SAN DIEGO — The general economic landscape took center stage at this year’s Mortgage Banker’s Association (MBA) Annual Convention and Expo.
The two GSEs heads were also given the chance to voice out their views on sensitive topics such as regulation and accounting issues, as well as have extensive discussions on the importance of technology in the mortgage industry and extending homeownership to minorities.
John Courson, 2003 chairman of the MBA, said that he has been in the mortgage business for 45 years, and never before has the industry been viewed as the major driver in the national economy. However, when homeowners put $200 billion of their discretionary income back into the economy “people did listen,” he stated.
For his part, MBA’s 2004 Chairman Robert Couch spoke on the MBA’s focus on investing in communities. He said that it is important to “to take credit in what we do” on a community level while also helping the general economy. He said that mortgage lenders should not view the housing sector as merely propping the economy but to also “think about how you are investing in America’s communities.”
In the session called point and counterpoint, Former Senator Bob Dole praised the MBA’s family-centered approach to community building. Former Vice President Al Gore, who introduced himself as someone who used to be the next president of the United States, identified the housing sector as being one of two engines that has been driving the economy into a recovery. However, he did warn about the effect of the expected sharp increase in interest rates considering that 20% of all mortgages have a variable rate and Americans have a personal debt burden of 110%.
The GSEs
In his speech, Fannie Mae Chief Executive Officer Franklin Raines said that the housing sector has terrific prospects going forward. He stated that as early as 1993, mortgage origination volume was only at $1 trillion (which is equivalent to 9 million homes). Last year, he said that volumes already totaled $2.6 trillion (15 million homes) and this year volumes are expected to reach $3.5 trillion (19 million homes).
Raines also addressed the issue of moving the regulation of the GSEs over to the Treasury, saying that moving it over this department is good if it done right. He said that he supports a strong, well-funded regulator for the housing enterprises. In a separate interview with members of the press after the session, Raines said that he is hoping for a quick resolution from Congress on this issue. He said, however, that the resolution might happen next year because of all the issues that Congress has to sift through before coming up with a final decision. However, he remains optimistic after the results of hearings from the previous week.
Freddie Mac’s Chief Operating Officer Paul Peterson in his speech focused on how the mortgage industry can be successful in moving from a refinancing market to the more usual purchase market. He said people in the primary market should go out proactively to source business and look at how to run more operations efficiently.
He said going forward Freddie is going to focus on: 1) credit and interest rate management, 2) providing accurate financial statements in a timely manner, and 3) emphasizing its partnership with the primary market to provide homes in the United States.
Peterson said that Freddie is working very hard to release its revised financial statements by November, though he could not guarantee this. In the upcoming revised statements, Freddie would be disclosing information on its fair value balance sheet, which Peterson said would show the true economic value of the company.
