TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/81279
TAKE 5 David Stevens on the State of the Housing Market David Stevens made news earlier this year by resigning, then rejoining, the Mortgage Bankers Association, where he serves as president and CEO. We take five with the former Federal Housing Administration commissioner to talk rules, mortgages, and scandal. M // We're used to hearing a lot of bad news about the housing industry. What inspires you about housing today? STEVENS // I have been in the real estate finance industry for more than 30 years and continue to be inspired by it every day. We no doubt face challenges, but each of those challenges is an opportu- nity to strengthen the industry and help improve the quality of life for countless Americans. This indus- try is one that has an enormous impact on people's lives because a home is the biggest investment most people will ever make. Study after study demonstrates that homeownership leads to better societal outcomes. Mortgage bank- ers help people realize the dream of homeownership and that is inspiring to me. M // Before your current role with MBA, you served as Federal Housing commissioner. What do you make of the FHA's fiscal house today? STEVENS // FHA was designed to make loans that carry more credit risk and those loans will typically have a higher default rate. I think the overarching question is whether the model is secure enough to absorb those losses. When I was FHA Commissioner, we increased funding for the agen- cy, improved risk management and tightened underwriting standards to ensure long-term sustainability. We went after hundreds of bad actors, removing them as future threats to the FHA program. Like the rest of the industry, FHA's 16 | THE M REPORT future will ultimately be shaped by the evolution of the economic and housing recovery, but I do not sense an imminent threat at this point in time. M // What will happen if the Consumer Financial Protection Bureau proceeds with the Qualified Mortgage rule without taking many concerns from comment letters into account? STEVENS // We believe the CFPB is taking comments from the industry into consid- eration, and I would point to the re-opening of the comment period as evidence of that. Also, CFPB Director Richard Cordray recently said his agency wants to draft a rule based on a "sound debate" and does not want to restrict access to credit. So we feel like regulators are listening, and we are optimistic any final rule on this will be workable for our members and, ultimately, strengthen the industry. But we are continuing to work night and day, with our industry allies, as well as a diverse collection of consumer and other advocates, to reinforce our arguments in as strong a way as possible. M // There's a lot of talk about splitting up systemically important financial institutions, with Citi founder John Reed recently advocating such a move for Citi. Is it time to downsize "Too Big to Fail"? STEVENS // This is a much larger debate than just mortgages, but the mortgage market, and ultimately borrowers, are best served by a diversity of players and business models. There are benefits to the various business models in the mortgage finance industry. Lenders large and small have clear value to ensuring a steady availability of mortgage credit to the American homebuy- er. The key is to ensure that there is competition, which provides direct benefits to consumers. is carrying out a critical mission. After I announced my intention to make a move, I had some very frank conversations with a num- ber of people, including many MBA members, and realized just how important the work is that we are doing and how much is left to do. M // What advice would you give to a mortgage finance professional just starting out in a brittle market with still-weak demand? STEVENS // Ultimately, our business is about helping people achieve and maintain the dream of homeownership, so the bor- rower must always come first. Everybody in our business must look at each borrower like they are a member of our own fam- ily. Each transaction must be conducted with integrity and understanding. I wouldn't give my brother a loan that he didn't un- derstand, or couldn't repay. If my sister came to me with a problem, I would do everything in my "Ultimately, our business is about helping people achieve and maintain the dream of homeownership, so the borrower must always come first." — David Stevens M // You recently made the switch from MBA to SunTrust, but the deal didn't go through. What was the reasoning behind your decision to stay with MBA? STEVENS // Although many signs point to an increasingly healthy housing market, this is a time of great uncertainty for the real estate finance industry and MBA power to find a way to keep her in her house. And if that wasn't possible, I would want to help her leave her home in the most dignified and least intrusive way possible. When we treat our customers as family members, doing the right thing for the customer and our business will come naturally.