Written by David Lykken, Managing Partner of Mortgage Banking Solutions. I just returned from the MBA's National Secondary Conference in NYC and this topic was discussed at length.  Amongst those I spoke with and conversations I overheard, opinions vary.  The “free market” folks want Fannie and Freddie completely privatized while others just want things to go back to the way they were... the GSE back in 'quasi' status.  No one I spoke with wants the them to permanently be owned by the government… most seemed to agree that this is NOT healthy for the industry. The key is the return of private capital… it is essential that we attract private capital. As it relates to private capital Here’s something that most of you reading this blog will find interesting… and something I talking about for the first time in this blog.  It has to do with private capital!  Some of you know that comments I made related to rumors about Warren Buffett leading a group to acquire Rescap were published in the NY Post and other publications across the country over the Christmas holidays.  What I found most interesting, revealing and VERY encouraging is that immediately after those articles appeared, I was (and continue to be) inundated with calls from investment groups and funds of all “sizes, shapes and forms” calling me interested in exploring making investments in anything “mortgage”.  This confirmed to me what I have sensed that there’s a lot of capital with interest and ready to invest.  But as a result of many many conversations with potential investors, there’s no imminent "gold rush" about to happen at this point.  While there are many factors, two key factors stand out in what I am hearing when I speak with private capital sources.  They are…

• Stabilization Collateral Values – There’s reasonable evidence that property values are stabilizing… “Are we at the bottom?”
• Quantifying Future Regulatory Risk – “What is the new regulatory environment our industry going to look like?” …i.e. (1) the reconciliation of SB 3217 with the House version and (2) state level supervision of our industry (see Kate Berry’s article published May 18th in the American Banker entitled “In Mortgage Regulations, States Catch Up – and Then Some”)

Key to the future of the GSE’s in a meaningful way is private capital!  I can attest is that there are larges amounts of private capital out there showing significant interested in making significant investments in the mortgage industry in almost every area and at almost every level.  If you are reading this blog post and recognize the need our industry has for private capital, I have four “B’s” for you…

1. Be encouraged… private capital is returning
2. Be patient… there are a number of factors that will determine timing
3. Be ready… have a plan
4. Be reasonable… have reasonable expectations… “Toto, I’ve got a feeling we’re not in Kansas anymore.”

For regular weekly updates on all of this, I invite you to listen to my weekly Internet BlogTalkRadio program which ‘airs’ each Monday at 10 am Pacific, 11 am Mountain, Noon Central and 1 pm Eastern time by clicking on the following link… http://www.blogtalkradio.com/search/lykken-on-lending/