WASHINGTON — Panelists at the second general session of the Mortgage Bankers Association’s (MBA) National Secondary Conference & Expo were all praises for the housing market, while executives from Ginnie Mae, Fannie Mae, Freddie Mac and the Federal Home Loan Bank spoke in detail about current issues affecting their respective organizations.
Paul Peterson, executive vice president and chief operating officer at Freddie Mac, said that while some in the market are concerned about rising interest rates and the corresponding upward movement in mortgage rates, increases may not necessarily adversely affect the housing market. For instance, though rates have now risen to the 6% level, this is low compared to the historical average of around 8.9%. The supply and demand dynamics in the market are also looking good. Currently, there is only about four months worth of mortgage supply but demand for the product remains robust.
The housing market is part of the fabric of our country, declared Ronald Rosenfeld, president of Ginnie Mae. Although there are some areas of weakness, there are still many places where growth remains robust, such as Las Vegas. In Vegas, there is a significant amount of untapped land, he said.
Aside from the health of the housing sector, the panel focused on key themes such as providing access to a diversity of mortgage products, minority homeownership, current GSE issues, and affordable housing goals for the different institutions.
In terms of minority homeownership, Fannie Mae Vice Chairman and CEO Daniel Mudd believes the focus should be to lower the cost of mortgages and to find new areas of growth. Minority borrowers may not having a traditional income profile or credit history, or may have had negative experiences with banks before moving to the U.S.. To build their trust, non-traditional avenues, such as churches, can be used.
Discussion also centered on the issue of affordable housing goals for the GSEs. Ginnie’s Rosenfeld believes corporate goals can interfere with social goals. Freddie’s Peterson said it is important for the GSEs to have defined missions. For instance, should goals for the GSEs compete with those of the FHA?
Though there has been much hoopla about the role of the GSEs, representatives from Fannie Mae and Freddie Mac defended their respective organizations and goals. Freddie’s Peterson said that the GSEs were created to provide liquidity to the market and to have institutions permanently committed to housing finance.
For more on this discussion, see next week’s ASR (4/26/04).