Which leaves one time for chimerical thoughts that have little grounding in reality.
Bear with me.
Yes, I know, the political current thinking is they ain't going back to anything that they were. (This is an August mental exercise only, not an expression of any current Washington reality.)
But here goes: the Feds, the US taxpayers, us folks, are about to get their money back, early in 2014 ($187B), and they (us) will STILL have a claim on 80% common stock warrants of the two.
This means, again just for fun, that if the government spun the companies back out, a la AIG, taxpayers could have a claim on 80% of $270B, or:
Which means taxpayers would receive, all in, $187B plus $216B, or over $400B.
Don't I know that. I live inside the Beltway, after all.
This is only an illustration of cost/benefit thinking. Was the Iraq invasion worth it? Maybe. Setting aside the human lives, was it worth an expenditure of $1.5 Trillion? It's a good question--what else could the US have done with that money?
Is killing Fannie and Freddie worth it? Could be. But is it worth $216 billion of real money?
Don't ask me. I'm on vacation.
The only thing I’ll add to my friend’s wonderful fantasy is that the real cost will be far greater when a politically driven Congress tries to implement its “square peg in a round hole” untested mortgage finance model, and scrambling all of the mortgage finance eggs, while the President wistfully talks about all of the new family formations who will need housing.
Fannie Mae Senior Vice President for Government and Industry Relations (1983-2004)
Board Member at the Fannie Mae Foundation
“The credit crisis will have been very costly for banks -- or bank shareholders, to be more precise -- but the mortgage market will remain a source of enormous profits and opportunity for major banks. All the more so if the Obama administration is successful in pushing through its newly unveiled plan to wind down Fannie Mae and Freddie Mac. After all, not many companies earned more than JP Morgan's $6.1 billion in the second quarter, but Fannie was one of them: The mortgage agency reported a whopping $10.1 billion profit this morning.”
- The Motley Fool -
Ideology drives debate on mortgage reform
WASHINGTON (MarketWatch) — President Barack Obama decided this week to lead from behind on housing finance and it looked a lot like trying to catch up.
The conventional wisdom is that Congress and the White House had to wait for evidence of a solid recovery in housing before rocking the boat with talk of reforming the mortgage market.
That time has come, apparently, with home prices gaining and housing starts generally on the rise.
So the president went to Phoenix, one of the markets hardest hit by the housing bust, to celebrate the recovery and to endorse a bipartisan bill in the Senate that wants to “wind down” the government-owned financing institutions that guarantee and securitize most of the mortgages in this country. Read Obama’s comments.
There’s no question housing finance needs reform, but it will prove difficult to decide the fate of the two companies, Fannie Mae FNMA +2.60% and Freddie Mac FMCC +2.11% , without resolving the controversy about the role they played in creating the financial crisis — and that means a full-fledged ideological debate.
There is little doubt that hubris and corruption led to empire-building and other abuses at the two institutions.
But the Republican narrative of the financial crisis seeks to lay the entire blame for the housing bubble on Fannie and Freddie, which had become Democratic fiefdoms, exacerbated they say by pressure from the Clinton administration and Democratic lawmakers (above all, they say, former Massachusetts Congressman Barney Frank) to promote low-income homeownership.
In this fashion, the Republican narrative seeks to exculpate the banks, whose boundless greed led them to lower lending standards and push mortgages onto people so that these loans could be bundled into toxic securities for unwitting investors at home and abroad. Read the report of the Financial Crisis Inquiry Commission.
The reason this debate needs to be resolved is that winding down Fannie and Freddie and eventually getting the government out of the mortgage business would leave the field to those same big banks that created the bubble in the first place.
Because the administration has neglected this issue for so long, the Republicans have assiduously planted their version of events in public opinion and will play on it to end the government role in mortgages as quickly as possible.
For Republicans, this means the government has no business subsidizing low-income families to buy homes; they should rent.
Even liberal blogger Matt Yglesias appeared to echo this narrative when he mused this week, “It’s a bit strange to come out of a massive crisis with its origins in the housing sector and the cult of homeownership, and come out of it with a reform agenda that very much doubles down on that very same cult.”
But to impute a “cult of homeownership” to this country as if it were a specifically American obsession ignores the fact that the U.S. has only a middling rate of homeownership compared to other industrial countries.
