Dave Stevens
At the Mortgage Bankers Association’s Independent Mortgage Banker Conference in New Orleans last week, MBA CEO Bob Broeksmit was visibly emotional while sharing his thoughts on the passing of David Stevens. MBA also showed montage videos of Dave at work and play with family, friends and colleagues that brought laughter from Dave’s rich sense of humor (and willingness to ham it up for the camera) and also tears of sadness for losing him so suddenly and far too soon. Dave seemed to be doing everything he could to fight the aggressive prostate cancer that he had while remaining an outspoken thought leader in the housing and mortgage finance industry. I know we all wished we could have said goodbye, but that just never would have been right while he lived.
There was something magnetic about Dave’s personality that made you feel appreciated even in brief interactions. Dave was able to effortlessly lift up and make connections with people of all types.[1] He started his career as a loan originator, and that sales mentality never left him regardless of the tremendous substance he acquired over the years. Dave understood that salesmen win people over[2] when people like you the most.[3] When I wrote about Kim Newby’s passing last year, I mentioned a story about Dave always asking me about her, but that story was just as much about Dave’s connections and caring about people as it was about Kim.
Dave’s thought leadership
I have quoted and referenced Dave many times in this blog. His insights, intellect, perspective and experience made him a person I viewed as a highly credible source for housing industry thought leadership. What made him so credible to me, aside from his articulate, sincere, and thoughtful analysis of housing issues, was that he had reached the highest levels of influence and power yet remained fully grounded in reality and practicality. Sure, in this era of highly polarized and tribal politics, Dave’s staunch support, especially on social media, for Democratic candidates and causes, might have rubbed some people the wrong way. But, Dave understood the alignment between the housing industry and consumer welfare, and he was passionate in defense of the role of homeownership in improving the lives of all Americans.
In fact, regardless of his political views, Dave wasn’t afraid to speak out against bad housing policy decisions regardless of party affiliation: the Federal Reserve Board, FHFA, CFPB, the Biden administration and even industry powerhouses like ICE’s Encompass/Black Knight all heard their share of Dave’s criticism and commentary over the years. Meanwhile, I’m sure the housing media[4] appreciated that he seemed to never turn down an interview request either. Whether you agreed or disagreed with his politics or conclusions, it was clear his intentions were in the right place, and he didn’t play political favorites with housing and mortgage finance policy.
Our paths crossed regularly over the years. I met Dave initially when he was my old bank’s Wells Fargo and later Freddie Mac rep, then worked with him on the Board of RESPRO when he was running Long & Foster’s affiliated businesses and I was my bank’s RESPRO representative[5]. I lobbied him with other industry reps when he was FHA Commissioner in the first Obama Administration and, of course, connected many times while he was MBA’s CEO from 2011 until 2018. After he got into consulting, we communicated often about industry issues[6], and he was an avid reader of these Musings.[7]
Great minds…
One of our last discussions was about the issue of repurchases and how recent GSE putbacks for minor defects were counterproductive to efforts to expand homeownership to marginalized and underserved communities. I wrote in my Mortgage Musings on September 25, 2023,
“…these repurchase demands are particularly confusing at a time when the only discernable federal housing goal is seeking housing equity. Passing huge losses back to originators for immaterial and technical violations acts as a massive disincentive for mortgage bankers to seek and approve marginal borrowers.”
Dave and I were in complete agreement on that point. So much so, that when I heard a Housing Wire podcast that he had done almost two weeks earlier, I apologized for not quoting him; even though I had first heard that podcast the day after I posted my blog.[8] Of course, he was totally gracious when I apologized for printing something that looked almost exactly like something he had already said.[9] He didn’t ask me to, but he still appreciated that I quickly posted an update with an after the fact attribution. Meanwhile, to emphasize Dave’s thought leadership and effectiveness on that issue, in November 2023, another rare housing policy thought leader, Laurie Goodman of the Urban Institute’s Housing Finance Policy Center[10], wrote a research brief entitled GSE Repurchase Activity and Its Chilling Effect on the Market | Urban Institute. It now seems that the GSEs are finally beginning to agree too.
