- 2 months ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Pete Mills, senior vice president of residential policy at the Mortgage Bankers Association, about GSE reform, legislative priorities and the impact of the government shutdown on housing.
To learn more about Trust & Will, click here.
Related to this episode:
MBA Annual Registration
https://www.mba.org/conferences-and-education/event/2025/10/19/default-calendar/annual-convention-and-expo-78770
Is it possible for the GSEs to exit conservatorship without market disruption? | HousingWire
https://www.housingwire.com/articles/is-it-possible-for-the-gses-to-exit-conservatorship-without-market-disruption/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
To learn more about Trust & Will, click here.
Related to this episode:
MBA Annual Registration
https://www.mba.org/conferences-and-education/event/2025/10/19/default-calendar/annual-convention-and-expo-78770
Is it possible for the GSEs to exit conservatorship without market disruption? | HousingWire
https://www.housingwire.com/articles/is-it-possible-for-the-gses-to-exit-conservatorship-without-market-disruption/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00Welcome, everyone. My guest today is Pete Mills. He's the Senior Vice President of Residential Policy at the Mortgage Bankers Association to talk about their priorities, the wins and the things they're still working on in this administration, and also to talk about MBA Annual.
00:15Before we dive in, I want to thank our sponsor, Trust & Will, for making this episode possible.
00:26Pete, welcome back to the podcast.
00:28I'm happy to be here. Thank you.
00:29We are happy to have you here. Of course, we are here at the Mortgage Banking Summit, and you are going to be on stage with me and with Rob Zimmer of CHLA here in a little bit.
00:38But I did want to pull you aside because I have lots of questions for you.
00:42Okay.
00:43So, okay, Washington, D.C. right now. It must be a really interesting place to be working.
00:47Well, we're not working if you're working for the federal government because there is a shutdown at the moment.
00:51So it's been a fascinating year, very different from the first Trump administration.
00:57We're dealing with a lot of new issues and a very different style.
01:01So it's been a very challenging time, for sure.
01:03And you guys have had some wins on advocacy.
01:06What MBA has been – we have the Trigger Leads Bill.
01:09Trigger Leads Bill was a huge win.
01:10The VA servicing bill was another big win.
01:12And the tax bill.
01:15There were a lot of issues in the one big, beautiful bill that could have impacted real estate finance negatively.
01:21There were a lot of concerns about pay-fors that would come out of the real estate finance side of things.
01:26Most of those stayed out of the bill.
01:28Things we wanted to extend that were in the original tax bill from 2017, we got extended.
01:33So it was a good outcome.
01:34Well, it is a good outcome.
01:35Yeah. So, you know, people have asked us, like, what happens to mortgages when the government shut down?
01:41We've written quite a bit about it.
01:42But from your perspective, what changes for people in the industry during this whatever – however long this transition time is when there's a shutdown?
01:50So it depends on the length of the shutdown.
01:53The good news is Fannie and Freddie are not impacted directly.
01:57So life goes on there.
02:00Some issues around flood insurance.
02:02Right.
02:02Lack of flood insurance.
02:03There is private flood insurance available in some markets, not in all markets.
02:07Cost of that can vary.
02:09So that can be a challenge.
02:12In the FHA, VA and rural space, very different.
02:14So FHA, direct endorsement, lender insurance programs, their technology allows most of FHA to go forward.
02:22Oh, nice.
02:22Without too much difficulty, if you have issues that require individual, you know, humans at FHA to provide guidance or some instruction on an issue, that's going to be a challenge.
02:33That can delay things.
02:35VA, again, mostly okay.
02:39But VA loan technicians get involved a little bit more in the VA process.
02:43That can be an issue.
02:45And then rural is the big challenge.
02:46Rural does not yet have a direct endorsement program.
02:49Loans are written by the rural housing staff.
02:53So things do tend to grind to a halt there.
02:56The other big one is the IRS Ives, the tax transcript process.
03:03That is open.
03:04That is something last shut down that we fought very hard to get that reopened and we were successful.
