Wednesday, June 18, Bill Cosgrove Chairman-Elect, Mortgage Bankers Association President and Chief Executive Officer, Union Home Mortgage

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1 Wednesday, June 18, 2014 Bill Cosgrove Chairman-Elect, Mortgage Bankers Association President and Chief Executive Officer, Union Home Mortgage

2 GSE Reform Where are we today? Johnson/Crapo GSE Reform Legislation Passed out of Senate Banking Committee 13-9 bipartisan vote Likely stalled in the full Senate prolonging conservatorship well into the future FHFA Director Mel Watt good news Focused on several items we ve been advocating for Greater clarity around reps & warrants Enhanced risk sharing to bring in more private capital Common or fungible GSE security Alignment - Opportunity to reignite transition steps 2

3 Our Principles Secondary Mortgage Market Reform needs to produce a more stable and competitive system for all lenders, with greater protections borrowers and taxpayers. New system must utilize familiar and reliable systems, processes and personnel from current GSE model. New system must be accessible by lenders of all sizes and business models. Robust and Competitive marketplace benefits all. 3

4 Billions of dollars in originations Estimated Originations 1990 to 2014: SF Market $4,500 Estimated Mortgage Originations: $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 Refi Purchase $0 Source: MBA Forecast January

5 MBA Economic Outlook GDP Growth 2.6% 2.3% 2.7% Inflation 1.5% 1.9% 2.4% Unemployment 7.4% 6.3% 5.8% Fed Funds 0.2% 0.2% 0.8% 10-year Treasury 2.4% 2.9% 3.4% 30-year Mortgage 4.0% 4.7% 5.2% Refi originations ($ B) 1, Purchase originations ($B) New Home sales (thousand) Existing home Sales (thousand) 5,074 4,976 5,568 5

6 The Regulatory Ecosystem for what has become a very complicated web of relationships and interdependencies. Origination Servicing CFPB RESPA/TILA Escrow LO Comp Appraisals HMDA ATR/QM Disparate Impact/ Fair Lending Servicing Standards HUD/FHEO QC Policy MIP Policy HPML SAFE Federal Reserve Indemnification Risk Retention/ QRM HUD/FHA LLPAs Loan Limits Basel Minimum Servicing Fees FDIC, OCC, SEC G Fees Buybacks Volcker Rule False Claims FHFA/GSEs DOJ Reg AB Margin Rule DISCLAIMER: The policies/rules/regulations shown, as well the corresponding authors/stakeholders, are illustrative and thus may not be an exhaustive list. Author of Policy/Rule/Regulation Stakeholder of Policy/Rule/Regulation Securitization/ Secondary Markets 6

7 The Regulatory Ecosystem: ATR/QM Loan Limits (FHA, FHFA) Risk Retention/QRM (HUD, FHFA, Fed, FDIC, OCC, SEC) Disparate Impact (HUD, CFPB, DOJ, Fed, OCC, FDIC) ATR/QM (CFPB, FHA, FHFA) LLPAs (FHFA) MIP Policy (HUD) QM Patch (FHFA, HUD, VA, RHS) DISCLAIMER: The policies/rules/regulations shown, as well the corresponding authors/stakeholders, are illustrative and thus may not be an exhaustive list. Author of Policy/Rule/Regulation Stakeholder of Policy/Rule/Regulation 7

8 First-time Homebuyers Have Not Returned Source: Louise Schiavone. Degrees of Indebtedness. Mortgage Banking magazine. October Analysis of Federal Reserve s Survey of Consumer Finances. 8

9 Understanding the Rules ATR/QM National Servicing Standards Loan Originator Compensation Vendor Management Coming Soon - Fair Lending Coming Soon - CFPB Exam Manual Coming Soon - RESPA/TILA Integration mbaeducation.org/compliance 9

10 How will you get ahead? Value of a Diverse & Inclusive Workforce Foster Creativity and Innovation Gain Market Share and Prepare for Future Growth Attract and Retain Top-tier Talent Wealth Effects and Economic Growth MBA Diversity Summit June 25-27, Washington, DC 10

11 Partnership MBA Board of Directors State Relations Committee (SRC) will be led by 2 Co-Chairs (1 Ambassador, 1 State Leader) All Ambassadors are members of the SRC Residential Board of Governors (RESBOG) State Subcommittees State Subcommittees State Subcommittees State Ambassadors State Relations Committee (SRC) Commercial/Multifamily Board of Governors (COMBOG) State Subcommittees State Subcommittees State Subcommittees State MBA Leaders (Paid or Volunteer) State Ambassadors MBA Members Prospective MBA Members State MBA Leaders Revenue sharing opportunities for MBA membership and product offerings STATE RELATIONS INITIATIVE 11

12 Collective Engagement 12