Econ 101
Speaking of thought leader Goodman and the Urban Institute, analysts have been talking about a housing supply shortage since 2021 as low rates and COVID-19 induced changes in shelter needs sparked the housing market demand, while supply chain issues and “twice shy” developers and builders limited new construction. The Biden Administration acknowledged housing supply problems in 2022, but, to absolutely no one’s surprise, its unambitious plan proved ineffective.[11] Lack of supply continues to be the biggest impediment to homeownership today. In a January 10, 2024, research note Goodman concluded that the Lack of Housing Supply Is Largely Responsible for High Home Prices and Rents. That research states that “the way to fix it is to build more housing (and rehabilitate existing housing where economical).” Supply and demand, that’s Econ 101.
Meanwhile, in his eloquent remarks about Dave in New Orleans, MBA’s Broeksmit also noted that Dave wouldn’t just get frustrated with government created barriers to housing that only seem to be getting worse: instead, Dave would loudly shout about the absurdity and misalignment of government policies such as the new Basel 3 “endgame” framework.[12] Broeksmit noted, “no bank ever failed due to MSR write downs”[13], but if you don’t understand what an MSR is you’re going to have a hard time getting worked up about Basel 3. Most mortgage origination folks who easily understand repurchase issues and trigger lead problems are far downstream of the implications of Basel 3. So, they don’t understand how this European[14] banking capital framework will make mortgage lending significantly more expensive in the US without any corresponding benefit to consumers or the banking system. Basel 3 simply concludes, without evidence, that mortgage loans and servicing rights are massively riskier than we thought previously, so banks will need more capital to hold those rights. Again, while not as easy to understand, it’s Econ 101 that Basel 3’s real endgame will tend to increase interest rates for mortgage consumers. That’s an own goal[15] for the US economy that bank regulators ought to reconsider.
MBA is shouting about it, but policymakers who need pitchforks and torches to be moved, aren’t likely to see protests in the streets over capital requirements and Basel 3’s inflationary and supply restricting impact. This is the kind of thing where a respected independent voice like Dave’s could bridge the technical with the practical to have some real influence.
Housing finance policy thought leadership needed
I’ve frequently bemoaned the lack of a cohesive and effective federal housing policy in these Musings.[16] FHFA, HUD, the GSEs and enforcement officials all have housing finance missions that focus on equity, but we aren’t moving the equity needle notwithstanding all kinds of press releases about fair lending enforcement and targeted housing finance programs for communities of color. Housing equity it would appear, is not really an actionable policy to address housing issues generally. Equity is a laudable aspiration and the right thing to do[17], but seeking equity is totally ineffective to increase the housing supply[18]. Meanwhile, these are the headlines today: Housing is unaffordable for a record half of all U.S. renters : NPR and Home Price-to-Income Ratio Reaches Record High | Joint Center for Housing Studies (harvard.edu).[19]
The loss of David Stevens takes away one of the country’s most respected and articulate independent voice for housing and mortgage finance policy thought leadership. Knowledgeable, independent voices on housing and mortgage finance from academia, think tanks, and even the financial press are few and far between. While the progressive left has equity as its lodestar in housing, conservative thought leadership doesn’t seem to even think at all about housing and mortgage finance policy.[20] Meanwhile, MBA, ABA and other trade associations’ staff have some tremendously smart and articulate housing and mortgage finance thought leaders in their ranks, but trade associations will always be viewed skeptically in any policy debate. Just as government officials must abide by the policy dictates of the elected administration in charge,[21] trade association staff are limited in what they can say to maintain fidelity to their members’ interests.
Maybe someone should endow some chairs for housing and mortgage finance at their favorite think tank.[22]
[1] In hindsight, Dave reminded me a lot of my uncle Jerry Levy in that respect.
[2]This is what is called “closing” in sales parlance.
