Today the Millennial generation (born between 1980 and 2000) makes up 25rnpercent of the workforce and will constitute 40 percent by the end of therndecade.  Many are already looking to buyrnhomes.  Stevens says this generation hasrnmoderate credit scores and only enough savings for a low down payment at a timernwhen policymakers in Washington are proposing higher down payment requirements.  At the same time rulemaking confusion onlyrnadds to the problem of getting the housing market back on track.  </p

Stevens cites the conflict between disparate impact rules and the QMrnstandards and that an emphasis on attracting private capital runs counter torncalls for risk retention on private capital transactions.  He refers to the risk retention standards ofrnthe Dodd-Frank Act as regulatory madness, however his objection seems to berncentered on those proposals for higher down payments which were not the intentrnof the framers of the bill.  Such a hike,rnhe says, could restrict more than 75 percent ofrnqualified homebuyers from accessing the most competitive, affordable loans.”</p

Stevens says minorities and immigrants are also being squeezed, citing 2012rnHMDA data that shows denial rates for African Americans on conventionalrnpurchase loans running over 50 percent.  “That suggests an awful lot of borrowers are being deniedrnaccess to credit under today’s very tight, post-crisis rules,” he says. </p

MBA’s Research Institute for Housing in America projectsrnthat immigrants will constitute 32.2 percent of household growth between 2010rnand 2020, 35.7 percent of the growth in homeownership and 26.4 percent ofrnrenter household growth and Hispanic, Asian, and Black households will grow byrn65 percent.  Stevens said he must ask,rngiven the difficulty of these demographic subsets in obtaining loans, ifrnrenting will overtake homeownership.   </p

He blames the GSEs for eliminating the ability ofrnborrowers with average credit and low down payments to have access to mortgagesrnat reasonable prices because of the strict standards they place on lenders whornsell them loans.  “Add-ons, calledrnloan-level price adjusters, for credit scores below 740, or LTVs above 80rnpercent, on top of base guarantee fees, adverse market fees, and mortgagerninsurance fees have produced a portfolio that – as wasrnsaid in the recent HMDA report – ‘implies no risk taking,'” Stevens says.  Fannie Mae and Freddie Mac are virtuallyrnprinting money for the Treasury and this costs homeownership and the broad recoveryrnof the housing market. </p

Stevens believes we are approaching a situation where demandrnwill outstrip both housing supply and available credit for middle-classrnborrowers.  Striking a balance betweenrnrisk and access to credit has always been difficult and now we are a long wayrnfrom the right balance. </p

Stevens, like most in the industry, calls for reformsrnthat encourage more private sector participation and says there is no doubtrnthat the conflict in rule-makings is hampering this goal and repeats his andrnMBA’s frequent earlier calls for greater transparency from Freddie Mac, FanniernMae, and their conservator the Federal Housing Finance Agency (FHFA) in theirrnpolicymaking process and more opportunity for stakeholders to weigh in on majorrnrulemaking.   </p

“We, as one industry,” Stevens says, “can help the economyrnfind its footing at a time when it could really use a boost. As rates start tornrise, the recovery will need every ounce of help from all sectors of the economy.rnThe real estate finance business can be an ally to growth if the policymakersrnpartner with us -rather than hold us back.”

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.