Stevens: Housing ‘Critical to Economic Success of Every American’

BOSTON–Mortgage Bankers Association President and CEO David Stevens, CMB, outlined four strategies the mortgage industry must undertake in the coming year.

“We share this common purpose,” Stevens said here this morning at the MBA Annual Convention & Expo. “Because the fact remains: housing doesn’t only comprise about 18 percent of the gross domestic product, or about one-fifth of the U.S. economy. It isn’t only a steady source of hundreds of thousands of jobs. It is critical to the economic success of every single American.”

Speaking before several thousand mortgage bankers, Stevens said MBA was “stronger than ever–we couldn’t be more ready to move forward”–and outlined strategies in which MBA has the most credible voice.

First, Stevens said, MBA has a voice in removing barriers to expansion of credit to both owner-occupied and rental finance.

“Today, you are being discouraged from lending to some first-time homebuyers,” Stevens said. “Why? Because the fear of a mistake, even if irrelevant to the credit decision, exposes each of you to unacceptable risk. Because of overly aggressive and sometimes inappropriate enforcement actions by some key government agencies. Because the regulatory framework is too often redundant–state regulations piled on top of federal regulations, piled on top of international rules, often conflicting with each other. No wonder you have no choice but the most conservative lending posture in order to meet the lowest common regulatory denominator.

Stevens said MBA and its members must work to find the right balance among necessary enforcement, appropriate regulation, consumer protection and lender risk. “Rules should be clear; accountability should be rational,” Stevens said. “Credit, including private capital, must be accessible.”

Second, Stevens said, MBA has a voice when it comes to creating and promoting affordable housing through incentives, such as the mortgage interest deduction, down payment savings and matching plans, as well as encouraging financing and building of affordable rental units near places of work and transit.

“The economy is improving but housing–in direct contrast to past recoveries–is lagging,” Stevens said. “Why? And what accounts for first-time homeowners lagging as a share of total homeowners–about 25 percent below what’s considered normal, 31% vs the ‘normal’ 40%? Are current rules like the QM, at least as it is written, too narrow? Is it too blunt of an instrument, actually discouraging the homebuyer of today and tomorrow?”

Stevens noted perhaps nothing illustrates the need for new incentives more than the “millennial gap”–the delay in qualified millennials buying a home. “It’s more than the fact that they’re not buying–it’s that they’re not renting either,” he said. “Whether the reason for this delay is tight credit, student loan debt, the lack of affordable housing stock, average wages for young people or just that millennials are taking their time before making big decisions like getting married or buying a home, it is causing an unusual and unsustainable rise in rental costs, particularly in urban areas.”

Stevens said the industry and policymakers must think about credit engines and new ways to document borrowers so that more sustainable prospective homeowners have a chance. “We must use Low-Income Housing Tax credits and other programs to encourage the building and financing of more affordable rental and owned housing” he said. “And once we do, we must also find ways to communicate that. Think of the ways the Obama Administration ‘pitched’ Obamacare…how they used different platforms, aimed directly at young Americans, to sell the program. Certainly, we can do more to ‘advertise’ the benefits of homeownership to the millennial generation.”

Third, Stevens said MBA has a powerful voice as a leader in housing. “We must start a dialogue that acknowledges the changes the industry has made, a dialogue that recognizes the unprecedented safety of the housing market, and, ultimately, a dialogue that promotes confidence in the housing market,” Stevens said. “This January, we will be unveiling a new marketing campaign to highlight the benefits of housing and the good we are doing, and we will arm you with the content you need to get the message across.”

Fourth, Stevens said MBA has a voice in advocating that all of these issues stay front and center. “Creation of a National Housing Policy Director by our new President,” he said. “Someone who works in the White House. Someone with the authority of a direct report to the new President. Someone empowered to call meetings, drive results, and measure progress. Someone who has not just the title, but also the teeth.”

“The bottom line is this: MBA is the most effective voice in housing finance, and we will use that voice,” Stevens said. “As you know, we are not your average trade association. We have the size and scale, the expertise and resources, and we have the members to really make an impact. It’s the power of our scope and unity that gives us the force behind our voice.”

Stevens also addressed his ongoing, public battle with an aggressive but treatable form of cancer, detected this summer and expressed appreciation of MBA members and staff for their support. “Today’s challenge is personal to Mary, me and our family–but I am attacking this the same way I do everything else,” he said. “And this evil disease has a tough challenge ahead, as we intend to win this battle. So, thank you for all of your work to make this industry united and great, but also for your words of encouragement and support.”