Attendees at a secondary mortgage market conference were told by the head of the Mortgage Bankers Association that regulation is holding back housing.
David Stevens highlighted how real estate finance is “in the penalty box.” He explained that people in the business feel like they’re walking around with giant targets on their backs as the Justice Department and other enforcement agencies drive housing policy.
The unproductive environment continues despite hundreds of billions of dollars in settlements paid by lenders and significant changes made to
controls, compliance and the borrower experience.
Stevens, president and chief executive of the trade group, made the remarks at MBA’s Secondary Market Conference and Expo, according to a prepared transcript of his presentation.
The industry’s chief lobbyist noted that
turnout for the event, which is being held this week in New York, is the most in a decade.
He said the enforcement environment and negative rhetoric
are hurting both home buyers and home lenders. Home ownership stands at the lowest point in more than two decades.
“Current policy has erected a set of ironclad choke points that are preventing or discouraging qualified young families and non-traditional borrowers from ever buying homes,” he said. “And it’s working — I’m sorry to say.”
The trade group’s leader said its time for state and federal policymakers to be held accountable for their role in the recovery — admitting flaws and acknowledging needed rule corrections.
“Some regulators appear to have an enforcement-first strategy, instead of providing clear rules and guidance — particularly regarding unfair, deceptive, or abusive acts or practices — UDAAP actions — which expose lenders to an outcome that we call ‘regulation by enforcement action,'” he stated.
Stevens said that rules are different for depository bankers and mortgage bankers.
He noted that there is confusion among and across federal agencies.
He cited issues with the rate-checker tool, excessive use of False Claims Act actions and a flawed complaint database.
“Housing policy is failing today,” Stevens said.
Stevens discussed the inflexibility of the Ability to Repay/Qualified Mortgage rule, which needs to be rewritten. He noted that the only reason the QM rule is working today is because of the “GSE Patch.”
Most of the non-QM lending that is happening is being done on jumbo mortgages, and credit remains tight for lower-balance borrowers like first-time home buyers.
