"This is still a fragile sector to cover from an equity point of view," said Chen. "Anything that dents confidence in economic growth will hurt the industry." "We had the weakest M&A activity last quarter and that is with a low free cash flow yield and strong balance sheets. That is because of low CEO confidence out there," he added. As for any progress on resolution of the mortgage finance giants, which is seen as key to bringing back private capital into the mortgage market, Fannie Mae ( FNMA) and Freddie Mac ( FMCC), Gardner believes there is greater chance of that happening under Obama. "A second term president can take the risk of diving into mortgage finance," said Gardner. Romney on the other hand will not want to hurt his chances of re-election by tackling a politically-sensitive issue such as the role of government in housing. Written by Shanthi Bharatwaj in New York.