Dear Mr. President:
While I am not sure to whom this letter should be ad-dressed--whether it is President Obama or President Romney--the truth is the name of the addressee is not what matters. The needs we have in this country overall, as well as the needs of the housing sector in particular, do not change with the specific occupant of the White House.
Of course, Mr. President, your own housing situation will be secure for the next four years. But the housing situation for millions of Americans will be impacted for decades to come by the policy decisions you make in the first few months of your term.
As a mortgage industry veteran working every day to help responsible borrowers purchase or refinance a home, I would offer a few suggestions on where you could focus your attention during your term.
My advice is that we should not look backwards, rehashing where we are now or how we got here. Rather, I would presume to point out, as clearly and dispassionately as possible, the work that still needs to be done and the principles that should not be compromised.
Let me underscore two priorities and two principles that will serve all of us well.
Priority 1: Determination of the federal role in the housing finance market
The future of the government-sponsored enterprises (GSEs)--Fannie Mae and Freddie Mac--must be determined and, if they are to be closed, the nature of their replacement must be determined without further delay.
Currently, with Fannie and Freddie in conservatorship and steps being taken to accelerate their wind-downs, the market is left unsure as to the federal government's commitment to being the primary facilitator of the secondary mortgage market.
Beyond the facilitation role (packaging and sale of mortgage-backed securities [MBS]) that the federal government currently plays, the access role that the federal government plays, through its guarantee of the underlying mortgages in the investment instruments, must be addressed without delay. While other federal housing programs beyond Fannie and Freddie, including those of Ginnie Mae and the Federal Home Loan Banks, will continue to operate and provide implicit guarantees, their scope and role in the system is limited.
The existence of a U.S. government guarantee for certain mortgages substantially reduces the risks to investors, lowers the interest rates borrowers pay and increases access to homeownership. Yes, it is true that this guarantee...