In a list compiled on Wikipedia, the U.S. ranks 16th out of 25 major countries, behind Belgium, Spain, Australia, the U.K. and numerous others, with only a 65% rate of homeownership compared to 97% in top-ranked Bulgaria and Lithuania. A less current ranking in a 2011 OECD study is similar,
Conservatives will be quick to point out that these higher rates of homeownership are achieved without government involvement and without 30-year fixed-rate mortgages.
It may be that is where the U.S. should go, too, but we’re not there yet and we can hardly change a system decades in the making overnight.
In every country, homeownership is rooted in the culture and social structure, making comparisons and specious correlations (look, Germany has only 42% homeownership and it’s the strongest economy in Europe) largely irrelevant.
The Senate bill introduced by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner calls for creation of a new regulator, the Federal Mortgage Insurance Corp., to replace the Federal Housing Finance Agency and to keep the government involved with an insurance fund instead of Fannie and Freddie’s underwriting and guarantees.
But Moody’s Analytics cautions that the bill — which allows the same institutions to originate mortgages, securitize them and collect the private capital needed to get the FMIC guarantee on the securities — could lead to domination of the mortgage market by the megabanks that brought us the financial crisis.
“The risk is that the Corker-Warner system could become dominated by large financial institutions,” says the Moody’s paper, prepared by chief economist Mark Zandi, “potentially limiting competition and increasing worries about too-big-to-fail.”
Given the tardiness of the Obama administration in addressing this issue, it’s virtually certain any actual reforms will be left to the next president. And with Fannie and Freddie now delivering fat profits to the government, Congress may be inclined to tackle more urgent matters.
In the meantime, the ideological issues driving the debate need to be discussed openly and fully, not with code words and blinkered assumptions.
How one discredited “mortgage expert” from the American Enterprise Institute launched an ongoing disinformation campaign to destroy a successful government program that helped stabilize the mortgage markets.
Much of the brouhaha concerning the fate of the Federal Housing Administration can be traced to the actions of one dishonest man, a crackpot who is treated with utmost deference by the current Chair of the House Financial Services Committee and by friends in the media.
Genesis of the Disinformation Campaign
As recently as last September, the House was capable of passing a piece of legislation, known as the FHA Emergency Fiscal Solvency Act of 2012, with a lopsided bipartisan vote of 402 to 7. The Senate version of the bill, sponsored by Pat Toomey, was co-sponsored by Richard Burr, Kay Hagan and Mark Warner. It seemed likely to pass in the Senate as well, until December 13, 2012, one day after The New York Times published a favorable story on the crackpot research of Edward Pinto of the American Enterprise Institute. On that date, the bill was sent back to Committee to die.
According to two knowledgeable sources, neither of whom are Democrats, Pinto was lobbying in the Senate to kill the bill, and he persuaded Sen. David Vitter and two other GOP senators to do just that.
Whether or not he had a hand in killing the legislation, one fact is indisputable. The only reason why anyone pays attention to Pinto’s disinformation campaign is because last year’s bipartisan bill died. And the only reason why anyone would take Pinto’s work seriously is if that person were ignorant of the subject matter, or shared Pinto’s contempt for the truth. His campaign went into overdrive on November 16, 2012, the day HUD released the latest annual actuarial study of FHA’s mortgage insurance portfolio. Right away, Pinto reveals his duplicity.
A Profound Misunderstanding of an NPV
FHA’s annual actuarial study is primarily a net present value calculation, prepared by an outside consultant, of the insurance in place as of July of the current year. The NPV, the 2012 portfolio had an NPV of negative $13.5 billion, a considerable downward slide from the 2011 portfolio, which was valued at $1.19 billion. The primary reasons for the slide were traceable to revised assumptions, which pertain to cash flows extending more than 30 years, and to a different methodology for calculating the NPV, used by a newly hired consultant.
The NPV number refers to a static portfolio in liquidation, as opposed to the economic value of an ongoing enterprise. Pinto demonstrates an inability to differentiate between the two concepts, which is a pretty big deal. Because, notwithstanding all the controversy surrounding the mortgage crisis, there remains one universally accepted truism: If you don’t understand the difference between a static loan portfolio and an ongoing lending enterprise, you don’t know WTF you are talking about.
So, upfront, excuse me for belaboring some obvious points, which seem to escape Pinto. An NPV is a way to count your chickens before they hatch; it involves a number of forward-looking assumptions. As any kid who ever took a course in finance knows, if you tweak the assumptions, you can change the NPV dramatically. Similarly, there are different methods for calculating an NPV. Change the method, and you change the outcome.
