BLOG VIEW: The gathering of industry professionals at the recent Mortgage Banking Association (MBA) annual convention brought to mind a political rally. The event was held just a couple of weeks before the national election and it was rife with two-party theme-based gatherings and political speakers.
But the politics discussed at the event were not limited to the presidential campaign. I observed two very distinct agendas while at the MBA conference. Rather than who would win the White House, the debate that permeated the convention was about whether the mortgage industry can eliminate – or at least dilute – the new and burdensome regulations and restrictions placed on our business, or whether to accept the regulations and move on.
I'll call the first group in this debate the ‘do-nothing and hope the new president will make it go away’ party. Its members appeared to cling stubbornly to the belief that the new regulations and regulatory audits would be watered down to the point that they would essentially not exist. These individuals took out their wrath not only on the new regulations, but also on the entity charged with enforcing them, the Consumer Federal Protection Bureau (CFPB). Those in the ‘do-nothing’ camp tended to malign CFPB examiners or dismiss them outright.
This party had plenty to say about the new regulations: The regulations are unrealistic, cost-prohibitive and punishing to loan officers and companies alike, or so they said. Factor in the yet-to-be-finalized requirements surrounding the qualified mortgage (QM) and qualified residential mortgage (QRM) and the revamping of disclosures, and the members of this group were either ready to leave the industry altogether or were hoping that a new Romney administration would see the light and reverse these requirements.
It's not surprising that the members of this camp are very discouraged about the next few years. They see fewer originations and continued devaluation of mortgage servicing rights. While most of these individuals were committed to remaining in the business, they appeared to be much less interested in new technologies and new concepts for attracting and retaining customers.
Unfortunately for them, the reality is that the CFPB has been shown to have broad voter support. A survey conducted this past summer by Lake Research Partners, a public opinion and political strategy firm in Washington, D.C., found that 73% of voters, including both Republicans and Democrats, favor the Dodd-Frank Act and 66% of voters favored the creation of the CFPB. The chance that these regulations will be changed in any meaningful way in favor of lenders is nil to none.
I'll call the other party at the MBA convention the ‘let's move on’ contingent. This group has accepted the new regulations and they are already working to incorporate them into the mainstream of their origination and servicing processes.
The ‘let's move on’ party believes that the industry has been reshaped by the collapse of the market four years ago. Rather than focusing on the negative, they are embracing the opportunity to redefine how they do business. The members of this party are enthused about the idea of using mobile technology in both the origination and servicing processes as the next generation of home buyers begins to make its presence felt.
While concerned about the regulations and the impact of such unknowns as QM and QRM, this group believes there is room for improvement and growth in the mortgage industry – and they want to be a part of that endeavor.
During the convention, I spoke to people who are starting up new mortgage and servicing companies. They are looking for new technology unencumbered by outdated applications that do not currently ensure compliance. I also spoke to people who have already undergone a CFPB exam. They now have a much greater understanding of what is required of them and are moving forward to make the necessary changes in their business processes.
I found a number of technology companies that I would place in the ‘let's move on’ party. Those companies are eager to address concerns with issues of data integrity and consumer operational risk management. Many vendors I spoke with were in the process of embedding a quality control review process into their systems, and some had already done so. These advances can be expected to take the bite out of the cost of the regulations.
There is, of course, one significant difference between the mortgage industry's two parties and the nation's political parties. Unlike politicians who must persuade many voters at a time, lenders have to convince only one member of the electorate to determine which group to join – themselves. Â
It's clear which party I favor. I hope that by next year's conference in Washington, D.C., more members of the industry will decide to join our delegation.
Guest blogger Becky Walzak is president of Looking Glass Group, LLC, an Indianapolis-based consulting firm focused on business transformation initiatives in the financial services industry. Walzak is also the president of rjbWalzak Consulting, based in Boca Raton, Fla. She can be reached at (561) 459-7070.
