perhaps put it best when he issued the following statement upon passage of the bill: "Regrettably, the House moved forward and passed a bill that could adversely impact borrowers and lenders alike. …