(Many, including myself, would take issue with the consultant’s change from a stochastic analysis to a Monte Carlo simulation for 30-year projections, but that’s beyond the scope of this piece.)
Also, given the way that discounted cash flows work, changes that occur sooner in time have a bigger impact than changes that occur further out in the future. So, when loans perform better or worse than expected in the first year, the updated NPV of the same portfolio can change dramatically.
I know, you’re thinking, “Duh.” But lot’s of people miss this point, which is the dirty little secret of credit ratings for private label mortgage-backed securitizations. A synonym for NPV is “credit enhancement,” which, for the rating agencies, represents the margin for error, or safety cushion. Credit ratings are supposed to be stable over time, whereas NPVs for RMBS can be wiped out very quickly.
Static Loan Portfolios Versus Ongoing Enterprises
The NPV of any static loan portfolio is an estimate of the projected future income from performing loans, used to offset the projected future credit losses from defaulting loans. In FHA’s case, the static pool consists of insurance policies on mortgages, but the same concept still applies. If loans in a static portfolio prepay at a faster-than-expected rate, that shortfall in income is lost forever. The NPV goes down and the balance between good loans and bad loans irrevocably shifts for the worse. This is one of the key risks assumed by investors in any private label residential mortgage backed securitization.
And early prepayments are exactly what triggered the collapse of the subprime mortgage market in the late 1990s. A multitude of subprime RMBS portfolios were weakened when creditworthy borrowers refinanced at faster-than-expected rates beginning in 1998. Back in the 1990s, people had this quaint notion that an originator should have skin in the game. Many now-defunct subprime originators, like ContiFinancial and Southern Pacific Funding, acquired the equity tranches of deals securitizing the mortgages they originated. And with faster-than-expected prepayments, the NPVs of their bond holdings plummeted in value, which wiped out their capital, prompting banks to cut their credit lines and, viola, they went out of business rapidly.
This is really basic and really important: Rapid prepayment impacts the risk of principal recovery for private label deals in a way it does not for mortgage securities sold by Fannie Mae and Freddie Mac. Forget about any implicit or explicit government support, we’re talking about structure in structured finance deals. Private label RMBS are non-recourse, whereas the government sponsored enterprises guarantee their deals. Anyone who equates the credit risk diversification of private label deals with that of GSE securitizations is simply too ignorant or dishonest to be taken seriously.
Historically, the biggest trigger for rapid prepayments is falling interest rates. This is bad news for private label deals, but not for buy-and-hold lenders, which can easily replace early prepayments with new or refinanced loans. Similarly, if an investor in one GSE securitization sees the mortgage pool declining more rapidly than expected, he knows that the corporate guarantor is still generating new business, which enhances its ability to honor that guarantee. And since the GSEs extend credit during all stages of the real estate cycle, an individual investor is less concerned about credit losses from a mortgage pool that was booked at the wrong time.
The FHA, which insures mortgages, is like a balance sheet lender; it books new insurance policies on new mortgages when other loans prepay faster than expected. But the annual NPV of FHA’s portfolio, calculated by an outside consultant, Integrated Financial Engineering, Inc., assumes that FHA will never book a new insurance policy ever. Prepaid mortgages represent a permanent shortfall in cash flows. This fiction may be useful for analyzing the extant portfolio, but, again, the volatility in the different annual numbers is mostly traceable to revised assumptions and methodologies. And no one would confuse that valuation with GAAP accounting, which is based on the idea that you don’t book income or losses until the period when they actually occur.
The consultant calculated the annual NPV based on forecasts by Moody’s Analytics as of July 2012. The revised assumptions of lower interest rates, triggering faster prepayments, lowered the NPV by $8 billion. The revised assumptions of reduced home price appreciation lowered the NPV by another $10.5 billion.
As the consultant wrote, “We project that there is approximately a 5 percent chance that the Fund’s capital resources could turn negative during the next 7 years.” Such concerns were addressed in the FHA Emergency Fiscal Solvency Act of 2012.
Ed Pinto and His Cherry Picked Factoids
The same day that the actuarial study was released, Pinto rushed out his crackpot analysis to frame the media narrative. He said the FHA was masking its financial problems, because the latest interest rate forecasts, which were lower than those in July 2012, meant that the company was $31 billion in the hole. If you have no idea what he’s referring to, his words sound confusing, but not ridiculous.
