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What Should Trump Do About The GSEs?

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Great news! It was announced that the housing market has fully recovered from the debacle of the Great Recession. While good for the housing industry as a whole, the better news for mortgage lenders is the elimination of any new regulations.  Having dealt with two of the most difficult fallout of the crisis can we now wipe our hands of the problem and get back to running business the way we did prior to 2004? Well, not quite. There is still the issue of Fannie Mae and Freddie Mac to address.

Everyone, including consumers, is aware that these entities were up to their eyeballs in the lending programs between 2004 and 2008. Despite the fact that they each provided an AUS for use by lenders, the rules were written so that it would basically approve every loan submitted. Staying competitive seemed to be the only criteria. Their punishment however was slightly different. They were taken into government conservatorship after being bailed out by the federal government. And here they have remained. But now it seems that the time has come, or the industry has determined that it is time to finally resolve this problem. So what’s to be done and when.

The interest in answering this question seems to have generated a number of ideas about what to do and when to do it. For example, on a recent conference call one speaker, when asked about the GSE’s situation stated that he did not see any political catalyst to do anything at the present time. One of the primary reasons is the belief that the FHFA and its director, have a reasonably well run organization which allows for a delay in any action. He went on to say that while some changes in the charter and mandate are likely to occur, the issue of repaying taxpayers the $187B owed by them has to be addressed.

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Prior to these statements, articles in industry magazines were suggesting that there seems to be some disagreement on exactly what to do with the GSEs. While most agree that there is a continuing need for the government to be involved in the secondary market, whether this is the current GSEs or some other type of entity seems to be at the heart of the debate. One popular idea is to create a public utility with government control of all fees and charges through regulation. Paramount in this approach is the expectation that this entity will continue to offer access to all lenders and provide them with equal pricing.

With one of the GSE mandates being to provide affordable housing options to working class families, those involved in organizations that monitor this also want to ensure that this focus continues. However, based on the latest HMDA data, which shows that the greatest correlation to denials for non-white, Hispanic males or females was whether they were to be sold to one of the GSEs. This issue will continue to be burdensome to the agencies and despite the fact automated systems will continue to evolve, the on-going use of rules-based algorithmic models will do nothing to ensure the viability of any lending program, especially for these affordability issues. One thing seems consistent through all of these discussions. In whatever structure this government involvement takes place, it cannot be allowed to pose such an enormous risk to taxpayers again, nor can it ever again place the broader financial system at the level of risk it did during the Great Recession.

Another voice in the on-going discussion of what to do with Fannie Mae and Freddie Mac is the Mortgage Bankers Association (MBA) who recently published an introduction of its forthcoming proposal for addressing this issue. Based on the document it is clear they support a new secondary market approach. This initial document places an emphasis on the role of the federal government and the necessity of preventing this new “market” from fluctuations due to political turmoil, favoritism and/or changing administrations.

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The GSEs cannot be allowed to pose such an enormous risk to taxpayers again, nor can they ever again place the broader financial system at the level of risk it did during the Great Recession.

While most agree that there is a continuing need for the government to be involved in the secondary market, whether this is the current GSEs or some other type of entity seems to be at the heart of the debate.

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The focus of any congressional actions, according to the MBA position, should be to promote liquidity that stimulates investor purchases of mortgage-backed securities and prevent the taxpayers from taking on the risk of these securities. There are four critical elements they have identified that they believe must be part of any long-term solution. These include establishing the value of combining competition and regulations; providing equal access for all lenders regardless of size or structure; enhancing their current public mission for promoting affordable housing and finally, to maintain the level of liquidity for both single and multi-family housing. Furthermore, the MBA has included in this statement support for allowing the creation of additional privately owned entrants to compete with the reformed Fannie Mae and Freddie Mac.

These entities, including the new Fannie Mae and Freddie Mac would be organized as private utilities with a regulated rate of return and a public purpose of providing credit to the conventional mortgage market. In addition to this “end state,” MBA has identified a series of “Guardrails” that must be implemented to reinforce this new mandate. Among these are such standards as the maintenance of a “bright line” between the primary and secondary markets; these utility companies must be standalone to prevent any undue influence (such as those from big banks) and the resulting utilities should be regulated as a Systemically Important Financial Institution (SIFI).

