FireDream

Transparency in the Mortgage Industry: What a Novel Idea

After all these years in the mortgage industry, you’d think that I’d get tired of reading stories about our business and all of the changes in it.  But I have to admit that the advent of the internet and all of its easily-accessible information made my mortgage news addiction even greater.  And with all of the brouhaha of the last year, I’m surprised that I can tear my eyes away from the screen because there’s something new popping up every minute.

It was in one of my daily online news gathering moments that I found a story on CNNMoney.com with the headline: “A Plan to Jumpstart the Mortgage Market”.

Obviously, I’m a fan of jumpstarting the mortgage market and am, in fact, working daily to make just such a thing happen.

As such, I read on to the subheading which began, “An industry outfit hopes that by making it easier for investors to understand pools of mortgage-backed securities….”  Now THAT really caught my attention.

It seems that a private, industry-based group, the American Securitization Forum, has launched Project RESTART.  Its goal: to rebuild investor confidence in mortgage-backed securities, especially in the secondary market with loans not backed by Fannie Mae or Freddie Mac.

How do they plan to do it?

According to the story, it’s simple: they’re going to make “the process of securitizing loans for investors more transparent so they can more clearly understand the nature of the mortgage pools they purchase.”

And why, you might ask?

Check this out: because it “would allow investors to better assess the risks and rewards…”

Well good heavenly days, why didn’t someody think of such a novel concept as transparency in the mortgage business before?  Oh wait-they did.  Or, more specifically, we did.  But once again, I digress.

This story underscores why transparency is good business both on the borower level and on the larger level of the mortgage investor.  Being able to see all of the information and understand all of the information is key to any individual making a good financial decision.  It is the individual-whether a homebuyer or an investor-who needs the opportunity to determine, based on his or her assessment of risk versus reward, what choice he or she is willing to make.

Based on the information in the article, I think that the American Securitization Forum is right on target in the plan that is being proposed.  Anything that brings more transparency to this industry is sure to bring more consumer and investor confidence to it.  I applaud them for their efforts, and gladly welcome them to the mortgage transparency marketplace.

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.