Reform Must Keep the 30-Year Fixed-Rate Product Available


The 30-year fixed-rate mortgage must remain a viable product in the post-government takeover industry, the members of a panel agree at the Mortgage Bankers Associations annual convention.

This product is so ingrained in the American housing finance system and its removal would have unintended consequences, says Michael Heid, the president of Wells Fargo Home Loans.

The payment stability of the 30-year FRM makes a difference for the customers of McCue Mortgage, says its president William McCue. Almost all of its applicants are for Federal Housing Administration-insured loans and the certainty of the payment of the 30-year loan gives those customers comfort.

There must not be a focus on the end game when they recreate the mortgage market. Rather, everyone from industry through regulators, need to make this a fertile ground to try ideas. The result may be there are multiple ideas which are best for the market, McCue says.

There also needs to be a change in the mentality of policy makers that housing caused the second worse financial crisis in American history and it needs to remain in the background until forgiven, he adds.

We must turn the past on the past and create stability for the housing finance market and there is an opportunity for that in the coming year, says FHA commissioner Carol Galante.

Leave a Reply