WASHINGTON — Sen. Elizabeth Warren (D-Mass.) told a meeting of housing finance executives Tuesday that existing housing finance regulations need to cover mortgages written in normal markets as well as booming markets.
Warren, considered the designer of the Consumer Financial Protection Bureau – spoke to a standing-room-only audience at the Mortgage Bankers Association's annual meeting at the Washington Convention Center.
She praised the existing Qualified Mortgage regulations for helping to introduce a level of accountability into the mortgage origination process which, she said, history has shown can be knocked off track by the moral hazard represented by incentives to issue mortgages without sufficient care.
But Warren suggested that when the U.S. housing market returns to a boom time – and it will, the Massachusetts Democrat said – originators will make non-QM loans and other firms will bundle them into securities that will be sold to investors.
“We may need to look how existing QM rules could be strengthened for the boom markets,” she said.
Warren put her comments about GSE reform into the context of the housing crisis and how it came about, a process she said independent researchers had left largely with private label securities originators and sellers and not with the GSE' and their affordable housing goals.
Warren claimed the affordable housing goals had been made scapegoats for the crisis by opponents “who have wanted to get rid of them for years,” adding, “It's time to put down that red herring.”