June 25, 2021

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Mortgage News

Mortgage Industry and Government Collaborate on Solutions

On Wednesday, the Five Star Institute presented the Government Forum 2021: A Virtual Event, bringing together executives from the mortgage services sector and government officials for a day of impactful conversation about the industry’s most pressing issues.

The day started with Ed Delgado, Chairman of Five Star Global, who welcomed the attendees to the virtual event and introduced Rep. Steve Bartlett, Senior Advisory Board Member for Treliant; President & CEO of the Financial Services Roundtable from 1999-2012; and Representative to the US Congress from 1991-1993. While in Congress, Bartlett served on the House of Representatives banking committee where he led the successful push to set the market for federal mortgage rates. He served as Deputy Whip and was a sponsor or major co-sponsor of nearly 20 major laws, including the Enhanced Secondary Mortgage Market Act, Fair Labor Standards Act Reforms, FHA Deregulation, and Americans with Disabilities Act.

One of the topics discussed at Delgado was that the industry was heading for a “Housing Crisis 2.0”.

“There are too many similarities to what the industry went through in 2008,” said Delgado of the current market situation. “This crisis does not arise from subprime lending or irresponsible credit, but rather from the long-term and ultimate effects of an extended moratorium.”

Bartlett pointed out a few concerns that need to be addressed by the industry in order to avoid a potential real estate crisis.

“We have some issues that the industry is grappling with,” said Bartlett. “This is nothing like the chaos we were in during the last crisis. The industry is strong and I have never seen such good and solid use of technology in any industry that I can remember. They’re increasing the use of AI to serve all types of customers. Second, the industry is about serving its customers … finding a mortgage that works and that people can pay back. “

The The Mortgage Bankers Association (MBA) recently reported that approximately 2.1 million homeowners are at some level of leniency, and that is challenging, according to Bartlett.

“With the customers we work with at Treliant, the last thing we want to do is foreclose, except in extreme cases where someone has left the property,” said Bartlett. “The last thing an originator or servicer should do is foreclosure because, as we say in Texas, ‘Hell will break loose’ when we start! It’s a different way of thinking than we had with mortgages in the past, but we need to get into that way of thinking now. “

This was followed by the panel discussion “Economic Precipice”, with the moderator Stanley C. Middleman, founder and CEO of Freedom Mortgage Corporation had a chat about the aftermath of the pandemic and took a deeper look at when the US economy will recover as a result.

Among the panelists who joined Middleman was Edward Golding of the MIT Golub Center for Finance and Policy and Head of FTA from 2015-2017; Tobias Peter Research Director for the American Enterprise Institute residential center, and Jesse Roth, EVP of Business Development for Auction.com.

“We’re getting off a pandemic that I have absolutely no previous experience dealing with,” said Middleman. “We have seen some significant events in our lives – hurricanes, earthquakes, disasters – but certainly nothing on this scale. We have seen a significant response from the government directing private companies to do the work of supporting the people of this country. From my point of view, we have done an incredible job to protect people and their homes and to help them lead as normal a life as possible. “

As Middleman noted, the government and service industries have worked together to keep more Americans in their homes than the nation faced the pandemic crisis last year.

“I think it’s important that we take social responsibility to look after homeowners … I call it ‘Aware Capitalism’, but it’s best when the private meets the public,” said Middleman. “If the government can do good to help the home, I think that’s very positive.”

Goulding noted a number of measures the government can take not only to reduce the volume of forbearance, but also to level the playing field and make it affordable for all.

“We know a lot of groups have been left behind,” said Gouding. “We need a way, and homeownership, along with education, is a way to build wealth in communities that have not had access to wealth.”

And the transition of the presidential regime in January brought a number of new appointments to the top regulators of the housing industry. With new leadership at US Department of Housing & Urban Development (HUD), Consumer Finance Protection Bureau (CFPB), and the Federal Housing Finance Agency (FHFA), The Prioritize Panel examined the focus of these new leaders and what they can do to facilitate a smooth transition for those who are indulgent.

Led by moderator Alex McGillis, Senior Director, Product Development, The Answer for Accelerate Loans, in the “Setting priorities” panel was Leslie Meaux Pordzik, SVP in the Office of Issuer and Portfolio Management at Ginnie Mae; Chad Mosley, President of Mortgage Contract Services (MCS); Prasant Sar, Supervisory Policy Analyst for the FHFA; and John Vella, Chief Revenue Officer for Altisource.

