Dallas, TX – February 21, 2013 – (RealEstateRama) — David H. Stevens, President and CEO of the Mortgage Bankers Association, today delivered a speech at MBA’s National Mortgage Servicing Conference & Expo.
Below is the text of Mr. Stevens’ speech, as prepared for delivery.
[Please Note: These are prepared remarks. Mr. Stevens may add or subtract from these remarks during the course of his presentation. Portions of the text may be omitted during the speech.]
Look around you. The seats are filled and the sessions will be full – a testament to the commitment each one of you has to serving your customers effectively, efficiently and diligently, and also to rebuilding your businesses and helping our industry succeed.
At MBA, we are proud to bring you this conference, and others, dedicated to helping you listen, learn and network with your industry colleagues. We strive to bring together experts and colleagues, so you can do your job better, share war stories and learn from each other. Many of the sessions that you will attend were designed by servicers, for servicers. We listen to what you want, marry our expertise with your expertise, and bring together the resources you need to have a fruitful three days.
Our business, the servicing business, is helping people achieve the dream of homeownership, but it is also helping them through a lifetime of ownership. The complexities, nuances and changing economic times have a dramatic effect on everyone in our interconnected real estate finance system – consumers, lenders, investors, servicers and the vendors who serve them.
And now Washington is playing an ever increasing role in real estate finance. After what we saw in 2008, 2009 and 2010, there’s no doubt that changes had to be made to improve the system for everyone involved and help the housing market and our economy recover.
However, it’s the consumers and homeowners that will ultimately be restricted from buying and maintaining their homes due to overlapping, overly restrictive and uncoordinated regulations. It’s the middle class, first time buyers, and minorities that will feel the greatest impact.
I have consistently warned of the regulatory tidal wave to come and it is now finally upon us. Over 3500 pages of regulations have been released in just the first few weeks of 2013 and many more will be released by mid-year. These changes will impact business operations and the future of mortgage access for years to come.
MBA has been a loud, strong voice on the many regulatory issues. We have consistently met with policymakers, Congressional leaders and White House officials every step of the way.
And we are being heard.
Just last week, President Obama gave his State of the Union address to the nation. He laid out his key economic policy issues and he recognized housing’s role and importance to economic recovery. He said, and I quote,
“But even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected.
Right now, overlapping regulations keep responsible young families from buying their first home. What’s holding us back? Let’s streamline the process, and help our economy grow.”
Clearly, the Administration “gets it” at an intellectual level, but now we need to make sure they “get it” at the operational level. That’s part of what this conference is all about – coming here, listening to the CFPB staff explain the rules, and letting them know, respectfully, what works, what doesn’t and what we need to work on together.
Streamlining the process will help everyone in the entire real estate finance ecosystem, but especially all of you.
Everyone in this room plays a critical role in the success of the mortgage business. The job you do can greatly impact so many sectors of this fragile mortgage system. Any disruption to your daily activities can and will affect homeowners, customers, your businesses, and can alter the real estate finance marketplace.
The key to our complex and interconnected business is balance. When one part of the ecosystem fails, we are all affected. When origination and underwriting quality deteriorated in the early part of the last decade, and borrowers found themselves in trouble, the burden fell on you. When your work is disrupted, many others are disrupted, ultimately disrupting financial streams.
We must have a balanced system and balanced processes to continue the growth we have seen thus far, returning our industry to a path of stability.
At MBA, our job, my job, is to fight for you – your work and your business – and to make sure that policymakers understand the system and understand what you do. Only then, will they have the knowledge to propose useful, productive changes.
When the housing crisis hit, servicing bore the brunt of the heavy lifting in the very early stages with an onslaught of homeowners in desperate need of solutions. I was just coming in as the President’s FHA commissioner and I can recall the numerous meetings with Shaun Donovan, Timothy Geithner and members of the President’s economic policy and housing teams, as well as countless conversations and meetings with servicers about HAMP, HARP, FHA Short Refi and other programs that we were developing to give you the tools to help as many borrowers as we could.
In a very short amount of time, servicing went from a low cost, low touch, efficient business to a high cost, high touch, and tough environment. You were on the front lines taking, absorbing and implementing a slew of new programs and new government guidelines, with new “experts” and auditors looking over your shoulder, telling you what to do and how to do it, causing major disruptions to servicing.
The key to helping borrowers and stabilizing the housing market was how efficiently you could service borrowers, finding solutions for those who could, with your help, afford to remain in their homes, but also assisting those that needed to find another path, ensuring they were taken care of with compassion and transparency. What we know, and isn’t talked about nearly enough, is how much the servicing industry accomplished on its own, achieving much more than any government program.
The HOPE NOW Alliance reports that since 2007, a total of over 6.06 million loans have been modified. Of those modifications, nearly 5 million have been proprietary loan modifications, versus only 1.1 million receiving HAMP modifications.
Additionally, in 2012, non-HAMP workouts totaled over 2.2 million. Workouts include Repayment Plans Initiated, Other Retention Plans Completed and proprietary modifications.
You had to do it all – servicing customers, complying with new government guidelines and programs that seemed to change every month, while also implementing new business strategies from your own companies.
