“Two kinds of forces assist in recovery: natural and artificial. There are those who believe that natural forces primarily govern and that recovery is more in spite of, than because of, artificial forces. 

If people insist on demanding a remedy for the evils we are suffering today, the only sure response is 'Time.

That Wisdom... from the opening address delivered by Chairman W. Walter Williams at MBA's Annual Convention in….

…1934.

The address was called “Looking Forward” and in the 18 months immediately preceding, the following artificial forces had been set in motion:
The FDIC,
the Emergency Banking Bill,
and the Farm Credit Administration. 

Just like today, lots of measures were being debated and passed.

Chairman Williams went on to say, and I quote: “the whole Nation went speculatively mad !!

We all contributed to the breakdown. Let us be men enough to stand up and admit it.

Such an experience emphasizes the extreme importance of stressing once again the homely, timeworn virtues that go to build sound individual character.

While it may be true  that natural forces operating with time work steadily towards recovery, there is much that the individual can do to help or hinder those natural forces," end quote.

In those words, do we not hear an echo of John Robbins' call for integrity, and Kieran Quinn's admonition for a return to sound fundamentals?

What Mr. Williams couldn't have known in October of 1934 was that much of the recovery was already underway. 

In just a few months the country would see unemployment decline -it was still a ghastly 21%!, but it was finally going the right direction. 

The GNP headed up for the first time in years, also, by 7.7%. 

So why am I talking about 75 years ago when there's so much going on right now? 

To point out that it is very hard indeed to see exactly where you are when in the middle of such turmoil.

And that as difficult as times may be, we have gotten better at responding quickly and responding in the right way.

Compare today to the S & L crisis of the '90s, when upwards of 750 banks failed.

While we're not out of the woods, it's safe to say that we won't be seeing anything near that. 

The infrastructure remains ready. Ready to sustain long-term manageable growth.

We talk of restoring investor confidence, but it really is a two-way street --investors need to have realistic expectations of,
as well as confidence in, THEIR INVESTMENTS.

So it's up to everyone to set realistic expectations. 

A crisis caused by so many factors needs many actions to quell it.
Both natural
and artificial.

Let's look at the steps we've already taken, those under consideration now, and some new ideas with great promise.

In February, the economic stimulus package was quickly passed. 

Its temporary increase in conforming loan limits for Fannie, Freddie and FHA were a welcome boost for the secondary market.

In March, OFHEO, Fannie and Freddie announced their initiative to immediately bring about 200 billion dollars to the mortgage-backed securities market. 

As this audience knows, the lowered capital surplus requirement is estimated to free up about $2 trillion dollars for jumbo loans, sub-prime refinancing and loan modifications.

At the same time, the Federal Reserve took the unprecedented step of creating a temporary overnight lending facility for investment banks. 

Federal Home Loan Banks were granted extraordinary temporary powers in April.

They can now use Affordable Housing Program set-asides to help low income borrowers refinance or restructure subprime loans.
Aid could come in the form of assistance with down payment, closing costs and counseling costs.

Today, we are calling for more action.!!
 
Specifically --
FHA modernization and a strong
GSE regulator,
two items MBA
has championed
for years. 

We're also asking for legislation that would allow state housing agencies to issue tax-exempt mortgage revenue bonds for use in refinancing the mortgages of borrowers in trouble.

As for new initiatives, we are calling for the licensing of all loan originators, both brokers and actual lenders, and for the creation of a national database that can boost consumer confidence by holding all originators accountable.  This includes requiring a surety bond and audited financials of brokers. 

We are not alone in this --- a National Loan Officer Registry has the support of Wells Fargo, Bank of America and others.

I'm also pleased to announce that RESBOG has convened a Rescue Plan Task Force, whose job it is to formulate and disseminate principles and best practices that promote long-term solutions.
 
These comprehensive approaches will improve conditions overall. 

Its focus is not bail-outs, but overall market health, which can have a lasting impact beyond the crisis.

As FHA is modernized and takes on a greater role in this recovery, we need, as an industry, to take a good look in the mirror and admit that our own expertise with FHA has diminished as its share declined in recent years. 

I dare say many of our originators and underwriters need a refresher course, and those that don't will still need an update on the changes to FHA.  

That's where CampusMBA comes in.  I urge all of you to attend the panel discussion on changes to the FHA, and sit in on the excerpt of a CampusMBA course that will follow the discussion.  It will become clear how essential education on this issue really is.

Action, in the form of artificial forces, is needed, and needed quickly.  But there is a difference between fast action and ill-advised quick-fixes.
 
Action for action's sake alone is harmful. 

I applaud Congress for taking the appropriate action, so far, of eliminating bankruptcy cram downs from proposed legislation.

By rightfully leaving out this piece that some seek as a solution, we avoided a damaging quick fix.

However, there are still many active proponents of a cram down. 

MBA remains watchful and will continue to clearly and simply demonstrate the obvious ill effects that such a change to bankruptcy laws would have on the entire market. 

Nothing would subvert the work of the best natural force --TIME - more than allowing cram downs today. 

Now let me quoteour Chairman Kieran Quinn's  Senate Banking testimony.  “Even though current conditions seem bleak, there will come a day when non-GSE sources of liquidity will return to the secondary market.

When this happens, the primary market will become vibrant and once again blossom with innovations in housing finance products and services.”

Note the order in that last sentence. 

When non-GSE sources of liquidity return, then the market becomes vibrant again. 

It is homeowners who benefit most from the liquidity that results from investor confidence.

We must all work to restore that confidence.

We are all links in that chain.

“Time” indeed may be our only sure remedy.

Time for people to feel they've seen the worst of it.

Time for the market to re-adjust.

Time for investors to believe in the soundness of  products again.

With our prompt and prudent actions, we have given time a bit of a head start.