A week ago, I was attending the Mortgage Bankers Association's annual conference, in Atlanta. The dominant issue was regulation. Two years after we, the taxpayers, bailed them out with billions of dollars, the mortgage bankers want to be left alone to do as they please. As we continue to dig out of the mortgage-led real estate collapse, the bankers feel confident that they have good judgment.
Few people attended a panel discussion about how to contact delinquent borrowers to negotiate loan workouts, and fewer attended a discussion about foreclosure mediation. But it was standing room only at the discussion whose panelists included the heads of Fannie Mae, Freddie Mac and Ginnie Mae. The panel titled "Legislative and Regulatory Outlook" was full, too.
One of the panelists at "Legislative and Regulatory Outlook" was David Hay, a group vice president and associate general counsel for SunTrust Mortgage. He showed a humorous Powerpoint slide of what a mortgage note might look like in the future, after the government finishes its meddling. I didn't catch the exact wording, but the faux loan note said something like, "I promise to repay my home loan unless I have financial trouble, and then I have the right to have the principal reduced."
"Will it come down to this?" Hay deadpanned. "It might. I don't know." The bankers in the audience chortled. "That certainly would make life a lot easier for consumers," Hay added.
SunTrust, the parent company of Hay's employer, received $4.9 billion in TARP bailout money. That's $35.50 from each taxpayer. The company repaid its bailout early so its executives wouldn't have limits on their compensation. So my wife and I got our $71 back, but I'd like a little humility in return.
Bankers feel anxious not only about the extent of regulation, but about the pace of regulatory change. This year they've implemented a government-mandated change in the good faith estimate that consumers receive within three days of applying for a mortgage. Next spring, that document probably will change again. Bankers complain that these frequent changes are costly.
I see the merit in that complaint. But mortgage bankers gripe about something else. They say they worry about running afoul of the rules. But what they're really saying is that they want to tread as close to the line as possible, without violating regulations. After all they've put us through, you would think they would no longer be so arrogant.