Federal regulators who are supposed to be keeping a watchful eye on Fannie Mae’s and Freddie Mac’s financial activities have penned a woefully wordy and unimaginative dissertation about technology developments in mortgage origination. They needn’t have bothered.
The 45-page document, “The Single-Family Mortgage Industry in the Internet Era: Technology Developments and Market Structure,” that the Office of Federal Housing Enterprise Oversight released Friday could be a decent if lengthy term on paper mortgage technology or an introductory text for Mortgage 101. But this historical review adds no new observations that haven’t already been researched and reported elsewhere. Nor does it offer any new conclusions or thoughtful suggestions about the industry’s implementation and use of technology. Fannie Mae and Freddie Mac are hardly mentioned.
Consider these pearls of wisdom:
“Technological innovation has been an important influence on the evolution of the single-family mortgage industry in recent decades.” (page 1)
“The Internet has emerged as a powerful communications medium, where a growing share of the customers of financial services are accessing information and executing transactions online.” (page 4)
“Single-family mortgage lenders began to automate their operations during the 1980s. At that time, the computer systems of most lenders were based on mainframe architecture with application software developed for processing efficiencies.” (page 7)
“Computer networks were created after the introduction of the personal computer in 1981.” (page 13)
Now these gems admittedly are the most egregious examples of inanity.
But must we read more?
The only possibly interesting observation–”failure to modernize RESPA, coupled with thin profit margins and a lack of capital, has slowed innovation by individual settlement services firms” (page 12)–offers no more than another history lesson.
The most useful bit may be page 45, which lists the 37 acronyms contained in the report. (But gosh, did anyone else know that “PC” means “personal computer”?)
Worse yet, this document is just the first in a forthcoming series of such tomes that OFHEO will publish to “enhance public understanding of the U.S. housing finance system,” according to an OFHEO press release. When did public education become part of OFHEO’s mission?
Editorial writers love to crusade against government waste, and sometimes they sound a mite too outraged about small expenditures that represent only a miniscule fraction of the huge federal budget. But when an expenditure, however so small, is so obviously a waste of taxpayer money, it’s an amazingly tempting target. This report fits the bill.
OFHEO Director Armando Falcon acknowledged 16 people who provided “helpful” and “useful” comments and suggestions on the report. None of them, seemingly, mentioned that it’s just a boring rehash of old information that’s available elsewhere. Didn’t these folks, whose agency is responsible for oversight of two gigantic mortgage finance corporations, have anything better to do with their taxpayer-paid time?
Come to think of it, we’re not sure this report was worth the time it took to write an outraged editorial about it.
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