03:09So that was a big win.
03:10And this time around, it's staying open.
03:13So that's been a good outcome.
03:14But as things drag on, one of the big challenges is what do you do with federal employees that are applying for mortgages or getting ready to close?
03:23Oh, I didn't even think about that.
03:24How do you verify employment?
03:24How do you deal with a furloughed employee?
03:26So as this thing drags on and people start missing paychecks, it becomes a much bigger issue.
03:30I hadn't even thought about that specifically, right?
03:34You know, I know we wrote a story that, you know, I think we counted up like, or, you know, we looked at the data for all of the closings that could be impacted because of the flood insurance.
03:43Because that's not really related, right?
03:45I mean, that just, it expired at the same time as the government shutdown happened, but it's right in there.
03:51It would be nice to get a long-term reauthorization of the NFIP so that we don't do this every time there's a shutdown.
03:57It would be.
03:57That would be very nice.
03:58And that's been an advocacy priority for some time for the entire real estate finance industry.
04:03So we talked about some of the wins that you guys have had.
04:05What are you working on?
04:06What are your priorities right now?
04:08Obviously, anything related to the GSEs and whatever is being discussed now.
04:13I can't call it, I'm not sure it's release.
04:15I'm not sure it's not really an IPO because they're already publicly held.
04:21Secondary offering.
04:23So there's a lot going on in that space.
04:25I think a lot of uncertainty.
04:27Two real different tracks.
04:29One is what I call the deal track, which is how do you put together as an investment banker a release of two companies that are still in conservatorship.
04:38Yeah.
04:38The second track is what I call the sort of the market stability track where Treasury is very focused on however we do this, how do we do it in a way that doesn't disrupt the market?
04:47At some point, those two tracks shouldn't have to come together.
04:51Timeline for that is uncertain.
04:54I think if it's not baked by mid-year, then I think you'll wait until after the midterms.
05:01I think they'd want to be careful not to do something that could potentially be disruptive before a midterm election.
05:09I think one of the challenges for us as a news org covering this administration is like things happen fast and maybe without a lot of like, you know, oh, they didn't convene a committee.
05:20And, okay, we expect it to come out this way.
05:21But it's like it's a it's a true social post and that happens a lot, especially when it comes, it seems like with the GSEs.
05:28So we had the about a month ago, maybe it was even longer, where Trump posted something where it looked like he was at the stock exchange and and he had a November date on there.
05:38And that was just like shocking to me.
05:41I was like, November, is that even possible?
05:42So how do you deal with like the timing that might be happening with it's all very uncertain and we don't you know, we crave certainty.
05:51We crave process process gives us a way to get involved and provide our guidance and do our educational work on the policy issues to make sure that things don't disrupt the marketplace.
06:00So it does create some challenge.
06:02I will say, on the other hand, it creates impetus for action.
06:08So, you know, we've been in conservatorship for 17 years.
06:11It feels like this time it's real and something is going to happen.
06:16I can't tell you what.
06:17Again, these two paths are going to have to converge at some point.
06:20But the style does provide an impetus for action.
06:24I think that's a great way to look at it.
06:26I think there's also what any time that Trump does that, there's there's momentum around the issue again.
06:32It comes up again in a way that is really hard.
06:34If you were like, we've convened this, you know, committee, we're putting out a paper, we're doing research.
06:40Yeah, which, I mean, are all good things.
06:43And they're all important.
06:44They're all important.
06:45At the same time, you know, if you need a hype man, that's kind of what we've got for this.
06:50Yeah.
06:51Tell me a little bit about, like, when it comes to the GSEs out.
06:54What is a lot of people in this industry have never, you know, they haven't been in the business when the GSEs weren't in conservatorship.
07:01What do you think that they may not know about that?
07:07Well, look, the GSEs are sort of the foundation of the biggest part of a housing finance system.
07:12It's how we have deep liquid markets for 30-year fixed rate mortgages, freely prepayable, available through all market cycles in, as Bob Brooksbent likes to say, in 435 congressional districts around the country.
