Last week David H. Stevens announced he would step down as commissioner of the Federal Housing Administration, and this week its being announced that he will be named the next chief executive of the Mortgage Bankers Association (MBA). During his two-year stint in the Obama administration, he was a key adviser on housing-finance policies. He will succeed John A. Courson, a former mortgage banker who took the helm of the MBA in 2008. Mr. Courson’s departure is seen as a unexpected upheaval to a trade association that has had an extremely vociferous three year period.
The current housing crisis has hit the once-powerful trade association hard. The MBA has been distressed with once powerful lenders failing and others being swallowed by healthier rivals at low valuations. Indication of the times, last year the MBA sold its Washington, D.C., headquarters for a loss — after it struggled to attract tenants. The 10-story glass building bought at the height of the real estate bubble, depicts the current situation of the housing market: boom turned bust. The MBA has been forced to cut down its staff and it has seen its lobbying clout recede on Capital Hill.
In the WSJ Mr. Stevens said in an interview on Tuesday, “This is an opportunity to provide leadership and a clear vision, a renewed sense of direction for the MBA and its members.” That membership has stabilized over the last year, but is far from where it wants to be.
Now given the current climate, Mr. Stevens must reaffirm the group’s relationships with its largest members, some of which are growing dissatisfied with the MBA’s weakening influence in Washington. As important, he must also balance the tensions amongst the smaller banks that have a growing concern on the playing field they believe to be heavily tilted in bigger banks favor.
Mr Stevens won’t personally be allowed to lobby any former colleagues for at least two years under the administration’s ethics rules — we will also be forced to take additional steps to recuse himself from any contact with the MBA or its members on government business until he departs the FHA at the end of the month, according to a parsed statement from a spokesman for the Department of Housing and Urban Development. “We think it’s important to ensure that there’s not even an appearance of conflict of interest,” the spokesman said.
The 54 year old Stevens formerly held top positions at Wells Fargo & Co. and Freddie Mac. At the FHA, he had a first person view of key debates about the future of Fannie Mae and Freddie Mac and the construction of various mortgage-modification programs.
Mr. Stevens warns MBA’s members that they face a “trust deficit” and that it is imperative that they do more to help troubled homeowners and accept greater regulation from federal and state officials. At the FHA, Stevens inherited a government agency that was facing a theatrical rise in market share and loans. He urged to eject lenders that were not meeting the agency’s lending standards and raised fees borrowers must pay in order to rebuild the agency’s dwindling reserves. However, he resisted more sensational steps to increase borrowing costs for home buyers.
The theater in Stevens new position is that he most likely is going to contend with his former administration on a number of critical policy debates. A glaring example is “cramdown”, which is efforts backed by the Democrats and the Obama administration that allows judges to restructure mortgage debt through bankruptcy protection. As it currently stands, the industry is staunchly against efforts that could require banks to write down mortgages as part of any settlement over foreclosure abuses.