So, What’s Missing?

Although these ideas and discussions are preliminary presentations of the more in-depth concepts discussions and legislative actions to come, the common thread in all the current offerings is the focus on Fannie Mae and Freddie Mac’s role in a new secondary market functionality. Emphasis has been placed on the idea that these new utilities will be aggregators of conventional single family and multi-family loans. So, where does that leave the other activities of that these agencies now control?

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One of the most obvious is that of creating and administering credit policy. While one of the “guardrails” listed in the MBA’s GSE Reform Principles and Guardrails, released on January 30, 2017, is the operation and management of “…the government’s QM-like single family eligibility parameters…”. What is not clear is whether the credit policies to be put in place will be unique to each utility or whether there will be one set of guidelines for everyone. One question left unanswered is whether the QM exception in place today will remain past the current stated end date.

As everyone is aware today, Fannie Mae and Freddie Mac compete through the variations in these guidelines, even to the point of differing calculations for determining income for rental properties. If this level of diversity in guidelines was to exist in several different utilities, it seems likely that it would cause confusion as well as set up any number of these entities to take risks that are would not be acceptable. Furthermore, the ATR/QM standards are the result of the CFPB regulations that the current administration as well as congressional opponents have vowed to eliminate.

In addition to these problems, while Fannie Mae and Freddie Mac have as a foundation of their charters the requirement that they expand homeownership opportunities for potential borrowers requiring more affordable housing, the reality is that this has not occurred. All one must do is review the past year’s HMDA data, including 2015, to see that the denials for non-white, Hispanic, men and women are most highly correlated to the intent to sell the loan to Fannie Mae or Freddie Mac. So, the question remains, if the current guidelines are failing to produce the results required of these agencies, how does adding more of the same expand that opportunity? On the other hand, will the emergence of very divergent guidelines individualized from each utility cause too much confusion and misdirection for the industry to handle?

Another expensive and antiquated program that are part of the agency requirements is Quality Control. Following the mortgage meltdown and the abundant evidence that quality failures were a direct cause of the mortgage failures, both agencies introduced loan quality initiatives. Unfortunately, these programs did not address the primary issues of ensuring the processes that produced these loans were under control, but continued to rely on controlling each loan through an inspection process both before the loan went to funding as well as afterward.

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Despite the fact automated systems will continue to evolve, the on-going use of rules-based algorithmic models will do nothing to ensure the viability of any lending program.

The issue of what to do with Fannie Mae and Freddie Mac will continue to play out for some time to come.

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While the intent to “discover” problems prior to funding was a noble effort, the result has been companies implementing 100% reviews on approved loans without a clear understanding of what to do with the results, how to cure many of the problems or obtaining updated information. Furthermore, the post-closing QC still occurs 90 days after the loan is closed and the sampling programs acceptable remain biased and the results incomprehensive.   To add insult to injury, these additional reviews double the cost while adding little if any, value.

With the adaptation of multiple utilities will the existing QC requirements remain, will each aggregator have the option to determine how they expect this analysis process to be completed or will every lender can design their own? Regardless of how it plays out, the value of quality control can be added in by ensuring that pricing reflects the product quality sold.

Last, but not least is the issue of compliance with regulatory requirements. Up to this point the GSEs have deliberately avoided evaluating individual compliance to regulations. While there are some valid reasons for this approach, with the new utilities, will this continue or will utilities decide to become involved with this process.

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The issue of what to do with Fannie Mae and Freddie Mac will continue to play out for some time to come. However, forward thinking originators and servicers will also be scoping out how any of these options can impact their business and be prepared when it does happen.

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Brace Yourself

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In his early days in office President Trump has shown that he is ready to shake up the mortgage industry. He has said that he plans to re-evaluate Dodd-Frank and he also suspended a reduction in the premium rate offered by the Federal Housing Administration to homebuyers. The reduction, relatively small, would have saved homebuyers about $500 a year. So, what do these early moves mean for this industry?

