It might be fitting that Bob Broeksmit struck a more conciliatory tone during his speech to kick off MBA Annual than he did last year, when he said the mortgage trade organization was “playing offense” to “stop the madness.” After all, the general election is a little over a week away and the MBA has hedged its bets.
“Republicans could sweep everything. Democrats could sweep everything. But we think the most likely outcome is divided government,” Broeksmit, the MBA’s president and CEO, said in the kick-off speech for the event in Denver. “Regardless of who wins the White House, they’ll probably face at least one chamber of Congress controlled by the other party. In other words, we’re getting ready for two years of gridlock at least.”
Broeksmit said that no matter whether it’s Donald Trump or Kamala Harris who’s in the White House, the MBA expects the Fed to continue cutting interest rates. But this cycle will likely be shorter and less steep, he said.
“Our best estimate is that 30-year rates will hover between 6% and 6.5% for the rest of this year, then settle in the high 5s by the end of next year. We’re looking at a different story, though, when it comes to federal policies,” he said.
Broeksmit said that a gridlocked Washington will mean housing legislation will be a relatively rare sight. Whoever ends up in 1600 Pennsylvania Avenue will have to rely heavily on regulation, using the Federal Housing Finance Agency (FHFA) and the Consumer Financial Protection Bureau (CFPB) to enact policies.
“Both agencies will keep pumping out new rules. So will other agencies that cover housing and lending. Yet while the stream of regulation will continue, the kind of regulation depends on who wins,” he said. “Donald Trump and Kamala Harris have very different governing philosophies.”
Recent policy victories
“We know how to stop bad ideas, or at least make them better,” he told the crowd. “And we’re always ready to push for good policies that enable you to do more for Americans.”
Broeksmit touted the MBA’s recent victories, pointing out that it was instrumental in the FHFA abandoning its original rule for the Suspended Counterparty Program.
“When the proposal came down last year, hardly anyone was paying attention,” Broeksmit said. “But the MBA paid close attention, and we immediately saw the danger it posed. That rule would have banned companies that make minor mistakes from working with Fannie and Freddie. It wasn’t just overregulation. It was an overreaction. And we refused to let it stand.”
Basel III Endgame Rules, which Broeksmit called a “disaster in the making,” was another big policy victory for the trade association.
“It would have seriously injured low- to moderate-income lending by raising risk weights on specific kinds of mortgages, particularly low down payment loans,” he said. “That increase in required capital would inevitably mean fewer loans would be made, and the loans that are made would be more expensive. The treatment of mortgage servicing rights would have compounded the problem, driving up costs for every borrower.”
Broeksmit also said Congress is in the midst of considering the MBA’s suggested reforms on trigger leads.
Opportunities ahead
Regardless of who wins the election, the next president will focus on housing, he said.
“For all their differences, both Donald Trump and Kamala Harris will focus on housing. Both of them have said we need to get prices under control. They’re also clearly aware that we need more affordable units for purchase and rent,” he said.
Broeksmit noted that many of the key provisions of the 2017 Tax Cuts and Jobs Act will expire at the end of 2025. As the tax debate ramps up, “we’ll keep telling lawmakers that Americans need to keep more of their take-home pay,” he said. “If we truly want to help more Americans find affordable housing, the last thing we should do is raise their taxes.”
In an ode to his spicier speeches of 2023, Broeksmit said that regulation has gotten out of control.
“Someone has to bring order to this mess,” he said. “That’s why MBA is strongly calling for the creation of a national housing director. Under our proposal, a housing director would focus solely on housing and oversee every housing policy, no matter which agency it comes from, and spot contradictory rules from a mile away.”
He closed his speech with a touch of optimism for mortgage bankers.
“If the last year proves anything, it’s that we get results when others can’t,” he said. “And I know that together, we can achieve even more for the benefit of all the American people.”
