MarketWatch reports that in his annual letter to shareholders, JP Morgan CEO Jamie Dimon outlined what he sees as impediments to a functioning mortgage market. Mr. Dimon highlighted the need for effective regulation, yet believes that the current regulatory regime is fraught with overly burdensome restrictions, costing the industry and estimated $300 billion per year. In the letter, Mr. Dimon stated, “We needed to create a safer and better functioning mortgage industry. However, our housing sector has been unusually slow to recover, and that may be partly due to restrictions in mortgage credit.”
In particular, he cited the Federal Housing Administration’s (FHA) use of the False Claims Act as causing many lenders to reduce or eliminate their mortgage business in certain sectors. Noting the volume, complexity, and overlap of various post-crisis regulations, Mr. Dimon also called for uniform servicing standards, noting that “new mortgage rules and regulations total more than 14,000 pages and stand about six feet tall.” The article also mentions that other factors may influence mortgage lending, including potential homebuyer sentiment, increasing rents, and low housing inventory.
SFIG advocates for clarity and certainty in the face of regulatory and legal complexity, and believes that the current regulatory regime produces unintended consequences, including a lack of liquidity, higher costs, and misaligned incentives. We will continue to work with market participants and members across all asset classes to drive constructive legislative and regulatory reform.