The housing finance system must be given back to the companies that make mortgages and the borrowers who use them to buy homes, keynote speakers said at the Mortgage Bankers Association’s (MBA) National Secondary Market Conference in New York.

Lewis Ranieri, who is generally credited with creating the MBS, warned that the capital markets are being turned over to regulators who are so intent on protecting consumers that they are all but eliminating the private market.

Ranieri, who now heads Ranieri Partners, said it is wrong to think the mortgage finance system can be rebuilt to totally eliminate any risk. While there should be a regulatory framework that provides for transparency, it also should provide for certainty and consumer choice.

“The government should not eliminate virtually all private market options, de-factor turning mortgage finance into a government province where the taxpayer assumes all the risk,” he told the conference.

Another opening session speaker, Richard Dorfman of the Securities Industry and Financial Markets Association (SIFMA), said the Dodd-Frank Financial Reform legislation forces regulators to look backwards while offering no strategies for the future. “There is no vision forward,” he said.

Dorfman, who is managing director of the securitization group at SIFMA, likens the situation to a golfer who complains about his lie. “If you are obsessed with how you got there,” he said, “it is difficult to get to the hole.”

The industry “needs a goal, something to shoot for,” Dorfman said, encouraging the industry to take the visionary role the government has capitulated on. “I’m not saying the past is best forgotten, but it should not be elevated to such importance without considering what comes later.”

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.