The spotlight was on you, and you came through. You helped millions of distressed borrowers, made tremendous strides, instituting change management strategies both on your own, and under the watchful eyes of a critical media, policymakers and consumers.
This is our industry and this is why we are all proud of what we do.
Thanks to your leadership, new emerging models for servicing are now becoming more prevalent. You became a business within a business to provide the best, most efficient and transparent customer service because you know more than anyone else the hardships of the families and their desire to responsibly remain in their homes.
Roles and responsibilities within the business have changed and new ones added in order to accommodate the sheer volume of servicing needs. We now have a vast array of distressed asset managers, specialty servicers and other new sub segments of servicing operations. The change management required has certainly provided its challenges, but in the end has provided a far better experience for servicers and borrowers alike.
So where do we go from here?
For the past two years, MBA has been a leading voice in the debate over government-mandated National Servicing Standards. Whether we wanted it or not, believed we needed it or not, policymakers were going to act. And it was incumbent upon us, you and those of us representing you working on the frontlines, to be a voice of reason in this debate. If not, we would have no say as the “nouveau experts” made their rules.
The CFPB finally released the Servicing Standards Rule in January, which is beginning to provide some certainty around servicing, but we still have some significant reservations about the rule.
We commend the CFPB for an open and transparent process. We may not always agree, but we have been heard. I can’t count the number of times MBA staff and our member servicers had the opportunity to sit down and explain the practical implications of the potential changes that that CFPB wanted to make to the servicing business model. We now have, for the first time, a comprehensive set of national servicing standards.
Overall, the objective of this effort is the right one – create one set of rules so that borrowers know how they will be treated and servicers know what is expected of them. The question still remains; do these rules achieve that objective?
MBA secured significant wins on many issues, for example, the removal from the proposed rule of the ability to make oral error resolution and information requests. In the final rule, there is no private right of action on general servicing policies, procedures and requirements and continuity of contact. And finally, the smaller servicer exemption was expanded. Not as far as we would like, but far better than as originally drafted.
There are volumes of detail in the nuances of the nearly 800-page Servicing rules. We are analyzing the rules, and listening to you – the people who have to make this work – as we identify the key areas that the Bureau will need to reconsider and fix. There are tensions and conflicts that need resolution between CFPB rules, other federal agency rules, and state laws. More flexibility is needed for smaller servicers and the CFPB should consider implementation extensions where necessary, particularly for the areas of the rule without statutory guidelines.
MBA has been and will continue to be there at every step, every turn as rules are proposed, finalized and implemented. We have been a loud voice on behalf of servicers with numerous testimonies, every open comment period, countless press releases, statements and media interviews. We have also been a constant voice with member fly-ins, letters to regulators and Capitol Hill, meetings with CFPB, FHFA, Treasury, and HUD.
We never missed an opportunity to tell your story. These rules will have a dramatic effect on your future, the future of our industry and future of homebuyers and homeowners for generations to come.
MBA has the access to the regulators and legislators that affect your world and our top priority is supporting a legislative and regulatory environment that strengthens your effectiveness, your business, and the entire real estate finance system.
For example, when Superstorm Sandy struck the Northeast coastline, we all wanted to do everything we could to help the many families who lost so much. Servicers have been working hard to process claims, obtain required documentation, and distribute funds as quickly as possible.
This process is not always easy to understand and becomes even more cumbersome when policies are not consistent across the federal agencies.
We at MBA accessed our resources and proposed to HUD a common, streamlined protocol to help you disburse assistance as efficiently as possible to help borrowers rebuild and return to their homes.
MBA opens the doors to policymakers, but they want and need to hear from you. You are the ones on the front lines. You know your customers and what they need best. Our success comes from working together. This only happens if you participate with us.
We need you to be a leading voice in Washington and at the grassroots level through the Mortgage Action Alliance or MAA. MAA is dedicated to strengthening the industry’s voice and advocacy power in Washington, DC, and state capitals across America. By getting involved with MAA, you can play an active role in how laws and regulations that affect your business are created and carried out through education, advocacy and building relationships with policymakers. This is a vital time for servicing to resolve the conflicts between national and state regulations and your voice matters.
MAA members receive action alerts that provide valuable information on national and state policy issues as well as suggested action steps to make your voice heard. It’s non-partisan. It’s free. It’s easy to sign up, and it’s easy to make a difference. Check out MBA’s website for details or visit the MBA booth in our Expo hall.
So let me leave you with this.
The last few years have been tough for our business. And servicers have not gotten the credit they deserve for helping borrowers in need and for the role they have played stabilizing the housing market.
Collectively, as one industry with one voice, we can promote and achieve an efficient, effective, safe and balanced mortgage servicing system. That is MBA’s role, to unite that voice. Together, by communicating with policymakers, we can have a profound and positive outcome on the future of real estate finance for generations to come.
All of us are stakeholders in the success of this industry, the marketplace and the economy. As stakeholders it is our duty, and our responsibility, to find workable solutions, create efficiencies and provide the best service possible to the many families we serve.
The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: www.mortgagebankers.org.