The alarm over regulation continues to paralyze the mortgage business.
That's what attendees of the Regional Conference of Mortgage Bankers in Atlantic City, N.J., heard from David Stevens, president and CEO of the Mortgage Bankers Association. And it is what I heard at a private roundtable there with industry leaders.
Stevens told the meeting that an air of “complete uncertainty” is hanging over the industry now, causing a “mortgage blockage.”
He noted that 11 regulators now have some sort of sway over the business, and that the recent big settlement between state attorneys general and big servicers “didn't settle the market.”
“We made massive mistakes,” Stevens told the mortgage bankers. But he pointed to some avenues of recovery, especially the impact of the “Gen Y” cohort that is now entering its home owning years. This is a bigger group than the baby boomers, he said, and will repay efforts to cater to emerging market groups such as Latinos and other minorities.
Regina Lowrie, a former head of the national MBA, agreed with Stevens on both the market uncertainty and the potential ramping up of business with emerging markets. “We are ready for the emerging markets—Hispanics, Asian, African-Americans,” she told a National Mortgage News roundtable at the meeting.
E. Robert Levy, who chairs the New Jersey Mortgage Bankers Association and several other industry groups, agreed emerging markets will be important but said the right products need to be offered to make a success of it.
Obviously the subprime products of a few years back are not what's needed. But what about the 3% down products the GSEs offered with mortgage insurers back in the 1990s?
Those were targeted for the affordable market and the immediate word on them was that they would turn into “instant REO.” Well, that didn't happen, thanks to automated underwriting and GSE standards. It would be nice if every potential homebuyer had 20% to put down on the house. Not going to be the case, though. A well-underwritten 3% down loan is something to be considered.
There's no doubt the mortgage business is going through a hard time, hunkering down until the blizzard of regulations abates and the backlog of foreclosures works its slow but steady way through. Still, one of the speakers at the meeting brought up an old proverb that certainly applies just now: the stronger the wind, the stronger the tree.
