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Stevens Calls for Federal Housing Policy Coordinator, Greater Transparency from FHFA

Chicago, IL – October 23, 2012 – (RealEstateRama) — David H. Stevens, President & CEO of the Mortgage Bankers Association (MBA) today delivered the following remarks at the association’s 99th Annual Convention and Expo in Chicago, IL.

[Please Note: These are prepared remarks. Mr. Stevens may add to or subtract from these remarks during the course of his presentation. Portions of the text may be omitted during the speech.]

“Welcome everybody. It’s great to see all of you here.

You are the backbone of this business. I just want to take a minute to thank you for your commitment to this industry, and for the hard work you do—day in and day out to make dreams come true for America’s families.

These are times of great uncertainty.

for our country…….

for our business…….

for future generations.

In the coming weeks, voters will decide much about the future of our country.

In the coming months, Washington will decide much about the future of our business.

And, those two things together–will decide much about the future for many generations of Americans.

Will it be a future of wide-open opportunities? Or will the American Dream be downsized?

Will this country be about small ideas and diminished dreams? Or will it be about big ideas and inspiring dreams?

Over the coming months, policymakers will decide the future of opportunity in this country. And opportunity doesn’t get much closer to home than having the chance to buy a house.

But housing opportunity is under attack right now. Risks of litigation, regulation, and agency policies are forcing housing opportunity into retreat.

The American Dream is in the fight of its life.

It’s future could very well hinge on what we do together in the coming year.

One year ago, I stood on this very stage.
I spoke to you for the first time as the leader of this proud organization. You were sizing me up, and I was getting my arms around the serious challenges we face.

And a year ago, back in DC, we took a hard look at MBA’s strengths and how we could put them to better use by talking louder and prouder about the great things our members do.

We started forging a new MBA—a higher-profile version that showcased the best of the old–with some new strengths added in.

MBA has always been the industry’s big tent. Our members really do represent the entire field of real estate finance—whether it’s rental or owned—whether it’s single family or multifamily. So we are using that fact in our messaging and advocacy.

In the last year, we worked hard at bringing you more meaningful content in our meetings–as well as creating brand new meetings that fit the times.

We ramped up more targeted educational offerings, and worked hard at becoming a more member-centric organization.

And the advocacy has been ramped up too—we are at the table every time your interests are in the crosshairs. And that’s often—in case you haven’t noticed.

But it didn’t happen over night. And the work is ongoing.

I remember the state our industry was in last year when I appeared on this very stage.

Back then we were reeling from the blows to our reputation; dealing with the near destruction of our industry and a wake of turmoil to homeowners across the country. Fannie and Freddie were still hurting badly. Dodd-Frank was in our future–with its thousands of pages of new rules—yet it wasn’t in our IMMEDIATE future–like it is today.

One year ago it was critically important for us to come together in Chicago. But today—I have to say–your presence here is even more vital.

Over the next four months, much of the future of our industry will be decided. The Dodd-Frank rules are now truly imminent. And they will dramatically transform our business—make no mistake about it. More importantly they will determine what kind of housing market we leave for future generations.

Will it be the same dream machine–so uniquely American—that’s elevated so many out of poverty?

Will it be a housing market that offers a ladder-up for a new middle class?

Or, will it be a market that shuts the door on all but the most comfortable and secure?

Will it be a housing opportunity society? Or will it be a take-no-chances market –where only the fortunate need apply?

I deeply believe in the housing market—and I know you do too. I believe the home mortgage is a doorway to opportunity–when used responsibly. I know that together we can rebuild that dream. This is about reclaiming our future. About standing up for what is important–and getting it right.

But it’s definitely not about letting others decide our destiny.

Government policymakers need to recognize they can’t do this alone. They desperately need our expertise. They cannot understand how complex this business is compared to those who work in it like we do.

It’s time for Washington to stop thinking of our industry as a problem they need to fix.

Because, frankly—-their fixes are often a big part of the problem.

When it comes to all policymaking today, Washington often appears dysfunctional. Housing policy is no different. There is massive disconnect among federal agencies charged with reforming our business. We’ve got Congress and 9 different regulators in Washington currently working on rules that will directly affect our industry. And they aren’t working together.

All of these well-intentioned people–don’t seem to talk to one another.

That’s a problem.

The CFPB has six different major rulemaking efforts all slated to take effect early next year. That’s a huge regulatory compliance burden to absorb–all at once–in a highly automated business. That means your operations and tech folks won’t have much lead time to implement all these changes. Yet, in Washington, they don’t seem to get that.