Today the FHA released its FY 2012 actuarial study and as documented by FHA Watch, the FHA’s financial condition continues to deteriorate. This report should be cause for significant concern for Congress and taxpayers. As expected, the report shows that the FHA main single-family insurance program has a negative economic value of negative $13.5 billion. Even under generous accounting rules that no other financial entity gets to use, it is insolvent.
To make matters worse, this report is already obsolete and outlines a conservative estimate of the true losses incurred by the FHA. The projection of negative $13.5 billion is based on Moody’s July 2012 forecast projecting 10 Year Treasuries in CY Q3:12 to be over about 2.2% and climbing to 4.59% by 2014. Today the 10-year is at 1.57%. Under that same forecast, mortgage rates are projected to double to 6.58% by CY Q3:14.
The base case scenario ignores the Fed’s September QE 3 announcement. FHA has once again ignored intervening events that dramatically change the base case findings in their annual report. If the current low interest rate scenario were substituted, the FHAs FY 2012 is a negative $31 billion. Yet, FHA chose to cherry pick a piece of “good news”–the study projects that FHA will generate $11 billion in new economic value in FY 2013 and seize on it as evidence the 2012 deficit will be largely wiped out and all will be fine. This ignores the real negative $31 billion hole in 2012. No matter how bad things get today, FHA continually paints a rosy picture. The SEC would be all over a public company that played by FHA’s rules.
“Yet FHA chose to cherry pick…”? Hey Ed, projecting much?
Let’s get to the big stuff first. Pinto says that the “economic value” of the ” FHA main single-family insurance program,” is not negative $13.5 billion, but negative $31 billion, based on an interest rate outlook that was even lower than that forecast in July.
Pinto conflates a static portfolio at a point in time with FHA’s ”single-family insurance program”, which operates as a business. He says that FHA is dishonest in its presentation because the NPV, would change if it were based on updated projections from Moody’s Analytics, which show that interest rates are expected to be lower than previously forecast.
Again, under the methodology used by Integrated Financial Engineering, lower interest rates translate into faster prepayments, thereby reducing future income which is assumed to be lost forever. It’s sort of like assuming that every wage earner in his 30s who changes jobs or is temporarily laid off will never get another payroll check for the rest of his life.
Historically, about 60% of those loans that prepay because of lower rates end up refinancing with FHA.
And since interest rates have risen over the past few months, the outside consultant will need to reverse that year-old assumption that hammered the NPV. So, we can expect, at minimum, an $8 billion increase in the net amount.
Of course, Pinto ignores what he wants to ignore.
The same holds true for home price appreciation. The consultant assumed that housing prices would increase by 1% during 2012, which is why the NPV fell by $10.5 billion. As it wrote:
Moody’s July 2012 house price index forecast is very similar to the alternative scenario called “mild second recession in July 2011. Compared to its July 2011 forecast, Moody’s Analytics’ July 2012 local house price growth rate forecast is more pessimistic in the short run. In fact, the difference is that the 2011 “mild second recession” has a deeper short-term HPA drop in 2012, but rebounded back to exceed the July 2012 forecast by 2014 and stayed higher thereafter.
And once again, home price appreciation in the near term has a much bigger impact on the NPV than price appreciation further out in time. And the impact of price increases and decreases is huge, especially in terms of loss severity on defaulting loans. For instance, in California during 2005, loss severity subprime defaults was under 2%; in 2008 it was 70%.
As we know, Moody’s Analytics was way off in its short term home price forecasts. Home price appreciation, especially in the bubble states, has been quite robust over the past year. As the firm stated in June, “Housing has gone from a major weight on the economy to an important source of growth.”
Consequently, if the NPV were calculated today, using the current FHA portfolio and the current projected prices increases from Moody’s Analytics, FHA’s NPV would be positive.
This is but one part of Pinto’s multi-layered smear campaign against a program that has never relied on government support for 78 years. Pinto also cherry picks to pervert history and malign the dead, by deceitfully conflating decades-old examples of poor FHA management and oversight with the agency’s underlying business model. More on this later.
