BLOG VIEW: Back when I was a kid in the 1970s, one of my favorite television programs was ‘In Search Ofâ�¦’ This weekly show, which was hosted by a very serious Leonard Nimoy, went around the world in pursuit of a wide variety of historical mysteries and peculiar phenomena that happily baffled the conspiracy-minded public. ‘In Search Ofâ�¦’ left no stone unturned: from Scotland's Loch Ness to Easter Island to the apex of the Himalayas to the Holy Land's ancient sites were scoured with each mystery under consideration.
Despite the diversity of mysteries it pursued, the program had one consistency: ‘In Search Ofâ�¦’ was notably lacking in offering any specific answers to the mysteries in its viewfinders. We never got to actually see the alleged Loch Ness Monster, nor did we ever learn just what happened to all of those missing ships and aircraft in the Bermuda Triangle or if Noah's Ark was really resting on some Turkish mountain. And in the rare instance when some sort of explanation turned up, it was often quite bizarre – particularly when a baffled and exasperated housewife in New Jersey was identified as possibly being the long-lost aviator Amelia Earhart.
I am reminded of ‘In Search Ofâ�¦’ because today is the opening day of the Mortgage Bankers Association's National Secondary Market Conference. If there were a mystery that lends itself to a full-throttle search, it would be the pursuit of the private-label market. But this also seems to be a mystery that is defying a solution.
At last year's conference, the big news was Redwood Trust's dramatic venture into private-label residential mortgage-backed securities (RMBS). One year later, the private-label market hasn't changed very much – Redwood Trust issued a second private-label RMBS offering earlier this year, but no one else is following its lead.
So what is it going to take to resurrect the private-label market? At the moment, no one seems to have a solid answer. The Obama administration has been running away from the issue of housing finance reform ever since it moved into the White House – it literally kicked the subject of reforming the government-sponsored enterprises (GSEs) down the road for two years before dumping a trio of options on Congress without any recommendation to pick one idea over another.
Nor has the Republican-dominated House of Representatives come up to the challenge. Its leadership is on a stridently quixotic quest to repeal every piece of Obama-blessed legislation passed by the previously Democrat-controlled Congress. Obviously, no one told the GOP that you cannot plan for the future if you are obsessively stuck in rehashing the past.
As a result, the inertia in determining the fate of the GSEs is having the exact opposite effect on the issue of housing finance: Fannie Mae and Freddie Mac are, by default, continuing to prop up the secondary market at the expense of the U.S. taxpayers. The private-label market, which should be the dominant force here, remains conspicuously absent.
I would like to say that our industry has the answers, but I am not hearing any positive input. In looking over the program for the National Secondary Marketing Conference, I do not see anything that addresses the elusive private-label market.
Instead, the conference covers almost every possible topic relating to secondary marketing except the resurrection of the private-label market. The conference gives the impression of the government-run GSEs as the new normal, when they should be seen as a transitory period away from reckless foolishness to a more stable housing finance environment.
And this is not just a problem that is limited to our industry – even the International Monetary Fund (IMF) has become impatient for change. As reported here on MortgageOrb the other week, the IMF gave the U.S. government a very rare public review in its just-published Global Financial Stability Report, bluntly stating that it is ‘clear that an overhaul is needed.’ However, the IMF does not offer a solution away from the current mess.
Thus, we are left with a complex puzzle that has, so far, eluded a sane solution. Well, maybe someone can tap Leonard Nimoy and his ‘In Search Ofâ�¦’ crew to gather together again and look into this mystery. And even if Nimoy and company cannot solve the problem, at least they can take credit for making some sort of effort – which is more than many people in Washington can claim.
– Phil Hall, editor, Secondary Marketing Executive
(Please address all comments regarding this opinion column to hallp@sme-online.com.)
(Photograph of Leonard Nimoy in ‘In Search Of…’ courtesy of Alan Landsburg Productions)