That’s a problem.

You’ve got the CFPB embarking on new audits of non-bank mortgage. Oh, and by the way, that comes on top of 50 states, the OCC, HUD and others, all with their own set of requirements. Of course, they couldn’t all just agree on one set of audit rules. For some small lenders worried about complying with all of this, or simply having the resources to dedicate to multiple regulators who set up shop in their offices for weeks or months, will decide it’s just time to close their doors. That means fewer lenders out there.

That’s a problem.

You’ve got the Fed delivering the best housing recovery medicine possible—record low interest rates. Yet, credit policy is so tight those rates are being neutralized. QE 3 should be boosting the housing market like nobody’s business. Yet, aggressive buyback demands from Fannie and Freddie, compare ratio pressure from FHA, intense examiner scrutiny of lender decisions, risk of false claims, litigation and more are causing undue underwriting caution. And credit overlays are making it impossible to qualify for a loan. So QE 3 is being blunted by restrictive credit conditions when it should be fueling a booming recovery. And this reflects our market conditions before the coming onslaught of new rules.

That’s a problem.

With all the challenges in today’s economy, it’s time to harness the demand-engine of the U.S. housing market—not leave it idling in neutral.

But for all those in government that still deeply distrust us, let me be very clear about one thing. We are not talking about revving up an industry built on irresponsible lending. None of us wants that. We abhor that. That approach almost ruined our industry. The one we work in every day. We must be vigilant to never again let others — motivated purely by greed — hijack our proud and honorable industry.

But there is some middle ground here. The regulators think they know how to rebuild the business–but their way is built around countless rules and restrictions that would choke off business for all but the overqualified.

Washington policymakers don’t even recognize when their own policies produce outcomes that lead responsible lenders to simply pull back for fear they will be hit by buyback demands or enforcement proceedings. Or both!

Take the proposed disparate impact rule coming out of HUD–and the ability-to-repay QM rules coming out of the CFPB. Here’s a case of where one rule the federal government is promoting could produce an outcome that the federal government will be punishing.

It’s a no-win situation for lenders.

Unless lenders are given a broad credit standard that defines “ability to repay” as part of QM with a clear safe harbor, they are going to err on the side of caution, and not make loans to some credit qualified borrowers who may be on the margin. And it’s just a fact that more low- and middle-income families without perfect credit are in protected classes. So there could be disparate impacts on those protected classes as a direct outgrowth of the QM rule if there is no safe harbor or too narrow a credit definition.

Can we make Washington understand that? Believe me we’re trying.

There are so many more instances like that, where our expertise can shed light on the policymaking.

And it’s not as though we don’t want any new rules. We support consumer protections that bring consistency and transparency.

We just think we can do better than the state of confusion coming from this new set of rules now being proposed.

So, for all who believe America is still the place to create dreams and watch them come true, we need to get to work.

We need to start now. It’s time to get it done. Together we can do this. Watch us.

Consider what’s at stake. We have a very fragile housing recovery under way right now. The market is starting to heal. But if a bunch of new rules — hostile to home buying — start to crush the budding recovery early next year, it will be hard to see how the market gets back on its feet and could also lock out the same families we are trying to protect.

And if the modest home price gains we have built so far begin to retreat–we will all be in trouble. Borrowers will go back underwater increasing risks to homeowners.

So here’s what MBA is going to fight for. Listen up, because I need you with me on this.

We are calling on leadership in Washington—whichever Administration is in the White House come January—create a role for housing policy coordination—a traffic cop for all new rules. This new liaison for policy would ensure that regulations compliment one another rather than conflict.

There is broad consensus that private capital must return to the market. Everyone says they want diverse mortgage markets where both community-based lenders and large, nationwide banks compete on a level playing field. But time and again, the policy prescriptions are producing the opposite. We need someone to be on point to make sure our collective housing policies will actually produce the results they intend.

This office won’t have authority to tell regulators not to do their job, but to identify points of conflict, try to balance timing and impact on markets, and push regulators to communicate with each other.

It might not reduce the number of masters we serve—but it would at least make them talk to one another.

The office would be charged with bringing a rationale, integrated approach to housing policy change management. And it would have a clear and absolute mandate to identify and evaluate downstream effects and unintended consequences of all changes to government housing policy.

This would be a huge win for the American people. It would give all of us greater confidence in the markets we serve and help set housing on a sustainable recovery path.

