Why Do We Fear Consumers?

Recently Mortgage TrueView introduced a website for consumers that allows them to identify a listing of lenders in their area. No big deal you say. But it seems, at least according to lenders we have talked to, it is a very big deal. You see, this rating is based on the HMDA data. Lenders it appears, are very concerned that this data is biased against them and will give consumers and others focused on Fair Lending some yet to be determined means to point a finger at a lender for not being “Fair”. Yet how is publically available data that any consumer can see, a risk to a lender? In fact the data in the database actually identifies many smaller lenders whose ability to process and make a decision on loan applications are equal to or better than the larger lenders. This program is really a valuable marketing tool. Yet lenders seem to be afraid.

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At the recent Risk Management and Quality Assurance Conference there was a lot of talk about the new “Manufacturing Quality” requirements of the agencies. These entities were eager to announce how much better the loan quality is now and how pleased they, as investors & insurers, are with the product. However manufacturing quality concepts state that an effective business ensures that products and/or services provided by a business does in fact meet the expectations of all customers. When I asked what we have done to ensure that the product/services we provide meet the consumers expectations, all I got back was a blank stare. Others of course told me quite bluntly that quality is not a consumer issue and that their expectations are not important to us.

Apparently, as an industry, we see consumers as a necessary evil, one to be kept quiet and fed disclosures so that they cannot give feedback that we perceive as negative. In fact I have had attorneys tell me that they advise their lender clients to never tell the consumer anything.  Looking at the attitude presented in these comments, it would appear that this industry is afraid of consumers and as a result we give them only the necessary information that is required of us by the CFPB. And yet we wonder why the CFPB keeps adding more and more to our regulatory burden.

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I wonder what would happen if we turned this attitude around and made the consumer the focus of our attention. If fully explained, would consumers still be confused and nervous about the origination process? Would they be as likely to file a complaint if they knew exactly what the note and mortgage required of them? Would they be more likely to tell us if they run into financial difficulty and take advantage of the modifications and forbearance we have always offered? What if the CFPB had nothing to do about mortgages and focused instead on payday lenders or student loans? Take about regulatory relief!

Right now this idea is but a dream, a future that may never be. But what if?

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