07:26If you've been in the business for a short period of time, you take that as a baseline.
07:34I've been in this business for 40 years.
07:37And the GSEs back in the day were much smaller.
07:40And the footprint was much smaller.
07:42It makes a huge difference.
07:43So that's what's at risk if we don't get it right, if we don't get the process right, if we don't get the transition correct, if we don't solve for will investors buy a trillion and a half dollars of MBS every year?
08:01Will they continue to trade hundreds of trillions of dollars over the course of a 12-month period in the secondary market, in the aftermarket for trading MBS?
08:13If we don't get that right, those things are at risk.
08:16So it's really important that we get it right.
08:18And I've been heartened by the fact that Treasury Secretary in particular has been very clear that whatever they decide to do, the North Star in all of this is going to be making sure we don't disrupt the market.
08:31We don't blow mortgage treasury spreads out in the process.
08:36We don't have an adverse impact on long-term mortgage rates.
08:40So about a year ago, I interviewed Bob.
08:43And his message at that time was all about safety and soundness.
08:47If this is going to happen, there's going to be a release or, like you said, whatever you want to call it.
08:51I'm not sure.
08:52But if we're going to pull them out of conservatorship.
08:55And I feel like MBA has been a very consistent voice on safety and soundness.
09:00And we have to think about, you know, a lot of people want to rush this for a lot of reasons.
09:04But when you're looking at what matters to the mortgage market, you're like, it has to be in a way that doesn't disrupt everything.
09:12So, yes, I think the short-term issue is mitigate market disruption.
09:16The long-term issue is making sure that sort of recap and release doesn't become rinse and repeat.
09:21We don't want to have the same thing happened pre-2008.
09:26So there's a lot of things in the regulatory space, robust capital standards, CRT.
09:33So you're laying off a lot of the risk.
09:34You're getting a separate view from the private sector of the risks that the GSEs are taking through the CRT process.
09:40That's really important.
09:41And uniform mortgage-backed security is an important piece to provide that depth of liquidity.
09:46All of these things are things we have to get right in the long run.
09:49Let's talk a little bit about because the GSEs do so much of the backing of mortgages now, right?
09:54I mean, they do so much.
09:55It's sort of a de facto regulator in the sense of, you know, their standards become the standards.
10:01And so we're in now a deregulatory environment, especially if you look at the CFPB, right?
10:07Ninety percent, literally decimated from its – and I think many people in the mortgage industry, you know, would think that's a good thing in many ways, right?
10:15There's been some overreach there.
10:17I know that on the other hand, it's like, oh, now you've got all the state regulators.
10:20When you think about if Fannie and Freddie aren't that, you know, aren't doing all the loans, aren't setting the standard combined with that deregulation, what does that look like?
10:28Potentially, it could be chaotic.
10:30And again, that's really important to the process.
10:34Yeah, they set standards.
10:36I think a big piece of this needs to be thinking about FHA's mission as the regulator of these two giant companies.
10:47Do they have the authorities they need to prevent a repeat of what happened in the run-up to 2008?
10:52A lot of good things have been done in the last 17 years to build an infrastructure, a regulatory infrastructure, but it's not a regulatory infrastructure.
11:01They've been doing it using conservatorship powers, conservative powers, and not their regulatory authorities.
11:07So how do you take things like a level playing field on G-fees?
11:13So in the run-up to the crisis, the GSEs each had market share deals with individual lenders at deep discounted G-fees in order to basically get market share.
11:24That was not a good outcome for the marketplace.
11:27Right.
11:28FHFA fixed that using their conservators' powers.
11:31They basically had the ability to stand in their shoes of the GSE's management and make these decisions.
11:35And they issued a whole series of directives over a decade and a half to address a lot of the issues that were problems pre-2008.
11:44How do we make sure when they come out that those aren't lost in the process?
11:49An excellent point.
11:50So create a regulatory and a supervisory framework for the FHFA to manage the GSEs when they get out.
