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» VISIT US ONLINE @ DSNEWS.COM 63 banks to hold on to CLOs in order to gain access to much- needed capital. e president seems unwilling to touch what many describe as his crowning legislative achievement, threatening to veto any changes that reach his desk. Maxine Waters (D-California), the ranking Democrat on the House Committee on Financial Services, vowed to continue the fight and called for regulatory expansion in the final two years of the president's term. "e president's pledge to protect Wall Street reform is even more critical in the aftermath of recent Republican efforts to chip away at the law and return to the lax policies that brought our economy to the brink of collapse. It's clear the president understands that the best way to ensure we continue to make positive economic progress is through strong oversight of Wall Street and an even stronger consumer watchdog." A LOOK TO THE FUTURE e Phoenix speech was to formally announce that the president had instructed the Federal Housing administration (FHA) to lower its mortgage insurance premiums down from 1.35 percent to 0.85 percent, a move that the Administration estimates is expected to save new homebuyers an average of about $900 per year in mortgage payments. e president argued that the move will help the economy as a whole and not just housing. "If they're saving $900, that's money that's going to be going throughout the economy," Obama said. "Over the next three years, these lower premiums will give hundreds of thousands of more families a chance to own their own home. It will help making owning a home more affordable for millions more households overall in the coming years." Castro defended the move in January during a speech at the National Press Club in Washington, D.C. "is is a common sense step—FHA's premiums will still be 50 percent higher than pre- crisis levels," Castro said. "is premium change only makes an FHA loan more affordable for qualified families. All other FHA requirements will remain the same, including verification of a person's ability to pay. Families still have to qualify for an FHA loan—but when they do, they will find a more affordable path to homeownership waiting for them." Reaction to the announcement ran the gamut within the housing industry with the National Association of Realtors enthusiastically endorsing the cut while several housing experts doubted that it would make much difference at all. "e Financial Services Committee is already planning to bring Secretary Castro before our members to question him about the poor financial condition of FHA, which President Obama is apparently about to make even worse," Republican Texas Congressman and Chairman of the House Committee on Financial Services Jeb Hensarling said in response to the announcement. "e spirit behind the reduction may be well- intentioned, but I have to wonder if the administration isn't being overconfident in its estimate of the impact of this change," Five Star Institute President and CEO Ed Delgado said. "Taking their savings figures at face value, I'm not sure a $900 savings moves the needle to bring enough homeowners into the market to justify the hit taken to FHA's capital reserves." For his part, Sharga believes that lowering the insurance premiums will result in only a "miniscule" risk to taxpayers, but the impact it will have on home sales will be minimal if the administration's estimates come to pass. "e administration estimates that 250,000 people may be able to buy a home due to the reduction over the next three years," he said. "If they're correct— and frankly, this administration has always overestimated the impact of its mortgage and housing-related policies—those extra homebuyers will add approximately 1.6 percent more home sales than what's already being projected. More likely, we'll see the FHA's share of loan volume go up a little bit, as their offerings will now be competitive versus conventional loans, especially for sub-729 FICO score borrowers." As is the case with most two-term presidents, the Obama Administration seems to be in legacy protection mode heading into its final two years. ey have a compelling case. When President Obama took office, the country was in the midst of the greatest financial crisis since the Great Depression. Six years later, we are now a good deal down the road to recovery. ere is plenty of spin to be had on both sides of the political spectrum. e question remains: Would we be this far down the road if a different administration with a different set of policies were in power? Would we be even further down the road —or perhaps not as far? COVER STORY INDUSTRY INSIGHT REGUL ARTORY INSIGHT SUCCESS FORMUL AS WHAT THEY'RE SAYING

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