In a new episode of the HousingWire Daily podcast, host Sarah Wheeler interviews Bob Broeksmit, president and CEO of Mortgage Bankers Association (MBA). The couple discusses the latest developments in private equity banks (IMBs) during the election, a review of Federal Housing Administration (FHA)’s 203(k) loan program — which allows homebuyers to include repair costs in their loans — Basel III regulatory proposals and more.
Broeksmit begins the discussion by sharing his views on Republican and Democratic interest in the housing market after attending bipartisan meetings this year. He says putting housing at the top of the national agenda is a big step in the right direction for the industry as a whole. But Broeksmit also expressed skepticism about Democratic presidential nominee Kamala Harris’s mortgage relief proposal, which she sees as unnecessary due to the existing FHA loan programs with minimum down payments of 3.5%.
He says the industry’s problem is more about supply than demand, and he likes Harris’ policies to encourage new construction across the U.S. Wheeler chimes in and says the pain of low housing supply has reached The White House after years of miscommunication.
Next, the duo discusses the FHA 203(k) changes and the implications for the entire housing supply. The problem with the 203(k) plan, according to Broeksmit, was the pre-funding limit of $35,000, which wasn’t enough to really help homebuyers. Recently, the amount has been raised to $75,000, and buyers can finance broker fees. The program promotes innovation by encouraging consumers to renovate old buildings and add them to the fold.
“We are very interested in this as a way to bring tired houses back to good condition in a cost-effective way through the FHA program to get homeowners to do this work,” said Broeksmit.
Next, Wheeler asks Broeksmit to share his perspective on the latest new Basel III proposal and why it’s beneficial for the entire mortgage industry. Basel III is a set of proposed regulations designed to improve regulation, supervision and risk management in the banking sector. It aims to help banks survive economic crises and ultimately provide more capital to qualified borrowers.
Basel’s comprehensive re-proposal compensates for what Broeksmit calls unnecessary changes, or “gold-plating,” of capital requirements to levels 20% higher than already required. The first proposal would have made banks stop giving loans to low-income, minority and first-time home buyers. But without unnecessary gold plating, all home buyers have a better chance of getting bank financing, he said.
Wheeler and Broeksmit continue to examine how the great housing market affects IMBs. Broeksmit explains that high interest rates have an impact on these lenders by making it difficult to start mortgages. The Federal Reserve The rate cuts will make life easier for IMBs looking to offer more money this year, and he expects more rate cuts beyond the 50 basis point cut announced this week.
To close the discussion, Wheeler asks about the impact of artificial intelligence on the IMB community and whether the industry plans to embrace a new technology-focused environment. Broeksmit says leading IMBs are already using AI to identify potential buyers and refinance. He believes that using AI for these purposes is essential to maintain portfolio and service quality.
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