It's time for regulators to stop choking the housing recovery, the president of the Mortgage Bankers Association said today at the group's annual convention.
"Enough is enough," David Stevens told his fellow bankers at the conference in Washington, D.C. "The overcorrection and conflicting policies that continue to come out of Washington are threatening not just this market, but they are threatening the recovery."
Stevens added: "I stand here looking over a landscape of confusion, excess, piling on, and dysfunction standing in the way of true economic recovery."
Two things that have gone wrong
Stevens, who ran the Federal Housing Administration early in the Obama administration, had plenty of criticisms of Congress, regulators and Fannie Mae and Freddie Mac. His complaints can be boiled down into two categories:
- There were rules, lawsuits and enforcement actions that made sense in 2009 and 2010 but are counterproductive now.
- When you look at individual regulations, each one looks like a good idea. But when you pile all the regulations and policies atop one another, you end up with an overly restrictive mortgage system that discourages people from borrowing to buy homes or refinance their mortgages.
On that second point, if you've applied for a mortgage in the last couple of years, you understand what Stevens is talking about. Getting a mortgage is a paperwork nightmare. "The rigid oversight and overly aggressive policing is out of control," he said. "Regulation is cutting off perfectly good transactions in our business."
Higher prices, fewer choices
Stevens complained about high premiums for FHA mortgage insurance. The FHA is charging higher premiums than it needs to, Stevens says, "at the expense of the very families FHA was created to help."
Elsewhere, agencies propose new rules that conflict with one another, or that unnecessarily restrict borrowing, Stevens said.
"We are here to call on policy makers to recognize the collective impact these rules, regulations, litigation and enforcement actions are having because they put the American Dream at risk," Stevens said. His suggestion: Appoint a "national policy coordinator to make sure new regulations are not in conflict and do not have unintended negative consequences."
The MBA has suggested this before, and it sounds like an OK idea. But the fact is that, if the Obama administration were to appoint a "national policy coordinator" to oversee mortgage regulations, that person immediately would be branded a "mortgage czar," and there would be an uproar. Commentators would invoke Marx, Stalin and, heck, maybe even Freud.
So the mortgage czar idea, while it has some merit, is a nonstarter. Maybe the MBA can come up with a better suggestion.