Challenging. It is a word that has become synonymous with the mortgage banking industry in recent years, and 2013 has been no exception.
With great challenges, however, comes opportunity to evolve, revolutionize and open new doors to the future. At its core, that has been the mission of USFN, which is celebrating its 25th anniversary year. Due to its longevity, the company is in the unique position of being able to take a step back and appreciate how far the industry has come. Recently, the company took the time to reflect on the hurdles faced by the industry and the successes it has achieved during the last quarter century, as well as to take a quick look into the future.
A look back in time
When the first meeting of the USFN board of directors was held in December 1988, the mortgage industry looked very different than it does today. While it may be a bit of an exaggeration to call it the "Wild West," there was most definitely significant variation in the level of service and expertise that was available to industry servicing entities, from their state counsel. The mortgage industry was still in the process of "professionalizing," and a fractured and fractious landscape of part-time attorneys, state- and county-level specialists, and a large number of servicers and aspiring servicers made industry conferences chaotic and high-level coordination a seemingly impossible challenge. There was an enormous number of players, but there was not a corresponding amount of cohesion or centralized sources of information on the critical topics of the day.
With the nationalization of the mortgage industry, it was obvious that lenders and mortgage servicers were going to need structure. They needed a dynamic and nationwide network that would serve as an asset for the industry and a trusted and verified source of ability, knowledge and training.
When USFN was founded, it was a rather unique and exciting time for the entire mortgage banking industry. Almost overnight, bitter rivals and regional competitors were brought together in a room and asked to work in a collaborative and constructive manner.
To their credit, virtually all of them did exactly that. When you talk to those pioneers today, it is clear that among the biggest challenges in the late 1980s was reconciling state differences and finding ways to coordinate and transmit shared knowledge and new insights. Standardizing reports and developing effective middleware was just the beginning. Longtime USFN member Larry Phelan, of Phelan Hallinan, LLP in Philadelphia, says "the efficient exchange of case information between attorneys and servicers was both our greatest challenge and our greatest achievement."
Over the next 25 years, technical innovations would create extraordinary new efficiencies, and sweeping legislative and regulatory changes would introduce new complexities and challenges to what was once a very personal and local business.
The new normal
In 2007, then-USFN President Rich Leibert referred to 2006 as "the most dramatic year in the history of our industry," noting the year was "characterized by record volume." Six years later, and for a myriad of very different reasons, that same statement holds true (with the exception of the volume) for the current industry landscape. Dramatic is an understatement.
The foreclosure crisis brought with it an unprecedented amount of change and pain. We have seen nearly a complete "do-over" of the industry and how it conducts business, with more new regulations passed in the last few years than in the prior few decades. From the Dodd-Frank Act to the establishment of the Consumer Financial Protection Bureau (CFPB) and a renewed focus on compliance regulations, the changes experienced have been impactful and complex. More time, energy and financial resources have been spent to digest and implement these new regulations and ensure compliance is being adhered to than ever before. By all accounts, the legislative environment has never been more negative for banking and servicing organizations and the associated businesses in the industry, though it does appear to be settling.
Confronted with a new way of business – and a new "normal" – professionals from all segments of the industry have worked together and adapted. As a whole, the industry become more proactive, rather than waiting for legislative relief or a resurgence in the economy to bring reprieve from these regulatory challenges. We've seen an increase in advocacy, with our peers reaching out to lawmakers and to their colleagues to voice concerns and ideas over current legislation and promote more positive legislative changes at the state and national levels. The law firms representing servicing and banking clients have been actively involved in ensuring that new regulations and new laws and policies can be implemented in a legally correct way and that the rights of creditors are protected.
With this advocacy comes great responsibility, and the industry's attorneys have not shied away from that obligation, consistently demonstrating principled integrity and strong professional ethics.
Looking to the future
Looking forward at the next 25 years, it is clear that the industry must continue to reinvent itself. In the face of structural upheaval and legislative turbulence, our industry's future will be characterized by how well we respond to the obstacles put before us. Comprehensive professional training and ongoing education will become more important than ever, and the ability to rely on trained, trusted and vetted legal counsel will be even more essential.
USFN will continue to be an influential voice on emerging legal, procedural and professional issues and will remain a key cog in forging strong and productive attorney-servicer relationships. The industry's default servicing law firms will continue to work with their peers and the mortgage banking industry as a whole to prepare for the changes and challenges ahead to help them move forward in positive and exciting new directions, andÂ provide them with the resources and representation they need to compete in a competitive and ever-evolving professional environment.
For 25 years, USFN has brought mortgage professionals together to innovate, inform and inspire; to be a forum where industry partners, peers and competitors can both share with and learn from each other; and to provide steady guidance and leadership. It has been a rewarding yet challenging quarter of a century for USFN and its member firms.
Alberta Hultman is executive director and CEO of USFN, a national not-for-profit association of law firms, trustee companies and industry-specific vendors that specialize in the area of creditors' rights, foreclosure, bankruptcy, loss mitigation, REO and other loan servicing matters.