Mortgage Bankers Speak Out on Economy

WASHINGTON, DC & TORONTO-Discussion and proposals on the state of the economy and how to shape public policy to prop it up have been the focus of the first days of the annual conference of the DC-based Mortgage Bankers Association of America, held here. The September 11 terrorist attacks, which damaged the Pentagon and leveled New York’s World Trade Center twin towers, have rocked the real estate and mortgage finance industry. Attendees at this conference have been discussing ways to use their industry to keep the economy from faltering further.

“There is not question that the economy took a serious downturn following the tragic events of September 11th, and we expect overall fourth quarter results to be rather dismal,” said Lyle Gramley, MBA consulting economist. Gramley added, “The economy is clearly in a recession at the present time. However, we are very encouraged by the fiscal and monetary policy initiatives recently implemented by the administration, Congress and the Federal Reserve.” MBA points to lower mortgage interest rates as a key component keeping the US economy afloat. MBA also has taken aim at the stimulus package being proposed in Washington right now. The association noted that the tax cuts and spending increases might add up to about $75 billion. That, combined with permanent tax cuts passed earlier, the $40 billion in additional budget outlays for reconstruction and increased security, would add up to a stimulus package amounting to about 2% of Gross Domestic Product, a sizable amount, MBA experts said.

The association also laid out public policy agenda related to the mortgage finance industry, which it believes would help the economy going forward. Many of the proposals relate to home ownership and residential mortgage financing. However, MBA has several proposals related to the commercial side of the business.

Among its public policy ideas is to increase development of affordable rental housing to spur economic development by: