Laurie S. Goodman of Amherst Securities Group, who warned in 2011 that up to 11 million mortgages in the U.S. were likely to default, has testified before congress on conflicts in the mortgage industry and called for some dramatic solutions to clear the overhang of foreclosed properties in the U.S. housing market. She was also one of three speakers from the 65th CFA Institute Annual Conference who made CNN headlines in January.
Goodman’s suggestions for fixing the U.S. housing market — which favor rehabilitating borrowers to protect investors from losses incurred in the foreclosure process — were originally opposed by major U.S. mortgage holders including Fannie Mae and Freddie Mac, but that may be changing in the face of pressure from sources such as the U.S. Treasury department.
In an article published in the Journal of Structured Finance (subscription required), Goodman claims that principal reduction measures for homeowners at risk of foreclosure are the most successful type of mortgage modification. While principal reduction has been unpopular in some quarters, Edward DeMarco, acting director of the Federal Housing Finance Agency, recently gave a speech suggesting that Fannie Mae and Freddie Mac may reconsider their stance on principal reductions.
In an interview with Bloomberg Surveillance, Goodman described the Federal Housing Finance Agency’s pilot program for bulk sales of properties as the “quickest solution” to clear the housing market, and noted that “Policy makers have finally gotten the prescription right.”
Goodman is a senior managing director at Amherst and previously worked as manager of U.S. securitized products research at UBS. In May 2011, she testified before the U.S. Congress on National Mortgage Servicing Standards and Conflicts of Interest, listing a number of ways that mortgage servicers have incentives to act against the best interests of mortgage investors and homeowners, outlining why mortgage modifications fail, and declaring that “transparency for investors is woefully inadequate” in the housing market.
At the 65th CFA Institute Annual Conference in Chicago, which is open to CFA Institute members and non-members alike, Laurie Goodman will be discussing ways that individuals can assess and interpret trends in key housing data to better understand the state of the U.S. housing market. You can register to attend the event to hear more from Laurie Goodman in person, and follow this blog for more speaker updates as the conference draws closer.