GRAPEVINE, TX (February 8, 2018) – (RealEstateRama) — Dave Motley, CMB, 2018 Mortgage Bankers Association (MBA) Chairman and President of Colonial Savings, F.A. today delivered the following remarks at MBA’s National Mortgage Servicing Conference and Expo 2018 in Grapevine, Texas.
[Please Note: These are prepared remarks. Mr. Motley may add to or subtract from these remarks during the course of his presentation. Portions of the text may be omitted during the speech.]
Good morning, MBA, and welcome back to Texas!
It’s my pleasure and honor to be with you today serving as MBA’s 2018 Chairman, representing both Colonial Savings and the servicing industry.
You know, sometimes servicing gets painted with such a negative image.
We’re the paper pushers…The check collectors…The ones who follow through on delinquencies and, occasionally, unfortunately foreclosures.
All we care about is getting our check on time- which couldn’t be further from the truth!
And, from the policymaker perspective, they are perhaps understandably skeptical and cautious as the result of a few bad actors that gave the entire servicing industry a black eye.
And the fact is, even within my own company, too often, we have talked about a file having this or that problem, sometimes forgetting the fact that every file is really a family trying to improve their situation.
I really don’t think that is whowe are. Either as a company, or as an industry.
The fact is, we care about our customers and their homes. The best part of my job is being part of a team that helps people get a home of their own. What often goes unsaid is the importance of helping those people stay in their home if something unfortunate happens. Otherwise, what’s the point of helping them buy that home in the first place?
Which is why, at Colonial, we have coined a motto – “Families, not files.” Because we are supposed to be a source of information, expertise and help. It’s not a file that needs help to avoid foreclosure…it’s a family.
Let me take a moment to tell you about the Sanchez family.
The Sanchez family fell on hard times due to illness and the resulting loss of income. As with many in these situations, house payments fell behind. In order to avoid foreclosure, the family worked hard to sell their home.
They found a buyer and got all the way to the closing table, only to find what they believed were outstanding late fees, and previous tax advances that would prevent the sale of their home.
They asked Colonial to step in. We quickly worked with the settlement agent, the realtor and the borrower, walking them through the paperwork, helping them understand that the fees were already accounted for and they should be good to close (after we forgave a small debt).
Our team at Colonial was available even at the last minute to quickly mitigate the situation and help the sale to close, relieving a great burden for the Sanchez family.
While this may seem like a small thing to you and me, it wasn’t to the Sanchezes. But this is the sort of thing servicers do every day.
Because these are families, not files.
Luckily, in this situation, we had the ability and flexibility to quickly resolve the problems without any regulatory hurdles. But that isn’t always the case.
As we work with policymakers to address the legislative and regulatory burdens that prevent us from providing the service we want to give, we should always keep our families in mind.
We continue seeking clarity in the rules with written and reliable guidance all servicers can follow, and all consumers can understand.
We need servicing alignment across all investors and guarantors – HUD/FHA, VA, DOJ, USDA and even the GSEs. We need all federal government agencies on board following the same standards.
Take for example the uncertainty that still exists around FHA loan level certifications and DOJ enforcement standards under the False Claims Act. Though these have been used primarily to bring cases for origination issues, the risk is similar for FHA servicers who submit these certifications or claims for defaulted loans.
HUD Secretary Carson committed to address this issue at MBA’s Annual Convention and we are continually following up with HUD in hopes that progress will be made in the near future. Ideally we can reach a point where lenders and servicers will only be liable for material errors that would have altered the decision to approve the loan for FHA insurance, and good-faith mistakes will not result in draconian punishments.
By determining loan defects through terms of insurability, FHA would provide greater certainty and clarity regarding the types of errors that can expose lenders to False Claims Act risk. Limiting this risk, along with reforms to lower the cost of servicing FHA loans, would encourage more robust participation in the FHA program.
Servicers also need a cohesive framework in which to provide loss mitigation and alignment across investors and guarantors. We know what works in default servicing and should align towards those standards. Such changes would provide equitable outcomes that don’t vary based on the particular government insurer or guarantor; such changes would reduce consumer confusion about available options and would provide servicers with a single playbook they need to follow.
With this in mind, an MBA Task Force comprised of over 35 members from 20 companies convened to draw upon the experiences of the financial crisis and HAMP — to formulate universal principles that should be applied to a future loss mitigation program.
After much deliberation, the task force developed the One Mod Waterfall Proposal. It incorporates four themes that drive successful loss mitigation – accessibility, affordability, sustainability, and transparency.
Life after HAMP shouldn’t be a guessing game. A unified framework, like the One-Mod proposal, offers clarity and predictability to both servicers and consumers.
But, then there are the extraordinary, unexpected tragedies that have catastrophic impacts on people’s homes and lives. Because it’s not a file that lost their home in a hurricane or wildfire…it’s a family.
And MBA and our members get it. Immediately at the onset of the hurricanes and flooding in Texas, Florida, the Southeast, and Puerto Rico, MBA deployed consumer and industry resources on its website to help families impacted by the devastating hurricanes: basics like a checklist, along with tips for consumers on who to call, and links to disaster resources such as FEMA.
These industry resources are a one-stop shop for all mortgage investor, insurer and guarantor guidance related to disaster responsiveness. Because when we’re prepared, we can help our customers that much better.
Many of us needed this guidance.
Colonial alone serviced about 9,000 families who were impacted by hurricane Harvey and over 5,000 families who were impacted by Irma.
We provided resources and information straight from our website for the families in need of help regarding their weather damaged homes.
Today, many families remain stuck somewhere between FEMA assistance and Hazard or Flood insurance payments; proceeds that they need to rebuild their homes.
