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What’s the New Normal?. David H. Stevens President and Chief Executive Officer Mortgage Bankers Association. The Regulatory Ecosystem. …for what has become a very complicated web of relationships and interdependencies. Servicing. Origination. LO Comp. Servicing Standards. CFPB.
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What’s the New Normal? David H. Stevens President and Chief Executive Officer Mortgage Bankers Association
The Regulatory Ecosystem • …for what has become a very complicated web of relationships and interdependencies. Servicing Origination LO Comp Servicing Standards CFPB Appraisals ATR/QM HMDA HUD/FHEO RESPA/TILA Disparate Impact/ Fair Lending Escrow QC Policy HPML Federal Reserve MIP Policy SAFE Risk Retention/ QRM Indemnification FDIC, OCC, SEC HUD/FHA Basel Loan Limits Minimum Servicing Fees LLPAs Volcker Rule G Fees Buybacks False Claims FHFA/GSEs DOJ Reg AB Securitization/ Secondary Markets 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 Confidential: Not for Distribution Stakeholder of Policy/Rule/Regulation
Estimated Originations 1990 to 2015 Source: MBA – July 2014 Mortgage Finance Forecast
Refinance Applications – Recent Activity Source: MBA Weekly Applications Survey
Expensive to Run Total Net Production (bps) Source: MBA’s Quarterly Mortgage Bankers Performance Report
A Changing Set of Demographics Looking Ahead: • Millennials will form 24 million new households • Households in their 30s – increase by 2.7 million • Majority Minority Joint Center for Housing Studies of Harvard University
Minorities Will Account for Three-Quarters of Household Growth Over the Coming Decade
Household Growth - Younger Minorities and Aging Baby Boomers
Projected Changes in the Population, by Age 2012 - 2022 Source: Census Bureau
Share of Households Living in Central Cities, by Age of Householder, 2001, 2005 & 2011 Source: American Housing Survey
Number of Women and Men with Bachelor’s and Higher Degrees, by Age, 2013 Thousands Source: Census
Owner- and Renter-occupied Households & Homeownership Rate Thousands of households Homeownership rate (%) Source: Mortgage Bankers Association and Census Bureau
Household Wealth Increasing Source: Federal Reserve
Credit Score Trends Source: CoreLogic
Lower FICO Borrowers In GSE Purchase Market – Declined & Not Returned Source: U.S. Mortgage Insurers
Pricing Beyond Reasonable Returns? The proposed December gfees would have increased the cost of credit across the board. Furthermore, MI coverage lowers loss risk to an effective 67 LTV(1) (1)MI coverage protects against loss, but higher LTV loans would be expected to have a higher incidence of default
Share of First Time HomebuyersAs percent of existing home sales Source: National Association of Realtors
Challenge: The Delay Source: FRBNY / Equifax