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William Fall, CEO at The William Fall Group, says, “The higher rates that we are starting to see would have happened regardless of the election outcome. I believe the MBA’s outlook in October remains fairly accurate. The fundamentals of the housing market are strong, and while there will be much less refi business going forward, I think we’ll see a very healthy growth in purchase volume. Of course, this shift in the market will impact the appraisal industry. Appraiser capacity in some markets is very high, and I expect regulatory activities will affect AMCs over the coming year. Perhaps it goes without saying that some valuation companies will be better equipped than others to manage these challenges.”

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Curtis R. Knuth, Executive Vice President at NCS (National Credit-reporting System, Inc.), believes that “the new administration will focus on a few obvious things, such as the privatization of the GSEs and what the runway for that will look like. Many solution providers and lenders were aware of the pilot programs Fannie Mae was running prior to the launch of Day 1 Certainty, which provides relief from reps and warrants, among other benefits. Although I don’t think anyone expected the program rollout to progress with a single vendor for each solution of the program. It was conducted as if Fannie were a private rather than a public entity, which is normally very careful not to pick winners or losers. It’s something we’re drawing congressional and administration attention to.”

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Jeff Bradford, President at Bradford Technologies, sees big changes to come. “I believe the Trump Presidency will have a Big Time effect on the financial industry,” he notes. “The first casualty will be the CFPB. In October the United States Court of Appeals for the District of Columbia Circuit handed a major victory to PHH, declaring that the CFPB’s leadership structure is unconstitutional and the director of the CFPB has too much power. The ruling means that a Trump Presidency will surely clip the agency’s wings. It will be interesting to see how much power the CFPB will be left with to enforce compliance and levy fines. It may not even survive.

“The second casualty is Dodd-Frank, the law that of course created the CFPB,” Bradford continued. “Trump’s transition team has recently indicated that it would like to see a full repeal of the law. Does this mean that we will go back to the Wild West that created the Great Recession, or just a milder form of it? The third major change could be GSE reform. The key will be if moderate Republicans and Democrats collaborate to create an economic shock absorber that dampens the effect of the changes the Trump administration will attempt to make.”

“The Trump presidency will have a significant effect on housing,” added Jeff Doyle, Chief Executive Officer at LoyaltyExpress. “We are already witnessing higher interest rates due to anticipated major federal infrastructure spending and stronger economic growth. A bigger economic impact, however, will come from the reversal of banking regulations. As lenders are encouraged to loosen standards (especially for middle-income households), an upswing in residential construction and debt-financed spending will serve to boost economic growth.

“More relaxed CFPB and other major Dodd-Frank regulations will lead to greater lending competition as well as a streamlined mortgage origination process. The downside of deregulation is riskier lending programs and more defaults. Caution must be the central theme so that deregulation does not lead to a recurrence of the 2007 financial crisis. But overall, growth and inflation will both increase,” Doyle pointed out.

But will Trump be a net positive or a net negative for mortgage lending going forward? “There are two different ways the Trump election victory will affect the mortgage market,” answered Josh Friend, CEO at InSellerate. “One is bad, and one is good. On the negative side, we can expect to see higher interest rates, which we’ve already seen happen since the election. Mortgage rates are up more than 50 basis points due to a massive sell-off of U.S. Treasury securities. The fear is that President Trump will be spending a lot of money to cut taxes, create jobs and rebuild our infrastructure. Those are good things, but they will cause inflation, and interest rates will rise as a result, as they already have.

“The second impact from the Trump Presidency will be a positive one for the mortgage industry and a win for both borrowers and lenders, and that is reduced regulatory requirements. Complying with all of the new regulations that have become law over the past several years has increased the time and cost of producing loans for both borrowers and lenders. Trump made a lot of promises during the campaign to reduce regulations and he seems to be moving forward on them during the transition. His appointment of Steven Mnuchin as Secretary of the Treasury, who has a mortgage banking background, should also benefit our industry.”

