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DS News April 2018

DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

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58 Peter Wallison is the first to admit that his beliefs on housing policy may be controversial. However, having served as White House Counsel under President Ronald Reagan, as General Counsel of the U.S. Treasury Department from 1981 to 1985, and now as the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute, he has no problem fighting for his beliefs at the highest level. Recently, Wallison took a bold stance by declaring the U.S. Treasury Department "rogue" in an op-ed for e Wall Street Journal. In the piece, Wallison voiced his confusion that the Treasury Department seems to be veering away from the Trump administration's overall focus on deregulation. In January, Secretary of the Treasury Steven Mnuchin stated that reform of the government- sponsored enterprises (GSEs) Fannie Mae and Freddie Mac was a top priority for the Trump administration, but cautioned that it was impor- tant that the government continue to support the mortgage market. During a Senate Banking Committee hearing, Mnuchin expressed com- mitment to maintaining the 30-year fixed-rate mortgage backed by a government guarantee. "I don't think the private markets on their own would support it. As we talk about GSE reform, we need to make sure we don't do something that would put that at risk." However, he also stressed the importance of "substantial private capital" being involved in any new system, so as to limit taxpayer risk. "If there is any guarantee, [it is important] that taxpay- ers are paid for putting that up, as opposed to explicit guarantees that weren't compensated in the past," Mnuchin said. Wallison's stance is rather different. "I think the most important thing to understand is that the only reason for the government to be involved in the housing finance system is to help low and medium income families buy homes," Wallison told DS News. After the U.S. economy and the housing market endured the traumatic Great Recession, developing comprehensive policies on hous- ing finance was a crucial aspect of reviving the economy. Now, between an administration that has taken a new stance toward financial policy and the continued fluctuation of the economy, it may be time to take a look at what regulations may need to be updated in the face of today's market conditions—controversial or not. To address this, we spoke to some of the industry's greatest leaders about the lessons they learned during the housing crisis, and how it's shaping their stance on financial policy today. CHARACTERIZING THE POST-CRISIS ERA Rep. Jeb Hensarling (R-Texas) has been one of the most outspoken proponents of reform- ing the GSEs, Fannie Mae and Freddie Mac, for some time now. During a December 2017 speech on housing reform, Hensarling didn't mince words. "e current system is rigid and risky, distortive and inefficient, and it devalues individual choice and inhibits long-term pros- perity. In other words, the hybrid GSE model is wrong. It is unfair. It is broken. It is irreparable. It cannot be saved, it cannot be salvaged, it must not be resurrected, and needs to be scrapped." "A better system would give all Americans the chance to become homeowners," Hensarling continued, "if they so choose and are qualified, in a way that encourages responsible mortgage lending and promotes long-term economic growth and stability." e Hon. Edward DeMarco served as the acting Director of the Federal Housing Finance Agency (FHFA) immediately follow- ing the crisis from 2009 to 2014 overseeing the C O V E R S T O R Y / N I C O L E C A S P E R S O N W I T H A D D I T I O N A L R E P O R T I N G B Y D A V I D W H A R T O N The importance of housing to the U.S. economy has contributed to the challenges of market structure reform. Industry leaders are opening the dialogue for change to drive economic growth and better homeownership across America. SPEAKING OUT STEVEN MNUCHIN United States Secretary of the Treasury ELIZABETH WARREN U.S. Senator 2013-2018

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