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74 be a feature of any housing reform proposal. Regulators must be careful of proposals that downplay the role of private capital in the name of innovation, especially when we are in the midst of the longest economic expansion in the last 70 years 2 . II. Promote Stability—ere is broad agreement on the importance of maintaining a stable market for the 30-year fixed rate mortgage, which is encouraging. While the ultimate goal would be legislation that provides an explicit government guarantee covering credit losses, much can be done today. In particular, regulators should be working to set, and supervise, mortgage lending and servicing standards that promote stability. Examples of regulatory oversight include review of the types of products being offered and syncing up standards so that one segment of the market does not have an incentive to start a "race to the bottom" on lending. As the Federal Housing Finance Agency continues to work on a revised Enterprise Capital Framework proposal, the Agency should be mindful of the impact the new Framework will have, not only on the GSEs, but on the market as a whole. Either too much or too little capital could be very disruptive. III. Ensure Access—Access to mortgage finance for creditworthy borrowers and participation by lenders of all sizes is significant when you are talking about taking next steps and how to best move forward in the future. Loan-level credit enhancements can facilitate low down-payment lending to creditworthy borrowers, especially when placed on mortgage loans before they are guaranteed by the federal government. To ensure lenders of all sizes and types can participate in the market, all lenders should have access to the same fees and origination costs 3 . Also, the GSEs have made great strides in technology while in conservatorship. As housing reform advances, we need to make sure that the entire market benefits from the advances that the GSEs have made, not just particular pockets of the market 4 . IV. Foster Transparency—A key to a stable and robust future housing market will be transparency and clarity around underwriting, capital standards, and loan performance. Real transparency will help ensure that all borrowers are offered the best product at the best price. Similarly, transparency will enable market participants—lenders, servicers, mortgage insurance providers, and investors—to ensure that they are being held to standards that are consistently applied across industries, to avoid picking winners and losers. e GSEs have decades and decades of data that would benefit the overall market, and as technology advances, the amount of data available will only increase. Similarly, greater insight into the engines that drive much of today's underwriting—Loan Prospector and Desktop Underwriter—would enable the broader market to not only understand credit policy, but to assess it as it evolves. Eventually, this transparency could encourage other mortgage guarantors to enter the system 5 . THEN AND LATER At this point, you may be asking yourself, "So, what might housing reform look like in a world where Congress is unlikely to act in the near term?" at is a thoughtful and honest question, and to be frank, regulators have tremendous power to shape, or reshape, the housing market. at kind of regulatory reform is happening today. Among the initiatives currently under consideration at the Federal Housing Finance Agency, the Consumer Financial Protection Bureau, and the Securities and Exchange Commission alone are the impending Enterprise Capital Framework coming from the Federal Housing Finance Agency, the Qualified Mortgage Notice of Proposed Rulemaking (expected to be published by May), and reconsideration of disclosure requirements under Regulation AB at the Securities and Exchange Commission. Each of these would have a major impact on cost and availability of mortgage lending. As regulators continue moving forward Feature By: Rohit Gupta Regulators must be careful of proposals that downplay the role of private capital in the name of innovation, especially when we are in the midst of the longest economic expansion in the last 70 years. 1 U.S. Mortgage Insurers: It's Time to Reform the Housing Finance System 2 U.S. Mortgage Insurers: MI Protects Taxpayers 3 U.S. Mortgage Insurers: It's Time to Reform the Housing Finance System 4 U.S. Mortgage Insurers: Assessing Proposals to Reform America's Housing Finance System 5 U.S. Mortgage Insurers: It's Time to Reform the Housing Finance System