Johnson-Crapo delay is not a big, huge housing reform setback
This is what everyone was expecting
The HousingWire breaking news coverage of the Johnson-Crapo shocker from this morning errs on the side of caution in citing an indefinite delay.
"Indefinite" could end up being a long time, and we don't want to sugarcoat that. [Update 1: Looks like this may happen next week, so Trey Garrison's coverage is also updated.]
At any rate, this headline needs to be placed in the greater context of where housing reform stands in this nation. Allow me to do that now, and to explain why the delay is not the biggest setback to housing reform ever seen.
First, let's start with a fact check: Senator Mike Crapo believes reform could have passed committee today — but he thinks a "short delay" will give his colleagues more time to assess the reform.
As he said, no one places more gravitas on this issue than he does:
“Housing finance reform remains the most significant piece of unfinished business from the 2008 financial crisis. Fannie Mae and Freddie Mac greatly contributed to the housing bubble, the financial crisis, and the dramatic government intervention that resulted,” Crapo said in a statement afterward. “The current system is unsustainable, leaves taxpayers exposed to potentially trillions of dollars in liabilities, and has left the mortgage market in a state of limbo, forcing private capital out of the market.”
Unfinished since 2008? Six years of Congressional ineptitude to reform this most important piece of the economy?
That's one way to view it, but it's not mine. And it's not what the experts expected either. HousingWire noted that analysts put housing reform on a much longer timeline than "happening right now."
For one, it's already been six years, and it's not as if Congress completed nothing in that time. After all, all good things come to those who wait, and here's why.
At the recent SourceMedia mortgage servicing conference in Dallas it became clear that the average mortgage finance professional is not greatly clued in to what manifestation any type of housing reform will take. They acknowledge that Fannie Mae and Freddie Mac need to change, but just don't want more costs and higher prices in doing business, which is what housing reform might bring.
They will, however, fall behind trade groups and think tanks such as the Bipartisan Policy Center. They entrust these parties to lead in a way that takes into account everyone's best interest.
This is not a responsibility to take lightly, and a major reason HousingWire is throwing its weight behind meaningful housing reform by partnering with the BPC on its vital Housing America’s Future: 2014 Housing Summit — to be held this September in Washington, D.C.
I commend Johnson and Crapo for recognizing when more time is necessary, and facing those who would criticize that decision. As Crapo says, this is the single biggest decision we in the mortgage industry face.
Let's get it right this time, no matter how long it takes.
Our industry depends on it.