BOSTON, MA (October 28, 2016) – (RealEstateRama) — Rodrigo Lopez, CMB, Chairman of the Mortgage Bankers Association (MBA) and Executive Chairman of NorthMarq Capital, today delivered the following remarks at the association’s Annual Convention and Expo in Boston, MA.
[Please Note: These are prepared remarks. Mr. Lopez may add to or subtract from these remarks during the course of his presentation. Portions of the text may be omitted during the speech.]
Isn’t it great to be in Boston, with its revolutionary history, prestigious educational and cultural institutions, its sports heroes and legacies, and, of course, what a better place to be in October but in the midst of beautiful New England surrounded by more than four thousand mortgage bankers?!
Today, I stand before you ready and excited to serve as your 2017 MBA Chairman.
With great appreciation for our industry and the communities we serve, I want to thank you for this incredible opportunity. Like many of you, my passion for our industry is derived from helping others achieve their dreams of providing for their families, contributing to their communities, and growing their businesses. We work every day to make these dreams come true. Together we have made progress, but we can do more.
In the past decade, the housing industry has experienced dramatic changes. While creating a safer atmosphere for consumers, it has also presented some challenges to the dream of an affordable home or owning and growing a business. Change brings challenge, but with challenge comes opportunity.
Working together, we have the means and opportunity to advance real estate finance in America to the benefit of our industry, the economy and consumers. It will take time, effort, commitment, and intentional focus in three critical areas:
- First, affordable housing, access to credit, GSE reform, and a balanced regulatory environment;
- Second, transformational technology; and
- Third, achieving meaningful diversity in our industry.
Over the next year, you will frequently hear me talk about these three issues. Please allow me to give you a preview here today.
First, whether it is owned or rented, every family in the United States should have access to a safe and affordable home.
Today, the economy has regained its footing after the great recession. We are at full employment, which should stimulate meaningful wage growth. However, homeownership in the United States is at the lowest level in more than fifty years!
Current home rental data is not any better. Although we are constructing nearly 400,000 new rental units per year, only a small subset of these units will be affordable to lower-income households. The combination of stagnant incomes and rising rents has resulted in an almost 40 percent increase in renter households who spend more than one-third of their incomes on housing. For some, rent approaches nearly half of their incomes; an unacceptable statistic under any circumstance.
The greatest impact is on low-income, working families who can least afford it, forcing them to make difficult trade-offs with other necessities. This is not the American Dream.
We have an opportunity to improve access to credit, being mindful of the need to balance new regulations with innovation and responsible adjustments to the housing finance system.
And how appropriate as we gather in the “Cradle of American Liberty”, that I stand before you calling for a housing finance revolution. Consumers deserve, and the economy requires, a reliable, consistent, and effective housing finance system. We need a single, holistic housing strategy that harmonizes, preserves and enhances the policies that work, while improving those programs that are failing too many families today.
This revolution should be agnostic toward rental versus ownership, so long as the outcome is housing that is safe and affordable. All our nation’s housing needs lie along a single continuum that includes both single-family and multifamily, and incorporates rental and homeownership, government and private capital. We should utilize and fully fund direct subsidies to develop, rehabilitate and preserve affordable housing units for the lowest income households and special needs groups.
With a new Congress and a new Administration next year, we have a real opportunity to change the housing finance system, to create a level playing field, one that primarily works for consumers, but also works well for lenders, regardless of size or business model.
Earlier this year, MBA created the Task Force for a Future Secondary Mortgage Market, whose objective is to develop a proposal that will address the future of the secondary mortgage market, and, in particular, an end-state model that can fulfill an affordable housing mission while reducing risks to the taxpayer.
Over the past four years, MBA has repeatedly called for reform that preserves as much of the GSEs’ infrastructure as possible, and as Chair of the task force, I can assure you that we are mindful of this imperative. We must achieve a secondary mortgage market that is guided by our core principles:
- Maintaining a bright line between primary and secondary markets;
- Preserving a deep and robust TBA market for the 30-year, fixed-rate, pre-payable single-family mortgage;
- Maintaining a functioning long-term mortgage finance market for multifamily rental housing;
- Including an explicit government guarantee to attract global capital and preserve liquidity during times of economic stress;
- Providing strong and transparent regulation and corporate governance that provides both direct access and a level playing field for lenders of all sizes and business models; and
- Finally, private capital should primarily assume most of the risk, not the taxpayers.
