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The fun and challenge of covering housing and mortgage reform

Lorraine Woellert Bloomberg News December 2013

Real people homeowners and renters Folks who make a living off those people agents, lenders, settlement companies, retailers, lobbyists Local and state governments taxers and regulators, lobbyists Wall Street lenders, securitizers, insurers, investors, servicers, economists, lobbyists

Washington regulators, politicians, GSEs, think tanks, advocacy groups, lobbyists

MBS, RMBS, CLO, CDO, REMIC, TBA, QM, QRM, HAMP , HARP, PLS, ARM, MID, PMI, OMG! Debt-to-income, ability-to-pay, loan-to-value Monetary, fiscal and economic policy Fannie v. Freddie v. Ginnie v. private label HUD, FHFA, GSEs, FHA, CFPB, NEC, FDIC, FED Mass-refis, g-fees, reps & warranties

(no end of sources, people & stories)

Homeowners, would-be buyers, renters, communities, retirees Civil rights and social justice groups who view housing as a basic right:

National Fair Housing Alliance, Council of La Raza, National Low Housing Coalition, National Housing Conference, state housing finance agencies State consumer affairs divisions, attorneys general, trial lawyers, U.S. PIRG, Consumer Federation of America, CFPB, National Community Reinvestment Coalition, AARP

Consumer protection groups:

Agents & brokers: National Association of Realtors, Zillow, Century 21, Sothebys, Berkshire-Hathaway, your local brokerages and army of real estate agents, many of whom are local politicians and donors. Do not underestimate the influence of this group Lenders: Mortgage Bankers Assoc. American Bankers Assoc., credit union associations, financial services firms. Heed that note on influence above Builders, contractors & labor: National Association of Homebuilders, unions. Again, influence Title & settlement companies, mortgage insurers, reinsurers: American Land Title Association, AIG and a league of politically active small-town lawyers. Big-dollar financial companies youve never heard of down to the guy who runs City Hall Appraisers, architects, landscapers, retailers: People who read your paper and care about this stuff

County, city and town governments rely on property taxes to fund schools, infrastructure Local and state judges oversee foreclosures Local law enforcement handles evictions States subsidize affordable housing through housing finance agencies, which sell taxexempt bonds and administer tax credits States oversee consumer protection and insurance regulation

Commercial banks lend money, service loans, securitize mortgage debt (package loans into bonds and sell them), trade and invest in mortgage bonds Financial Services Roundtable, SIFMA, American Securitization Forum Private-label issuers do all of the above without help of Fannie, Freddie or Ginnie Redwood Local and regional banks and credit unions make loans to consumers. Most sell those loans to Fannie or Freddie. Some stay on the banks books (portfolio loans) Mortgage insurers do what GSEs and FHA do, only without government support Genworth, Essent Servicers send bills, collect payments and manage foreclosure process. Some also manage borrowers escrow accounts to pay property taxes and insurance Ocwen, IBM, commercial banks Investors buy mortgages pensions, mutual funds, foreign governments, hedge funds, banks, you and me Economists!

Regulators and enforcement Fed, CFTC, FDIC, OCC, NCUA, CFPB, HUD, SEC, DOJ, IRS, Treasury, oversight committees Politicians and policymakers banking, tax and judiciary committees, White House GSEs government-sponsored entities Fannie Mae and Freddie Mac, overseen by the Federal Housing Finance Agency (FHFA) Ginnie Mae a cousin of Fannie and Freddie that pools FHA, VA and USDA loans

Lobbyists, lobbyists, lobbyists. Lobbyists.

(aka the fine print. Dont freak out)

MBS, RMBS = TYPES OF BONDS: mortgage-backed security, residential mortgage-backed security.

Mortgage bonds are pools of home loans sold to investors (securitized)

CDO, CLO, PLS = TYPES OF MBS = TYPES OF BONDS: collateralized debt obligation, collateralized loan
obligation, privatize-label security. All make it easier to invest in mortgage debt. More investors means more money floating around means more homebuyers getting loans means more homes sold. CLOs, CDOs and their exotic offspring also are known as derivatives

REMIC, REIT = WAYS TO BUY AND SELL MBS: real-estate investment conduit and real-estate investment
trust. Offer tax benefits to investors

TBA = SPECIAL WAY TO BUY AND SELL MBS: to-be-announced market, where Wall Street can trade
Fannie, Freddie and Ginnie bonds that dont actually exist yet

QM, QRM = SAFE MORTGAGES: qualified mortgage and qualified residential mortgage. Dodd-Frank Act
definitions of low-risk home loans. QRM rule meant to give lenders and securitizers incentive to keep skin in the game (share risk) or face lawsuits and regulators wrath

HAMP, HARP = AID TO HOMEOWNERS: Home Affordable Modification Program, Home Affordable
Refinance Program. Government programs to help troubled borrowers into easier-to-pay loans and help underwater homeowners get lower interest rates

ARM, option-ARM = TYPES OF MORTGAGE: adjustable-rate mortgage as opposed to a fixed-rate, 30- or

15-year mortgage. Not necessarily evil. The more exotic option-ARM is riskier because it gives borrowers the option of paying less every month

Conventional v. Jumbo = TYPES OF MORTGAGE: Conventional mortgages are backed by Fannie, Freddie
or Ginnie, which cap the size of loans they insure. Jumbos are high-dollar mortgages the agencies wont touch. Jumbos are securitized through PLS or held on portfolio


Debt-to-income, ability-to-pay, loan-to-value: Ways to gauge a borrowers risk of default

Here comes Mel Watt! Will mass-refi follow? Which GSE reform bill will win out? Will any? What if nothing happens? Whats happening as Washingtons role shrinks? Whos making money on housing now? How? Politics not as simple as left-right, GOP-Dem, urban-rural Its not just about single-family ownership Foreclosure mess is NOT over!

Lobbying is just gearing up

This story is LOCAL