The Forward Mortgage Industry and The Reverse Mortgage Industry Must Unite

The forward mortgage and reverse mortgage industries are prosperous in angst and rich in abject despair as it tries to navigate rules and laws that are un-navigable. They create layers of redundant and unnecessary activities  that have no basis in serving the needs of the borrowing customer. The mortgage industry  as a whole, is like the octopus on roller skates-moving in different directions without going anywhere.

Accordingly, the forward mortgage and reverse mortgage industries will collapse from the weight of its own collective detritus. Neither possessed a sufficient enough vision of protecting their customers. Instead, the participants- the broker , the banker and the FDIC bank tried to protect their own turf.

The collective mortgage industry will be working harder, longer and more inefficiently as it follows new regulations and laws that does little to protect the consumer. Existing problems are made worse as the industry throws liquid upon the fire. This time the liquid is gasoline.

We know that fish swim in schools, geese fly in flocks and horses run in herds. Humans could learn a lot from these animals. They actually work together to get where they are going.

Those groups that make up the mortgage industry do not like to work together. The FDIC banks think they are better than the mortgage brokers and bankers. The mortgage bankers think they are better than the mortgage brokers. The point that all of them have missed is that they serve the borrowing public. Rather than work together, they have confused the regulators and lawmakers, as each points the finger at the other. And so the borrowing public will suffer because the opportunity of a united front was lost.

Each of the disparate mortgage groups have petitioned Congress in their own way. Without the power of collective wisdom, Congress will not be convinced and will create their own solution to a perceived threat. The industry has seen this first hand.

Legislators and regulators can promulgate rules and laws, but without a complete understanding of the ramifications of each, the aforementioned acts will create insurmountable barriers rather than the protection sought.

It is time to speak the truth and say things that many are thinking. Sometimes it is important to moderate the tone  and the words and to keep emotions in check. Now is not the time. When a home is on fire we do not tell a parent to GRADUALLY carry the child to safety.  And so I will make a plea for sanity.

First: The RESPA revisions are fatuous and offer little in way of protection. Rather, they create a bureaucratic nightmare for the mortgage lending industry as very technical compliance rules trump any protection from the creation of same.

Second: The HVCC rules that will go into effect will only benefit the banks since most own appraisal management companies. Real advocacy on behalf of the client will be lost. The appraisal will have to be paid up front by credit card. No longer will the senior borrower be able to pay for same out of the loan proceeds. A senior borrower will be forced to proceed with an application in order to find out the appraised value of the home. The mortgage industry cannot survive in a sterile environment. The HVCC rules facilitate less lending as lenders look to reduce risk by getting lower appraised values.

Third: The S.A.F.E. Act is suppose to make the mortgage industry safer. In essence it makes it easier to be good and harder to be bad. The testing component is eliminating many from remaining in the industry. On the reverse side, originators who had no forward mortgage experience, will find it difficult to pass this exam. That is why the act needs to be amended to account for the reverse mortgage side of the business. Until this is done, livelihoods are in jeopardy. At the same time, many of the bad players will also be gone in the forward and reverse mortgage industry. I surmise that when the dust is settled the S.A.F. E. Act will do what Congress intended. To have good people in the mortgage industry. And if that is what was intended, and the Act accomplishes that, then there is no need for HVCC or the new GFE either.

The mortgage industry has to show Congress that it is capable and competent. The FDIC banks believe that they teach their originators what everyone else in the mortgage industry is learning by taking continuing education and pre application credits. They know that this is disingenuous.  I do not believe that any originator working at a FDIC bank, could not pass the NMLS exam based upon what the FDIC banks purportedly teach.

It is now or never for the mortgage industry to unite. If each group cannot see that there is enough business for everyone, then I suggest that we all dust off our resumes.

Comments

[Kathie Adler]

The mortgage tsunami has hit. But it's been coming in wave upon wave for nearly a year. I have said many times we do not have an advocate; maybe we have the Mortgage Bankers Association and NRMLA, but is anyone listening? Did HUD listen to our cries? Had we had true and effective representation these stringent rulings would never have passed. Why doesn't HUD talk to the loan officers who are in the trenches every day or to the senior homeowners who look to their government to help them? We in the industry have been deluged with HUD's NEW Mortgagee Letters that it feels like a huge tidal wave. I am just weary of all the new things we've been hit with due to all the new regs and laws and tolerances and time constraints. Three days this, seven days that. The NEW Good Faith Estimate is a good one. Is it all being done to overwhelm? Or to help our borrowers as we have been told? We are supposed to enjoy this business and help seniors. How can it help if borrowers have MORE paperwork to read (and oh how they HATE all the paperwork-- ask me how I know!)? And if their closings are delayed? This business is now RIFE with more paperwork than before, and MORE to explain to the poor senior who only wants his money! I feel like I live in old Russia with the Bolshevik's breathing down my neck and me running from them while I try to survive! Dennis is right, we must unite or we are all doomed to more of the same.