Lender Survey: GSE Takeover Was Necessary

According to information released today from ""MORTECH LLC"":http://www.mortech-llc.com, a company that has provided research on lender attitudes and behavior and their use of technology for the last twenty years, early returns to the MORTECH 2008 survey show lenders overwhelmingly agree that the federal government had good reason to intervene in the operations of government-sponsored enterprises (GSEs) ""Fannie Mae"":http://www.fanniemae.com and ""Freddie Mac"":http://www.freddiemac.com when it stepped in and took conservatorship of the two companies on ""September 7"":http://dsnews.comview_story.cfmxid=2851 of this year.
Jeff Lebowitz, owner of MORTECH and publisher of the company's annual study, said that looking at the past twenty years of survey data, ""Fannie Mae and Freddie Mac always found a great deal of grass roots support from the average mortgage lender. For an overwhelming majority (75 percent) of lenders to say that the federal takeover of the GSEs was necessary, their on-the-ground experience must have contradicted their long-held faith in the mission of the agencies,"" Lebowitz concluded.
Preliminary MORTECH survey results (116 company interviews) show that lenders are in agreement with the need for takeover. However, survey respondents are much less in agreement that they, or the public, will benefit from the federal intervention, MORTECH said. In general, the company revealed, lenders doubt that doing business with the GSEs will become easier and probably will be more difficult following government intervention.
%{=FONT-STYLE: italic; TEXT-DECORATION: underline}Based on the MORTECH 2008 lender responses regarding the GSE takeover:%
- More than half see the singular benefit of Treasury intervention to be improved mortgage market liquidity;
- More than half don’t think the added liquidity will result in lower interest rates to home buyers;
- Two-thirds don’t believe that transacting business with the GSEs will be less costly; and
- Eighty percent hold that it will be harder to find and fit appropriate loans for the hard-to-qualify borrower.
""The GSE intervention focused on financial policy and was not aimed at re-engineering transaction flows in the mortgage industry,"" commented Lebowitz on the interim results. ""In our interviews, lenders foresee the unintended fallout of intervention leaving non-traditional borrowers shut out of the market.""
""FHA lending will help,"" Lebowitz added. ""Yet the lenders’ consensus is that either alternative mortgage structures or funds for expanding homeownership in this country will be destroyed.""
The final results of the company's 2008 survey will be published in mid-December.