You will hear more about how we view the options to move forward in the coming months, as we work toward a formal proposal in 2017. So first and foremost, let us make housing finance reform an essential economic growth opportunity for families, our industry, and our country.
Next, technology presents a new frontier of opportunity for real estate finance. We need to be poised and ready to take the necessary steps in strategic innovation, or technology disruption.
This is the era when people expect information instantly, in the palm of their hand, whether we are talking about outreach to homebuyers, business intelligence solutions for commercial lenders, or attracting new employees.
Clara Shih, the founder and CEO of Hearsay Social, who spoke at this convention yesterday, suggests that “companies, especially those that have traditionally lacked digital touchpoints or have low interaction frequency with their customers, need to rethink their business practices and even their business models to adapt to the age of constant digital connectivity and influence.”
By embracing new technologies, we have opportunity for tremendous growth. We can achieve greater efficiency in operations and regulatory compliance, but there is much more.
New technologies will help us attract and communicate with more customers, but also new generations of employees. Today, one in four workers in the United States are millennials. Adopting relevant technology to attract this rapidly growing segment of our population will improve customer service and our business operations, and help us retain and attract good and creative employees.
This is where Bill Emerson’s characterization of Quicken Loans truly resonates: “a technology company that happens to do mortgages.” Over time, everyone in our industry must adopt this mindset. To survive and grow in today’s complex regulatory environment, technology must be an integral part of every real estate finance leader’s strategic plan.
It is exciting to think with a mindset of “what could be”, rather than one based on “what has been”. Technology is the transformational engine that will drive this change.
Finally, there is another opportunity that touches everyone in this room – Diversity and Inclusion.
The face of America is evolving. Over the next decade, there will be sixteen million new households in the United States. Today’s minorities will become the majority. The millennial generation proportionally has the largest share of immigrants. It is essential that we view these demographic changes as positive opportunities.
For example, according to the National Association of Hispanic Real Estate Professionals, or NAHREP, Hispanics were the only ethnic group to show growth in owner-occupied units in the United States in 2015.
To benefit from this evolution and take advantage of these opportunities, we must be inclusive in every aspect of our businesses. We need to move beyond standard business practices and develop diversity management strategies with dedicated recruiting, mentoring and leadership programs.
Building a culture of inclusion and diversity in our companies brings more strategic vision to our business plans. A diverse and inclusive workforce allows for better decision making, providing leadership with alternative perspectives. Cultural diversity leads to broader ideas and greater success. Diversity is not only good for racial and ethnic minorities, but ALL employees derive benefits from being part of an inclusive workforce. And a good, strong workforce is better positioned to serve our rapidly changing and diverse consumer base.
Diversity happens as the fabric of the “we” begins to change such that we become less focused on our differences. Rather, we focus on the goals we share and begin to realize we are stronger and better as we live, work and play together.
Finally, I have one very important and personal initiative to share – giving to and supporting our communities.
MBA’s Opens Doors Foundation has become a favorite charity for Mary and me. It provides us, as an industry, the opportunity to support families with critically ill children. Tomorrow morning we will share an update on the foundation’s progress and announce the Community Champion Award winners. You will also have an opportunity to give your support to families in need. I hope to see all of you here tomorrow morning with your purses and wallets open!
This truly is one of those opportunities where any amount helps. A $100 donation from everyone registered for this convention would help nearly 200 families with a critically ill child at a Children’s Hospital.
Allow me to share one last thought.
When we drive a car, the rear view mirror is small, but the windshield is wide open.
As an industry, where we have been is important. We do not want to forget the lessons we have learned and the progress we have made in the recent past, but the important work is in the opportunities that lie ahead.
With a new Administration and a new Congress, we have an incredible opportunity to revolutionize real estate finance in America. Together, we can create a housing finance system that provides access to credit for those who need it and supports affordable housing – rented and owned. Through transformational technology we can innovate and revolutionize the consumer experience. And we can improve our customer service and grow our businesses by becoming the most culturally diverse and inclusive industry in the United States.
I look forward to serving as your 2017 Chairman to accomplish these goals. I look forward to working with all industry stakeholders, consumer advocates, policymakers, legislators and regulators, to steer real estate finance to a prosperous future for consumers and industry participants, but most of all, I am eager to listen and learn from you.
Together we can make the American Dream a dream come true for many more deserving families in this great country, the United States of America.
Rob Van Raaphorst
(202) 557- 2799