Bob Broeksmit: Three Ideas to Improve Housing Landscape, Right Now
(Image by Anneliese Mahoney)
WASHINGTON–Mortgage Bankers Association President and CEO Bob Broeksmit, CMB, shared some ideas for how to ease challenges in the “sluggish” housing economy during MBA’s Compliance and Risk Management Conference here Sept. 28.
“Housing is too big a part of the economy for it to flounder, and there are things we can do immediately to rejuvenate it,” Broeksmit stated.
He started with the guarantee fees and the loan-level price adjustments from the GSEs, both of which he categorized as “too high.”
“If you look at their quarterly profits and you look at the credit quality of the loans they close, there’s a big mismatch between the price they’re exacting and the risk they’re taking,” Broeksmit said.
“You could do that with an across-the-board change to LLPAs,” Broeksmit noted. “You could do it targeted to first-time home buyers, you could do it to certain loan amounts. You could turn it into a closing cost credit. There are myriad ways to do this.”
Idea No. 2 is a cut to FHA’s mortgage insurance premium, said Broeksmit, outlining that FHA has an 11.47% capital ratio when it’s required statutorily to have 2%. “I think these government bodies owe a duty of countercyclicality to American consumers, and we recommend that if the FHA were to lower its mortgage insurance premium, they embark on some sensible trimming of risk at the tail,” he cautioned.
And, “credit reports and credit scores are too expensive,” he said. Providers of credit scores and credit reports can cut their prices before any government action, he suggested. “The government action is coming,” he said, predicting an end of the tri-merge system and noting that providers could benefit from voluntarily taking action before that.
Broeksmit provided updates on MBA’s efforts on other regulatory topics, including President Donald Trump’s executive order on mortgage affordability and subsequent regulatory action. MBA along with other trade groups has asked the Consumer Financial Protection Bureau to concentrate on the loan originator compensation rule, which was included on the recent regulatory agenda put out by the CFPB.
He also listed as of interest conversations around the servicing rule with sensible fixes for loss mitigation efforts, TRID tolerances and timing requirements, mortgage right of recission and the ability-to-repay rule.
On the legal side, Broeksmit pointed to the litigation regarding New Jersey’s expanded disparate impact rules that MBA feels countered the federal standard. “It is not an attack on disparate impact,” Broeksmit stated. “We are in it to simply prevent states from overreaching beyond what the Supreme Court permitted for disparate impact and we remain as all of you do, fully committed to fair housing and fair lending.”
Another hot topic on the regulatory docket: An update on Basel III is anticipated in mid-December. Broeksmit said the main things MBA is watching include the treatment of mortgage servicing assets, warehouse lending capital risk weights and the treatment of unused portions of warehouse lines, as well as providing support for the loan-to-value striations on risk-based capital for on-balance sheet loans.
