Billion-dollar originator sees end to 'abusive' regulation

by MPA03 Sep 2013

The country's first billion-dollar originator has predicted government regulation could find balance in the future as the industry rights itself.

In an exclusive interview with MPA, New Mexico originator Greg Frost has lamented the over-regulation of the mortgage industry.

"By virtue of the economic collapse that has been attributed to the mortgage industry, we’ve been overregulated and hamstrung by government intervention, and it has swung too far to the conservative side," he said.

But Frost sees brighter days ahead, saying the momentum could shift in the future toward less "abusive" regulations.

"Statistical analysis is starting to show bureaucrats and politicians that the industry has righted itself, so going forward I don’t think they will feel the need to proliferate our industry with abusive and restrictive regulations," Frost said.

Much of this shift, Frost said, is because the increase of regulation on originators has produced negligible borrower benefits. He argued that the processes behind mortgage origination were not to blame for the financial collapse, but rather mortgage instruments themselves.

"They think that another two or three forms for the borrower to sign will make the industry better– but the reality is borrowers hardly read them. A dramatic increase of paperwork and processes is not where the problem lies; it lies in the creation of faulty mortgage instruments that undermined credit analysis. It threw credit analysis out the window for a short period, but it was done to us, not by us, in the industry. I see a leveling, and possibly the pendulum swinging towards the liberalization of that," he said.

To read the full interview with Greg Frost, keep an eye out for MPA 7.5, on desks soon!

COMMENTS

  • by John C Durham | 9/3/2013 10:12:10 AM

    I think the abuses were related to very large institutions putting out securities paper. Much of the derivative market continues to operate in the dark as moves to bring back Glass-Steagall have gained momentum.

    Seems like the larger the institution is the more regulation it needs. Also, I think that really good ideas on how best to regulate are almost completely missing.

    But, again, still I believe that the volume of regulation and taxes especially, should relate to size. We need Glass-Steagall for starters and a "Super" Glass-Steagall" as the end game or the big banks as David Stockman recommends.

  • by Jeff in NY | 9/3/2013 11:43:26 AM

    I could not have said it better myself. I look forward to the day they take the teeth out of some of these onerous rules & regulations.

  • by Bob asks | 9/3/2013 12:46:43 PM

    Does anyone see hope for the mortgage broker / Originator who wrote mortgage applications for the last 23 years and fell into financial distress being forced to surrender his originators license due to credit problems? Incidentally, never a consumer complaint nor an administrative action within the 23 year stretch.
    Thanks Dodd/Frank and Gov. Corzine

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