By Tony Garritano
What’s going on in the mortgage market? What trends should you be aware of? Tony tells you in this daily column.

Newfi Lending Reaches $1 Billion In Mortgage Originations

Newfi Lending, a technology-enabled residential mortgage lender and portfolio company of Warburg Pincus, has originated over $1 billion in loan volume. The company reached this milestone just 24 months from the time it launched lending operations in April 2015. The $1 billion in mortgage volume is a combined result of Newfi Lending’s direct-to-consumer and wholesale lending operations.

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“These incredible results in such a short period of time validate our dual-channel business model,” said Newfi Lending CEO Steve Abreu. “We achieved this significant milestone despite the challenges of ramping up a new company in a limited geography. This bodes well for Newfi as we accelerate the growth of our sales organization and the expansion of our national footprint.”

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Newfi Lending has experienced significant growth in 2017. The organization has now expanded operations to 9 states: Arizona, California, Colorado, Florida, Oregon, Pennsylvania, New Jersey, Utah, and Washington. The company has received licensing approval for 16 states and plans to operate in over 20 states by the end of 2017.

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Founded in 2014 by industry veterans, Newfi Lending is a national mortgage lender reshaping the borrowing experience through a combination of proprietary technology, product innovation, and personal touch. Newfi delivers a more efficient and transparent process resulting in lower costs and higher levels of customer satisfaction and trust.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Partnership Enables Efficient Home Equity Lending And LOS Integration

FirstClose, a provider of end-to-end technology solutions for refinance and home equity lenders nationwide, today announced a partnership with Pensacola, Fla.-based Pen Air Federal Credit Union. The partnership integrates FirstClose into Pen Air’s loan origination system (LOS), LoansPQ. A MeridianLink solution, LoansPQ integrates loan origination, core processing and internal banking software in almost any configuration.

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The integration with FirstClose provides the credit union access to an end-to-end refinance and home equity lending solution, as well as a vendor management system that eliminates duplicate data entry. Pen Air is able to easily order instant property reports, AVMs, desktop valuations, property condition reports and flood reports directly from its LOS. In addition, FirstClose will handle all closing and recording responsibilities on behalf of the credit union.

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“FirstClose’s unique, comprehensive solution provides an effortless way to process all home equity loans and home equity lines of credit,” said David Lancaster, VP of Lending, at Pen Air. “We pride ourselves on providing our members with the best possible service, and we’re looking forward to working closely with FirstClose to achieve this.”

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“We already value our partnership with Pen Air and look forward to helping Pen Air reduce closing times, cut costs and increase efficiencies,” said Tim Smith, co-founder and president of FirstClose. “Our goals align with Pen Air’s in that we are focused on providing the most accurate property information in an efficient and easy-to-use way.”

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Union Bank Tries To Assist Qualified First-Time Homebuyers

Union Bank has received $1.1 million in program funds from The Federal Home Loan Bank (FHLB) of San Francisco to provide matching grants to low- and moderate-income, first-time homebuyers. The bank received $1 million in Workforce Initiative Subsidy for Homeownership (WISH) Program funds and $100,000 in Individual Development and Empowerment Account (IDEA) Program funds. This is the seventh year that the bank has received WISH and IDEA program funds.

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“We are pleased that the FHLB of San Francisco has for the seventh consecutive year entrusted us with both WISH and IDEA program funding,” said Julius Robinson, Head of Corporate Social Responsibility. “Home ownership is critical to building economically strong communities and we look forward to working with our community partners to assist more qualified recipients achieve the dream of home ownership.”

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The WISH and IDEA first-time homebuyer programs offer eligible low- and moderate-income households 3-to-1 matching grants of up to $15,000 for the purchase of a home.  The funds can be applied to the home buyer’s down payment or closing costs. WISH grants are targeted to working families and individuals who are ready to make the transition from renting to owning. The WISH funds can complement or supplement a number of local, state, and federal homeownership programs and initiatives. IDEA grants are targeted to homebuyers who have been saving for the purchase of their first home through an Individual Development Account (IDA) or participating in their local housing authority’s Family Self-Sufficiency (FSS) homeownership program or in a lease-to-own program administered by a government entity or nonprofit organization.

