Like it or not, the mortgage industry has one of the biggest impacts of any industry upon America's economy, political landscape and even its social well-being.
The American Dream of homeownership should not and cannot be allowed to die because of the dark period that brought predatory practices into the mainstream. Housing is every bit as important to America as the national transportation system or healthcare system; it's integral to the country's welfare.
Discussion of GSE reform and the possibility of a privately-dominated mortgage-backed securities market is rampant. But housing affects too many Americans to simply cast out government involvement, especially where the GSEs and Ginnie Mae are concerned.
The mortgage industry does not require a tremendous overhaul, as some suggest. Such an undertaking could in fact have damaging and wide-ranging consequences. Instead, industry professionals should seek to tweak and fine-tune the way real estate transactions are facilitated.
Right now, the pendulum is swinging again between risk mitigation (and tighter available credit) and affordable homeownership. This has happened for decades and will happen again. In an effort to prevent another economic crash because of events in the real estate and mortgage industry, the states and federal government have enacted a sweeping range of regulatory and legislative reforms.
Although there are opinions to the contrary, the value of homeownership remains high. From a public policy standpoint, higher rates of homeownership tend to indicate political, economic and even geopolitical stability. Homeowners are more likely to be producers in the economic, social and political realms. They tend to be people willing to take ownership and responsibility within their communities. This is a broad-stroke statement, but one that remains true.
Nothing has changed the fact that housing remains a unique and vital element of the U.S. economy. The way homes are built might change but people will always need places to live, whether in single family or multi-family residences. Many will continue to seek the benefits of ownership, rather than rent. Unlike the core products of some industries, the core product of the housing industry is incredibly unlikely to ever become obsolete.
Purchasing a home (and mortgage) is generally the largest transaction a consumer will ever undertake, and it is a worthy endeavor. Often, a home is the owner's greatest asset. Default and foreclosure damage not only the homeowner, but the community as well, so it's easy to see why the government has such an active role in the mortgage industry: it touches almost every American in some way or another and reaches into industries which rely upon housing or mortgage-based dollars in support of housing, like construction, technology and market securities. As the mortgage and real estate industry goes, so goes much of the economy. Almost 300,000 Americans are gainfully employed by the mortgage and real estate industry, either directly or through businesses which take in the majority of their revenue from real estate-related activity.
Although there can and should be debates about how the industry is regulated and overseen, it's undeniable that the whole of the industry merits comprehensive oversight. Currently, that structure is in place and it can and will prevent a collapse similar to 2008's in the future. There is no reasonable argument for lower levels of government participation in the housing industry. It is the backstop of government support (implicit with the GSEs and explicit with Ginnie Mae) that helps to keep the American Dream alive, even in difficult times.
Joseph J. Murin is currently vice chairman
of Chrysalis Holdings and is a former president of Ginnie Mae.