Ron McCord, the new president of the Mortgage Bankers Association of America, hailed Fannie Mae's decision to stop asking lenders to buy back performing loans as a "big plus" for the mortgage banking industry.
Speaking at a breakfast before the opening general session of the trade group's 83rd annual convention on Monday, Mr. McCord said that Fannie Mae's decision, announced last week, will put pressure on rival Freddie Mac to follow suit.
The MBA, which has been criticized by some members in the past for not moving quickly enough to stand up for the industry's best interests, played an active role in lobbying Fannie Mae, formally the Federal National Morgage Association.
Mortgage bankers had become increasingly dismayed in the last year with the increased use of credit scoring models by Fannie and Freddie in evaluating performing loans. The two agencies examine lower-scoring loans more closely and ask lenders to buy back those that do not meet standard underwriting guidelines.
Warren Lasko, executive vice president of the MBA, said at the opening session that credit scoring had been increasingly moving the industry toward risk based pricing, something that Fannie and Freddie have expressed reluctance to do.
Addressing the controversy over scoring, Mr. McCord said he believes marketplace pressures will force Freddie Mac, formally the Federal Home Loan Mortgage Corp., to cease its buyback requests as well. Still, Mr. McCord cautioned that the MBA is not forcing Freddie to make this decision.
"I'm not trying to run Freddie Mac's business," Mr. McCord said.
Nonetheless, the events of the past week demonstrate that the MBA has heard the complaints by some of its larger members about its ineffectiveness regarding certain high profile issues.
Mr. McCord said that he is "concerned when members feel we as a trade association are not doing our job." He conceded that in some cases the MBA has been slow moving, citing the fact that some larger lenders last year independently lobbied HUD regarding Respa issues.
"I can't disagree with what they try to do," he said.
Mr. McCord said that under his watch the MBA will take a leading role in pressing for a resolution regarding Respa. He said that remedying the fact that there are two competing automated underwriting systems will be another priority.
Currently, lenders can use either Fannie's Desktop Underwriter or Freddie's Loan Prospector. Mr. McCord admitted that it will be difficult to get the two publicly traded companies to reach a compromise on this technology issue but stressed that it was imperative to work towards establishing a single automated entry system.
"Two systems don't reduce costs in the long run," he said. "We really should have to underwrite loans only one time and move right to the closing table."
