Scott Stern runs St. Louis-based Lenders One, which provides services to 110 mortgage banking firms. On Thursday he testified before the Senate Banking Committee on what he calls Scott Stern’s first law of economics. That is: To stem the fall in housing prices, the country must address the foreclosure problem. Keep borrowers in the homes, less housing inventory comes on the market and prices stay up.
Like many in the mortgage biz he’s frustrated that the Fed’s sharp cuts in rates haven’t brought folks back buying homes. “There is a crisis of confidence,” he says. Stern supports Senator Chris Dodd’s proposal to allow mortgage loan services to shave 10% off the loan amounts of troubled borrowers. Mortgage investors, not the government would take the hit. That way borrowers could refinance into safer, goverment-insured fixed rate loans. “They’re trying to put incentives in place to encourage investors to participate,” Stern says. “There’s a lot of good thinking on this.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.