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» VISIT US ONLINE @ DSNEWS.COM 51 COVER STORY SPECIAL FE ATURE INDUSTRY INSIGHT INDUSTRY INSIGHT The year ahead is shaping up to be one of great change in housing with uncertainty lurking around every corner. Brian Montgomery, industry expert and veteran of both the Bush and Obama Administrations, gives his insight on what to expect. During the depths of the housing crash while writing a similar year-ahead piece, I borrowed a line from the noted science fiction writer Ursula LeGuin, who years ago opined, "the only thing that makes life possible is permanent, intolerable uncertainty – not knowing what comes next." A very wide swath of the housing industry is witness to Ms. LeGuin's observation every workday, although as we look toward 2015, I think it appropriate to partially modify the idea to suggest that we are about to embark on a new stage of "tolerable" uncertainty. One uncertainty became very clear November 4 when the Republican juggernaut swamped the moribund Democrats, giving the GOP control of the Senate while also expanding the Republican lead in the House to its highest level since 1946. Notably, this will be the first time Republicans have controlled both chambers in almost a decade. What that might mean for housing finance reform is unclear, as a House bill pushed by Rep. Jeb Hensarling (R-Texas) never got out of committee, and a somewhat bi-partisan Senate bill stalled out. at said, the "tolerable uncertainty" of the housing market and all it encompasses remains with us for the foreseeable future. Given the difficulty of predicting anything coming out of Washington these days, I'm going out on a limb to speculate about what the shift could mean for some of our favorite housing finance policy topics . . . from GSE reform to the future of the FHA. GSE REFORM On the oft-mentioned topic of GSE Reform, the conventional wisdom would be nothing happens legislatively for two years. FHFA Director Mel Watt has previously signaled his desire to leave the legislative action to Congress but could continue to make administrative changes, including developing a 95 percent to 97 percent LTV loan product in an effort to help bolster more lending to working-class families. I have previously opined that the next president could have within his or her electoral mandate the "need for a level playing field for working families wanting to buy their first home" or words to that effect. e president-elect will demand some level of change to the current housing finance system and ask for a bill within six months. And I suspect he or she will get one. Unfortunately for all of us, I'm forced to predict that the next president will need to step up and lean into this issue, because it is doubtful there will be movement over the next two years. External events, including lawsuits stemming from revisions to the conser- vatorship agreements between Treasury and the GSEs, have given rise to groups like Investors Unite, who are fighting what has been the permanent suspension of their rights as shareholders. at might cause a movement toward some level of reform either through legislation, legal, or administrative action. Yet one could offer that the interests of these investors conflict with those of the American taxpayer, who both bankrolled and benefited from the GSEs during the crisis by covering the companies' losses to ensure ongoing liquidity to the marketplace. While I don't normally think of Vladimir Lenin and GSE reform, his quote from 100 51

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