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52 years ago could apply to our current state of housing finance: "ere are decades where nothing happens; and there are weeks where decades happen." In short, external events and politi- cal mass may collide and somehow create momentum for GSE reform and in the blink of an eye, what heretofore had only been abstract theory becomes reality. However, given the dynamics at play, it seems much more likely to assume that the current GSE state remains and many more American people grow increasingly outraged at their inability to realize the so-called American Dream. HOMEOWNERSHIP RATES Despite mortgage rates at near-record lows and house prices at affordable levels in many markets, the percentage of first-time homebuyers fell to 33 percent in 2014, which is the lowest percentage in almost 30 years, according to the National Association of Realtors. In most years, the percentage of first-time buyers is around 40 percent of home sales. e overall homeownership rate in America has fallen to its lowest level since 1995. According to the U.S. Census Bureau, the overall homeownership rate in the third quarter of 2014 stood at 64.4 percent, down from just over 69 percent. e homeowner- ship rate for minorities was notably lower, with African-Americans at 42.9 percent and Hispanics at 45.6 percent. Will 2015 present an opportunity to restore homeownership to at least pre-crisis levels, particularly for diverse communities who suffered a greater proportion of fore- closures? e opportunity certainly exists to make some gains in 2015, particularly if policymakers and industry leaders can find common ground to improve access to credit for those most in need. However, I am skepti- cal that this administration can make the case for homeownership without acknowledging that their policies have caused some degree of market contraction. Absent any honest assess- ment of the role of the government in stifling market recovery, I don't see significant change until the next presidential election. Further, demographics affect the trends, with an ever-aging boomer population and the enormous millennial gang descending upon the market. Is the decrease in home- ownership a reflection of these 80 million or so millennials who are overburdened by student loan debt and a challenging employ- ment market, simply not being able to or willing to make a commitment to homeown- ership? Or is it a result of tightened credit policy, often further constricted by lenders as they insulate themselves and their share- holders from repurchase risk by enforcing overlays to program credit policies? Might it be that potential homebuyers find it difficult to compete with institutional, international, and local investors on the acqui- sition of property? Most likely some combina- tion of the above, plus the emotional scars of observing parents and others suffer through the hardship of delinquency, foreclosure, and loss of their dreams have caused these young households to choose to rent or stay in an extended family household situation. HOMEOWNERSHIP OPPORTUNITIES FOR MINORITIES Immense opportunity exists to better serve our diverse populations, particularly the rapidly growing Hispanic segment. Household formations in the Hispanic com- munity are expected to grow considerably in the next decade and beyond. If we take into consideration potential immigration reform, millions of additional households may become eligible for financing. e potential positive impact to the housing market and our communities is significant. Affordability will be a central consid- eration for these and other households in America. e Federal Reserve's decision to end QE3 (Quantitative Easing) was expected and supported by many. After all, how long can the Fed artificially support the marketplace? While no surprise, the market must anticipate an increase in interest rates. While many suggest that an increase in rates will help to drive down home prices, the overall effect on access to credit for first-time homebuyers and minority homebuyers is unclear, particularly those most in need of low down-payment financing. REGULATORY ENVIRONMENT Let's turn to regulation of the housing industry and the fallout resulting from the crisis. Granted, additional oversight was appropriate and some level of punishment warranted. at said, further government action needs to be tempered. e aggressive legal and enforcement actions are now creating an environment where lenders are extremely cautious for fear of future fines and liability. At this stage, there is a need to balance the pursuit of bad acts and provide a path for good actors to take more risk with an opportunity to cure mistakes. Such balance is increasingly challenging for lenders in an environment where any error at any point in the loan origination process carries the potential threat of government litigation and civil money penalties to the tune of tens of "I am skeptical that this administration can make the case for homeownership without acknowledging that their policies have caused some degree of market contraction. Absent any honest assessment of the role of the government in stifling market recovery, I don't see significant change until the next presidential election."

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