Innovation and the adaptation of new technologies were a topic of the panel, as more and more in the service area use AI-based solutions to support borrowers with their deferral plans. In return, government authorities also adapt these technical solutions as evidence Ginnie Mae’s recent announcement that her Office of Enterprise Risk (OER) has launched a number of machine learning and AI model pilots. An AI algorithm deployed by Ginnie Mae reduces the likelihood of false negatives and false positives when identifying issuers who may pose an increased risk but slip through the cracks of traditional risk identification methods.

“We are currently moving our entire platform to the cloud,” said Pordzik. “It will open many doors for Ginnie Mae to be very agile and quickly modernize our platform.”

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a $ 2.2 trillion economic recovery bill passed by Congress and signed by the President last March in response to the economic fallout from the pandemic, has stood impacted the service industry. The Government Forum presented the “Caring for Homeowners” panel, which looked in more detail at how this far-reaching legislation affects service providers. Rented by Steve Meyer, AVP, High Risk and Investor Compliance for Secure properties, the members of the panel included Marissa M. Yaker, Managing Attorney of Foreclosure for the Padgett Law Group; Kristin Wong, CFPB financial analyst; and Jack V. Konyk, Executive Director of Government Affairs for Weiner Brodsky Kider, PC.

“The industry has done a great job identifying badly criminal people and bringing them to leniency,” said Wong. “Of the borrowers who have become seriously in default due to COVID, only 2% of them have not used the forbearance. Ideally, that number should be around 0%, but the industry has really gone out of their way to reach and support these troubled borrowers. “

And as the GSEs prepare for their “ultimate exits from the Conservatory”, the “Charting the Future of the GSEs” session discussed the challenges that remain to this plan and whether the events of last year are slowing the momentum of the GSE.

Moderator Tim Rood, Head of Industry Relations for AMC site, chaired the GSE discussion, which was attended by panelists Marcel Bryar, founder and CEO of. participated Mortgage Policy Advisor, LLC; Ron Haynie, SVP Mortgage Financing Policy for Independent Community Bankers of America; and Edward J. Pinto, Resident Fellow / Director for the American Enterprise Institute residential center.

Fannie Mae SVP and Chief Economist Doug Duncan followed the GSE discussion with his expert views on housing finance, the mortgage industry and the broader US economy, and gave insights into the attitudes of buyers and sellers towards home ownership in his presentation “Where Housing is Headed”.

“Our expectations for economic activity in 2021 are that unemployment will continue to decline, down to something on the order of 5%,” said Duncan. “At the same time, economic growth will continue to accelerate and grow to around 6.8% for the year as a whole, which is the strongest annual growth rate since the early 1980s.”

The government forum concluded with the “Eye on the Horizon” session, where industry leaders discussed the day’s most important findings and presented their outlook on the future of the housing market.

Michael Waldron, General Counsel and Chief Compliance Officer Community Loan Servicing, LLC Chaired the discussion with panelists John Bell III, Deputy Director of the US Department of Veterans Affairs; Maria Fernandez, Senior Associate Director, Office of Housing and Regulatory Policy at FHFA; and Brian D. Montgomery, chairman and founding partner of Gate House Strategies, LLC and former Deputy Secretary at HUD (2019-2021).

“During the pandemic, web and mobile technologies really helped keep borrowers connected and engaged,” Fernandez said. “In all honesty, it also helped keep the mortgage credit flowing.”

And while the pandemic hit every pocket in the nation, Montgomery noted that the industry had prepared for such a widespread crisis on a smaller scale as it battled through events like hurricanes and other natural disasters.

“We all had warm-ups for COVID-19 and we didn’t know at the time, but we have had regional natural disasters, sometimes in large urban areas like Hurricane Harvey, but never with the range of COVID-19” where it affected every city said Montgomery. “The cooperation between the authorities was very important, we had discussions almost every day, especially with the FHFA. We didn’t want companies to go in one direction. We looked at the situation from the home buyer’s perspective and what the best situation would be to stay in their homes. The communication was not only important with the government agencies, but also to get back to the public. “

The Five Star Institute would like to thank the companies that sponsored the Government Forum 2021, including Host Sponsor Host Auction.com; Co-host sponsor Altisource; and partner sponsors Insight One solutions, Mortgage contract services, Padgett Law Group, and Secure properties.

In September of this year, the Five Star Conference & Expo returns from September 19-21 with a personal event at the Reunion Tower, the Dallas landmark, Hyatt Regency Dallas. Click here for more information or to register for this event.