One of the most prominent thought leaders in the mortgage banking industry is complaining that politics is framing the narrative surrounding the changes in the Loan Level Price Adjustments (LLPAs) upfront fees for loans backed by Fannie Mae and Freddie Mac that will occur on May 1.
David H. Stevens, the former president and CEO of the Mortgage Bankers Association and the Federal Housing Administration commissioner during the Obama administration, used his LinkedIn page to bemoan the encroachment of partisan politics into the LLPA story.
“I hate it when housing issues get politicized,” he wrote. “That doesn’t mean I won’t state my opinions, but when issues like the LLPA changes get turned into a right versus left debate it makes my stomach turn.”
Stevens cited his own feelings on the issue, noting, “In the case of this policy change I stated my concern about the precedent of making this set of changes. I opposed Director Calabria’s policy when I thought he was on a path that would have harmed the GSE’s critical role and in similar fashion I did the same here with Director Thompson.”
Stevens added that he publicly expressed his concerns on the LLPA changes as far back as February – yet the issue did not grab public attention until more recently.
“The media provocation recently (I think) came from the NY Post story which snowballed across the conservative media primarily,” he said, referring to an April 16 article with the headline “How the US is subsidizing high-risk homebuyers — at the cost of those with good credit.”
“By the time I got contacted by Newsmax I knew this had gone too far,” Stevens added.
Looking forward, Stevens warned that the federal housing policy runs the risk of disfigurement by partisan philosophy, with a future for the government-sponsored enterprises assaulted by “an array of FHFA Directors over the years to come whipsawing these two institutions in very unhealthy ways based on the party in power. The GSE’s are far too critical to housing and for the first time I am beginning to lean into the idea that perhaps recap and release without congressional reform may be a superior outcome to what seems to me to be a more politicized environment of over-site of these two very important companies.”
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Everything is political, especially when an election is in view; the whole mortgage industry is in trouble again and as an appraiser I feel that we are heading for another 2006-2008 but for different reasons. Back then it was the subprime market and the dishonest mortgage bundlers/sellers that caused it, the next one will be caused by FannieMae/FreddieMac with their new and “improved” way of valuation that eliminates an appraisal by a real person not associated with the valuation transaction. It’s like having a fox guard the hen house. I thought that FannieMae/FreddieMac were under government oversight still, I must be wrong, but there should be another agency that keeps them in check. Oh well, I’ll try to diversify my business and wait around for more foreclosure appraisal assignments in 5 years.
Stevens, an appointee of the leftwing Obama administration, is complaining that “conservative media politicized” a new policy by the leftwing Biden Administration. That new Biden policy increases fees on borrowers with strong credit in order to subsidize borrowers with weak credit. The policy punishes people who represent a low risk of default in order to subsidize borrowers who represent a higher risk of default. The policy also violates Biden’s promise not to increase taxes on people who earn less than $400,000 per year. Mr. Stevens should explain how Biden’s new policy (a) is fair, (b) will actually work, (c) won’t increase mortgage default risk, and (d) isn’t politically motivated.
You are case in point!