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As I sit here today and sign off on checks directed to my federal, state and local governments, I have to admit I’m not humming “God Bless America” under my breath. In fact, like many, I’m muttering something I hope my four-year old son doesn’t hear. But it’s not because I don’t believe I should have to pay taxes.
Ok, maybe a little. But that’s natural. In all seriousness, I get that one can’t have a civilized society without apportioning at least some of the fruit of his/her labors to a greater, communal good. So I’m not going to be making an anti-16th Amendment argument here.
I’ve spent the past couple of months watching very closely the efforts of our government (state and federal) to “fix” our mortgage, real estate and settlement services industry. Take your pick, doesn’t matter: the Fed’s LO compensation rule; the executive white paper recommending a wind down of the GSEs; the proposed servicing settlement between the major servicing companies and the state attorneys general. Does something need to change or be fixed within our industry? Obviously. Many, many mistakes (and even criminal acts) were spawned by our industry in the past decade, to the detriment of many. I’m not so enamored with the Invisible Hand that I believe we should be completely deregulated.
But what I’m seeing out of DC and the state capitals lately doesn’t feel like a genuine effort to “fix” anything to me. Instead, and perhaps I’m too cynical here, I see an incredible growth in involvement and power for people I didn’t vote for. For people who are accountable to no one in particular. If I call my Congresswoman tomorrow, I’m pretty sure the Fed won’t back off on some of its new rules. It probably won’t even explain them. If I contact my Senator, I don’t feel entirely confident that the CFPB (the most powerful bureau in DC even before it comes to life, apparently) will listen carefully to the folks of my industry as it begins to combine the RESPA and TILA forms. In fact, I have a feeling we’re only seeing the vanguard of an army of new rules, regulations and enforcement patterns that may make our industry long for a return to the glory days of 2009.
Worse, I see legislation that strikes me as knee-jerk—and it’s coming from both parties. If I vote Republican, I’ll see my industry handed over to a select few. If I vote Democrat, I can expect an even bigger alphabet soup of agencies, bureaus and other “cops on the beat.” I see the strong potential of unintended consequences (at least, I hope and pray they are unintended) resulting from actions which suggest a poor understanding of the way the housing industry works and, even worse, a poor understanding of what caused the issues we face today. In fact, some of the suggested solutions would seem only to empower the same entities blamed for the fix we’re in.
How did that happen?
Whatever one thinks for the concept of the GSE, or of Freddie or Fannie themselves, it’s hard to believe that the decades-old federal policy of “an American in every home” can turn on a dime into “only the most qualified and most risk free Americans in homes if they can afford it.” It’s akin to throwing a Porsche (ok, maybe a fast Buick) into “reverse” as it zooms along the Autobahn. The results will be fairly predictable.
Moreover, a climate of uncertainty, shifting compliance requirements and heavy-handed oversight has yet to prove fertile ground for market recovery. It simply doesn’t work that way.
I’m even more concerned that these things are being pushed forward not as the result of thoughtful thinking or careful long-term planning, but instead, as an ad-hoc patchwork of “solutions” intended solely to mollify an increasingly angry public right now (see “Dodd-Frank”). After all, an election cycle is beginning very shortly. If that really is the impetus, how angry will said public be five to ten years from now when it’s nearly impossible to purchase a home unless you’ve recently won the lottery? The very same consumer groups calling for an end to GSEs, YSPs and the like today will be screaming for more affordable housing in a few years. Guaranteed.
Then again, I’m not sure that most of the elected or appointed officials pushing these quick fixes will really care by then. That will be the problem of another generation of the elected and the appointed, and will likely be handled in time for the election cycle pressing them.
I’m feeling a little cynical today. I’ll be writing in the upcoming issue of Real Estate and Mortgage Executive (contact me if you’d like to receive it) about what I think our industry should be doing about it.
But as I shuffle off to the mailbox, hand heavy with my checks to the federal and state treasuries, I wonder which bureaucrat’s career I’m funding today, and what he or she really has in mind for the industry which helps me feed my family in the coming months and years.