Joe Pickett
President, Mortgage Bankers Association
Joe Pickett got an in-depth lesson in crisis management by watching Steve Ashley, the often beleaguered 1994 president of the Mortgage Bankers Association. While serving in that role, Ashley had the unenviable tasks of leading an industry whose business had dropped by nearly a third in one year, steadying his troops as HUD and Congress chanted louder for CRA-type regulations, and grudgingly pioneering the association's fair lending best practices agreement with HUD. It was a rough year and he was undoubtedly happy to pass the torch.
Pickett, who will moonlight in 1995 as CEO of BancBoston Mortgage Corp., is faced with some of the same daunting issues. Fortunately for him, the waters surrounding those issues will probably be somewhat calmer in 1995. Originations are expected to be about $730 million in 1994--about $400 million less than 1993--but the most tumultuous times for the industry appear with the mergers and acquisitions fervor finally falling off.
And a new Republican Congress, led by Sen. Alfonse D'Amato, R-N.Y., promises to hold hearings on CRA enforcement policies early in 1995 that could take the edge off proposed regulations. Those facts considered, Pickett's tenure is likely to be much more pleasing than Ashley's.
Dan Russell & Larry Dale
Directors of Affordable Housing for Freddie Mac and Fannie Mae
Forty-four percent by 1998. Whoa!
That number--the unconfirmed percentage of Fannie Mae and Freddie Mac's overall business that HUD wants the government-sponsored enterprises to ensure is dedicated to affordable housing--is intimidating. The actual performance goals HUD is expected to release sometime this summer may not be quite that ominous, but that uncertainty is probably playing greatly into Dan Russell and Larry Dale's plans for 1995 and beyond.
Both GSEs will probably offer another crop of affordable housing initiatives throughout 1995. Dale and Fannie got a jump on the year by giving its seller/servicers an early Christmas present in November by making its 97% loan-to-value program available to them all--the single most progressive low-mod program ever. Freddie's steps haven't been as bold, but the pace set by Fannie could force Freddie into more dramatic actions. Look for a Freddie 97% LTV program in 1995. Some think they may go even further, perhaps allowing their seller/servicers to offer "credit enhancements" for qualified low-income borrowers, i.e., 95% to 100% LTV loans with the cash down provided by the seller in return for more favorable pricing.
Allen Fishbein
Director, Centers for Community Change
Bankers and their lobbyists must have been ecstatic in 1994 when Deepak Bhargava and Chris Lewis, two housing industry activists with a knack for annoying bankers, bowed away from those duties in favor of new challenges. Their departure left Allen Fishbein as the most visible remaining consumer activist for housing issues.
Fishbein, who has been with the Centers since 1978, most recently focused attention on changes in the Federal Home Loan Bank System, where he wants to see HUD set tough statutory goals for community development lending. He'd also like to see new requirements on members' use of the system's cash window that is based on their community lending records.
Joe Ventrone
Majority Director, House Banking Housing Subcommittee
Who will influence incoming House Banking Committee Chairman Jim Leach and Housing Subcommittee Chairman Rick Lazio on housing issues? With both chairmen relatively inexperienced in housing issues and shaping legislation, Joe Ventrone, the new majority staff director of the House Banking housing subcommittee, will play a lead role. That role will be especially important now that President Clinton and the administration has joined the budget-cut bandwagon in general and has singled out privatization of FHA to symbolize his new image.
Ventrone's views on housing, particularly on FHA, have some mortgage industry lobbyists deeply concerned. Others, specifically private mortgage insurers and thrifts, share many of his views and admire his candor. Depending on which side of the fence you sit, he's either St. Peter or Beelzebub. One thing both sides agree on, however, is that he will play a key role in shaping housing and mortgage-lending legislation for the foreseeable future.
Ventrone, a grizzled veteran of the housing panel with 11 years experience--a virtual lifetime given incredible turnover in Congress recently--is also a former staffer in FHA's multifamily program where he toiled for nine years. He is a strong proponent of the private sector and is said to vigorously support the latest Office of Management and Budget proposal to privatize FHA. The new housing and community development subcommittee is likely to take on a uniquely Ventrone flavor.
His new key role in housing legislation is incredible in light of the fact that the thrift industry had to pull out all the stops just a few weeks ago to torpedo a substantive increase in FHA ceilings. But will his magnified presence mean a massive retooling of the 1994 housing bill that passed the House before stalling in the Senate? Probably not, mostly because many of the provisions in that bill were made by Republicans. But any provision even close to suggesting increases in FHA loan limits will not be included.
