Residential Magazine

Housing should be high on Biden’s to-do list

By Jim Davis

President-elect Joe Biden’s administration will confront a host of issues after his inauguration this month, including the ongoing coronavirus pandemic, a wavering U.S. economic recovery and a deeply divided nation. Another issue that should be a priority is housing.

Economists say that, with the exception of the Great Recession, housing has helped the nation recover from every recent downturn. This should be the case once COVID-19 is under control.

“Housing is very important,” says Kimber White, president for the National Association of Mortgage Brokers (NAMB). “I say it as, ‘There goes the housing market, so goes your economy.’”

What should the Biden administration do? Several mortgage industry associations have opinions. 

Housing is very important. I say it as ‘There goes the housing market, so goes your economy.’

Kimber White, President, National Association of Mortgage Brokers

The administration’s first six months will be judged by how it handles the COVID-19 health crisis, says Bill Killmer, senior vice president for legislative and political affairs at the Mortgage Bankers Association (MBA). To deal with the economic impact of the pandemic, the administration should create an “environment that would allow for people to continue to purchase or refinance their homes, which has been a form of needed economic stimulus,” Killmer says.

The MBA would welcome measures to help the public get through the next several months — such as extended unemployment benefits, additional stimulus checks or emergency rental assistance, Killmer says. Regarding forbearance programs, the Biden administration should understand that servicers are still required to pay investors. And in light of last year’s social-justice battles, the administration should focus on affordable housing and minority homeownership by adding more housing stock and crafting creative solutions to increase homeownership within communities of color. 

The MBA also would like to see a resolution to the conservatorship status of Fannie Mae and Freddie Mac. “It really is kind of one of the last unsolved problems from the Dodd-Frank era,” Killmer says. 

White likes some of Biden’s proposals to spur home purchases, including a tax credit of up to $15,000 for first-time homebuyers. A similar program through the Obama administration helped generate home sales. 

The Biden administration should seek to limit “trigger leads” in which credit bureaus sell borrower information, White says. These should only be allowed if consumers opt in, he says, noting that these marketing tactics often confuse elderly or first-time homebuyers. “It’s your credit, your privacy, your rights,” White says.

Scott Olson, executive director of the Community Home Lenders Association (CHLA), would like to see a reduction in fees, including the mortgage insurance premium charged for loans backed by the Federal Housing Administration (FHA). The annual premium pays for the FHA’s Mutual Mortgage Insurance Fund, which helps the agency protect against defaults.

CHLA advocates for the Biden administration to cut the fee to its pre-housing-crisis mark of 50 basis points while eliminating the life-of-loan premium policy that was put in place to address the housing crisis. Olson notes that FHA must maintain the insurance fund at 2% of the agency’s overall loan portfolio. At the end of fiscal year 2020, the fund was at its highest amount in recent memory at 6.1%

Another priority for CHLA is guarantee-fee parity, an issue related to the administrative fee charged by the GSEs for mortgage-backed securities. Before the Great Recession, the GSEs charged different fees to different companies, including lower fees for large companies such as Countrywide Financial and Washington Mutual.

Both companies went under during the housing crisis. “They thought they were safe,” Olson says. “It turns out, it was a mirage.”

Since the crisis, FHFA has had a policy — at the discretion of its director — that the GSEs charge the same guarantee fees to all institutions. This should be made permanent, Olson says.

CHLA also wants the same licensing requirements for mortgage originators at banks and nonbanks. Under the Secure and Fair Enforcement for Mortgage Licensing Act, an originator at a nondepository lender is required to pass a written test, complete an independent criminal background check and take continuing education courses. A bank originator, however, isn’t required to complete the same steps.

Olson believes that a Biden-appointed director of the Consumer Financial Protection Bureau may extend the same licensing requirements to all originators in the interest of protecting borrowers. And the new administration will have to have a plan in place once forbearances end, Olson says. He notes that many of the systems previously set up to prevent homeowners from losing their homes have successfully weathered the pandemic. 

“I think that everyone deserves a pat on the back for the fact that things have gone pretty well under the circumstance,” Olson says. “This has been a really difficult economic environment.”


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