Mortgage Bankers Association (MBA) president and CEO Bob Broeksmit proposed creating a national director to oversee housing policies and address the “regulatory knots” that “sap the country’s economic strength.”
This czar, called the “National Housing Policy Director,” would be directly located in the White House, accountable to the President, and able to spot – and stop – contradictory rules regarding housing issues.
“This position would bring order to the chaos. The Director would oversee every policy that affects housing, no matter which agency it comes from,” Broeksmit said during an Exchequer Club Speech on Wednesday.
“The official, and his or her team, would have a deep knowledge of existing laws and regulations, enabling them to spot contradictory rules from a mile away. And the Director would be empowered to stop agencies from making regulatory knots worse, and better yet, start the long overdue process of unraveling them.”
According to Broeksmit, there’s an “alphabet soup of regulatory agencies” or “too many cooks in the regulatory kitchen.” In addition, the Consumer Financial Protection Bureau (CFPB) and the Federal Housing Finance Agency (FHFA) are “effectively no longer independent agencies,” he added.
Broeksmit said that “not all the rules were bad”— a positive example is the qualified mortgage rules—but there is little coordination and attention to compliance and the implementation burdens and costs. Ultimately, new regulations have been “rolled out at a breakneck pace with little regard for how they affect each other, much less our industry and, more importantly, the consumers.”
For example, the United States Department of Housing and Urban Development (HUD) “charges lenders over 22 fees that are duplicative, unnecessary, or downright expensive compared to private sector options,” Broeksmit said. It has resulted in 75% fewer multifamily loans over the last two years.
Broeksmit once again criticized the CFPB for its blog post saying it will scrutinize what it described as “junk fees” imposed on borrowers when closing a mortgage.
“The CFPB is now collecting information, presumably as a precursor to issuing a regulation or guidance that could force lenders to absorb these costs,” Broeksmit said. “But here’s the thing: These fees they are targeting? By the White House’s own definition, none of them are junk fees. What’s more, many of them are for services required by other federal agencies.”
Another Broeksmit target was President Joe Biden’s proposal to “scrap” lender title insurance, which Fannie Mae and Freddie Mac require before they purchase a loan, he said. The proposal is part of a new plan to lower housing costs, announced during the March State of the Union address.
Regarding the Basel III Endgame rules, Broeksmit said it imposes an “absurd” 250% risk weight on mortgage servicing rights, driving banks farther away from mortgages and weakening the entire market for MSRs, severely impacting independent mortgage banks (IMBs).
“At the same time, by increasing the amount of capital that banks must hold against their warehouse lines, Basel III would make it much more expensive for IMBs to get credit from other banks, which is key to the IMB business model. All told, Basel III will lead to higher prices on fewer mortgages. That’s a disaster for Americans, especially first-time and low-income homebuyers,” Broeksmit said.
Regarding all these proposals, Broeksmit added that even if it’s a “political stunt,” they “betray a lack of knowledge” about the housing industry. He said “blog posts and the bully pulpit” can lead to “contradictory and unworkable policies.”