11:57That's probably one of the most important things from a safety and soundness perspective to make sure we don't go through a repeat of 2008.
12:03This brings me to my next question, which is really about the mission of the GSEs, right?
12:08So President Trump recently put a post on social again, which was tying, he said he was urging Fannie and Freddie to boost home builders, right?
12:19And it wasn't clear to me like how Fannie and Freddie could do that if you're talking about single family homes.
12:24And also, you know, of course their mission, part of their mission is affordability.
12:28But it is one of the questions to me is like if they came out of conservatorship, what is their mission the same?
12:33Is it, are they there for the same reasons?
12:36So in this process, the GSEs charters are not changing.
12:41So the statutory mission on housing goals, the mission on duty to serve, those stay.
12:46When they come out, FHFA is no longer an independent regulator.
12:52They serve at the pleasure of the president.
12:54So I think, you know, the things like the footprint of the GSEs will change with the political parties, with each administration.
13:02And so that becomes an important factor as we think about things going forward.
13:06That mission obligation, that footprint that the GSEs have in the marketplace will ebb and flow with each administration as they come in.
13:13So that's something I think, particularly at this conference, where you have a bunch of IMBs here, they need to be on their toes.
13:18They need to be, you need to have a good non-agency execution for those times when that footprint is shrinking.
13:25They'll hopefully use sort of what we would call dials, not switches.
13:29So percentage of business goals are a challenge because if the market isn't producing exogenous factors, rate shocks,
13:39tax, things happening in the broader economy can impact the kinds of business that the market is going to produce.
13:46And if those are behind the goals, then it makes the goals excessively challenging to get and frankly distorts the market.
13:54People start managing their denominator instead of their numerator.
13:57So you create a whole lot of challenges in that respect.
14:00But the charters are staying the same.
14:04As I think about the mission going forward, you know, the tweet over the weekend about the builders,
14:11any conversation about supply is a good conversation because we've gone through a decade or more of underbuilding.
14:17So that's important.
14:18The GSE's role in that, I think the big focus there is some of the things that the administration is already doing,
14:25sort of carrots and sticks to get local government, state government to deal with permitting, zoning, planning,
14:33environmental reviews to streamline that process.
14:36I think there's a lot of work, good work that can be done there.
14:38The Road to Housing Bill does some of that.
14:40But the GSE specifically, we have been working with them on some construction to perm issues
14:45that we think can be very helpful to the market, in particular for independent mortgage bankers,
14:50for whom construction lending, they don't have a balance sheet.
14:53It's a challenge.
14:54So we've made some recommendations.
14:55There's some good conversations going with the GSEs on that front.
14:58And hopefully we'll get some C2P projects or C2P products that are more useful to the IMBs
15:05that are doing 65, 66% of the business right now.
15:08So that'll be an important, again, builder-driven benefit.
15:12Really, I think that's tremendous.
15:16You know, that is a way they can help.
15:17And I think it's one of the challenges that any administration has if they want to affect housing
15:22is that housing is super local.
15:25We know that.
15:26And the regulations and the policies.
15:28And it's really hard, no matter what the federal government wants to do,
15:32to really influence some of that.
15:33Right.
15:34Manufactured housing, modular housing, those are other areas where the GSEs, condos.
15:39Right.
15:39Where guidelines, there's only so far you can push the credit box.
15:43And there's already 3% down programs.
15:47Rates are where they are.
15:50I came into the business when rates were 18%.
15:53So when you hear high rates...
15:55I go, 6.5%, it's not that bad.
15:59But costs, the baseline cost of the home is what's out of whack.
16:05Right.
16:05So supply is important.
16:08Affordable supply is even more important.
16:09So things like modular condos are really important to the process as well.
16:13And if there are things that the GSEs can do to make that kind of financing easier to get,
16:17cheaper, so much the better.
16:19So, I mean, that's a path where I think that the president's tweet or post makes sense, right?
16:25Because I was like, I'm trying to figure out how this works with the GSEs and homebuilders.
16:30Right?
