Upcoming Classes

Search CFLA's Article Archive:

Regulatory Uncertainty Prevents Meaningful Housing Recovery

Washington just keeps kicking the can down the road.

americanbanker.comJune 5, 2012

By Clifford Rossi

Last week's announcement by the Consumer Financial Protection Bureau that it would to delay issuing final Qualified Mortgage rules for the mortgage industry and the Treasury Department's comments that housing reform requires further study are just the latest in a string of policy deferrals that prolong meaningful recovery in housing. 

The premise for this statement is simple: too much regulatory uncertainty persists in the market for credit to flow more freely.  

The Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices for April 2012, for example, suggests no real movement in banks' willingness to "open" the credit box much wider than it has been over the last couple of years, although lenders reported a pick-up in demand for residential mortgages overall. 

While no single factor explains the industry's reticence to expand credit availability, regulatory uncertainty over mortgage origination, servicing and financing holds back the return of private capital to mortgage markets.

To their credit, the various agencies tasked with creating rules that will redefine the mortgage industry of the future have taken a deliberative approach, recognizing the complexity and significance of what such changes may usher in.  However, these delays point toward a systemic policy malaise threatening to make the housing recovery since the crisis a decade-long process.  

Since it defines what type of mortgage products will generally be available going forward, the QM rule has a lot riding on it. For example, the Qualified Residential Mortgage rule, a separate part of the reform introducing risk-retention provisions into the securitization process, is effectively on hold until the CFPB introduces the final QM regulations. 

Beyond QM and QRM lie other major policy issues that have yet to be addressed which contribute to market uncertainty. Nearly four years after both enterprises went into conservatorship, a firm transition plan for Fannie Mae and Freddie Mac has yet to be announced or the details on what ultimately replaces these companies. The enterprises' regulator, the Federal Housing Finance Agency, has been proactive in positioning a strategic plan for handling legacy mortgage issues with the two firms, maintaining stability in securitization activities and working to develop the systems needed to support the future secondary market.  However, politics on both sides have stymied efforts to provide any concrete action plan for moving beyond the caretaking activity that has effectively cast mortgage finance adrift in a sea of regulatory uncertainty.

One way to reduce this uncertainty, while strengthening the focus and resources on key strategic issues for FHFA, would be to merge the two enterprises and reorganize the businesses around three functional areas coinciding with the FHFA's strategic plan: legacy asset management; ongoing securitization; and future data and system infrastructure development. But this plan can only be put in place if a viable replacement to Fannie and Freddie can be put forth. 

Clearly the issue is one of great complexity. However, too much time has elapsed now for there not to be a definitive game plan for reforming the secondary mortgage market.

Other areas of mortgage policy also remain unsettled.  One of these is the role of the Federal Housing Administration in mortgage markets and the health of its Mutual Mortgage Insurance fund.  Just last week, Lender Processing Services reported a sharp increase in foreclosures resulting from the surge in the FHA's market share during the 2008-2010 period.  While this served a vital countercyclical role at the time, the large share of volume taken by FHA and general weakness in the MMI fund pose fundamental risks to taxpayers and further private capital's reentry into mortgage markets.  Changes in FHA loan limits, insurance premiums and fees play a significant role in determining the extent of the federal government's direct participation in mortgage financing. Yet little movement in this policy area has been made, again reflecting a broader need for policy coordination on multiple fronts. 

In addition, Basel III's revised capital requirements for mortgage servicing rights and the efforts to overhaul servicing compensation add to the confusion for industry participants assessing the strategic value of owning a mortgage business.

A unifying thread between each of these policy deferrals is the lack of a coherent national housing policy and implementation plan and clear ongoing communication of important aspects in the execution of such a plan.  There is no single voice for the administration for housing. Given how much time has elapsed since the crisis, it will be difficult not to have history refer to this period as the lost decade in US housing markets. 

To have any hope at avoiding this outcome, the administration should announce the establishment of a U.S. Housing Stability Commission comprised of members representing the relevant federal agency representatives chaired by one of these members with a primary mission of creating, coordinating and disseminating housing policy. Further delay in setting the roadmap for mortgage markets threatens healthy recovery from taking place. 


Back to June 2012 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

SEE BELOW- http://www.certifiedforensicloanauditors.com

Call us toll free at 888-758-2352

Bookmark and Share
spacer
Facebook Like us on Facebook
Twitter Follow us on Twitter
YouTube View our YouTube Videos
LinkedIn Connect to us on Linkedin
 
BBB Logo

 

spacer
Contact us or view our Sample Documents & Audits by completing the form below.

  • Reload
  • Should be Empty:





 

DVD Sets Only $99

 

FREE Mortgage Fraud Analysis

 

Order Cutting-Edge Services Now

 

Quiet Title Packages from Licensed Attorneys

 

Affiliate Services

 

CFLA Sponsored Attorney Links

 

Take-Home Education Package

 

ALB Law Firm

 

Advocate Legal

 

The True News Network

 

Rubenstein Business Law

 

Atighechi Law Group

 

Scunziano & Associates

 

Get Certified to Perform Mortgage Securitization Audits

 

CFLA Training Academy

 

Expert Witness Services

 

Cutting Edge Expert Securitization Reports

 

CFLA Credit Cards

 

Breaking News

 

Letters to the Editor

 

CFLA Weekly Newsletters

 

Code of Ethics

 

Testimonials

 

Instructional Videos

 

Job Opportunities

 

License Opportunities

 

MARS Rule

 

Product Samples

 

Resource Links

 

Servicer Information

 

Foreclosure Laws

 

REST Report

 

Quiet Title Packages from Licensed Attorneys

 

Advertise on CFLA

 

Advertising Space: Mortgage Securitization, Quiet Title

 

Certified Forensic Loan Auditors, LLC
13101 West Washington Blvd.
Suite 444
Los Angeles, CA 90066

Toll Free: 888-758-CFLA (2352)
Mobile Users: CLICK TO CALL
info@certifiedforensicloanauditors.com

 

   
 
CFLA IS NOT A LAW FIRM AND DOES NOT PROVIDE ANY LEGAL ADVICE. CFLA DOES NOT OFFER FORECLOSURE CONSULTING OR FORECLOSURE RELIEF
SERVICES. CFLA DOES NOT OFFER OR ASSIST WITH ANY LOAN MODIFICATION SERVICE. CFLA ALWAYS RECOMMENDS THAT CLIENTS RETAIN COMPETENT COUNSEL IN THEIR RESPECTIVE JURISDICTION. CFLA HAS A FREE PROGRAM TO REFER CFLA CLIENTS TO LAW FIRMS IN NEARLY EVERY STATE AND CFLA
DOES NOT CHARGE OR OBTAIN REFERRALS FEES FOR THESE SERVICES. SERVICES NOT OFFERED TO RESIDENTS OF THE STATE OF NEVADA.

 
Home About Us Privacy Policy Terms of Service Disclaimer SERVICES Careers Contact Us
 
COPYRIGHT © 2013 . - All rights reserved.