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Union Bank will provide this year’s matching grants to qualified homebuyers in California. The funds will be available for home buyers with loans in escrow between April 1, 2017 and July 31, 2018.

Last year, the bank provided 67 WISH matching grants for a total of $986,825.

For more information about the WISH and IDEA programs, please send your inquiry to CSRgroup@unionbank.com.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Updated Platform Now Alerts Lenders To Loan Defects

LoanLogics has enhanced its LoanHD Loan Quality Management platform with an Audit Response Center (ARC). The new ARC enables mortgage lenders to efficiently address defects and conditions on loans immediately after each loan has been reviewed. Importantly, it also provides lenders with a compliance trail showing how each defect was addressed, so regulators and investors are able to clearly see what actions were taken.

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The ARC allows the lender to auto-assign a respondent, or the person in the lender’s organization who will submit rebuttals and clear loan defects, such as a missing document or an incorrect fee. The system configuration also identifies “responsible parties,” or the people most responsible for the defect in the origination process.

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The ARC includes a communication module that immediately notifies the respondent and the responsible party of defects discovered after a loan quality review. These notifications will also display responses from the auditor regarding the curing of conditions. The respondent will be prompted to log into the ARC portal to address all issues. Once resolved, the application automatically updates the LoanHD platform.

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This capability enables lenders to have complete visibility into the process, while making sure defects are addressed in a timely manner. Further, lenders can create action plans in LoanHD based on the frequency and sources of defects. These plans can then be easily monitored and tracked to reduce future origination defects.

“With this enhancement to LoanHD, relevant parties in the loan process will find out quickly if there are any defects or conditions in a loan that need to be addressed,” said Dave O’Malley, director of loan quality solutions with LoanLogics. “In addition, lenders will be able to track the progress of defect resolution and make sure the appropriate person in their organization responds to the issue or issues expeditiously.”

“At the same time, there is a compliance trail that shows how each defect was addressed,” O’Malley said. “Regulators and investors not only require lenders to find and resolve issues with loans, but they also would like them to show proof of what they did. This enhancement provides that level of detail so lenders are covered.”

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Automated Underwriting Of Portfolio Products Allows Lender To Expand

Cascade Financial Services (Cascade) has implemented LoanScorecard’s Portfolio Underwriter as its automated underwriting system (AUS). Cascade is an independent mortgage bank that specializes in manufactured and modular home financing.

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In May 2017, the company was named Regional Lender of the Year for the third consecutive year by the Manufactured Housing Institute, the national trade organization representing all segments of the factory-built housing industry. Cascade was founded in 1999 in Arizona and is currently licensed in 38 states, with plans to expand to the contiguous 48 states by the end of 2017.

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Cascade’s unique portfolio loan products include both land/home and home only loan options for manufactured home buyers. With Portfolio Underwriter, Cascade’s guidelines for these products can be captured within the engine to deliver a rules-based underwriting decision in seconds. Results of the decision are documented in an in-depth findings report, which includes the program-specific, conditional underwriting criteria used in the data analysis. This allows Cascade to automate underwriting its portfolio loans and manage exceptions based on valid compensating loan factors, rather than loan officer “discretion.” It also ensures consistent, transparent credit policy application to demonstrate Fair Lending.

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“Having an AUS to provide quick and consistent underwriting decisions on portfolio loan products is a very important part of being able to scale a business. And building an internal system that is intelligent enough to read credit reports and interface with an LOS takes significant time and upfront expense,” said Gerron Dover, Executive Vice President of Production at Cascade. “We selected LoanScorecard’s Portfolio Underwriter because it works seamlessly with our LOS, it was relatively quick and inexpensive to get set up, and it is now providing us the efficiency we need to offer our portfolio loan products on a more expanded scale. It also provides us the ability to quickly revise system parameters as we get more experience with our new loan products, and our lending guidelines evolve over time.”