Rick Sharga, Chief Marketing Officer at Ten-X, theorized that “the Trump Administration will, on balance, be good for the housing and mortgage industries for several reasons. I believe that the new administration will work towards a less burdensome regulatory environment, and more specifically will unwind some of the more problematic and punitive aspects of the Dodd-Frank legislation, which has made lending riskier, more difficult and more expensive. This should encourage more retail lenders to get back into the game, and hopefully bring back some of the smaller, community banks as well, which opted out of the mortgage market due to the overwhelming costs of regulatory compliance. More lenders making more loans to qualified borrowers – people who would have qualified for loans historically but haven’t been able to do so in today’s extraordinarily risk-averse environment – removes one of the major headwinds that has been preventing a full housing market recovery.”

Sam Heskel, CEO at Nadlan Valuation, agrees that Prsident Trump could be good for mortgage lending. He says, “Trump will not do things that make it more difficult for the industry to sell homes and close loans. At the very least, we can expect some rollback or easing of regulations that have added to longer appraisal turn times. In the near term higher rates and the typical slowdown in the winter months will ease appraisers’ workload and appraisal turn times will improve.”

So, what does this all mean? Many are cautiously optimistic even if they hate President Trump. “Regardless of your political bent, let’s first remember that Trump is a real estate magnate – and thus I’d like to believe he is well aware of the dynamics of the real estate market and would be disinclined to step on the hose, so to speak,” said Sue Woodard, President and CEO atVantage Production. “Fears over removing the mortgage interest rate deduction or “MID” are unfounded – he is considering a cap (and by the way, there is a cap already) – but even if the cap was $100K as Mnuchin suggested, it would take an enormous mortgage to generate $100K in mortgage interest.

“Simplification of the tax code could impact the ability of some buyers to deduct mortgage interest at all, but I believe most folks would remain in favor of simplification. I further suspect the CFPB is here to stay, but with the current structure placing direct oversight of the agency under the President – including a right to fire the director. I expect this might mean a more business/industry friendly agency, while still protecting the consumer. Opportunity abounds, as it always does in times of change – and it’s incumbent upon lenders to use technology to consistently and professionally communicate this message so that consumers don’t miss the opportunity to build and advance their financial futures,” concluded Woodard.

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The Fight Of The Century

In 1975 the “fight of the century” took place in Manila. Known as the “Thrilla in Manila”, Joe Frazier and Muhammad Ali took to the boxing ring to determine once and for all who was the heavyweight champion of the world. As any sports fan knows, Ali won that fight by a TKO decision at the start of the15th round. The fight earned its reputation because of the two men involved. They were both well-trained and totally focused on being champion. Everyone who watched that fight, from then until now, is impressed with the grace and dignity these individuals displayed during each round. Both, many said, were champions regardless of the outcome.

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The mortgage industry is now preparing for the next “fight of the century” as two more well-known individuals face off. No, it is not Deontay Wilder or Tyson Fury. Instead this fight will be between Trump and CFPB Director Richard Cordray. We all knew it was coming if there was a republican victory at the polls last fall, but when it will begin is still open to discussion. One thing is certain however, it will not be a graceful or dignified fight but a dirty, drag down, litigious drama with no clear winner and the only losers will be the mortgage industry and consumers.

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The impetus for this fight began several years ago, as the CFPB was created to stop the abuses of lending companies that lead to the Great Recession. The group was charged with creating new regulations for controlling financial organizations as well as monitoring consumer feedback on these company’s actions as viewed by the consumer. Because of its structure the CPFB had no interest or incentive in listening to or acting on the requests or efforts made by lenders to compromise on the details of these new requirements to make them more amenable or less costly. The examinations conducted by the CFPB resulted in tremendous penalties and fines that appeared to be exorbitant for the violations identified. This abuse of power came to a head with the litigation by PHH against the CFPB. In that case the court ruled not only that the CFPB was incorrect in its determination of the problem, but stated that the actual structure, which required no accountability to either legislative or administrative branch of the government, was basically unconstitutional. The call for significant changes in the organization and the new republican victory created an expectation that the Director would be fired immediately after the inauguration. Director Cordray however gave notice that he will not leave until his term is up next July and if necessary will use the courts to ensure his position. And so, the fight began.

