Richard's Real Estate Thoughts - Chattanooga TN Mortgage Lender: July 2010

Housing reform, including FNMA and Freddie, next on the agenda

Housing and GSE reform conference announced.

We have barely finished RESPA reform. We have survived SAFE Act requirements and a housing industry contraction. We now face a massive Financial Reform with most of its regulatory particulars undefined - leaving small businesses and lenders in a state of uncetainty. We now are on notice that we are about to face major reform in the US housing industry. (And let us not forget the health insurance reform.)

Just received from the FHA Commissioner David Stevens' desk: "The Administration is strongly committed to comprehensively reforming our housing finance system. Work is well underway and by early next year, the Administration will deliver a comprehensive housing finance reform proposal."

It seems to me that the agenda and the goal are set. Most decisions on broad outlines already made.

My point is that a major "comprehensive and fundamental" reform is not needed for our housing industry. The combination of FHA, VA, Rural Development, FNMA and Freddie Mac has served exceptionally well our national home financing needs for decades. Our housing market has been generally strong, that is until Congress decides to relax banking restrictions inorder to encourage risk, which Congress has done on occassion to pacify big bank lobbies.

The basic housing system though is sound with each agency providing excellent options for particular segments of the population.

The memo states that the question about major reform of the housing industry "is not if but when." The question apparently is also not what.

Housing reform is coming.

The GSE's, Fannie Mae and Freddie Mac, were conspicuously absent from the recent Financial Reform legislation. And no doubt that changes are needed and that their reform is coming. I think the broad outlines are set. My fear is that the reformers are going to use the abuses of Wall Street, abuses by the way which I think were largely left unaddressed in the Financial Reform bill despite rhetoric otherwise - reformers are going to use the abuses of Wall Street to abuse the most efficient home financing system on Earth.

It is almost like the goal is to keep us distracted so we forget how bad unemployment is. Keep us so off balance and uncertain that it is impossible to focus on the business of rebuilding the housing industry.

Give us a breather from massive regulatory change. Let us, the industry professionals in the trenches, do the work needed to heal our housing industry.

One thing is for sure, like it or not, the Obama Administration will leave its imprint - the administration of unrelenting and massive regulatory reform in all areas of our personal and work lives.

As you are commenting about the forthcoming increase in FHA loan down payments, comment also on the coming massive housing reform. Write to your representatives. I will ask mine to slow this regulatory reform train down just a little. Let's first find out what will result from what has already been done. The NAMB has provided this survey about GSE Reform (primarily Fannie and Freddie) as a start to express your voice on the matter.

Housing shows little signs of recovery. Uncertainty about existing and new regulatory changes is not helping.

UPDATE 7/28/10 - several articles on the GSE reform point to a significant lack of concensus on the form of the reformed GSE's. Here is a good summary on the variety of proposals. It seems to me a change in executive compensation, oversight to ensure the GSE's do not return to purchasing portfolios that are outside their own published underwriting standards, restrictions on lobby contact with Congress will go a long way to restoring the GSE's previous success in building a stable and strong conventional housing market.

No need for "fundamental and comprehensive reform." Just less lobby money for Congress.



Richard Smith
NMLS 184479

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Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee


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Richard Smith
NMLS# 184479 TN# 104002 GA# 28928 

Conventional, FHA, FHA 203k, HUD $100 down purchases, VA,

Rural Development ( USDA), and Jumbo Loans

Lending in Chattanooga, Tennessee and Georgia for over 20 years.

Sierra Pacific Mortgage

Cell phone: 423-280-0345 Email:

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This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Sierra Pacific Mortgage. 

Comment balloon 2 commentsRichard Smith • July 27 2010 08:58PM
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