Rulemakings will dominate the mortgage industry this year as the sector continues its "slow, bumpy road to recovery," keynote speakers said as the Mortgage Bankers Association's secondary conference got into full swing Monday in New York City.
The rulemaking surrounding the Qualified Mortgage — or QM, repurchase requests, national servicing settlements and government-sponsored enterprise reform will dominate the year, said David Stevens, president and CEO of the MBA.
But despite the attention to those four key areas, the MBA is tracking some 100 rulemakings in the Dodd-Frank Act.
Monday's opening session was part feel-good, part dire warning as speakers struck a balance between the good and the bad in the current marketplace.
An opening video, for example, provided the feel-good atmosphere. It showed an MBA member's recollections of his immigrant father buying a tract home in the New York burrough of Queens after World World II.
Mitch Kider, with Washington, D.C.-based law firm Weiner Brodsky Sidman Kider PC, recounted the reverence his father felt for the bank that provided the Federal Housing Administration loan that made it all possible.
"The people that work in this industry are working there because their heads and their hearts are in the right place," he said. "As mortgage bankers, you are doing wonderful things for society."
Stevens brought things back to earth by voicing borrower trepdition to buy homes, lender concern over burdensome regulations and investor mistrust of the process.
Borrowers, especially those on the margins, could be negatively impacted if the qualified mortgage rule — what he called "the holy grail of who gets access to a mortgage" — is too narrowly defined.
The need for more clarity in the system, for borrowers, lenders, mortgage servicers and investors, was a recurring theme from opening speakers.
On GSE reform, Stevens urged the industry do what it can without Congress, where he predicted a continued logjam.
"We need to take control of our own destiny," he said.
Lewis Ranieri, chairman and founding partner of Ranieri Parnters, widely considered a pioneer of modern mortgage finance, said the industry must be aware of those would not be content to fix the capital market but who believe the capital markets "are not simply broken … but are profoundly the wrong thing to do."
If it doesn't stay aware, the industry may end of with a fundamental rewrite of the way it does business, where everything resides on the balance sheet, he said.
Two mortgage businesses came to him recently about a possible sale due to the tough regulatory environment, Ranieri said.
"I truly believe the future of our industry is decided in the next eight months," he said. "There is a regulatory movement that isn't just trying to fix, it's trying to change."
Richard Dorfman, managing director of the Securities Industry and Financial Market Association, or SIFMA, said it falls on the industry to define the issues in ways that resonate with consumers.
Instead of complaining that Dodd-Frank is a burden to the banks, regulations should be defined in ways that show how they limit mortgage access to potential homebuyers, for example, he said.
"Consumers must be served, and they can and will be served by this industry," he said. "There is no doubt in my mind."