At the Mortgage Bankers Association 2019 Annual Convention & Expo, attendees heard from Department of Housing and Urban Development (HUD) Secretary Ben Carson and Federal Housing Finance Agency (FHFA) Director Mark Calabria on the latest from their departments.
Notably, Secretary Carson and Director Calabria discussed reform, with both noting that now is the time for reform.
“Some see these positive economic trends as evidence that reform should wait for a crisis. I disagree,” said Calabria in his statement. “To quote President John F. Kennedy, ‘The time to repair the roof is when the sun is shining.’ Now is the time to reform our mortgage finance system because our economy and housing market are strong.”
Calabria also discussed GSE reform, with a focus on preparing for an exit from conservatorship. One of the barriers in the way of putting Fannie Mae and Freddie Mac into private hands is building sufficient capital.
“FHFA is also working on a capital rule that balances the imperative of protecting taxpayers, the mission of supporting liquidity, and the economic incentives of raising private capital,” Calabria said. “This may be the most important rule of my tenure. It is a prerequisite for the Enterprises to be able to raise additional private capital.”
Coming off an interview with Squawk Box this morning when he revealed that the department will address FHA perimeters, which will impact how the False Claims Act is invoked, Carson spoke on the changes to the Act. HUD and the Department of Justice have just signed a Memorandum of Understanding between the two agencies concerning claims made under the False Claims Act. The agreement, he notes, “is intended to address concerns of uncertain and unanticipated False Claims Act liability for regulatory defects which has led many well-capitalized lenders to largely withdraw from FHA lending.”
“Having been a brain surgeon for many years, I’ve seen a similar phenomenon in the doctor’s office,” Carson adds. “Sometimes a patient’s agonizing uncertainty over what he or she might be diagnosed with is more stressful than actually receiving a difficult, but clear and unambiguous, diagnosis.”
“Or, to put it in financial terms, ‘The market hates uncertainty.’”