The national homeownership rate continues to decline, and many say that it’s only going to get worse because of tighter lending standards, burdensome regulations that create lender uncertainty and affordability challenges.

But even those three culprits – regulations, credit and affordability – aren’t as simple as most think.

That was the consensus among key panelists at the Bipartisan Policy Center’s Housing Summit in Washington, D.C. on Tuesday morning.

Robert Couch, a BPC housing commissioner, served as moderator of a panel consisting of professionals from each of the key fields of regulation, lenders, brokers, and housing partnerships.

“Clearly, getting a mortgage is not as easy as it used to be,” said Andrew Jennings from FICO. FICO did a survey of lenders and “…one of the questions we asked – Why do you think it’s difficult for borrowers to secure a mortgage? The overwhelming response was affordability. Not credit rating or credit score.”

Jennings said that he looked at borrowers on the margin in 2005 versus today. He found that people on the margins have about $25,000 in non-mortgage debt, which is a degree of stress and strain on their income.

Further, first-time buyers in both time periods with credit scores in the 680s to 700s were buying houses that averaged $250,000 in 2005, and today those houses average just $180,000.

“Housing prices somewhat have recovered but clearly people are qualifying for less money than they were. Where are the approvals coming from? Back in the heyday 90% of approvals were thin file and no derog(atory comments) – today 39% as of April 2014 –new first-time buyers are in the thin file segment. They are less indebted than people with derogs.”

Paulina McGrath, Republic State Mortgage, said the culprit was uncertainty among lenders.

“Lenders are scared. There’s investor pushbacks. Credit overlays that began before the regulation are part of what it’s costing,” McGrath said. “Loans are being underwritten two or three times and they’re looking over their shoulder. They are constantly being looked at – in many cases not even an underperforming loan. There are a number of issues at work here.”

Jim Parrott of the Urban Institute, who served as counsel to Housing and Urban Development Secretary Shaun Donovan, and as senior policy advisor with the National Economic Council, said there is too much regulatory uncertainty.

“The high cost of servicing loans, greater level of risk aversion (is part of it), but all that said, the bigger factor is the regulatory environment. There’s a set of conscious decisions to increase consumer protections and risk mitigants, but the bigger impact and concern is uncertainty around the underwriting,” Parrott said. “There’s uncertainty on when and why you’re going to put a loan back.

“The second area of uncertainty is the law enforcement side of this, not just regulators making sure regulators are following the rules. Also law enforcement has been on a bit of a run with settlements and enforcement – with the open-endedness (lenders) are just not sure what closure looks and feels like. It’s hard for them to quantify their legal risk in this space so there's a lot of pressure from boards to put in overlays to protect against this,” Parrott said.

“While there is consensus around the overlay issue, and indeed policymakers appear to be tackling it admirably, there is not consensus around the law enforcement side of things,” Parrott said. “Folks are still clamoring for retribution, heads of banks on sticks, etc., without making the connection to access to credit.”

Peter Elkowitz with the Long Island Housing Partnership noted that legal costs are staggering. It costs “$84,000 if it goes to settlement, and $150,000 if it goes to trial – lenders look at this, and of course, they are hesitant” to lend on the margins and take risks.

Despite the talk that demographics that suggest younger Americans don’t plan to buy homes, most every indicator shows that the fundamental aspiration to homeownership remains very strong, said Janneke Ratcliffe of the UNC Center for Community Capital.

“There are social and other benefits that motivate homeownership. The thing we are seeing in the data is delay. Which is not a big deal until you look at the economic benefits of homeownership,” Ratcliffe said. “The benefits of homeownership starts with how long a person is a homeowner, and how early and how long it is sustained.”

Also important is the way in which it is financed.

“You look at someone putting off buying when rates are now at 4% vs 6.5% in a few years on a on $200,000 loan is $10,000 in five years and that’s real money.”

Steve Brown, president of the National Association of Realtors, said there has been a fundamental change in outlook since the recession and that people no longer necessarily view their home as way to build equity – a backlash to the way it became a “piggy bank” in the run up to the recession.

“We should see 40-48% first-time buyers; right now it’s (in the 20% range),” Brown said. “Fundamentally homeownership is very much of a driving force for all the right reasons – better schools, better community involvement, lower crime rate, better school attendance, even some studies that it improves people’s health.”

But, he said, there’s a lack of confidence in the economics of it.

“On the housing policy side, certainty is the name of the game. The FHA and GSEs have recognized the nature of uncertainty hovering around their underwriting rules,” Parrott said. “We need to be erring on the side of access. Director Watt has made access to credit one of his strategic goals. (But there) is much less political consensus on what the right path forward looks like."

Ratcliffe said another problem is the burden of the regulations over details.

“Perfectly performing loans are being put back because of minor documentation errors,” she said. “There needs to be indemnification from GSEs like FHA do.”

Couch, who served as moderator, was unable to chime in, but in a separate sit-down with HousingWire, he went on to give his take