The following is an excerpt from Chapter 1 of Volume I of The Mortgage Professional's Handbook:
TIPPING POINTS: LESSONS LEARNED FROM THE MORTGAGE MELTDOWN
by David H. Stevens, President and Chief Executive Officer
Mortgage Bankers Association
I, like many other real estate finance executives, watched as the dominoes fell one by one. New Century, Ameriquest, Countrywide, Bear Stearns, Fannie Mae, Freddie Mac, Washington Mutual, Lehman Brothers, Wachovia, National City Bank, just to name a few. This was an alarming period with almost daily announcements of the next failure. It became so frequent for a period of time that we almost became numb to each subsequent headline. Yet, while many institutions failed, others, including the GSEs and the largest banks, were explicitly called out as too big to fail. This distinction, which invokes concern by some policymakers and legislators that their size provides both an enormous competitive advantage but also potential systemic risk to the nation’s financial health, remains a concern today.
Some months later, I received a call that I never imagined in a million years I would receive — the call to serve at the pleasure of the President of the United States. I firmly believe that helping families live and thrive in a warm home is the ultimate public service and it’s what we, as an industry, provide families throughout the nation each and every day. It’s the reason I became a mortgage banker 30 years ago, and now I was being called to serve families in an even greater way at a time when many were losing their homes. I was proud to answer the call.
I was confirmed by the U.S. Senate as Assistant Secretary of Housing and Federal Housing Commissioner in July of 2009, in the midst of responding to the housing crisis. Having been nominated by President Obama and asked to leave the private sector to join the administration was a move that made complete sense given the enormity of the crisis and the fact that I knew the content of the work was likely to be some of the most challenging I could ever experience as a mortgage finance professional.
Approximately three weeks into the job, I was called to a meeting in the Roosevelt Room of the West Wing in the White House for a housing meeting. It was the first time I had ever been inside the White House and there I was, entering the conference room across from the Oval Office, preparing to join the leaders of the most powerful nation on earth to discuss the housing crisis. I joined some of the greatest political and economic minds in the country — Treasury Secretary Tim Geithner, Austin Goolsbee from the Council of Economic Advisors, Larry Summers who headed the National Economic Council (NEC), Diana Farrel the brilliant number two from the NEC who ran most of the meetings with the President, Michael Barr from Treasury, Melody Barnes of the Domestic Policy Council, Jack Lew from OMB, HUD Secretary Shaun Donovan, and a variety of other key senior staff for housing policy from the White House and various key agencies. A few moments later while everyone was making conversation, the corner door opens and in walks David Axelrod, Rahm Emmanuel, and the President of the United States.
It was this very first meeting where I realized a very good lesson — industry knowledge matters. This was the meeting that elevated me as one of the “housing guys” — the person who could answer questions and provide insights about an industry that had played a large role in bringing the economy to its knees, destroying the wealth of millions of American families, and yet was a critical factor to any recovery. It became crystal clear when the President asked someone to explain what a warehouse line was, and the table grew silent until Diana turned to me and asked me to explain it. Three weeks on the job and President of the United States is staring at me for a clear explanation about a key factor in providing liquidity for funding mortgages. No pressure!
During my time inside the Administration, we did a lot of good work, but we also got some things wrong. We were creating programs and policies to address a crisis this nation had never faced in its history. While experts will evaluate this period in our nation with the benefit of hindsight, I can tell you as someone who sat at the table and actually participated in constructing some of the policies that resulted in many efforts to positively impact the outcome, that this was tough work in an untested environment with no models to reference, with work being done by very smart, committed, non-political individuals who, for the most part, shared a common goal — get the housing market back on track, protect as many families as possible, and make sure this never happens again. We were also under extraordinary scrutiny from Inspectors General, General Counsels, Congress, a wide variety of stakeholders, and the media. And we had to balance each solution with areas of concern for things like moral hazard and wasteful spending which made the task that much harder.
Read the rest of this chapter in The Mortgage Professional's Handbook!
David Stevens is President and CEO of the Mortgage Bankers Association (MBA). Prior to assuming this position, Dave served as the Assistant Secretary for Housing and Federal Housing Commissioner at the U.S. Department of Housing and Urban Development (HUD).
Dave has more than 30 years of experience in mortgage finance and has held several executive level positions in sales, acquisition, investment, risk management, and regulatory oversight.
He is well-known throughout the industry and is often quoted in the media as a key housing influential; serving as an industry authority on major mortgage finance legislative and regulatory issues. In 2013, Dave received the National Association of Hispanic Real Estate Professionals (NAHREP) Founders Award, presented to individuals that have distinguished themselves by their work in support of sustainable Hispanic homeownership to improve the quality of life for Hispanics in America.
He currently serves on the Hope Loan Port board of directors, the board of MBA Opens Doors Foundation, and as an advisory board member of the J. Ronald Terwilliger Foundation for Housing America’s Families.