Future Prospects: The CEO of JP Morgan, Jamie Dimon suggested that in future, the Bank could move out of the business of mortgage ownership. At an earnings conference call, Dimon mentioned that their bank may originate, securitize, service, but would not possess any mortgages. They would not own consumer assets. He mentioned that it could take eight years to arrive at a decision on this issue till the rules of mortgage business are set.
It is amply clear from Dimon’s point of view that the mortgage lending business does not appear to be prosperous. However, the rigid and strict underwriting norms have generated the most risk-free fresh mortgages in a short time. In fact, Dimon takes reference to the risk retention and securitization rules being adhered to while negotiations are on. These risk-laden rules would obviously render the mortgage business less lucrative for bankers to come up and possess mortgages since they could mandate holding on up to 5 percent of the risk on some loans. It would be tough for Americans to get loans or obtain refinance options that would have a reducing impact on the overall business prospects.
New Rules And Regulations: Besides the new regulations, Dimon does not prophesy return of investors to the mortgage market. There are several federal regulators and politicians dependent on this mortgage business. This type of market will return only when the investors arrive at a standpoint that mortgages would once again turn out to be the best bet. It is here where the report of the MBA fits in. There is an ongoing debate amongst lawmakers on the issue of taking apart Fannie Mae and Freddie Mac, the underlying assumption lies in the fact that both could easily be replaced by a stronger investor market.
Market Assumptions During The Decade: As per the report of the researchers, during the decade between 2000 and 2009, there was an increase in the rate of one point percentage in the home ownership. If it not been for the transition in accessing home ownership by smoother credit facilities and transformations in the socio-economic conditions, the rates would have gone down during the first five years, rather than registering an increase. A phenomenal increase in the rate of home ownership appeared during the boom, which was considerably high among youngsters below the age of thirty who were willing to face an excessive risk on the unpredictable mortgage products. It is essentially because of the perceptible alterations in the socio-demographic composition and the economical attributes. The researchers omitted from their report the most important transition in the attitudes of people towards home ownership. On an average, an American felt renting to be better idea than owning a house which resulted in an upsurge in the rental business across the country.
Speculations On The Market: Speculation is rife that the home ownership market through the country would make a recovery, however for certain reasons, policy makers and federal regulators consider that it would turn back the clock to the period before the housing boom. However, if there are no changes to the employment, earnings and other socio-economic attributes in the future, there are chances that there may be another decline in cities and territories where the prices were most flimsy during the last decade.