“Manual underwriting is time consuming, costly, and puts lenders at risk for Fair Lending violations,” said Ben Wu, Executive Director at LoanScorecard. “That’s why more and more forward-thinking portfolio lenders, like Cascade, are turning to sophisticated automation. By using Portfolio Underwriter, they’re able to not only automate underwriting for their unique portfolio products, but also reduce errors, improve efficiency, and expand their manufactured housing finance business.”

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

The Summer’s Hottest Housing Markets Are…

Ten-X, an online real estate marketplace, released its Top Single-Family Housing Markets Report for Summer 2017, which ranks the nation’s 50 largest housing markets according to current and forecasted housing fundamentals. Among the 50 largest US markets, the top five (in order) are Nashville, Tenn., Orlando, Fla., Fort Worth, Tex., Dallas, and San Antonio, Tex. These regions earned their spots by displaying consistently strong demand, home price appreciation, favorable affordability, and economic and demographic growth. ­

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This quarter’s list features four newcomers. Nashville jumped from sixth to first this quarter, pushing out Tampa, which tumbled off the list to eighth. Orlando regained a spot in the top five, jumping from eighth to second. The remaining three spots on the list went to Texas metros. Fort Worth leapt from twelfth to third, Dallas dropped two spots this quarter to fourth, and San Antonio climbed six spots from last quarter.

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“This quarter’s housing report continues to show that the housing market recovery varies greatly by region,” said Ten-X Executive Vice President Rick Sharga. “Markets in the South and Southeast with strong job and population growth – notably Texas and Florida – continue to have a much stronger outlook than much of the Midwest and Northeast. Markets in California and the Pacific Northwest appear to be cooling down a bit as home prices have risen to levels unaffordable for many prospective buyers.”

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Nashville endured a modest downturn in existing-home prices after the 2008 housing crash, but since then, prices in the metro have surged well beyond their prior peak. Orlando’s ranking reflects the continued opportunity for continued growth amid the protracted recovery seen across many Florida metros. Meanwhile, Texas emerged as a prominent force this quarter. Despite cooling somewhat with the onset of lower oil prices, the Dallas, Fort Worth and San Antonio markets have been resilient, with prices surging well beyond previous highs.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Pendo Joins Forces With The Mortgage Collaborative To Offer Appraisal Management Services

Pendo, a nationwide appraisal management company (AMC), announced a strategic partnership with The Mortgage Collaborative’s preferred partner network to provide appraisal management services to the organization’s 112 lender members.

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“We are thrilled to be aligned with such a great network. Our partnership with The Mortgage Collaborative allows us to make it easier for their members to experience the financial benefits that come from Pendo’s unprecedented service levels,” said Jeff Sandman, co-founder of Pendo. “We realize that appraisal turn times are a top concern for lenders because of the direct impact on their bottom lines. Our sense of urgency, personalized service approach and focus on delivering quality reports will put their members at ease.”

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The Mortgage Collaborative is an independent mortgage cooperative of small, mid-sized and community-based lenders that provides its members with access to products and services that help reduce costs, improve compliance and better manage their businesses. Its preferred partner network consists of product and service providers across the mortgage origination ecosystem.
Pendo, which has been the recipient of numerous industry awards in the past several months, differentiates itself through its renowned client and vendor relations programs, proprietary operational processes and its monthly client scorecard, a performance based report that rates the AMC’s monthly activity according to factors such as turn times, returned appraisals and quality.

