Ed Delgado, COO of Wingspan, (right): I dont think itll ever get back to normal. We saw a rare period of expansion of homeownership and affordability so I believe the mortgage industry has moved from a crisis of credit to a crisis of confidence. Customers are very leery about purchasing in the United States. We have record liquidity in the marketplace, we have record low interest rates, we have abundance of inventory, and yet theres no catalyst that brings buyers back to the market. Some resemblance of house price appreciation I would estimate would take place probably towards the latter part of this year, maybe the beginning of next year, but I dont see a full-blown recovery period or sustained stabilization until 2014.
Paul Wright, senior vice president, DRI: What you said about recovery and home prices, they dont get back to the point where they have been. From the foreclosure standpoint, my clients were asking those questions and giving the same answers four to five years ago. Fast forward five years and they are giving the same answers. As Ed says, were never going back to those glory days, but the foreclosure market and the REO market will have to come up with some type of balance. Whether its through government encouragement, regulations or just markets taking over, its probably going to take over five years for all this to get over. Even though we see the numbers, I dont think they truly what the numbers could be because theres a lot out there that the banks dont put out on the market just because theres a lot of properties out there that they dont want to be devalued by the fact that theyre having more distressed assets. They just sell a few and if the market doesnt do well they keep the rest back.
Suzanne Ball, president of Americas Informant, Inc.: My take on that is somewhat different. I see vacant properties come into the market. However, I see the shadow inventory slowly resolving itself through programs such as rent-to-own. There are other programs that are going to come out to light to liquidate the assets but we are going to be somewhat more creative in getting there. And the election year comes into play. It may be two to three years before we see a full recoveryalthough I dont think its going to be a full recovery either. Its going to be a different normalcy.
Tommy A. Duncan, president of Quality Mortgage Services, (left): Theres going to be many houses for sale with reduced rates that theres gong to be a push to sell, theres going to be a fire sale and people may purchase. But the housing market will not recover until those homes are sold and then sold again before we see some kind of normalcy in the housing market. I wondered whether well be able to do that with the current Dodd-Frank proposal of QL and QRL to provide that quality control.
Frank Pallota, EVP, Loan Value Group, (left): Wanted to follow up on something Ed said. Youre right. Borrowers are looking differently at the home purchase. What weve had for decades, even before the housing crisis, was the ability to transfer risk into the capital markets. There was public and a private ability to transfer risk. And while we have a homeowner that probably is a little bit sketchy about coming back into the market, the capital markets are still very weary about how to transfer risk. We do not see many private label securitizations for too many reasons. One is unemployment is still high so the ability to predict cash flows is challenged. The other big reason is that home prices are still onto a flat to downward trajectory. And in order to see a risk transfer into the capital markets you need to predict, one, both of those in a trajectory that is upwardsand were not going to have that for some timewhich means were not going to see investors into the market. And without the ability to transfer risk I do not think were going to see growth, at all, and for more than a decade.