In commentary published Wednesday by the Wall Street Journal, Countrywide CEO Angelo Mozilo argues for an increase in Fannie and Freddie’s conforming lending limits, saying that “Congress needs to temporarily raise the limits it now imposes on Fannie Mae, Freddie Mac and FHA mortgages by 50%, to $625,000.” Mozilo characterized the conforming limitations as a “more pressing issue” for Capitol Hill than the mortgage reform legislation that recently swept the House and is now under consideration in the Senate. Mozilo argues that moving forward with new regulation that essentially constricts the lending industry’s ability to lend is putting the proverbial cart (industry reform) before the horse (helping borrowers now in trouble) — and will leave potenially millions of borrowers out in the cold, as a result. The well-tanned CEO also weighs in on Financial Services Committee Chairman Barney Frank’s reform bill, surprisingly saying that in some regards, the current reform measure doesn’t go far enough:
To prevent a recurrence of the crisis and lay the foundation for the return of market liquidity, the primary goal of any major mortgage reform has to be to set clear rules and objective standards for all market participants. In its current form, the Frank bill does not go far enough in setting national lending standards. Without setting those standards and pre-empting conflicting or competing state laws, his bill would not address the disjointed system of rules that helped create many of the problems we are now cleaning up. What the market craves now is certainty. As Congress moves forward, we urge careful and deliberative work to improve the minimum lending standards that govern a borrower’s ability to pay, and what constitutes a tangible borrower benefit. Clear, objective standards are critical to bring investors back into the mortgage market.
You’ve got to give Mozilo credit — IMHO, he’s absolutely correct about the effect mortgage reform will have on the lending industry, and how it will further lock out borrowers in need of credit from having enough access to it. It’s also amazing to see Mozilo weight in that the Frank-sponsored bill doesn’t go far enough; I think what Mozilo’s looking for here is complete Federal oversight of lending, which may have the effect of bringing with it some quasi-guarantee for mortgage operations like his own.
