BLOG VIEW: I just returned from the Mortgage Bankers Association's (MBA) 2015 Annual Convention and Expo held in San Diego, and I must say, this year's conference was the best of the three I've attended. There didn't seem to be as much gloom this year as there was in 2013 and 2014, when it seemed as if new regulations were about to annihilate the industry.
In general, lenders and their vendor partners seemed more upbeat – although a bit exhausted – at this year's show, having already jumped a major regulatory hurdle in implementing the Consumer Financial Protection Bureau's (CFPB) new TILA-RESPA Integrated Disclosures (TRID) rule. I think in a way, the timing of the conference was good, as the entire industry was in a sort of self-congratulatory mood, having passed at least the implementation stage of this major new regulation. Many lenders and vendors spent more than two years preparing for, and working on, TRID. And, many of them continue to say that it is completely unnecessary.
During the conference, I interviewed several lenders, as well as numerous vendors (I think vendors out-numbered lenders about four-to-one at this show), most of whom told me that there had, so far, been no major problems in closing loans using the new disclosure forms. However, almost everyone agreed that the industry needs another 30 to 45 days to see whether any major problems start popping up. Also, it will take more time to see whether TRID has any impact on closing timelines. Many of the people I interviewed said it will likely take longer to close loans – especially in the beginning – and some estimated the average number of days to close would soon exceed 60 days. However, a few people told me that, as long as the proper technology is in place – and lenders know what they're doing – loans should actually start to close faster with TRID. That's because TRID has forced many lenders to adopt e-mortgage (e-doc, e-sign, e-delivery, e-record, e-vault, etc.) technology, which eliminates paper and manual processes.
But back to the general mood of the conference: One thing I picked up on is that pretty much all of the professionals in the mortgage space have been working incredibly hard lately. Some people at the show seemed exhausted (some were even sick, if you connect the two) – or, at the very least, when they described what they've been working on, it sounded overwhelming. I think that's because TRID and the other recent regulations have resulted in a lot of professionals having to pull double duty. I don't get the feeling everyone has a really robust compliance department – that stuff is expensive! I could be wrong, but I get the feeling that many execs think they can do just as good of a job – working with their staff and their attorneys – in meeting compliance as they would with a top-notch compliance officer (which, by the way, isn't that easy to find, from what I've heard). So, yeah, I think some of the people at the show were worn out but generally more happy than two years ago.
The show itself had some great content – including an awesome interview between comedian Jay Leno and former U.S. Secretary of State Colin Powell. There was also an interesting comment made by Richard Cordray, director of the CFPB, during his presentation to the effect that maybe the bureau should be paying more attention to the role technology providers and other vendors play with regard to compliance and, more specifically, with regard to the implementation of TRID. There were rumors circulating that some software vendors still were not prepared to deal with TRID as of Oct. 3, despite having an extra two months to upgrade their systems. However, I never heard any names, so whoever the offenders were, it is being kept well under wraps.
Even the usual rhetoric from Mel Watt, director of the Federal Housing Finance Agency, and Julian Castro, commissioner of the U.S. Department of Housing and Urban Development – who devoted most of their speeches touting how their agencies have made the dream of homeownership so much more possible for all Americans since the crash of 2008 – and how they are so much easier for lenders to work with (insert cynical smiley face) – was a hair better than usual.
As usual, I didn't get to attend as many sessions as I would have wanted (I hate that multi-tracking of the afternoon sessions because as a journalist, it's so hard to choose!), but the ones I did attend were quite good. Other top issues facing lenders, as evidenced by the line up of sessions, included the upcoming expansion of reporting requirements for the Home Mortgage Disclosure Act database, Fair Lending concerns and acceleration of the adoption of e-mortgage technology and all of it's implications, security being a huge one.
Finally, there was a lot of talk about the industry being ripe for further consolidation this year. As mortgage volume continues to decline, and as more and more mortgage lenders start to do things ‘the same way,’ mostly as a result of regulations and standardization of processes via software, the more lenders will each have more or less the same infrastructure in place. This could set up a scenario whereby it becomes much easier – at least in theory – for mortgage companies to merge. The bottom line is this: If it happens, it will likely be a symptom of the commoditization of the market combined with shrinking volumes and increased regulatory complexity. However, as we saw with the acquisition of mortgage document company IDS this week by non-mortgage company Reynold & Reynolds, not all mergers and acquisitions are predictable, at all. Plus, with these new marketplace lenders, such as SoFi and LendingTree, disrupting the mortgage space, it will be really interesting to see how things change next year.
MortgageOrb will have more detailed coverage of the conference in the days to come.