And, we are doing all we can to assist them.
As if hurricane destruction wasn’t enough, another natural disaster struck families in California. Wildfires are still burning and are noted as some of the worst in California’s history. More than 1.2 million acres have burned.
The North Bay fires resulted in $9 billion in claimed losses, according to the California Department of Insurance. Across the state, more than 5,700 residential properties were listed as total losses, while over 15,000 residential properties were listed as partial losses.
Servicers with customers in disaster impacted areas are working round the clock to provide families what they need to rebuild their homes and their lives.
This is one of the hardest jobs for servicers and some of the most difficult times for families. We take each situation very personally because there is nothing more personal to someone than their home.
And because these are families, not files.
Working with families also takes an understanding of who they are, their lifestyles, and their housing needs. And in this area, our industry can always do better.
And to do better, we must embrace diversity within our own organizations and in every sector of our industry. We need an industry that better reflects its customers. We all know and believe in the case for diversity. Now let’s do something about it.
At Colonial, we created our own Diversity and Inclusion Committee led by a cross section of people from all over the company — new employees and veterans; Senior VPs and clerical folks; and minorities representing people of different races, lifestyles and backgrounds.
Managers meet with their teams regularly to talk about our shortcomings and our successes from a diversity and inclusion perspective.
We encourage our folks to speak out on ways to knock down barriers and develop better ways to attract diverse talent and customers.
Whenever we recruit to fill existing or new positions, we seek out social media, publications and schools that are known to be active in multi-cultural communities.
These types of initiatives can be applied to every business. And here are just a couple of the things that MBA is doing to help you on this front.
MBA is providing more education on, and access to, services, tools and other resources to help its member companies advance their diversity efforts.
MBA is aggressively promoting jobs and careers in mortgage banking through Mortgage Banking Bound and virtual career fairs to attract new, more diverse populations to our industry.
We have created our mPact and mPower programs to provide a platform for bringing young people and women into our business and giving them a network that will help them prosper and advance.
By taking advantage of MBA’s diversity resources and incorporating simple, strategic diversity initiatives within our businesses, we can better serve the families who depend on us for their homes.
Folks, this is the future. Companies that don’t embrace diversity and inclusion are going to be left in the dust. It’s just that simple.
As we work with leadership in Washington, DC, to improve the servicing atmosphere, we must keep the families we serve at the forefront of our conversations.
We are closer to consumers than anyone and because of this, we have a unique perspective to advocate for the policies that affect our industry and impact consumers.
With the economy going strong and mortgage defaults low, now is a perfect time to evaluate the servicing business, seek out opportunities for improvement, and work with policymakers to make it happen.
We have an opportunity with a more business-friendly administration and Congress to make great changes.
Last year at this conference, I talked about the Basel III Accord’s punitive treatment of Mortgage Servicing Rights, and how the rule was bad for the entire industry.
Largely, as the result of the efforts of MBA and its members, the three prudential regulators gave us a “pause” in the BASEL implementation timeline last fall and subsequently proposed “a simplification” of the capital treatment that would raise the cap on MSAs from 10% to 25%.
This was a huge success story. But, we won’t back down.
We look forward to finalization of a “simplified” rule that would “loosen the noose” of punitive capital standards that the original rule imposed.
Meanwhile, some think now would be a good time to address servicer compensation or “fee for service”. I suggest we be very cautious here. There is a lot to consider.
What is the right amount of servicing fee?
Do you set the amount now and have it adjust with some index?
How do you estimate what future costs there might be?
This a very complicated topic and one for which we need to be very thoughtful and deliberate after having received a lot of input from the entire industry-originators, servicers, guarantors, and investors.
Here’s the bottom line… There are a number of issues on which we need to be working with regulators if we are to restore balance to the housing market;
Some of them are directly servicing related, while others could have ripple effects across the entire real estate finance industry.
And here is where you come into the picture. To be successful, we need you advocating with us. And we can start right here at this conference.
First, if you’re not already a member of the Mortgage Action Alliance, you should be. It’s free and it is MBA’s primary mechanism for effecting change quickly.
When the GOP tax plan passed the Senate Finance Committee, the bill contained a provision that would have required lenders who retain servicing to pay tax on their MSRs at the time the Mortgage Servicing Asset is created, not as the income is received under current law.
This change in tax accounting for mortgage servicing rights would have had a devastating impact on the flow of capital that supports a robust and competitive real estate finance market. It could have put a lot of us servicers out of business!
MBA jumped into action, and in addition to a surgical direct lobbying effort, we activated the Mortgage Action Alliance. We generated more than 9,000 letters to Capitol Hill – and succeeded in getting an exclusion for mortgage servicing contracts in the final Senate bill and conference report.
That’s the power of MAA and that’s the power we have when we act as one. 9,000 letters in less than a DAY is an impressive number, but every skirmish is different – and next time we may need ten times that amount!
There are 250,000 people employed in the mortgage finance industry. We need them all to be MAA members.
As evidenced by this recent call to action, the MAA is fast. It is free. And it is effective! To learn more, I’d like to invite you to join me this evening for the MAA/MORPAC reception at 6 PM. To be honest, this crowd has not been as actively engaged in advocacy as some of our other industry niches.
So please stop by tonight and we will discuss how you can help us continue to influence and educate lawmakers to move our initiatives forward and help our industry better serve our customers. We need you to lend your voice to our efforts. Bring your expertise, relationships, and experiences to the table.
Everything we do touches people’s lives.
What we do and how we serve our customers matters.
Because it’s about families, not files.
Rob Van Raaphorst
(202) 557- 2799