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“Pendo is a great addition to our network. Their industry reputation and core values align with our guiding principles of offering best-in-class products and services to our members,” said Rich Swerbinsky, EVP of National Sales & Strategic Alliances for The Mortgage Collaborative.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Ernst: Historic Number Of County Recorder Fee Changes

Ernst, a provider of technology and closing cost data for the real estate and home finance industries for the past 28 years, reported that the company was seeing vastly more fee changes for recording documents into the public record that has been typical for this time of year. Ernst tracks fee changes for the vast majority of lenders, automatically making updates to their systems so that guaranteed accurate fees are provided for disclosing to consumers on Loan Estimates, per CFPB’s TRID requirements.

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“We expect to see a fair number of fee changes and updates coming out of the nation’s County Recorders’ offices each month, but June has seen vastly more change activity than has been historically normal,” said Gregory E. Teal, president and chief executive officer of Ernst.

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County Recorders are under no obligation to inform mortgage lenders of fee changes but lenders are required under TRID to disclose accurate fee information to borrowers within three days of receiving a completed loan application. Failure to track changes in every jurisdiction can expose the lender to non-compliance risk, so Ernst tracks these fees with patented fee search technology and then updates its fee engines, guaranteeing the accuracy of every fee it reports back to lenders.

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In all, Ernst saw more fee changes in the first three weeks of June than it had seen in any one month over the past 11 years. We processed over 1000 data changes that impacted both recording fees and transfer taxes in nearly 350 or more recording jurisdictions. Uncharacteristically we’re continuing to see ongoing fee changes targeted  for implementation in both July and August.

Ernst programs processed 250 million real estate transactions in 2016, making it the most used technology of its kind in the industry. Since the company was founded 28 years ago, Ernst has processed well over 1 billion transactions and unveiled dozens of technologies and products that produce efficiency across the real estate industry. CEO Gregory E. Teal is a Mortgage Banking magazine Tech All-Star. The firm estimates that its technology is in use for 90% of the nation’s new loan originations and refinance transactions.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Pair Assist Mortgage Lenders On Applying For Tax Credits

Spiegel Accountancy Corp. has formed a professional alliance with Bedford Cost Segregation to assist its mortgage lending clients in applying research and development tax credits as a beneficial tax strategy.

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While the R&D tax credit has been around since 1981, it was recently made permanent and the incentives were expanded upon to increase opportunities for those who develop “internal-use” software, which broadens the types of businesses the credit may be applicable for. Now, certain mortgage lenders may benefit from this tax credit.

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“We have partnered with the best, Bedford, to help our clients determine their eligibility for these incentives,” stated Jeff Spiegel, CPA, Principal, at Spiegel Accountancy Corp.

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The R&D tax credit was designed to encourage economic stimulation and is an incentive for businesses of all sizes to invest in research and development activities and increase technological growth and competitiveness. The U.S. federal tax law provides a benefit up to 20% in the form of a non-refundable tax credit for mortgage companies that engage in qualified research and development activities. The credit, if used, can create immediate cash flow by reducing tax liability dollar for dollar. Mortgage companies that create new or improved products, processes or select technologies have the potential to take advantage of the credit.

Greg Bryant, Managing Partner at Bedford Cost Segregation said, “We’re excited about our partnership with Spiegel Accountancy Corp. and the wealth of opportunities our collaboration offers mortgage lenders.”

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

MBA President And CEO Calls For GSE Reform

David H. Stevens, CMB, President and CEO of the Mortgage Bankers Association (MBA), testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs at a hearing entitled, “Principles of Housing Finance Reform.” His full written testimony is available here. Below is Stevens’ oral testimony, as prepared for delivery:

Chairman Crapo, Ranking Member Brown, and members of the Committee, thank you for the opportunity to testify today.

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It has been nearly nine years since the GSEs entered conservatorship, and yet their long-term status remains unresolved. The financial crisis exposed the structural conflicts and misaligned incentives in the GSE business model, as well as weaknesses in the regulatory framework that was in place at the time.

Extended conservatorship is economically and politically unsustainable and an unacceptable long-term outcome. Without comprehensive reform, borrowers, taxpayers, and lenders will all face increased risk and uncertainty about the future.

