The three Republican and one Democrat candidates who unexpectedly lead in the polls are, David Stevens President of the Mortgage Bankers Association (MBA says, an example of an anti-establishment mindset that is echoing through the country.  Stevens told an audience at MBA's 102^nd Annual Convention that voters want to move the country forward but they want to do it in a different way.  Real estate professionals also want to turn the page and move forward.   And yet, despite, or maybe because of, the tidal wave of new regulations and countless changes to rules already in place, the market is not progressing as well as it could be in bringing housing back as the engine of our economy. 

"But if you take a closer look, if you look past the frustration, you will see that we have actually accomplished a lot," Stevens said.   "It may not feel like things are "back to normal", but we all know that the business will never be like it was before.  There is this new normal, the post crisis "normal" where every step we take, every loan we make, will be scrutinized closer than ever.  It is through that lens that we should look at what we have accomplished together." 

He recounted the changes and the industry's ability to rally and recover, calling it remarkable but also highlighted a number of continuing concerns, many of them arising out of the near total dependence of the conventional conforming market on the government guaranteed programs.  Despite improvements such as increased rep and warranty clarity, compensatory fee modifications, FHFA's work around the Single Security and Common Securitization Platform Stevens said, "The fact remains that the secondary market is still fragile and we could be just one market drop away from GSE legislation in a crisis environment. We need to avoid that at all costs."  

A major concern and one he hears the most about from MBA members is the two forms of risk share programs being used today, back end and upfront.  "Back end risk share has raised many concerns among market analysts, including ours at MBA.  These deals are not transparent and do next to nothing to help the borrower, since the loan has already been originated."  Then, Stevens said, upfront transactions are only being offered to a handful of institutions, leaving thousands of medium and small lenders out in the cold. "This is why we've consistently promoted upfront risk share that works for all.  It's also why we've included mortgage insurance and recourse as part of our proposed risk share structure.  It brings more competition to the market, could lower costs to consumers, and allows all lenders to participate on an equal, level playing field." 

Turning to regulations and enforcement, Stevens said lenders want to lend, but some of the actions being taken today are forcing them into a very restrictive and defensive posture.  The Department of Justice (DOJ) is using the False Claims Act in a way that has never been used before, to apply treble damages against lenders for originating an FHA loan with even the most minor of errors.  This puts on the brakes while the Administration on the other hand is urging consumers to buy homes, and the lending industry has been seeking to make credit available through MIP reductions and a return to responsible 97 percent lending.  "When lenders begin pulling out of the FHA market due to the enforcement environment, we are concerned about the future viability of the program and those that will be hurt the most are first-time and underserved buyers." 

MBA supports clear regulation, however, when everybody is too busy regulating, nobody is focused on the overall outcome and unintended consequences on consumers and the marketplace.  Multiple, duplicative or confusing rules do not always make for a better, easier or safer lending environment.  No matter how big or how small, Stevens said, you are regulated.  "We need to stop the finger pointing that ultimately attacks every business model for different reasons. If we keep on this path, there will be no lenders to serve the housing market."

The bottom line is this - regulators and legislators at all levels must recognize that today's is the safest lending environment in history.  Continuing to focus on the past, will not allow the housing economy to move forward. There needs to be an aggressive spotlight shown on abusive enforcement and the industry has to fight to establish clear rules of the road for lenders.  "Uncertainty remains in the lending community, whether it is the proposed FHA Loan Certification rule or the recently released guidance on Marketing Service Agreements by the CFPB.  These are just two examples of ambiguous rules that unnecessarily expose you to excessive enforcement risk," Stevens said.  

He told the audience they are sitting on the cusp of the best period of growth and demand for housing that the industry has seen in over a decade.  The study MBA released last month predicts that over the next ten years, the U.S. will gain between 13.9 and 15.9 million additional households. "The next generation has arrived; they are bigger than the Baby Boomers; and they all need somewhere to live.  Some will rent and some will own.  Should homeownership rates revert back to a healthy, long-term averages - not the historical lows we have today, nor the over-inflated rates of 2005 - Millennials could boost homeownership by 4.3 million households." 

That, he said, is why MBA has been so vocal about the need for regulatory clarity - so mortgage lending can serve this next generation to the best of its ability.  Clarity is needed in the rules to achieve the proper balance between consumer protections and access to credit. 

Stevens concluded that, with interest rates still at near historic lows and with more consumers ready to buy, there's tremendous opportunity on the horizon.  "We're on the brink of a robust housing future, but it will be a missed opportunity if we don't stop looking back and start moving forward. We need our policymakers to join us and turn the page."