There is much talk about new regulation. You can’t speak to any mortgage professional for too long before they start discussing the disclosure changes scheduled for next year. If you sum up the mortgage environment today, what it really boils down to is a time in our space that will be defined by how the industry reacts to change. So, hypothetically, if we look out five years from now, the question is: How much different will the mortgage industry be as a result of the shifting landscape?
“I believe that past is prolog, and I doubt that there will be any revolutionary changes that aren’t already on the drawing board,” answered John Liston, a part owner of ASC, the company that offers the Power Lender loan origination system. “I believe there will be increasing adoption of mortgage industry data standards, led in part by the growing influence of the Consumer Financial Protection Bureau (CFPB). I also believe there will finally be an interoperable electronic mortgage standard that supports electronic mortgage document interchange.
“However,” continued Liston, “I also believe that e-mortgage standard will achieve only slow acceptance. I believe there will be increasing support of lending applications on mobile devices. And from a purely business standpoint, I think there will be continuing consolidation of lending institutions due to the high cost of compliance, also in part due to the CFPB.”
Others see a far different mortgage industry five years from now when all things electronic are much more commonplace. “Surely the mortgage industry will continue to evolve in response to the regulatory forces that are being applied to lenders and advances in technology will continue to drive consumers into mobile channels for applications, disclosures, electronic signing, recording, and note vaulting,” noted Chris Appie, an attorney and Vice President of Products at Compliance Systems, Inc. (CSi). CSi is a provider of financial transaction technology and has expertise serving over 1,400 financial institutions across the United States. “I think that the ability to consume loan-specific data from the Uniform Closing Dataset will provide a more reliable pool of loans that investors can rely on and they will re-enter the market in a big way, regardless of the fate of Fannie/Freddie.
“We’re coming out of the compliance spin cycle and keeping all the regulatory and market-driven technology requirements on the customer-facing side in check will drive more lenders to seek comprehensive risk-management solutions to automate unstable manual processes,” added Appie. “This is an emerging need today, and within a few years I believe that risk management at the transaction level will become a basic requirement of technology providers.”
Even thought leaders on the servicing side of the business like Joseph Badalamenti, who got his start in the default management industry in 1967 as a HUD contractor, sees a more tech-savvy industry on the horizon. Badalamenti has 43 years of industry experience to his credit and over 5 million inspections later, he has built Five Brothers into a highly successful and respected industry leader offering a full range of default management services and technology solutions.
“Five years from now, the mortgage industry will reward those who in 2014 invested proactively in new technologies and operational strategies to keep pace with a complex, fast evolving regulatory landscape,” he said. “Success—particularly on the default servicing side—will mean working with the right third-party providers to achieve total visibility, control and process integration: The field service provider is now a critical and legally-bound link in the compliance chain. The best-prepared and most qualified providers will deliver the specialized knowledge, competencies and resources needed to help banks effectively mitigate compliance risk while dealing with the inevitable upward pressure on compliance costs.”
But the rubber really hits the road with the mortgage lender. Will they truly embrace what could be revolutionary change over the next five years?
“I am sometimes surprised at the twists and turns the mortgage industry takes,” pointed out Paul Anastos, President of Mortgage Master, a super-regional mortgage lender and one of the Country’s largest privately-owned mortgage companies. “For the past five years, we have seen many changes—some for the better, and others for the worse. Going forward, the industry will continue to experience greater oversight/scrutiny by regulators and the agencies. I anticipate this oversight to increase industry consolidation.
“However, at the same time we will begin to see some widening of the credit box to make it easier for responsible borrowers to obtain a mortgage,” continued Anastos. “As is always the case in the mortgage industry, it is about finding the perfect marriage between regulatory oversight and opportunity for worthy borrowers. All I really know is there will be changes, and successful companies like Mortgage Master will be prepared for them and prosper.”
I hope that all lenders feel the same way, because if they don’t, I fear that they won’t be in business five years from now.
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