We have worked very hard during the last twelve months to further build up our access to decision-makers and have a seat at the table. And it’s working. Today, we have a stronger voice in Washington and have been putting it to use.

Since January, we have testified six times before Congress. We’ve held 21 separate member fly-ins where MBA members met with federal agencies including Treasury, HUD, OCC, FDIC, the FED, the CFPB, the SEC, FHFA and FASB.

At MBA’s National Advocacy Conference our members conducted 210 Capitol Hill visits with their individual senators and members of Congress. We met with senior members of the president’s team in the West Wing of the White House where we talked about impacts from everything from repurchases, to loan officer compensation, to servicing standards to down payment requirements.

We have met one on one with Richard Cordray, Ben Bernanke, Shaun Donovan and Ed DeMarco.

And all of this has enhanced our credibility in Washington. But the fog of misunderstanding about our business and our motives has not fully lifted. And the trust deficit is still very much alive in DC.

And if they don’t trust us, they won’t work with us. And if they won’t work with us –well — the rules they come up with—just won’t work.

It’s basically that simple.

So, we’re at a point where we have to start fighting back. And there’s one point we really need to drive home. And it’s this: We don’t need to be sent off in the corner to be punished while others fix the housing market. We need to be part of the solution.

We think the answer lies in regulatory transparency and coordination.

Just like consumers need more transparency—so do we—before regulators hamstring our operations with potentially unworkable rules that harm consumers. Our industry desperately needs more regulatory transparency.

Think about it. One of the cornerstones of the CFPB is to bring consumers better transparency into the mortgage lending process. The CFPB believes—as do we—that transparency results in better decisions by borrowers.

So let’s give us the same deal—because better transparency equals better outcomes all the way around – for consumers and for better housing policy.

And while we are on the subject of better rulemaking out of Washington, there’s one more thing.

How about making the Federal Housing Finance Agency—FHFA—comply with public notice and comment rules before the GSEs impose critical new rules on our industry.

We all need, respect, and support the role the GSEs have played–and continue to play.

Where would this industry be without them? And until their future is defined, we are locked into a state of mutual dependency.

Yet even though Fannie and Freddie are regulated and government sponsored—their rules are set without benefit of the process followed by all other regulated government agencies.

That means they can rock our world without notice or comment. In fact, they can change the game without abiding by any formal regulatory process.

Consider some of the recent major announcements of planned policy changes from the GSEs–all done without public review and comment. They include changes to the minimum net worth requirements, arbitrary g-fee changes, volume limits for some existing sellers, new servicing rules, a new framework for reps and warrants, and changes to their securitization platform.

At MBA, we think it’s time for this to change. We must demand the opportunity to have input on any rules the GSEs are considering–before they are set in stone. This is only reasonable–and MBA is going to fight for it.

So we are on a mission. The coming year will be critical. Your support is crucial. Here’s what’s at stake.

If we allow things like the Qualified Mortgage to become an unqualified disaster, it’s not just the U.S. consumer that will be hurt. It’s the whole U.S. economy.

Our economy desperately needs a boost from a reviving housing market. The interest rates are in place to do it, thanks to the Fed—and quantitative easing would be a terrible thing to waste (to borrow a phrase from the good mayor of Chicago—Rahm Emmanuel).

But if we let the collective body of regulators, Congress and agencies in Washington continue to depress the recovery with uncoordinated and counterproductive policies, then housing will continue to be a drag on the economy.

Let’s not let that happen. Let’s demand policy that makes sense in the real world.

If you believe in this industry;
If you believe in housing opportunity for our kids and our grandkids;
If you believe that the American Dream is alive and well;
If you believe opportunity should not be limited to the 1 percent;
If you believe that housing can help get this economy back on track again.

Let’s work together. Stand up and be counted as part of MBA, as we rally our forces in Washington.

We know you’ve all got day jobs and you can’t read every email from me or my team. But we need you to keep up with the news on the policy front lines. We need you to help write the comment letters, call your congressman or regulator, show up at the conferences and meetings and join an MBA committee.

And membership in MBA is only the bare minimum. We need more from you than that. We need your active involvement.

This doesn’t happen without you. You need to show up in Washington when we need you because when you speak, you speak as an employers, taxpayers and business leaders and you speak for the American homebuyer.

We have a battle ahead of us. So let’s go get it done.

Thanks everybody. See you next year in Washington, DC when MBA turns 100-years-proud.”


The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: