Regional reduction in loan limits by US government agencies, government-sponsored enterprises preferable to across-the-board cuts, which would disproportionately harm states like California that have high housing costs, finds Milken Institute report
January 28, 2014
– C.A.R. Featured in Milken Institute’s New Report to Shape National Conversation on Housing Finance Reform
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) announces the release of a new Milken Institute report on housing finance, which features insights from C.A.R. CEO Joel Singer as well as prominent voices from banking, state government, and academia. Titled, “Rebuilding Housing Finance: Thoughts from California on Federal Reform,” the report features insights from a roundtable discussion during the 2013 California Summit held at the Milken Institute’s headquarters in Santa Monica, Calif. C.A.R. not only participated in the Summit but also played an integral role by helping to shape the special session on housing finance.
“To represent the voice of California REALTORS® and their interests at such a prestigious event is valuable to our members and ensures the challenges facing real estate professionals are part of an important conversation on finance reform, which will shape the future of our industry,” said C.A.R. President Kevin Brown, who attended the exclusive roundtable.
As cautious optimism returns following the burst of the U.S. housing market and legislators put forward various proposals on housing finance reform, the implications for California are considerable, given that the state represents a bellwether of the national housing market.
Panelists were convened to influence the national conversation, present the perspective of key California stakeholders, and build on areas of consensus. The California Summit, which C.A.R. sponsored, brought together the state’s foremost leaders in industry and finance, government, academia, and philanthropy to build relationships and brainstorm ideas for heightening California’s impact and advancing its interests.
The report features three key points of consensus among the distinguished panelists:
• Across-the-board reductions to loan limitations of government agencies and government-sponsored enterprises would disproportionately hurt states like California, where the cost of housing is high. Consequently, there should be a regional approach to such reductions.
• A transition in capital requirements for investors in mortgage-backed securities should not happen overnight, but the transition should indeed require investors to at least retain enough capital to sustain the losses suffered in the most recent crisis.
• In order to assist low-income and first-time home buyers, there is potential in creating a state-specific vehicle for affordable housing, such as a California guarantee fund.
There was, however, disagreement on the degree of systemic reform needed, the risk to taxpayers of an explicit government guarantee for mortgage-backed securities (MBS), and the correct mechanisms for future federal support for affordable housing.
Despite the disagreement, stakeholders and panelists at the Summit expressed a willingness to work through differences and combine the most sensible aspects of competing plans to create a stable, accessible housing system.
View the full report here.
Singer joined the following panelists to discuss housing finance: Claudia Cappio, executive director, California Housing Finance Agency; Dwight Jaffee, professor, Haas School of Business, University of California, Berkeley; Steven Mnuchin, chairman and CEO, OneWest Bank; and Phillip Swagel, senior fellow, Milken Institute and professor, University of Maryland School of Public Policy.
C.A.R.’s involvement at the California Summit was facilitated by the association’s new Thought Leadership program, an initiative that promotes intellectual engagement with a broad set of stakeholders and a set of strategies designed to elevate C.A.R.’s reputation.
Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 165,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.