It's Time to Speak Up

The mortgage industry needs to push back-hard. For the better part of the last four years, politicians have been pounding on banks and lenders as the source of all that ails our economy. The most recent example was the State of the Union address, where still more regulation, oversight and government involvement with lending practices were promised. While it's true that certain elements of this industry (mostly gone now) engaged in practices that contributed to the 2007 financial collapse, the fact of the matter is that the industry largely self-corrected before legislatures enacted laws impacting the manner in which lenders did business. Now, it is these very laws and unnecessary regulations that are slowing economic recovery and suppressing real estate values.
 
Indeed, much of what ails the economy and housing market is an unavailability of money. Creditworthy borrowers without 20% downpayments, homeowners with impeccable credit and payment histories but reduced home values, self-employed individuals, etc., are either unable to get a mortgage, or are stuck in unnecessarily high interest loans and/or loans with increasingly expensive mortgage insurance that may cost them thousands of dollars per month in additional payments. If this large number of potential borrowers-who historically accounted for few defaults and currently present little risk for default-were able to convert some of that unnecessarily high payment into disposable income, consumer spending would rise, followed by an increase in employment. The increase in employment coupled with common sense lending would spur home sales creating a real estate market recovery. Home values would rise, freeing yet more persons to take advantage of lower interest rates, and so on and so on. All of this would reduce government benefit payments, increase tax revenues, and positively impact the deficit. In it would mean short-economic recovery.
 
Instead, the pounding continues: More regulations and punitive investigations, more government control over and manipulation of lending practices, more of the very last thing that is needed and/or beneficial.
 
This industry needs to ban together and explain to the American people that lenders are not the problem, they are the solution. Until that happens, we will continue to see counterproductive regulations further preventing the common sense lending that is necessary to sustainable economic growth. Since the politicians seem more interested in continuing to point the finger at us, it's up to this industry to push back and give our side to the public-something we have never really done. Until that happens, it's just going to be more of the same-and that isn't good for anyone.