Housing Policy: Is It Too Little – Too Late?

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As the Obama Administration is winding down, the Treasury Department issued a paper that may be considered the administration’s final word on Housing policy. The paper indicates that reform efforts should focus on providing access to credit and affordable rental housing (Housing). A real revelation.

The goal is to provide fair and accessible housing to all Americans. Just about everyone agrees, including the MBA, but is it possible in today’s economic environment? Lenders are still a little gun shy about taking too many risks, there are fewer homes for sale at the affordable end, and it appears rates may be poised for an increase. All point to additional challenges facing current homebuyers.

With the decline in homeownership, we once again hear the call for lenders to ease some lending restrictions and to open the credit box to help more consumers obtain home financing. On one hand, we hear about how well mortgage loans are performing since the crash. While on the other hand, we hear cries to ease some underwriting standards. Not enough low credit score consumers are getting new mortgages. It seems like lenders are damned if they do and damned if they don’t.

Maybe that’s why current new loans are performing so well. They were granted to people who are qualified to purchase and maintain a home. Are we headed down the same path that helped cause the crash of 2008? Are we extending the credit box to include many borrowers who are not yet prepared and who do not qualify for a mortgage loan?

Are we doomed to repeat history? I sure hope not. I think the industry and the economy could not withstand another direct hit. Not to say that we shouldn’t be exploring options and alternatives that can increase the potential to qualify more consumers. But, as Dirty Harry (Clint Eastwood) once said, “A man’s gotta know his limitations.”

Ironic, now that the Treasury controls the GSE’s, the outgoing administration seems concerned about housing policy. However, still no word about what to do with Fannie and Freddie. The longer they remain in conservatorship, the longer the Treasury receives their profits. Strange how that works…

Be smart and be careful. Lend responsibly my friends. The company you save – may be your own.

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.