This week, the spotlight shines on Andy Pollock, senior managing director of Clayton Consulting Services.
Q: The TRID rule has been in effect for three months. How has the industry responded to this rule, and what measurable impact is it having?
Andy Pollock: TRID reminded me a lot of Y2K: In the months leading up to both, everyone expected some sort of disaster, but that never really materialized. Because lenders had time for extensive preparations—including updating systems and procedures, training, and adding supplementary resources—TRID’s impact has been very minor.
According to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, the total average closing time for most loan types stayed relatively flat or showed only a slight increase between September and October. In addition, some real estate agents that closed home sales subject to TRID said the process went smoothly and others said that they extended potential closing timelines to accommodate any possible delays. That said, we’re still in the early stages of TRID, so only time will tell.
Q: TRID was the latest in a series of regulations that reshaped mortgage banking. How has the level of quality control been impacted by these new regulations?
Andy Pollock: TRID was designed to eliminate confusion and surprises for the borrower. Unlike the previous Good Faith Estimate, the new forms under TRID itemize specific payment components, (e.g., the down payment, closing costs, prepaid costs, etc.) to ensure that the elements all add up to match the anticipated total cost. While TRID has improved borrower expectations, I think it’s also improved lender expectations and therefore loan quality control and asset quality.
Q: Prior to joining Clayton, you previously served as president and chief executive officer at WDB Funding, an alternative commercial lending company. How can you compare the challenges between the commercial and residential sides of lending?
Andy Pollock: Commercial and residential lending are not very different: when underwriting for either, lenders must capture the credit, collateral, capacity, intent and integrity for granting a loan. So the challenges remain the same—delivering the expertise of lending money and then getting the money back. Also, in my past life, I was the CEO of a large mortgage bank and ran my own consulting mortgage consulting firm, so my experience is well balanced on the residential side.
Q: What do you see as the state of the mortgage industry in 2016?
Andy Pollock: Overall, the origination market will probably be down or flat compared to 2015. I think we’ll see more new “fintech” entrants pop up and attempt to disrupt the traditional mortgage lending business by offering marketplace and consumer direct solutions. Of course, they may find themselves constrained by regulations, traditions, and industry expectations.
From an innovation perspective, I think the industry will still be trying to figure out when the millennials will be ready for homeownership, and the products they’ll need to achieve it. Also, I think there will be renewed interest in second mortgages, consumer loans and student loan refinancing and marketplace lending. And, heaven help us, even piggyback purchase lending might make a comeback.
Phil Hall has been (among other things) a United Nations-based radio journalist, the president of a public relations and marketing agency, a financial magazine editor, the author of six books and a horror movie actor. Also, as you will discover, he is not shy about stating his views.