Radian Gathers Mortgage Industry Experts to Explore Options for Supporting First-time Homebuyers
March 13 2013 - 9:00AM
Business Wire
According to a recent panel of housing and mortgage experts,
first-time homebuyers in today’s market face a distinct set of
challenges, but the opportunity for growth within the segment
exists if new regulations are shaped carefully. This consensus was
a focus of the fourth annual homeownership panel, hosted by Radian
Guaranty on February 15, 2013, in Washington, D.C. The event on
Capitol Hill entitled “Homeownership: Supporting First-Time
Homebuyers,” brought together industry experts to examine the
impact of pending regulations and key legislation, as well as the
importance of supporting first-time homeownership for the health of
the housing market as a whole.
Ken Harney and Teresa Bryce Bazemore get
caught up before the start of the panel discussion. (Photo: Radian
Group Inc.)
The panel included an audience of congressional, federal agency
and association staffers, and was moderated by Teresa Bryce
Bazemore, president of Radian. Award-winning and nationally
syndicated Washington Post real estate columnist Ken Harney
provided opening remarks. The featured panelists included four
notable experts in the housing and mortgage industries: Mark
Calabria, director of financial regulation studies for the CATO
Institute; Mark Fleming, chief economist for CoreLogic; Michael
Fratantoni, vice president of single-family research and policy
development for the Mortgage Bankers Association; and Barry Zigas,
director of housing policy for the Consumer Federation of
America.
Overall, the panelists agreed that the first-time homebuyer
segment is not recovering at the same rate as other segments of the
housing market, and it is crucial to keep this group of buyers in
mind when developing housing policy. According to Mr. Harney, “The
first-time homebuyer market is essential to the function of the
system as a whole. Based on historical norms, we have a net deficit
of homebuyers now, with underwriting standards becoming very tough
and student debts serving as a major obstacle.”
Mr. Fratantoni stated, “The most important thing to look at
moving forward is household formation. We had a period of decline
as young 20-somethings moved back in with their parents and
households doubled up. Now those people are turning to rentals,
just as rents are going through the roof, which means market
dynamics are favorable for a rebound in first-time buyers.”
Central to the panelists’ discussion was the impact of the
Qualified Mortgage (QM) rule on lenders and consumers, as well as
the implications of the pending Qualified Residential Mortgage
(QRM) standards aimed at risk retention. In general, the panelists
were in agreement that aligning the QRM standards with the recently
released QM standards and ending an ongoing period of uncertainty
would be most beneficial to the market.
Notably, panelists expressed concern that strict downpayment
requirements as an element of the QRM rule would create a barrier
for otherwise-qualified homebuyers, since coming up with a
significant downpayment is the biggest obstacle for many first-time
buyers, while not effectively minimizing the risk of default. As
Mr. Calabria pointed out, “Delinquencies result from a number of
factors, not solely the downpayment, but usually a combination of
downpayment and very poor credit quality.” Mr. Fleming agreed with
this sentiment, adding, “We have to understand there is a risk in
not requiring a big downpayment, but mitigate that risk by making
sure on the front end that borrowers have a good chance of making
their mortgage payment even if something bad happens in their life,
like a job loss.”
“There’s a level of fear that we’re creating what will become a
standard in the underwriting system that makes it harder for
consumers to get a loan,” noted Barry Zigas of the Consumer
Federation of America. “We should be more concerned with consumer
access to credit than a requirement for down payment. We have to
weigh the benefits of these requirements against the cost to the
system and decide how far we’re willing to go in closing off credit
to many in order to prevent foreclosure for a few.”
“For four years, Radian has had the privilege of gathering some
of the brightest minds in the industry in one room for a
collaborative discussion of the most pressing issues in the housing
market,” said Ms. Bazemore. “Right now, policymakers are faced with
the challenge of striking the delicate balance between protecting
mortgage lenders and encouraging safer lending decisions, and
ensuring eligible borrowers can still secure a mortgage. It’s a
highly complex process that requires bipartisan coordination across
all fronts.”
Additional information and photography may be found at:
www.Radian.biz/DCPanel.
About Radian
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia,
provides private mortgage insurance and related risk management
products and services to mortgage lenders nationwide through its
principal operating subsidiary, Radian Guaranty Inc. These services
help promote and preserve homeownership opportunities for
homebuyers, while protecting lenders from default-related losses on
residential first mortgages and facilitating the sale of
low-downpayment mortgages in the secondary market. Additional
information may be found at www.radian.biz.
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