Housing Advocates Remind Policymakers of Reform Principles

Reformrnof the nation’s housing system is picking up steam, with onernregulatory agency set to vote on risk retention exemptions on Tuesday, multiplernhearings about the future face of housing underway on Capitol Hill, and the administrationrnon record with its broad outline for change. rnBut, with everything else going on at home and abroad there has beenrnvery little media attention to the topic and reform could very well come tornpublic attention as an accomplished fact.</p

Therernare however stakeholders who are getting nervous that thisrnforward progress is taking place in a vacuum and that ideologiesrn(take your pick) will ultimately triumph over the industry’s interests.  For the second time in a week we have seenrnstatements issued from trade associations strongly hinting that they believernthey should be sitting at the table. rnLast week it was Securities Industry and Financial Markets Association and The Community BankingrnMortgage Project.  Today sixteenrnassociations, including the two just mentioned, have come together to draft “Principlesrnfor Restoring Stability to the Nations Housing Finance System,” and, yes,rnsuggesting they should be included in determining the outcome. </p

ThernMortgage Bankers Association  (MBA) today released a document  intended to help policymakers reform and repair the nation’s housing finance system.  “Central to thernprinciples,” the release said, “are the concepts that housing,rnthrough homeownership or rental, should be a national policy priority, privaterncapital must be the dominant source of mortgage credit but that a predictablerngovernment role is necessary, and changes to the mortgage finance system mustrnbe done carefully.”</p

The fourrnprincipals set forth in the document are:</p<ul class="unIndentedList"<liArnstable housing sector is essential for a robust economic recovery and long-termrnprosperity. Housing whether throughrnhomeownership or rental, promotes social and economic benefits that warrant itrnbeing a national policy priority.</li<liPrivaterncapital must be the dominant source of mortgage credit, and it must also bearrnthe primary risk in any future housing finance system.</li<liSomerncontinuing and predictable government role is necessary to promote investorrnconfidence and ensure liquidity and stability for homeownership and rentalrnhousing.</li<liChangesrnto the mortgage finance system must be done carefully and over a reasonablerntransition period to ensure that a reliable mortgage finance system is in placernto function effectively in the years ahead.</li<liThe statement saysrnthat the current government-dominated mortgage system is not sustainable butrninvestors need to understand what they are risking when they commit to a systemrnof private investor capital. There mustrnbe a workable balance between sound underwriting principles, consumerrnprotection, and the need for responsible innovation and risk-taking.</li</ul

While in favor of a private capitalrnmarket, the signors do not want the government to be absent from a newrnsystem.  “Government support throughrnvarious insurance and guarantee mechanisms is especially important tornfacilitate long-term fixed-rate mortgages, affordable financing for low andrnmoderate-income borrowers, and financing rental housing in all parts of therncountry including rural areas.” The ultimate goal, the statement says, isrnfor the public and private sectors to work together to ensure a largely privaternsecondary market that ensures the availability of safe, stable, and affordablernfinancing. </p

The coalition represented by thesernprinciples is a familiar one, sort of. rnThere have been a number of similar letters and statements issued overrnthe last several years by a group with MBA, the American Bankers Association, AmericanrnFinancial Services Association, and Housing Policy Council and several otherrntrade associations at its core.  Other groups,rnsome with a state or regional focus have periodically joined in on topics ofrnspecial interest to their constituencies. rnIn addition to the associations named above, the Principles werernsubmitted by:</p

CRE Finance Council</p

Independent Community Bankers ofrnAmerica</p

Manufactured Housing Institute</p

Mortgage Insurance Companies ofrnAmerica</p

National Council of State HousingrnAgencies</p

National Apartment Association</p

National Association of HomernBuilders</p

National Association of Realtors®</p

National Multi Housing Council</p

Real Estate Roundtable

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