Rep. Rick Lazio
Chairman, House Banking Housing Subcommittee
New York's Rick Lazio will have to learn on the job. The Republican from Long Island, N.Y., is in just his second year in Congress and has been handed the job last held by former House Banking Committee Chairman Henry B. Gonzalez, D-Texas.
Lazio's views on mortgage lending are still relatively unknown, but sources say he is a strong advocate of the private sector. According to a Lazio aide, the privitization of FHA will also be one of the first issues his subcommittee will examine.
Although his congressional tenure has been short, his aides note that he isn't completely inexperienced. In the last session he helped author provisions designed to ensure the solvency of the National Flood Insurance Fund, including provisions requiring lenders to force-place insurance on homeowners in designated flood plains. He also crafted provisions to permit HUD to relocate public housing residents who fear retribution for helping police fight crime.
Thrift lobbyists said they are pleased he will be chairman and believe they'll be able to communicate with him. Other mortgage lending lobbyists hadn't formed opinions of him yet, mostly because his inexperience in housing issues has not put them in close proximity to him.
He is expected, at least initially, to adhere strictly to party lines, lobbyists said, joining the crowd of incoming freshmen and other relative newcomers on the Gingrich bandwagon. Some believe, however, that beneath that staunch conservative exterior lies the heart of a moderate.
Lazio comes from largely suburban Long Island, and his district has a strong need for affordable housing. He is was also one of the few Republicans to favor the controversial issue of funding the RTC Savings Association Insurance Fund.
Henry Cisneros
HUD Secretary
The rules have changed for HUD Secretary Henry Cisneros and his two most visible deputies, Nick Retsinas and Roberta Achtenberg. With the White House and members of Congress seriously considering radical budget cuts that threaten the existence of HUD--or at least a substantial portion of its programs, most notably FHA--the Cisneros agenda may be somewhat collared.
Does Cisneros follow through on many of HUD's proposals, which included some unpopular increases in spending for fair lending enforcement, in light of the burgeoning budget battle? Perhaps not. And since this soap opera will likely be played out for much of the first half of 1995, Cisneros will have rein in his troops to avoid controversy.
Another factor that could affect how HUD operates is an as-yet unanswered request by House speaker-to-be Newt Gingrich to put a moratorium on all regulations for the first 100 days of 1995. The delay is intended to allow agencies an opportunity to concentrate only on reviewing their programs for cuts. HUD is scheduled to release regulations covering a series of mortgage-related issues, most importantly Respa regs on controlled business arrangements and servicing disclosures. The Gingrich proposal could have the effect of handcuffing Cisneros' ability, albeit temporarily, to govern housing policy. He better get used to it.
Sen. Alfonse D'Amato
Chairman, Senate Banking Committee
As incoming chairman of the Senate Banking Committee, Alfonse M.D'Amato, R-N.Y., has vowed to put pressure on regulators to reduce their regulatory burden on banking institutions generally, and the pressure from the Department of Justice as well as regulators to impose tough tests for compliance with the Community Reinvestment Act. That pressure is expected to be rewarded quickly through deletion of several provisions of the proposed Community Reinvestment Act regulation.
Provisions likely to face the ax, perhaps as early as the first part of January, include language mandating that institutions' records on applications for small business loans include data on race and gender. Also likely to be deleted is a provision imposing severe penalties for noncompliance with CRA now handed down only for violations of safety and soundness and insider activities regulations.
Sen. Richard Shelby
Chairman, Senate Regulatory Efficiency Committee
While Shelby is still battling Sen. Phil Gramm, R-Texas, for head of the securities subcommitee, it is believed that gramm will ultimately win this battle, forcing Shelby to take a lesser role, likely as head of the regulatory efficiency panel.
Shelby is relishing his first opportunity to be in the limelight of a subcommittee chairmanship as a Republican after years of facing severe pressure in his home state for working with the "liberal" Democrats.
The banking industry is happy to have Shelby in the saddle and will seek to use a 1992 survey prepared for the Independent Bankers Association of America as the starting point for "reg relief II" as it is styled to follow up on legislation passed this year that reduces the regulatory burden somewhat.
But the fallout from the Orange County, Calif., derivatives fiasco, the desire of Banking Committee Chairman Alfonse M. D'Amato, R-N.Y., to focus on the Whitewater investigation and the fact that banking law changes are not a priority for the Republicans may mean that immediate relief for banks through legislation is a delusion.
