MBA Chief Sees Diversity of Viewpoints as Strength

When mortgage lenders gather for the MBA's annual national mortgage servicing conference in New Orleans, they may find they have plenty of things to argue about.

And that's just fine, according to MBA chairman John Courson.

Mr. Courson, president and CEO of Central Pacific Mortgage Co., Folsom, Calif., says that diversity is a strength for the MBA, even if it means the trade groups members approach issues with a variety of different opinions and interests.

"This diversity really creates an atmosphere where we have a debate," he told NMN during a recent interview here. "I say it's a strength. I hope we don't ever lose that."

At the end of the day, when the MBA manages to create a consensus from its various factions on an issue relating to public policy, that position carries weight with policymakers, because it represents the broadest possible cross-section of the mortgage industry.

He cited some of the MBA's recent lobbying successes as evidence that the group's diverse input contributes to its clout. A terrorism insurance bill has been signed into law, FHA downpayment reform has been enacted, proposed increases in the Ginnie Mae guarantee fee have been stopped and FHA multifamily loan limits have been indexed to increase with inflation.

This year, the MBA sees a different landscape emerging, according to Mr. Courson. It may be an environment that sees less friction between different segments of the mortgage industry.

"I don't see the rifle shot type of issues that we saw last year."

The MBA expects to be involved in the continuing debate over predatory lending, and it is also working with HUD on issues pertaining to reform of the Real Estate Settlement Procedures Act. On the predatory lending front, the MBA now believes the federal government should play a role in creating uniform standards of conduct across the nation, so lenders, servicers and securitizers do not have to manage compliance with a myriad of conflicting state and local rules.

Instead, as a possible war in Iraq consumes much of the government's attention, the MBA has lined up behind President Bush's proposed economic stimulus, which includes an American Dream Downpayment proposal that would spend $200 million to help low- and moderate-income families buy homes. The president's proposal also includes a tax credit to encourage builders to develop single-family housing in central cities, which will fill a gap in the current panoply of hosing support initiatives, Mr. Courson said.

"Most of the programs that are out there are really devoted to multifamily housing."

He also believes that government policy should create incentives for private sector investment in mixed-income housing, specifically targeted to people making 60% to 100% of a city's median income.

He noted that real estate, driven by low interest rates and credit availability, has been a lynchpin of the economy over the last several years. The MBA estimates that lenders originated $2.46 trillion of home loans last year, with refinancing accounting for most of that volume.

Employment in the mortgage banking industry has increased by 37% since the beginning of 2001, adding more than 110,000 jobs to the economy at a time when many sectors have contracted.

While the MBA expects interest rates to gradually rise this year and lending volume to taper off from last year's record, the good news is that mortgage servicing rights will become more valuable, Mr. Courson said. And he believes that industry's ability to manage prepayment risk inherent in servicing portfolios has become stronger.

"I think the industry has gotten smarter. The hedging expertise and tools out there have become more refined," Mr. Courson said.

As the debate over economic stimulus and possible tax cuts heats up, the MBA remains eternally vigilant about one of the cornerstones of real estate finance: the mortgage interest deduction. Mortgage bankers do not want to see tax changes that roll back or diminish the value of the homeowner's ability to deduct interest payments.

MBA president and chief operating officer Jonathan Kempner said that at the end of the day, "people want to be a part of the process." The group's goal is to facilitate the debates that take place within the industry so that everyone's different viewpoints are understood.

Copyright 2003 Thomson Media Inc. All Rights Reserved.

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