Industry Update: the Future of eClosing and RON

Join industry experts for an in-depth discussion on the future of eClosing and how hybrid and RON closings benefit lenders and borrowers.

DOJ v. NAR and the ethics of real estate commissions

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How long until housing reform happens?

Here's what the industry can do to prepare

With the financial crisis now eight years behind the economy, the industry is long past due for reform of the government-sponsored enterprises and is pining at Washington to do something.

But a looming presidential election and changing government won’t let this happen anytime soon.

Jim Parrot, senior fellow with the Urban Institute, estimated during Goldman Sachs’ 2016 Housing Finance Conference that it will be three years until the industry sees comprehensive reform, putting the change somewhere in the realm of 2018 to 2019.

Parrot explained that the government won’t do anything leading up to the elections, and it’s not going to happen in the first year of the new administration.

Instead, Parrot answered the question, “What can get done now to make that issue less risky or scary?” The issue being the reform of the GSEs.

So far, the progress that has come out of reform talk pales in comparison to the amount of time spent talking about it.

The industry needs to move down a path toward a system with these two pillars, the private market bearing the credit risk and securitization, Parrot said.  

The industry needs to start pushing credit risk into the private market, along with creating a deep and wide market for credit risk, he said.

And on the securitization side, the industry needs to coordinate the processes that drive the different securitization systems that we have in place, so when reform does start, it will be easy.

As a result, Parrot said, “Fast forward three years, when we are all dragged back to the hill to talk, we will have a much better sense of how we think credit risk should be better put out into the private market. Then they can focus on what will be the remaining real challenge.” 

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