Authored by Timothy Kosiek and John Maddente
Educational sessions and dialogue at the North Carolina Banker’s American Mortgage Conference addressed pertinent topics in the mortgage and housing finance industry, including debate on the future structure and authority of the Consumer Financial Protection Bureau (CFPB), the complexity of compliance with various laws / regulations, improvements in mortgage origination and servicing processes and a broad range of opinions on housing finance reform.
The future of the Consumer Financial Protection Bureau (CFPB)
With the court case debating the constitutionality of the CFPB underway during the conference, discussions were frequent. Shortly after the conference, the Federal Appeals court heard arguments on the CFPB’s constitutionality and whether the bureau should be overseen by a single director or a board, similar to other regulatory bodies. A reoccurring focus during the conference was the future of the CFPB. While a verdict isn’t likely to be released until the end of 2017 or early 2018, the industry consensus is that there is not enough to constitute ruling the CFPB unconstitutional in whole. Instead, many believe the most likely outcome is a scaled back version of the CFPB, potentially with a more traditional regulatory rule setting focus.
Regulations were cause for discussion on several fronts throughout the conference. The subject of streamlining TRID, also known as the “Know Before You Owe” rule issued by the CFPB, was a hot topic of discussion. TRID, which had an effective date of Aug. 1, 2015, has gone through its first full year in effect and mortgage loan originators shared best practices from their implementations. Another regulatory topic discussed was the emerging expansion of data compliance in regards to the Home Mortgage Disclosure Act (HMDA), the federal law requiring certain financial institutions to provide mortgage data to the public, from the increased use of technology to gain efficiencies.
Home loan process efficiency through technology
Along the vein of technology efficiencies, mortgage originators and servicers discussed how technology and software enhancements improves efficiency of the mortgage approval, closing and recording processes, as well as the continuing challenges of servicing mortgage loans efficiently and within the prescribed requirements. Increased use of technology has been able to measurably reduce the process timeline as evidenced by a case study presented at the conference.
In Dec. 2016, Caliber Home Loans, a mortgage originator and servicer, completed its first all-digital loan closing, cutting down the average loan process from 70 days to 10 days.
With around 50 percent of states in the U.S. now having this capability from a regulatory standpoint, organizations should evaluate the landscape of their organization to determine their strategy going forward, including investing in IT and impacts on departments / procedures within their institution.
Housing finance reform
The final focus from the conference was discussion on housing finance reform. This subject had differing opinions between industry professionals, even on the focus of what the reform should be. One discussion focused on reforming the products themselves, such as the 30 year mortgage, with debate including the 30 year fixed rate mortgage is a cornerstone of the market versus that it is inherently broken and needs to be replaced with the 15 year.
As always, the American Mortgage Conference brought highly informative and thought provoking discussion to the mortgage servicing industry’s main issues, challenges and opportunities.
For more information on this topic, or to learn how Baker Tilly mortgage servicing specialists can help, contact our team.