Clifford Rossi

Ignoring the effects of loan seller origination, sourcing, and servicing processes in a post-GSE secondary market could generate losses for taxpayers.

Lenders’ choices today are stark: Make Qualified Mortgage loans and risk being sued under the disparate-impact doctrine; make non-QM loans and risk being sued under the ability-to-pay-doctrine; or sell their loans to Fannie Mae and Freddie Mac.

The proposed treatment of mortgage securities and associated mortgage financing activities will constrain the sector while handicapping efforts to bring private capital back to the secondary market.

It’s not enough to manage liquidity risk, credit risk, market risk, reputation risk, regulatory risk, and legal risk. Banks must understand how these risks interact with and affect one another.

Lenders will be exposed to material put-back risk unless steps are taken to set industry standards for loan origination and processing.

A lesson for Congress in liquidity risk and market contagion.

Placing the Federal Housing Administration inside the proposed Federal Mortgage Insurance Corp. would provide singular oversight for balancing the post-GSE mortgage market and a fully federal guaranteed market for specified market segments.

Homebuyers’ use of flawed automated valuation models creates an artificial drag on values during recoveries, amplifies appreciation during booms and results in a wide bid-ask spread that delays or torpedoes sales.

Moving to an expected-loss framework would be a step in the right direction but entails a great deal of subjectivity, model risk and confusion for investors trying to compare institutions.

Having one risk expert on the board’s risk committee is better than none, but a bit like having a general physician in an operating room when a heart surgeon, oncologist or anesthesiologist is needed.

Strengthening the underlying loan manufacturing process and diversifying this risk in the secondary market remain critical to ensuring the integrity of the market.

A call to reassign GSE affordable housing goals to private securitizers ignores important changes in underwriting standards and the nature of federal mortgage guarantees in the conventional conforming market.

Banks have made an effort to address the many deficiencies in risk management that surfaced during the crisis, but their execution has been lackluster. They should have accomplished more in five years.

Nowhere has the piecemeal approach to postcrisis regulation been more apparent than with the CFPB's Qualified Mortgage rules and its aggressive stance on the fair-lending doctrine of disparate impact.

The decline of Fannie Mae and Freddie Mac could usher in a mortgage renaissance for community banks facilitated by their natural partner, the Federal Home Loan Bank System.

The $22.5 billion Structured Agency Credit Risk transaction serves its purpose, but shows how much more work and thinking needs to be done to redesign the housing finance system.

Securing an economically and fiscally sensible approach to housing finance reform is taking a backseat to entrenched political views on both sides of the aisle.

Applying the latest statistical techniques to measure operational risks lulls us into a false sense of analytic security and desensitizes management to the important qualitative aspects of controlling such exposures.

Buried in the Corker-Warner reform bill are two provisions that would give the Federal Home Loan banks an opportunity to play a major role in the new housing finance system.

Replacing Fannie and Freddie with a federal catastrophic reinsurance agency is smart. Putting the wrong leader (like a politician) in charge of the new mortgage agency would be disastrous.