16:30Also, homebuilders are...
16:32You'd have to incentivize them to build more homes.
16:35They're not going to build more homes if, you know, every time they build a home,
16:37that's now competition for the home that they're going to build next week, right?
16:41So they're very picky about it.
16:43They don't want to lower prices next to the subdivision they sold at this level.
16:47That's a challenge always for the builders.
16:49And that's why they use other incentives, rate buy-downs and other things to incentivize purchasers.
16:55But if the federal government wants to incentivize builders to build more homes,
17:00that's to me where I'm like, how does that work?
17:03The GSEs are not the solution for that.
17:06I think that's more the tax code, for example.
17:09Okay.
17:09So what do you do when the government shut down, you know, when you're trying to advocate?
17:13What does that look like for you?
17:15So fortunately, there are essential employees in the key agencies.
17:20So there are people that talk to.
17:23A lot of what we do is we talk to our members.
17:25How is this impacting you?
17:26So our members tell us, hey, we're having an issue with...
17:30And this is what we did through COVID, for example.
17:31So much of the information that we had and the advocacy we did during COVID came from the bottom up.
17:38So when we have something like a shutdown, our members call us and say,
17:41we're having an issue with getting appraisal assignments.
17:43We're having an issue with, you know, one of the systems is down at FHA, not working.
17:49We take that information.
17:52We have people we can call because there are essential employees still at the key agencies.
17:56And we provide that information to them.
17:58And they don't want to inflict pain intentionally.
18:02So it creates action items to work through some of those types of exigent circumstances that come up in a shutdown.
18:09Interesting.
18:10I do think it's great that you're like, this is the opportunity to hear from your members what you can do.
18:16Speaking of that, we are coming up on MBA Annual, of course.
18:19This is a bellwether for the industry.
18:22Everybody marks their calendars based off of that.
18:24We're going to be there.
18:25We're going to have a President's Big Booth.
18:26What are you excited about?
18:27What should we expect at MBA Annual this year?
18:30It's going to be a great show as usual.
18:31We're in Vegas, which is always a great time.
18:34Registrations are strong.
18:35We're expecting probably close to 4,000 people, which will be phenomenal.
18:40And you can expect the typical great lineup of speakers.
18:44Gary Cohn and Larry Summers are going to be on stage together.
18:47It will be an interesting debate.
18:48Wow.
18:49We have the GSE CEOs coming as usual.
18:52I think what's interesting this time is we're doing sort of a conference within a conference on all of the technology issues that we're talking about here today and elsewhere.
19:00It's going to be in the hub.
19:02It's going to be throughout the conference in some of the panel sessions.
19:06AI, how you deploy technology at lower costs.
19:09To increase business.
19:11To produce efficiencies.
19:13So it's this entire conference within a conference, which will be great.
19:16And then we have all the other typical panels that we'll have on policy issues, market developments, operational issues.
19:22So it'll be a great show.
19:23And then the big one, obviously, is always the concert.
19:28Oh, yeah?
19:28And I'm really excited about this because we're doing something very different this year.
19:31We're going to have Jim Gaffigan open.
19:33Wow.
19:34And then we're going to have One Republic as the concert.
19:37That's awesome.
19:38It'll be a great show.
19:38No, that's going to be great.
19:39I mean, people will stick around for that for sure.
19:42I always love it because, you know, I'm the policy person.
19:44I'm like, I want to go to all the policy panels.
19:46I want to hear.
19:46And that's the great thing about being the NBA.
19:48You have the people in the room who are actually, you know, the GSC leaders.
19:53In the past, you've had the CFPB leader.
19:55You have them on stage, and they're kind of in the hot seat.
19:58So I appreciate that.
19:59Great.
20:00Looking forward to it.
20:01Pete, thanks so much for being here today.
20:03Happy to do it.
20:03Great for you.
20:04I really appreciate you doing the podcast, also being on stage with us.
20:07And I will see you soon at NBA Annual.
20:09Great.
20:09Looking forward to seeing you there.
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