Mortgage resets, disclosure debate to make for 'interesting' 2007.
Expect a "fairly tough correction" for the mortgage market in 2007--but it could be an even tougher year for lenders if the industry doesn't reach a consensus on better consumer disclosure for complex loan products, concluded a panel of lending executives at the Mortgage Bankers Association's (MBA's) 93rd Annual Convention & Expo in Chicago in October.
As mortgages begin to reset and the market adapts from what had been the best housing market in the last 10 to 15 years, the Years, The
the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109]
See : Time resulting change will be good in the long run, but it will not come without some growing pains grow·ing pains
Pains in the limbs and joints of children or adolescents, frequently occurring at night and often attributed to rapid growth but arising from various unrelated causes. , noted Freddie Mac Freddie Mac: see Federal Home Loan Mortgage Corporation. Chairman and Chief Executive Officer Richard Syron Dr. Richard Francis Syron was born in Boston on October 25, 1943.
Richard F. Syron is chairman and chief executive officer of Federal Home Loan Mortgage Corporation (Freddie Mac), a New York Stock Exchange traded company and the second largest source of mortgage financing in .
"The long and the short of what is driving this is that in the mortgage banking industry and in financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page. as a whole, there's too much capital chasing too little product," said Syron. "We're all going to get squeezed out on the risk curve; [many] already have. That's what we get paid to do."
Daniel Mudd Daniel H. Mudd is the current CEO of Fannie Mae (FNM). He is currently 48 year old and holds a Bachelor of Arts from the University of Virginia.
Daniel H. Mudd is President and Chief Executive Officer of Fannie Mae, headquartered in Washington, DC. , president and chief executive officer of Fannie Mae Fannie Mae: see Federal National Mortgage Association. , noted that even more important than the threat of declining house prices might be the resetting in 2007 of $1 trillion out of $9 trillion in adjustable mortgage products.
"These resets are going to have some very interesting and very difficult-to-predict impacts on consumers and others. Some of the maximum resets take people, who bought in the first place based on the monthly payment, from a monthly payment in the hundreds of dollars to a monthly payment in the thousands of dollars," said Mudd. "I think we're in for a very interesting year."
Some of that is due to the innovation in the mortgage market, and while he supports innovation, Mudd said, "It's not entirely clear to me that everyone knew exactly what they were getting into."
The key to nontraditional mortgage products is having and implementing "good business practices," said Michael Perry, CMB Noun 1. CMB - (cosmology) the cooled remnant of the hot big bang that fills the entire universe and can be observed today with an average temperature of about 2. , chairman and chief executive officer of Indymac Bank, Pasadena, California.
The final guidance on nontraditional products issued by federal regulatory agencies this past fall "won't have a major effect" on top lenders, because they are already doing much of what the guidance calls for, added Perry.
"If these products are offered responsibly by lenders and the consumers truly understand what they're getting, they have been good business for our industry and good business for homeowners," said Perry.
In his acceptance speech as 2007 MBA MBA
Master of Business Administration
Noun 1. MBA - a master's degree in business
Master in Business, Master in Business Administration chairman, John Robbins, CMB, proposed a standard loan disclosure for all mortgages nationwide, "with a simple, easy-to-understand tool that spells out both the strengths and weaknesses of the loan the borrower is getting."
The panelists backed the concept of fuller disclosure standards for mortgage borrowers in general, and specifically the reform proposed by Robbins.
"We can't ignore the reality. There's going to be a lot of heat about this, and we're going to be at the edge of the flame-thrower," said Syron. "I think we all better get on our horse and work with John [Robbins] and the MBA and get this done pretty quickly, because if we don't get this done pretty quickly, we're going to get something else."