Government agencies have restructured themselves for better risk protection to help still-struggling mortgage holders and to position themselves for the slow climb out of the mortgage and housing crisis of 2006-2009, executives told the audience at the ""Mortgage Bankers Association's"":http://www.mbaa.org/default.htm ""Annual Conference and Expo in Chicago"":http://events.mortgagebankers.org/99th_annual/default.html.[IMAGE]
Timothy Mayopolous, president and CEO for ""Fannie Mae"":http://www.fanniemae.com/portal/index.html, said the GSE has built a better foundation for the future and now looks to be part of the solution rather than part of the problem. As evidence, he pointed to the $25 million in dividends that Fannie has repaid to the Treasury.
Fannie wants to continue to support the recovery while laying a foundation for a better mortgage system going forward, Mayopolous said. An essential part of doing both is better risk management, a theme that other speakers echoed.
Fannie Mae has changed its risk management in part by reducing its share of the mortgage market. Mayopolous said Fannie had 41 percent of the market in 2007├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øa far too large share├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øand has looked to transfer more of its risk to the private market. However, Mayopolous admitted that it's not an easy proposition, as some private capital has pulled out of the market. Better loan quality is critical to bringing these investors back to the mortgage market.
""A better system needs to be safer and more transparent,"" Mayopolous said.
""A lot of work remains,"" agreed ""Donald Layton"":http://www.freddiemac.com/, CEO for Freddie Mac, adding that the GSE has made significant advances in products, customer service, and technology in order to sharpen its business and oversight of its lending.
Layton expects lending to continue to pick up and believes Freddie Mac will play a significant role in the growth.
""Ginnie Mae"":http://www.ginniemae.gov/, while continuing to work with Fannie and Freddie, has also introduced programs for small lenders and is continuing to provide better transparency for investors, according to president Theodore Tozer. Ginnie Mae is upgrading its technology, which will enable it to provide full disclosure on all of its 8 million loans within the next nine to 12 months. Currently, Ginnie Mae provides full disclosure on its loan pools but doesn't have the capability to provide the same visibility down to the individual loan level.
The new technology and transparency will also enable Ginnie Mae to more quickly recognize any trends so that it can respond faster if risk appears to be on the rise or if other problems emerge.
Risk management continues to be a concern to the ""FHA"":http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration, said commissioner Carol Galante.
""Our insurance fund is still susceptible to the risk of the housing crisis from 2006 to 2008. We are taking steps to strengthen the fund [but] we are dependent on the health of the economy, which is needed to get housing prices stabilized,"" Galante said.
A positive development is the sharp increase in home equity through June, a trend that is expected to continue through the end of the year. Galante added that the ""Rebuilding Equity Act"":http://www.govtrack.us/congress/bills/112/hr6467 and other administration-backed legislation could also help with the housing recovery, as they would help many of those homeowners who are still underwater with their mortgages.