I don’t know about you but I am overloaded on QM, Non-QM, updated rules, regulations and all the associated hot air. So, instead of continuing to toil over how, what, when and where things could possibly go wrong, I am going to think about all the good things that happened last year and what I am looking forward to this year.
One of the best things that happened last year was the growth of the industry. Low rates and increasing home values brought us a plethora of refinances, and while increasing rates have caused dips in purchase money markets, overall we are better off than we were four years ago. New companies are emerging and brokers, whose demise has been forecast since 2008, are still around and in many cases growing.
The long-anticipated punishing regulations have been issued, argued over, revised and are now ready to implement. And while we do not appreciate some of the changes they brought, it has caused us to rethink and redo our policies, practices and procedures. Technology advances have made many of these changes less burdensome and our focus is now, more than ever, on how to do things right; not just fast.
Our old nemesis, fraud, is still around, but has slid further back into the hole from whence it came. The delinquency and foreclosure rates are the lowest they have been in years and prospective homebuyers are more encouraged.
So what does that mean for this year? As the Chinese say, “May you live in interesting times” and the folks in this business surely know interesting times. We know the start of 2014 is certainly going to be interesting. However, we have tackled tougher issues than this and survived, so there is no doubt that, with a few hiccups along the way, we will soon have these regulation changes under control.
Interest rates will do what they always do; go up and down, but not necessarily in that order. There will be more companies emerging as well as some consolidations — the M&A market promises to be very busy in 2014. Servicing will face its challenges, but with more stable and performing loans in the portfolio, servicers will be able to focus on those internal processes that are demanded by the regulations.
The one big question mark I see is the focus on quality. While agencies and investors focus on the demand for more and more reviews, lenders have moved further and further away from the purpose of doing them; making sure there is reliability in the processes so that the next loan will be just as good as the one just inspected. When and how will lenders stop focusing on “data elements” and instead focus on the big “D”? No, not Dallas, but what the “Data” is actually telling them. If we get these two pieces of the puzzle under control then 2014 will be one of the best years for our industry in a long, long time.
About The Author
rjbWalzak Consulting, Inc. was founded and is led by Rebecca Walzak, a leader in operational risk management programs in all areas of the consumer lending industry. In addition to consulting experience in mortgage banking, student lending and other types of consumer lending, she has hands on practical experience in these organizations as well as having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.