Edition #5: Mortgage Industry as Heroes?
March 18, 2020|Mortgage Industry, Transactions, Virus Response
Challenges with Closing Loans
I’m posting my Musings mid-month because these virus issues require immediate attention (and it’s given me time to write). The mortgage industry will be challenged to close and service loans in the coming weeks; from staffing and social distancing to county recorders’ offices being closed and trouble getting employment verification.
Nevertheless, mortgage people (and related vendors) might want to think of themselves more like “first responders” in this crisis. As MBA President, Bob Broeksmit, recently noted the mortgage industry can “unleash billions of dollars of fiscal stimulus by helping Americans refinance to a lower rate, thereby freeing up resources for them to spend on other needs.”
Atoning for the Meltdown?
Unlike the “Big Short” type narrative for the 2008 meltdown and ensuing recession, the banking and mortgage business can’t be blamed for the damage this virus is causing to the American people and economy (China can be blamed, however). But, with rates kept low as an economic stimulus, this crisis offers our industry a chance at redemption…, but only if we can keep on closing loans.
Changing the mortgage industry’s reputation in the American economy will require tech savvy, creative working arrangements, and perhaps taking some calculated financial risks in the coming weeks. But, we have a duty to get this right this time. Younger people, in particular, may need to step up. Regulators too, like FHFA and CFPB, who will need to help by relaxing or suspending some rules to accommodate unprecedented circumstances to enable closings and forbearance for people temporarily losing income. All of us can be everyday heroes if we can figure out ways to work through the staffing and closing challenges without undue health or financial risk to staff, customers and community. Likewise, even with FHFA’s announcement suspending foreclosures, investors and servicers should step up right now to prepare for April when late payments inevitably become a massive issue.
Musings in a Time of Virus
Aside from cabin fever and dire warnings for the elderly, this period reminds me a bit of the “refi madness” of 2003 when I was in-house. That year, while the production staff was working overtime and weekends closing loans, I was tapping my pencil and playing minesweeper. No one seems to have many RESPA or other questions for me when loans find themselves.
Meanwhile, there’s no sports to watch other than my neighbor’s son practicing lacrosse in the backyard. Sorry, I don’t have many answers on this virus other than what you can get from the smartest people in the room or Mel Brooks’ kid, but, as I told my parents, in hindsight I’d rather know I overreacted than regret not doing more.