This article originally appeared in the August 2025 edition of MortgagePoint magazine, online now.
Phil Crescenzo Jr. Serves as VP, Southeast Division, at Nation One Mortgage Corporation. Crescenzo has over 20 years of industry experience helping homeowners, realtors, and building partners navigate the mortgage credit and approval process, making it easier for them to qualify. Whether buying, selling, refinancing, or building a dream home, Crescenzo understands that his clients have a lot on the line and is aware of the complexities of the market. As a mortgage expert, Crescenzo constantly monitors market conditions and the changes in mortgage programs in order to quickly and accurately provide financial guidance. Crescenzo and his team have a background in working with FHA loans, VA loans, fixed-rate mortgages, adjustable-rate mortgages, HARP 2.0, reverse mortgages, and more.
In this candid Q&A, Crescenzo offers his take on the long-standing effects of GSE conservatorship, how credit score pricing continues to box out would-be buyers, and what originators should prioritize when talking with clients in today’s unpredictable market. From equity-driven opportunity to policy-induced uncertainty, he argues that success lies in clarity, agility, and understanding what borrowers need.
Q: Could you discuss the potential impacts on the housing market if the GSEs end up finally leaving conservatorship?
Crescenzo Jr.: I worked in the industry before they were taken over in conservatorship, before the crash in 2008 and right after that. I have experience working with conventional loans and how they compare to FHA loans, then and now. One thing that gets lost in translation there is that when [conservatorship] took place, it was trying to recoup massive losses. It was panic. It was trying to correct a lot of things at once over a short period. Fannie Mae and Freddie Mac had such excessive price adjustments to start recouping some of the losses. They had to pay back big gains, but once the money was paid back, they never took it away. They kept them there. So, they’re cashing in on astronomical amounts of money because they started a certain way and never changed.
That made it where, for a 620 or a 640 credit score, it became very difficult to obtain a conventional loan without severe price hits in the loan-level price adjustments. What that means in real life is that a 620 credit score, or even a 660, can’t put 3% to 5% down without astronomical mortgage insurance because it’s based on the criteria. Say if it’s FHA, it’s a flat amount. There are only two variations on FHA regarding PMI. The shift went one way and another, and it created this huge divide in between.
What happens in that huge divide is that homebuyers get left behind and boxed out of the market. If you have an FHA mortgage to compare, it doesn’t matter what the credit score is; the MIP is going to be 0.55 for 3.5% down, and it’s going to be 0.5 for 5% down and more. Let’s take a conventional loan in today’s market with a 620 credit score, which would be pretty good for FHA, or would be above the minimum qualifying. If you take a 620 credit score with 5% down, not even three and a half, and you’re going to put more down, that PMI would be priced at about 220 basis points, which is five times the amount of that borrower’s monthly payment, so they’re not taking that loan.
What also took a big hit were cash-out loans. So, if a client wants to refinance with all these price adjustments and price hits when they are in an interest rate environment that’s already strained, that’s going to push even more people out because, financially it wouldn’t make sense to get a cash-out loan at 80% loan-to-value unless you had a 700 or 720 credit score.
The conservatorship discussions happening now are interesting. Some of them are projections, some of them are what if this or that could happen. It makes for interesting dialogue, but for investors, it makes the asset more attractive to offset some of these negative fluctuations or added risk, knowing that there’s government backing that removes some of that risk. However, government oversight always comes with heavy regulation, and you’ve got to play by their rules. But their rules aren’t real-time with the market—they never are. They’re always going to be a step behind, or they’re going to be way ahead, off-topic, or they’re going to be way behind and not reading the pulse of the marketplace. So, not everybody’s going to get taken care of in those scenarios.
If you had better economic conditions, then I would think that it would be very attractive not to have that government oversight.
If you have negative economic factors, you need to have government oversight. When they took away quantitative easing, that was the first big change in interest rates and mortgage-backed security pricing in several years. But for a consumer and from an originator standpoint, we knew that day when that changed. An hour later, you got a different price, and then it leveled out. But that was significant.
It was working for a while because in 2010, 2011, and 2012, there were still HARP loans. They were backing those loans to 125%, 150% loan-to-value appraisal waivers. No investor in their right mind would dream of taking on that loan without government backing. That was extreme then because we were digging out of a hole. People thought, “Hey, the government’s buying these. As long as we don’t get stuck with them, what do we care? Let’s get them in and out and shift that asset over where we know we’re secure.” Now, we need to level out the middle, but we’re also in a new administration. You have Trump shaking up the whole world economically in the short-term, but if you’re an investor, you still have to make long-term calls and project out years in advance.
Also, if the decision was made to privatize, you go right into the political spectrum where nobody’s agreeing on anything. It’s not going to be an open-and-shut case. Somebody’s going to disagree, somebody’s going to sue somebody, somebody’s going to say, “Trump, you can’t do that.” And he’s going to say, “Yes, I can.” Even if they decided to move forward, you still must get the bodies on board because it’s a complicated issue with the way it’s government backed. Do the liquidity requirements change? Is it like we’re saving 200 basis points because we don’t have all these regulations and fees, and we can offer better rates in the marketplace? Everybody’s trying to get to a more predictable market for a few quarters, which we haven’t had in about three years.
I think that shakeups are good, within reason, and they absolutely could create better offerings in the marketplace. But how do we know what investor sentiment is going to be? That’s the biggest piece. If there’s a market, companies are going to get something on the street and sell it. But if they’re not sure, they’re going to move in a more certain direction. I see very little movement. I see a lot of talk and minimal rate adjustments.
Q: If a conservatorship exit does happen, how should lenders be preparing for that eventuality?
Crescenzo Jr.: They need to be forward-thinking about how they’re going to communicate that to their database and to their clients. First, they must figure out what’s going on and how that affects the client, because in some scenarios, it might not. It is the obligation of the originator not to confuse the client.
There’s a hunger for real, true communication. They don’t want to be sold or hyped. They’re overstimulated. They just want the facts. So, my recommendation would be to think ahead about, if something like that happens, how you would relate it to the client. But more importantly, if it’s not relevant to them and it’s not going to affect them, then it should be minimized so that you can use the available time to focus on what the client needs, not what the lender thinks they need.
Q: Beyond the question of conservatorship, what other changes or market shifts are you preparing for?
Crescenzo Jr.: There are far more pressing issues that would take center stage ahead of this, but as far as the market goes, I’m planning on very little change. Focus on what we have today. There’s too much talk about the past and about what’s going to happen—the consumer’s head is spinning. I like to keep it simple and say, let’s just confirm where we’re at today. This is what we know today.
There are still some positives in the market. Equity gains are out of control in almost every area. The demand is still there. It’s heavy, so that makes buying less risky. We’re not going to be sitting on tons of inventory that can’t ever move. That would be a much greater risk, which did happen in 2008, and its value dropped. We haven’t seen it now because we have more people than homes in almost every area. They’re moving, the market’s helping, and that’s what I’m stressing to the buyers that are coming through. And I think the customers are starting to get acclimated to a rate with a six in front of it—they don’t like seven, and they’re not asking for five. I expect by the end of the year we’ll still be at six and a half, six and five eighths, barring anything major.
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