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However, this fight is not between two equally strong opponents seeking to show through their training and skills that they deserve to be called champion. This fight is between two egotistical politicians whose interest is focused only in being the destroyer of the other. Although the republicans and their supporters hope that their fighter, Trump, will win, Director Cordray promises to not let that happen. Meanwhile the Trump administration has shown no sign of, or any eagerness to, get into the action. This fight of the century promises to be longer, nastier and much more contentious than the “Thrilla in Manila”. So, hold on to your seats. This is sure to be very entertaining even if it ends up as a draw.

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Listen Up Candidates

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Have you been following the Presidential Election? Most people have. Why? It’s outlandish. Earlier this year presumptive Republican nominee Donald Trump called Hillary Clinton an “unbelievably nasty, mean enabler” who “destroyed” the lives of her husband’s mistresses.

The comments, made during an evening rally in Eugene, Ore., marked the sharpest tone he’s taken against the Democratic frontrunner since becoming his party’s presumptive nominee, and the first time he’s been so direct in referencing Bill Clinton’s affairs in months.

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“She’s been the total enabler. She would go after these women and destroy their lives,” Trump said. “She was an unbelievably nasty, mean enabler, and what she did to a lot of those women is disgraceful.”

In exchange, presumptive Democratic nominee Hillary Clinton condemned Donald Trump’s criticism of U.S. District Judge Gonzalo Curiel, who is overseeing lawsuits involving Trump University, during a conversation with MSNBC’s Rachel Maddow.

“This racist attack on the judge is just another example of how he is absolutely impervious to the values of America, to the progress that we have made over many, many decades,” Clinton said of Trump’s comments. “He’s trying to demean, and defame a federal judge who was a very accomplished federal prosecutor who was first appointed by a Republican governor in California.”

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Trump has said Curiel, who is presiding over two of the three cases against Trump’s now defunct for-profit school, cannot be fair in the ruling because Curiel is “a hater,” “very hostile,” and “Mexican,” and Trump wants to build a wall along the border with Mexico. Curiel was born in Indiana and is American.

I know, the level of discourse it’s unbelievable. With the presidential elections fast approaching, one in five Americans (21%) say a candidate’s housing and finance policies will influence their vote, according to new research conducted for loanDepot. Nearly two out of five (36%) also think the presidential candidates are doing a bad job of articulating their housing and finance policies, and 35 percent would like to hear more from the candidates on these topics. Among those interested in hearing more, 56 percent are Democrats, 39 percent are Republicans, and 29 percent are Millennials.

Americans also weighed in on their economic and housing priorities for the 45th president’s first 100 days, electing to keep housing more affordable and interest rates low. Making homeownership more affordable for middle and lower income families topped the list with 37 percent of Americans, including 32 percent who are Millennials, 64 percent who are Democrat and 32 percent who are Republican. Keeping interest rates low (34%) and making more credit available to small businesses (11%) are second and third priorities. There was bi-partisan agreement on keeping interest rates low during the next president’s first 100 days with Democrats and Republicans at 47 percent and 49 percent respectively.

“People across the nation told us they want to hear more from the presidential candidates about their housing and financial policies on issues like income, access to credit, interest rates and affordable housing,” said loanDepot Chairman and CEO, Anthony Hsieh. “The candidate who does a good job in communicating their policies moving forward has an opportunity to influence millions of potential voters.”

Same Old Same Old? Maybe Not ?

Most Americans expect their financial situations to stay the same or get worse as a result of the upcoming presidential election, which could be due to a lack of information from candidates about these key policies. While the majority of likely voters (66%) don’t expect the election will impact their personal finances, nearly one quarter (24%) think they’ll be worse off financially. Of those who expect be worse off, 56 percent say the candidates have done a bad job of articulating their housing and financial policies. More Democrats (50%) expect to be worse off financially as a result of the elections than Republicans (44%). Only six percent of all voters expect to be better off as a result of the general November election.

Millennials May Miss Out?

