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68 on at least 90 percent of the unpaid principal balance (UPB) of newly acquired single-family mortgages." For the 99 percent of the industry not involved in secondary markets or credit risk departments, this means the FHFA wants to make sure loan risk is spread out so taxpayers don't end up holding the whole bag of risk again, as they did nearly 10 years ago. e FHFA received 37 responses to its RFI from a variety of perspectives, including lenders, think tanks, mortgage insurers, and industry disruptors. Each had a different or slightly nuanced view. Reading through them reminds you that bakers like to bake and cooks like to cook. Each group knew their trade well and knew where they could mathematically squeeze out more efficiencies. e challenge is that changes in and around the housing market are making these equations more complicated with possibly only incremental benefits. CHANGE BEGETS CHANGE e FHFA, and by extension the GSEs, were created to help get people into homes. is means ensuring that, either through supplying capital or policies, homes can be affordable, attained fairly, and with a reasonably low amount of risk. However, the technical equations used to solve these issues now have to solve for new variables, and they are not always rational—human factors. e housing crisis 10 years ago created countless examples of economic ruin that we are still recovering from. Over the same time period, we have also changed drastically as consumers with the help of major technological advancements. ink about this: 10 years ago you likely had a flip phone, and had never heard of an iPhone. You used printed maps. e average internet speed was 1.9Mbps (that's slow). ere was no Zillow. In the meantime, the computer age took another leap forward. Personal webpages like MySpace gave way to Facebook. We begin researching EVERYTHING on the internet, sifting through content at a rate of 7 seconds per page. As a culture we began to adopt technology at a rate never before seen in order to consume more information quicker. A short decade later, we have an entirely new consumer mindset. e modern homebuyer, regardless of age, has adopted a "millennial- mindset" where everything must be mobile, technologically simple, and at a fair value. ey rent music, lease cars, and rent homes even if they could afford to buy. Increasingly, mobility and flexibility are valued more than permanence and ownership. It might seem nomadic, but this lifestyle choice gives potential modern homebuyers more control, another key marker of the technology age modern mindset. So, what does this change mean for the housing industry? Interestingly, the American Dream is still alive and well in the United States. Eighty-three percent of millennials believe owning a home is an important part of their personal American Dream, according to ValueInsured's Modern Homebuyer Survey released in January. But they want to own a home their way, not their parents' way—simpler, fairer, more mobile, more responsibly. One extreme take on this modern homebuying trend is tiny homes. ey are affordable even without loans involved they are modest befitting the social priority of millennials, and they are even on wheels. But let's be honest, modern homebuyers don't really want a tiny home. What they want are affordability, fairness, and flexibility. e FHFA has tried to address these new priorities somewhat by allowing the GSEs to open the credit box with programs that include parent gifting and acceptance of multi-generational incomes. TRID, the TILA-RESPA Integrated Disclosure rule, has forced the industry to evolve technologically, driving efficiency and choice. But in all of this, the industry is trying to change from within by tweaking what has been done in the past. Another key objective of the FHFA's RFI was "scale." But simply repackaging existing solutions will not float all boats and expand the market. ACHIEVING THE TRIFECTA OF AFFORDABILITY, FAIRNESS, FLEXIBILITY e industry is ripe for innovation. You can better and more objectively look at the FHFA's RFI submission if you add consumer needs to "The FHFA received 37 responses to its RFI from a variety of perspectives, including lenders, think tanks, mortgage insurers, and industry disruptors. Each had a different or slightly nuanced view. Reading through them reminds you that bakers like to bake and cooks like to cook. Each group knew their trade well and knew where they could mathematically squeeze out more efficiencies. The challenge is that changes in and around the housing market are making these equations more complicated with possibly only incremental benefits." 68

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