The Renaissaince Hotel in Washington, D.C. is currently hosting the Bipartisan Policy Center 2014 Housing Summit and the ongoing reform of the mortgage finance industry is on the tip of everyone’s tongue.
Housing is a hot topic right now. The proof is easy to find in the fact that the BPC shut down registration on Friday due to exceeded demand. “It became a fire hazard issue,” a BPC staffer informed me.
When the BPC proposed a trade media sponsorship, HousingWire jumped on the opportunity and it’s easy to see why; political will for housing reform is back on the agenda.
HousingWire senior financial reporter Trey Garrisons inked no less than four articles about what’s happening right now. Most interesting to me is his piece on the need for more housing finance reform.
In the panel I just attended, the title appeared to touch upon the same vein: Don't throw the baby out with the bathwater: Building on current reforms.
And building on current reforms means trying new things, keeping what works and discarding what doesn’t. At least, that was my biggest takeaway.
The sharing of what works seemed to be an agreed-upon process. But when it came to mortgage technology, there is no clear consensus that advances in the cottage industry should be universally shared.
Meg Burns, senior associate director for Housing and Regulatory Policy at the Federal Housing Finance Agency, said technological progress at Fannie Mae and Freddie Mac is moving along, but there’s still more work to do.
“I do think there’s been tremendous progress. I don’t think we’ve gone far enough,” said Burns, adding the mortgage information being collected today is too “fragmented.”
Fannie and Freddie remain focus on their own risk management, Burns added. It’s a good thing, she added, though the benefits of doing so stay with Fannie and Freddie.
“If we are going to advance the system, better tools need to be universally shared,” Burns said. “While there are data fields that have been standardized, many more have not.”
Darius Bozorgi, CEO of Veros, a valuation risk-management company and vendor to Fannie and Freddie, said advancement in technology increased “repurchase certainty” and indicated he believed more data transparency would be welcome.
After all, the industry must come to accept the uncertainty surrounding the fate of Fannie and Freddie through the reform process. “We don’t know what will become of those enterprises,” Bozorgi pointed out.
Chris Katopis, the executive director of the Association of Mortgage Investors said the sharing of data would only just be “the beginning of knowledge.”
“A lot more reform is needed. There are things the government needs to do more of and there are things the government needs to stop touching,” he said.
“When you start looking at what’s really happening, there are a lot of red flags. For investors it goes back to, 'Did we price the risk appropriately?'”
Katopis seemed less impressed with the usefulness of shared technology and data. If an investor is aware of the pool of delinquent borrowers, there is still little they can do to push for a solution. Fannie and Freddie, at least, can deal with the borrowers. Private investors don’t have that access, by way of comparison.
Speaker Shawn Smeallie, cofounder of American Continental Group, opened the panel by declaring, “loan-level data is vastly improved.” Mortgage technology, on the other hand, could use progress in the field.
Theodore Tozer, president of Ginnie Mae, mentioned a conversation with an underwriter who used Google to gather some data on potential borrowers. He remarked on the ease of which she did so.
He seemed open to transparency in mortgage data and technology, but not in a world where personal data would confuse that process with more publicly available information. Progress is needed, Tozer indicated, but it must be responsible.
“With all the interactive databases, how do you protect the consumer? If we can get to the point of a standard process, I agree with the premise,” Tozer said.
