U.S. home prices are stable, but home purchases remain stagnant as lenders restrict credit in the face of uncertain mortgage finance rules and regulations, Mortgage Bankers Association president and CEO David Stevens said Tuesday.
"Why are purchases stagnant?" Stevens asked a crowd while speaking at the MBA's Risk Management and Quality Assurance Forum in Dallas Tuesday. "The bottom line is extraordinary uncertainty, fear of risks, concerns about (mortgage) buybacks."
Yet, Stevens acknowledged some positive steps among regulators. At one point, he lauded the Federal Housing Finance Agency's recent decision to limit reps and warranties risk by developing guidelines that give lenders more certainty and time parameters with respect to buyback risk.
Overall, Stevens' speech followed the same pattern of careful optimism that has promulgated his year at the MBA. As CEO of the organization, Stevens made it clear the MBA is "agnostic" in its approach to getting Washington and the Consumer Financial Protection Bureau to understand the regulatory hurdles facing lenders. He's also supportive of the CFPB's efforts to cut out bad actors in the industry.
Still, one of the MBA's remaining hurdles continues to be the Dodd-Frank qualified residential mortgage rule, which will be fleshed out by the CFPB. In its current format, the rule will force banks to retain 5% risk in any securitized mortgage that lacks a 20% down payment. For Stevens and the MBA, the 20% downpayment rule essentially blocks underserved borrowers and middle-class families from the housing market.
"Our message to policymakers is about balance and protection. We have to make sure we keep access and accountability," Stevens told the crowd.
"Both the QRM and the QM rules are far too corrective and potentially eliminate access to qualified families who are on the margin," Stevens told HousingWire. To explain his theory Stevens said 1% of home buyers will always be able to acquire homes, but the other 99% --firefighters and teachers -- may be qualified to make payments while still lacking the requisite downpayment.