• Positive economic fundamentals including low mortgage rates at the national level and strong employment growth rates at the local level can explain much of the recent increase in house prices and much of the differentials in appreciation rates across the country.
• Investor activity has increased in certain U.S. housing markets, especially in the coastal areas. Lenders need to prudently monitor the level of speculative activity in such markets.
• Innovative mortgage products enable consumers to become homeowners. Mortgage lenders have provided a wealth of new products to meet the affordability requirements, cash flow needs, and risk tolerances of a range of borrowers. This range of choices is a clear benefit to consumers.
• Borrowers increase their risk exposure by choosing a product with low initial payments, but greater variability in payments over time. Borrowers need to carefully evaluate and monitor the incremental additional risk that these innovative new products represent.
• Regulators are doing their jobs by monitoring factors that may potentially be institutional or systemic risks, and by acting to balance the potential costs of these risks against the benefits of expanded homeownership. However, it is important to recognize that the mortgage market is fundamentally working: lenders are innovatively creating mortgage products that meet the needs of borrowers, while taking appropriate measures to manage risk.
• Policymakers and others should recognize that there are a number of factors that reduce risk to the housing and mortgage markets: a strong economy, growing household net worth, a strong banking sector, well-functioning and liquid financial markets, widespread securitization, alignment of incentives with respect to loan defaults, the widespread implementation of technology, and effective regulatory oversight all work to mitigate risk
  
  

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.