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.”