Housing finance was the main feature of a multi-panel discussion at the Realtors Midyear Legislative Meetings & Trade Expo in Washington yesterday.
Officially titled “Housing Policy in 2013: Challenges, Opportunities and Solutions,” the symposium featured a who’s who in the world of housing finance, including Ed DeMarco, the acting director of the FHFA, Carol Galante, the acting commissioner of the FHA, Mark Zandi of Moody’s Analytics and Susan Watcher, a professor at the Wharton School of Business.
“We all are cautiously optimistic that the signs of stabilization, and in some places, strength, that have begun to emerge in various housing markets are true signals that a long-awaited recovery is taking place,” DeMarco said. “While FHFA will keep its focus on foreclosure alternatives, refinancing, and ongoing liquidity in the marketplace, it is time for policymakers to begin work in earnest on the future housing finance system.”
As evidence of those efforts, DeMarco made mention of the FHFA’s efforts in building a new infrastructure for the secondary mortgage market; establishing standards that promote a safer and more efficient housing finance system; and increasing private capital while retracting government participation in the secondary mortgage market, goals that were, coincidentally, identical to what NAHB Chairman Barry Rutenberg advocated in a recent op-ed on financial reforms.
What DeMarco did not mention, though, was principal reductions, an omission that only reinforces how contentious the topic has become in recent weeks. After resisting calls from agents and lawmakers to pursue the policy, DeMarco stated in an address to the Brooking’s Institution that, contrary to what he had claimed, principal write downs would save Fannie Mae and Freddie Mac to the tune of $1.7 billion. Still, he said the FHFA would take its time in making a final decision on the matter, and a couple weeks ago, it announced it was delaying its decision.
DeMarco’s comments alone demonstrated the schismatic lending environment that 2012′s presidential victor can anticipate, come the 2013 inauguration. Since 2008, Fannie and Freddie have either purchased or guaranteed 75 percent of new mortgages, and when FHA financing is included, the government has accounted for roughly nine out of 10 new loans. Though many sources, President Obama included, feel that private lending must take a greater role in housing finance, the recent principal reduction throw down with the FHFA has shown that transition will not happen overnight.
In her comments, Galante stressed the mission and professional commitments of the FHA, making particular note of the recent changes the agency has made to shore up its troubling finances. Just this morning, we reported on the FHA’s finances, and how despite the changes that Galante referenced and data suggesting their impact, analysts still fear the worst when assessing the FHA’s portfolio.
Following Galante’s speech, a panel of industry experts debated the future of the GSEs and the government’s role in promoting the American dream of homeownership, and in comments following the symposium, NAR President Moe Veissi reaffirmed the association’s support for a secondary market.
“As leading advocates for homeownership, Realtors want to make sure that everyone who wants to own a home and is able to afford one can do so,” Veissi said. “Without a secondary market, mortgage interest rates would be unnecessarily higher and unaffordable for many Americans, and products like the 30-year fixed-rate mortgage would likely be inaccessible for most borrowers.”