With Millennials now outnumbering baby boomers as the nation’s largest living generation of consumers, their entrance into homeownership has been anticipated as a welcome boost to home sales, especially starter homes. However, while 38 percent of home loans closed by Millennials in April 2016 were FHA loans1, the survey revealed many are still discouraged about their incomes and the election’s impact on their access to credit. In fact, more than one third (36%) of Millennials say their primary financial concern is not making enough money, and 46 percent are concerned about how the elections will impact their ability to access credit. Two out of five (40%) Millennials said making homeownership more affordable to middle- and low-income Americans should be a priority for the next president’s first 100 days.

“As more Millennials enter the housing market, we expect to see a higher priority placed on better borrowing options for first-time homebuyers,” said Hsieh. “loanDepot is one of the five largest FHA lenders in the country and we remain focused on helping borrowers, including Millennials, access the credit they need to finance home purchases.”

Accessing Credit: Perception vs. Reality?

The loanDepot research found perceptions on financial trends sometimes don’t match reality. For example, 38 percent of Americans said they think it’s harder to get home loan today than it was immediately after the financial crisis in 2008. In fact, while guidelines have tightened since 2008, applications for purchase mortgages were more likely to be denied in 2008 than in 2014, the most recent year for which Federal Reserve2 data is available. Denial rates for home purchase loan applications hit 18 percent in 2008, while denials in 2014 topped out at 13 percent. Denial rates for home refinance applications in 2008 were 38 percent and dropped to 31 percent in 2014.

About the Survey?

The survey was conducted by OMNIWEB using the KnowledgePanel in a national online omnibus service of GfK Custom Research North America. The KnowledgePanel is the only commercially available online probability panel in the marketplace making the sample truly projectable to the US population, which sets it apart from traditional “opt-in” or “convenience” panels. A total of approximately 1,000 interviews were completed, with 500 female adults and 500 male adults. The margin of error on weighted data is +/- 3 percent for the full sample.

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Learn From The Politicians

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TME-TGarritanoPoliticians say the craziest things. Just look at the comments made by some of the 17 Republicans running for President. It’s out of control really. However, mortgage technology vendors should take notes about what not to do from these blowhards. Here are five things to avoid:

Don’t Complain. Nobody likes to deal with someone that continually makes excuses for shortcoming. Here’s what I mean:

“Can you imagine, if after the bridge investigation began, I came out and said ‘Oh, I’ve done all my business as governor on a private email server. And, I’ve deleted now 30,000 of those emails. But trust me none of it had to do with the bridge.’ Give me a break,” Chris Christie said to CNN.

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But the only email he provided to the Legislature last year came from his private Yahoo account. Christie turned over just one set of emails to the New Jersey Legislature in response to its subpoenas about Bridgegate. That email conversation contained edits that Christie made to a statement announcing the resignation of Port Authority official David Wildstein, who has since pleaded guilty for his role in the lane closures.

Democratic Assemblyman John Wisniewski, who led the investigation, told WNYC that Christie sent those emails in December 2013 from his personal Yahoo account. The public documents had previously been released but the email address was blacked out. Don’t complain when you’re doing the same thing yourself.

Similarly, Carly Fiorina’s campaign slammed CNN and the RNC, accusing both of them of “putting their thumb on the scale.” She’s complaining about being shut out of the debates.

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“If the RNC won’t tell CNN to treat post-debate polling consistently with pre-debate polling, they are putting their thumb on the scale,” Fiorina spokeswoman Sarah Isgur Flores said in a press release.

Flores ratcheted up the attack even further during an interview on Fox Business.

“This is the status quo trying to protect the status quo, trying to protect their power, their prestige, and so they want the same people on the stage as before, and they’ve set up a system that will do that,” said Flores. In the end none of this complaining is going to get Fiorina into the debate.

Too often I hear technology vendors complain about the lack of media coverage that they get or the fact that certain vendors are always in the news. Don’t complain about media coverage, form good relationships with the media so they cover you more.

Don’t Namedrop. You just don’t speak ill of the competition because you end up looking bad. For example Rick Perry blasted rival Donald Trump in the harshest terms — even comparing him to a “cancer” and “false prophets.”

