'Perfect Storm' of Regulations to Hinder Restoration of Competitive Mortgage Marketplace

David H. Stevens, President and CEO ofrnthe Mortgage Bankers Association criticized the federal government andrnfinancial regulators as providing a lack of transparency and an overlyrnburdensome regulatory atmosphere in remarks prepared for delivery at MBA’s inaugural IndependentrnMortgage Bankers Conference.</p

Stevens creditedrnthe federal government with driving much of independent bankers’ recentrnsuccesses with programs such as QE3, Operation Twist and HARP but also enumeratedrnthe burdens the independent bankers are carrying and asked “How can you keeprnrunning a business let alone grow your business in this atmosphere?”  </p

Right now thernpotential is there for a very bright future for the industry; interest ratesrnare a record lows, home prices are stabilizing, consumer sentiment is rising,rnand the affordability index is near its peak. rnThere is also the huge Echo Boom generation are nearing the peak age tornbuy homes and raise families, but “All of this is at risk with the ‘perfect storm’ of federalrnregulations that also lie ahead.”. </p

When governmentrnregulates pervasively it creates more risk for repurchasing and litigation andrntilt the scales toward larger institutions that have resources to manage thesernrisks.  “There must be a competitive mortgagernmarketplace where all have the opportunity for growth and policymakers must bernaware of the impact of the litany of rules and regulations causing confusion inrnour industry and the mortgage marketplace.”</p

Stevens conceded thatrnsome of the proposed changes were needed and even necessary to ensure thernmistakes of the past never happen again but that the pendulum has swung toornfar.  In a recent six-week period he saidrnMBA had to respond to six rulemakings covering things such as RESPA/TILArndisclosures, servicing standards, appraisal disclosures and the association isrnstill heavily engaged in some 3,000 pages of rulemaking generated by Dodd-Frankrnnot to mention issues related to FHA reform, Basel III capital rules, and RiskrnRetention/QRM rules from six regulators. rnIt is also working on issues related to the future of Freddie Mac andrnFannie Mae.  </p

He called again for thernWhite House to create a role for housing policy coordination-a traffic cop forrnall new rules.  This office would notrnmake new rules, but rather would ensure that ongoing regulations complement notrnconflict with each other. It wouldn’t have authority to tell regulators not torndo their job, but to identify points of conflict and try to balance timing andrnimpact on markets while bringing a rational, integrated approach to housingrnpolicy change management.   It is time,rnStevens said, “for Washington to stop thinking of our industry as a problemrnthey need to fix. Because, frankly—-their fixes are often a big part of thernproblem.”</p

Washington often appearsrndysfunctional when it comes to policy making including housing policy Stevensrnsaid.  There are 9 different regulators</bplus Congress engaged in reforming the mortgage business and they aren'trnworking together.  The answer lies inrnregulatory transparency and coordination. Just like consumers need morerntransparency-so do we-before regulators hamstring our operations withrnpotentially unworkable rules that harm consumers.  (GAO: 160 Entities Involved in Housing Assistance)</p