The general perception in the mortgage industry is that the CFPB and their new regulations are like an albatross around the necks of mortgage companies, especially the smaller independents.
The sentiment is that the new regulations add cost, limit credit availability and have created a sense of uncertainty in the market that has slowed the housing recovery and restricted much needed growth. Some of this is almost certainly true.
For many of the last 20 years, I have owned or managed an independent mortgage company. For most of that time, I operated out of Southern California—the most competitive mortgage market in the world and the former home to dozens of now-defunct companies, including Countrywide, New Century and Option One.
Pre-crisis, I ran a small but successful mortgage lending enterprise. My company could always compete on service as well as price, but my ability to grow was stymied by a couple of things that for years we could never overcome.
First and foremost, we could not compete on the "race to the bottom" when it came to product. While my company could offer competitive conforming and FHA mortgages, we couldn't offer the 100% LTV, no-doc mortgages with 1% teaser rates that made Washington Mutual the dominant player in our region.
And we definitely could not compete with the crooks operating on every block who were willing commit outright fraud to approve a borrower that I was not able to qualify.
Today my company may have to deal with what feels like an avalanche of regulatory requirements, and I most definitely believe the underwriting pendulum has swung too far the other way. But with the new ability-to-repay requirements and the compensation rules, we don't have to worry much about the above-referenced issues that made it difficult for our company to grow during most of my career.
The playing field for mortgage originators, while still favoring the larger companies, is more level than at any time in recent history and my ability to compete is stronger than ever.
This is evidenced by the fact that during the last three years, our small company has grown from 20 to almost 200 employees and our profitability is at peak levels.
OK, I'm an optimist. I have developed an internal culture that ignores the "sky is falling" mentality that has dominated our industry for a bit too long. I am not, however, delusional.
Are there issues and challenges in our industry that need to be addressed? Absolutely. Am I concerned about access to credit for the Hispanic homebuyers that my company has always focused on serving? You bet I am. But I am simultaneously more excited than ever about the future of my business and the direction of our industry, and I have not forgotten what things were really like just a short time ago.
Jason Madiedo is CEO of Venta Financial and 2014 president of the National Association of Hispanic Real Estate Professionals.