“Let no one be mistaken – Donald Trump’s candidacy is a cancer on conservatism, and it must be clearly diagnosed, excised and discarded,” Perry said, according to a transcript of his prepared remarks. “It cannot be pacified or ignored, for it will destroy a set of principles that has lifted more people out of poverty than any force in the history of the civilized world – the cause of conservatism.”

Similarly, George Pataki also called out Trump directly. Former Pataki slammed fellow Republican presidential candidate Donald Trump, who he said has been “disrespectful” toward Latinos with recent disparaging comments about Mexican immigrants.

“Yes, clearly, they’re disrespectful,” Pataki told Business Insider of Trump’s comments in a brief interview before the annual New York Republican Party’s gala.

Trump characterized Mexican immigrants in his campaign launch speech as “rapists” and drug runners when talking about how he’d focus as president on reducing illegal immigration. What happened to both Perry and Pataki? They sunk in the polls.

If you are a mortgage technology vendor don’t slam your competitors by name. You need to clearly articulate your value proposition, not waste time talking down about others.

Don’t Over-Generalize. Lenders want specifics. Speaking of Trump, the king of over generalizing is Donald Trump. When it comes to immigration he says building a wall will solve everything, and that Mexico will pay for the construction of the wall. When pressed about what to do with illegal immigrants in the country already, he said that he would round them up and send them home. How would he accomplish this? By hiring good managers. Obviously this is an over generalization that won’t solve the real problem.

Women make up a large voting block and Trump is not doing well among women so he over generalized again. “I will take care of women’s health and women’s health issues better than anybody and far better than Hillary Clinton, who doesn’t have a clue, “ he told reporters after an afternoon rally. Notice that he doesn’t give any specifics? As a mortgage technology vendor, you can’t just use buzzwords and acronyms that you think people want to hear to sell your product. You have to know your solution’s specific value proposition.

Don’t Pander. You can’t tell lenders what you think they want to hear, you have to clearly articulate your value propositions. Politicians tell people what they think they want to hear instead of the truth and they suffer for it all the time.

Former Florida Governor Jeb Bus changed his position on the Iraq War three times in the same week. In his clearest declaration yet on his feelings about his brother’s invasion of Iraq, Jeb Bush said that “knowing what we know now, …I would not have engaged.”

“I would not have gone into Iraq,” he said. But earlier in the week he told Fox News that he would have engaged, then he tried to backpedal because he knows that public sentiment is not in favor of the Iraq War.

Wisconsin Governor Scott Walker did the same think when talking about birthright citizenship. In the end Walker said, “My point is any discussion that goes beyond securing the border and enforcing laws are things that should be a red flag to voters out there who for years have heard lip service from politicians and are understandably angry.”

That’s a far cry from how the Wisconsin governor answered the same question last Monday. “Yeah, absolutely,” Walker said when asked by an MSNBC reporter at the Iowa State Fair whether he wanted to end birthright citizenship. The bottom line is that you should learn from these politicians and just tell it like it is instead of delivering falsehoods to make your system sound better.

Don’t Exaggerate. Nobody likes a person who stretches the truth and goes over the top. To this end, many politicians have exaggerating the impact of the nuclear agreement with Iran. Presidential candidate Mike Huckabee called the Iran deal “idiotic,” and likened it to events of the Holocaust, saying that President Barack Obama will ultimately “take the Israelis and march them to the door of the oven.” The Iran deal might not be perfect, but comparing it to the Holocaust is just wrong.

Politicians make the same exaggerated claims about the Affordable Care Act. Ted Cruz gave an impassioned speech on the Senate floor, a few hours after the Supreme Court ruled 6-3 to uphold the Affordable Care Act’s subsidies nationwide. The senator from Texas, who is also running for president, called the decision “judicial activism, plain and simple.”

“Today, these robed Houdinis have transmogrified a federal exchange into an exchange, quote, ‘established by the State,'” he said. “This is lawless. As Justice [Antonin] Scalia rightfully put it, without objection, words no longer have meaning.” Another crazy exaggeration.

If you’re a mortgage technology vendor, speak honestly and frankly with lenders. Don’t tell them that your system does things that it doesn’t. Exaggerating will only get you in to trouble.

I hope you learned a lot about what not to do from these politicians.

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