In 2011, the head of Moody’s Analytics reminded us how the FHA stepped in to help the entire economy:
U.S. home prices have fallen by more than a third; without the FHA, the decline would have been substantially worse. Many more homes would have been foreclosed, and private financial institutions would have faced measurably greater losses. Aggressive intervention by the FHA saved the housing market and the economy from a much darker fate.
Why are Pinto and his AEI cohorts so vitriolic in their attacks on FHA? Because, over the past 18 years, we have seen how private financing of higher-risk mortgages, especially in private label deals, has proved to be an unmitigated failure, whereas FHA’s long-term track record, which shows a foreclosure rate less than one-half that of subprime securitizations, has proved to be a self-sustaining success.
In the wake of the government take over of mortgage giants Fannie Mae and Freddie Mac, John Taylor, President/CEO of the National Community Reinvestment Coalition talks about how lower lending standards fueled the mortgage crisis.
A response to Ask President Obama Your Questions About Housing | The White House: http://wh.gov/lrfvc @whitehouse
Mr. President, I am the son of a retired Chrysler employee. My dad had been employed at Chrysler for 25 years before it entered bankruptcy. He lost his job and pension. At the age of 65, he now cuts and sells firewood to make it through the winters in Detroit. At the time, I was a homeowner in San Francisco, and my family suffered a substantial loss in our home value. Fortunately, we minimized our risk by saving money and using it to pay down the loan until we were able to refinance. However, others in our neighborhood were not as fortunate. The circumstances that led to their foreclosures were troubling. These events forced me to study the root causes that led to my dad's tragedy, and the subprime crisis, which then motivated me to study the problems associated with the conservatorship of Fannie Mae and Freddie Mac.
As the subprime crisis was evolving, banks were lending to people in our neighborhood with no credit. For instance, one buyer near us was foreclosed on within a month of his closing! This made it clear to me that the type of lending involved was fraudulent. Banks were originating mortgages and quickly selling them to companies like Countrywide, which is now owned by Bank of America. The new owners then bundled the mortgages into investment packages, illegally rated the mortgages triple-A and then sold them to investors. Like any product in the market, sellers are responsible for setting the expectation about the quality of their products, and must accept a return if the product does not, in fact, meet their label. I only later came to discover that these mortgages were packaged by some banks such as Bank of America, who has been at the mercy of your bailouts, and then rated these mortgages as triple-A. As you are aware, Fannie and Freddie have been in litigation against such banks for fraud, and to date, sued for hundreds of billions of dollars, and counting.
Mr. President, are you aware that Fannie and Freddie were the subjects of abusive behavior by loan originators, corrupt government officials, and Wall Street banks, which produced the personnel and circumstances that allowed the massive acquisition of low grade, privately labeled, subprime securities?
What exactly about Fannie and Freddie needs reforming, since their mortgages performed better than the rest of the market, and they helped stabilize the housing market since 2008?
What role did the FDIC play in preventing taxpayers from first loss, when the banks and insurance companies required billions more than Fannie and Freddie received in bailouts?
Wouldn't you agree that the same banks that were bailed out, have since been convicted of fraud, perpetrated against Fannie and Freddie? So, doesn't it make sense to focus our efforts on preventing fraud rather than winding down the GSEs?
Representative Jeb Hensarling of Texas, Senator Mark Warner of Virginia, and Senator Bob Corker of Tennessee are all seeking to pass legislation that would close the doors on Fannie Mae and Freddie Mac and sell off their assets to the highest bidder (Wall Street Banks). Doing this would destroy vital programs, such as the Freddie Mac Foundation, which helps thousands of struggling families through charitable investments, without using corporate or taxpayer dollars. Please share this post with your family and friends, and help restore these pillars of philanthropy to their communities, where they belong.
Did affordable housing goals for Fannie and Freddie play any role in the subprime crisis?
In 1992 Congress established the “affordable housing goals,” which were numerical targets for the share of Fannie- and Freddie-backed lending that went to low-income and minority borrowers. For years conservative analysts have falsely pointed to these goals as a catalyst for the housing crisis, claiming they pushed Fannie and Freddie to take on unprecedented levels of risk, creating a bubble and a bust in the subprime housing market that sparked the financial catastrophe.
That’s simply not true. A recent study from the Federal Reserve Bank of St. Louis found that the affordable housing goals had no observable impact on the volume, price, or default rates of subprime loans during the crisis, even after controlling for the loan size, loan type, borrower characteristics, and other factors. Federal Reserve Economist Neil Bhutta reached a similar conclusion in 2009, finding that the affordable housing goals had a negligible effect on Fannie and Freddie lending during the housing bubble.