[3] A long-time client of mine is known to ask his LOs why they lost a deal and, invariably, when the LO claims another company offered a lower rate, he will respond, “Wrong! The customer liked someone else more.”
[4] Query whether I should include myself as a member of the housing media. Again, this isn’t my day job, so I’d say no, but curious as to my readers’ takes on it. Maybe if I put this on Substack and charged subscription fees, but that isn’t my plan for this hobby and who would pay for this stuff anyway?
[5] I was RESPRO Chairman in 2006 and served on its Executive Committee for seven years.
[6] A podcast interview we did about RESPA and LO Comp in March of 2019 can be found on the Mortgage Musings landing page.
[7] Another avid Musings reader also recently passed away. Juli Mosely, was bookkeeper and assistant to my longtime client Mark Meyer, CEO of MLinc Mortgage Solutions. Juli died suddenly on January 22, 2024. Juli was a pleasure to deal with and was always a step ahead in helping you out. She will be missed. My condolensces to her family, friends, and all of her MLinc colleagues.
[8] Plagiarism is bad, but it’s not plagiarism to come up with the same idea without knowledge that someone else said it first. “great minds think alike” and all. Publishing someone else’s work as your own or without attribution is, however, plagiarism and perhaps copyright infringement. As some people have discovered, I am a hawk about that with these Musings, so if you want to use any portion of my Musings for your own purposes, please get my consent and/or properly attribute your source.
[9] His response was,“Yes, when I read it I assumed you had heard mine or you likely would have linked it. No worries, dude.”
[10]Urban Institute (UI) is perhaps the only national think tank not affiliated with a university that actually has experts on housing finance policy. Brookings Institute, American Enterprise Institute, and Cato Institute all have lots of economists, but none seem to focus on housing or housing finance. This lack of empirical and intellectual support makes policy initiatives extremely difficult. That said, it is a complete mystery to me what UI means when they say on their website, “…, our work is cited extensively—on both sides of the debate”. What debate and what are the two sides?
[11]If only someone had told them the plan was likely to be ineffective,…
[12]Chris Whelan is another rare, but outstanding thought leader in mortgage finance.
[13] Broeksmit also noted that they don’t even have mortgage servicing rights (MSRs) in Europe, so of course they think it is riskier.
[14]Basel is a city in Switzerland, not an acronym.
[15]That’s a kind soccer term for when you accidentally score on yourself for the opponent. Using a soccer analogy to describe a European bank regulatory framework is appropriate.
[16]See e.g., Ed. #51: Cancelled Debts and Cancel Culture (mortgagemusings.com)
[17] And, as noted by Josh Weinberg in my most recent prior Musing, it is also, “critical for lenders to remain relevant and take market share.”
[18]As I previously noted in Musing #25 in the Netflix show Peaky Blinders, Thomas Shelby (before that actor was the lead role in Oppenheimer) poignantly demonstrated to a union activist that lowering disparities doesn’t necessarily result in progress. In housing, equality as a policy won’t do anything to increase supply.
[19] “The Harvard Joint Center for Housing Studies strives to improve equitable access to decent, affordable homes in thriving communities”. Maybe Harvard’s Joint Center should study why federal and state housing policies focused on equity haven’t resulted in more affordable housing (or equality for that matter).
[20] A few years ago during Q&A for an economic policy focused webinar in which he spoke for 45 minutes about Federal Reserve policy, I totally stumped American Enterprise Institute senior fellow and National Review editor Ramesh Ponnuru with a relatively simple question about what to do with the GSEs. Ponnuru is a certified genius and I am sure is as well read on economic issues as anyone, but more than a decade of the GSEs under government conservatorship and it was like conservative policy thinkers had never spent a moment’s thought about that whether that was a good idea or not.
[21]Subject to their oath to abide by the Constitution.
[22] I’m sure owning an NBA basketball team is fun, but I’m looking at you, Mat Ishbia, Dan Gilbert and other mortgage company billionaire owners.