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Because MBA represents over 2,300 member firms of all sizes, both single-family and commercial/multifamily, including nearly 650 small, community-based mortgage lenders, we firmly believe that housing finance reform must foster a competitive primary market that is served by a diverse cross section of lending institutions.

A year ago, MBA convened a Task Force for a Future Secondary Mortgage Market. The Task Force reflected the composition of MBA’s membership, residential and multifamily, from integrated financial institutions to the smallest community lenders. Our Task Force truly represented the full depth and breadth of the entire real estate finance industry rather than the narrow interest of any one specific market segment.

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Our proposal seeks to ensure equitable access for smaller lenders to the secondary market: prohibiting special pricing and underwriting based on loan volume as occurred prior to conservatorship, preserving cash window and small pool execution options, and preventing vertical integration by the largest market participants.

I have submitted our proposal as part of my written testimony.

Our proposal recognizes the need for any comprehensive GSE reform plan to balance three major priorities: taxpayer protection, investor returns, and consumer cost and access to credit.

To achieve these policy objectives, MBA’s plan recommends recasting the GSEs’ current charters and allowing a multiple-Guarantor model that features at least two entities and preferably more.

Guarantors would be monoline, regulated utilities owned by private shareholders, operating in the single-family and multifamily markets. The core justification for utility-style regulation rests with the premise that privately-owned utilities attract patient capital and derive much of their existence and powers from the state.

The Guarantors would be subject to rigorous capital requirements that would provide financial stability without unduly raising the cost of credit for borrowers. These requirements could be satisfied through a combination of their own captial and proven means of credit risk transfer.

The implied government guarantee of Fannie Mae and Freddie Mac would be replaced with an explicit guarantee at the mortage-backed security level only. This guarantee would be supported by a federal insurance fund with appropriately-priced premiums paid by the Guarantors, much like banks pay for FDIC insurance.

Our plan explicitly calls for deeper first-loss risk sharing that is transparent, scalable to all lenders, and capable of limiting taxpayer exposure to nothing more than catastrophic risk.

The Task Force also developed recommendations in two areas that have vexed past reform efforts: the appropriate transition to a new system and the role of the secondary market in advancing a national affordable-housing strategy.

Our proposal specifically notes the importance of leveraging the assets, infrastructure, and regulatory framework of the current system wherever possible. We also believe that any workable transition must utilize a clear road map and be multi-year in nature.

We sought to develop an affordable-housing framework that appropriately focuses the scope of the federally-supported secondary market, covering both renters and homeowners of varying income levels.

Our plan suggests other improvements to better serve the full continuum of households, including updating credit-scoring models, better capturing nontraditional income, and providing enhanced liquidity for small-balance loans.

Our framework has outcomes that are transparent, well-defined, measurable and enforceable.

Only Congress can bring about the changes necessary to achieve the core principles outlined in our plan, which are necessary for a vibrant housing finance system.

FHFA has put in place a number of policies and procedures to improve access to the secondary mortgage market and reduce the risks to taxpayers. Now is the time for Congress to act to “lock in” these improvements.

After all, only Congress can alter the existing GSE charters, establish an explicit federal government guarantee, and create a regulatory mandate to maintain a level playing field.

And most importantly, only Congress can provide the legitimacy and public confidence necessary for long-term stability in both the primary and secondary mortgage markets.

We cannot go back to a housing finance system that provides private gains when markets are strong yet relies on support from taxpayers when losses occur.

Calls to simply recapitalize the GSEs and allow them to operate without further structural changes are misguided. Under such plans, the post-crisis reforms already achieved could be reversed at the discretion of future FHFA directors.

The American people rely on a housing finance system that enables them to rent a quality, affordable apartment, buy their first home, or build a nest egg to pass on to their children. We owe it to them to proceed with the hard work of reform without delay.

Thank you again for the opportunity to testify. And I want to reiterate MBA’s long-standing commitment to working with the Committee on all elements of GSE reform. I look forward to your questions.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.