That shouldn’t come as a surprise. Fannie and Freddie did not securitize any loans that met the industry definition of “subprime,” and the loans in their riskier securities—commonly identified as “subprime-like” or “subprime equivalent”—experienced delinquency rates that mirrored the prime market. The Alt-A loans that drove their losses were typically made to higher-income households and thus did not qualify for the affordable housing goals. While Fannie and Freddie did hold some subprime mortgage-backed securities in their investment portfolios—many of which qualified for the affordable housing goals—these investments lagged behind the rest of the market and made up only a tiny fraction of total subprime lending during the housing bubble.
As Americans Struggle to Climb Economic Ladder, Corker-Warner GSE Reform Effort Falls Badly Short
John Taylor, President and CEO of the National Community Reinvestment Coalition
This is a perilous time for opportunity in America. The housing crisis, which stemmed from a terrible confluence of malfeasant lending, Wall Street machinations, and regulatory negligence, has wiped out an enormous amount of community wealth. Millions have lost their homes, and millions more have been badly set back because of that crisis. And now our leaders' commitment to homeownership as an essential engine of economic mobility and opportunity for working people, and affordable housing at large, appears to be wavering. It is absolutely critical that our policymakers and leaders do not take the wrong lesson from this disastrous period in American finance. One persistent problem is that the housing crisis, which originated on Wall Street, continues to be wrongly blamed on Main Street, and poor people in particular. A series of ugly myths underlie that notion.
One of those ugly myths is that the affordable housing goals at Fannie Mae and Freddie Mac played a role in the housing crisis. The affordable housing goals require the GSEs to dedicate a certain percentage of their business to loans that support homeownership and rental housing for working class families. Some will try to tell you that those goals drove Fannie Mae and Freddie Mac to make bad purchases. This is plainly and demonstrably false. The truth is, controlling for risk characteristics, there is zero difference in performance between loans that meet the GSE affordable housing goals, and other loans in the Fannie Mae/Freddie Mac portfolios. That means that those who might try to tell you that affordable housing goals caused the crisis, or even played a role, are flat out lying. The truth is that the affordable housing goals play a valuable role in ensuring that the market serves creditworthy low-and moderate-income, rural, and minority borrowers with conventional loans.
And yet, the legislative high water mark for GSE reform thus far, the Corker-Warner GSE reform bill, contains no affirmative obligation to create access for creditworthy low- and moderate-income, rural or minority families to conventional home loans. The bill jettisons the notion that the secondary market system should be there to help serve those families. In doing so, it tacitly bows to these falsehoods about the GSE affordable housing goals. It would take the bad premise that the affordable housing goals caused the crisis and essentially codify it in law. And law based on myth is bad law.
The affordable housing goals generated $267 billion in affordable loans in 2012. In 2011, they generated $196 billion. In the Corker-Warner bill, the goals are eliminated right away, and nothing is put in their place to create an affirmative obligation for the market to serve a broad set of qualified borrowers.
The bill does provide some funding for affordable housing by assessing a fee on securitizations, but it contains no obligation on the part of the market to serve populations it has historically unfairly ignored. Even the funding mechanism it does include, which allocates the fees collected to the National Housing Trust Fund, the Capital Magnet Fund, and a Market Access Fund, has fatal flaws in the Corker-Warner bill. First of all, in 2011, the fees would have produced only $456 million at a minimum, and only $913 million at a maximum. Even more troubling, in the first five years after enactment of the bill, the fees do not have to be collected at all. In order to allow the funds to build up, the money generated by the fees might not be disbursed for another five years after that. That means there is a potential for ten years to go by without any public benefit at all. That alone should make the bill completely unacceptable.
There are many other deep flaws to the bill, including creating an arbitrary and unnecessary 5% downpayment requirement and 43% debt-to-income ratio limit for a mortgage to be eligible for a guarantee. These requirements would needlessly cut out a broad group of qualified borrowers.
Lawmakers and others need to understand that that endorsing this bill in its current form is endorsing a deterioration of opportunity. The fact that Corker-Warner has any traction at all is deeply troubling. Congress needs to do much better in charting out the future of mortgage finance in the United States. Throwing out our societal commitment to affordable housing and homeownership opportunities for responsible borrowers would be a grave mistake.