At the beginning of this new year, President Obama, much to the chagrin of many Republicans in Congress and constituents in the mortgage banking community, appointed Richard Cordray as Director of the Consumer Financial Protection Bureau.
Does Cordray’s appointment to the CFPB mean: For every problem there is an opportunity?
The former Ohio attorney general is not letting any dust settle on him as he has already commenced the nonbank supervision program. Cordray has been active as an enforcement chief with the bureau since 2010; in that capacity he actively pursued mortgage servicers for their less than professional operational practices.
Those of us who work in the banking industry, more specifically in the mortgage servicing space, have already begun retooling our shops to meet evolving business requirements. In a letter to ranking members on the House Committee of Financial Services and the Senate Banking Committee, Ben Bernanke, chairman of the Federal Reserve, referred to mortgage servicers as “gatekeepers to loan modifications and other foreclosure alternatives.”
Bernanke’s dispatch spoke to four crucial issues of best practices and accountability that would be most beneficial: (1) greater transparency of servicer’s performance, (2) if servicer performance was less than stellar, an easy protocol to transfer loans to another servicer, (3) a servicing compensation structure that encourages home retention rather than foreclosure, (4) a centralized system for registering liens.
The methodology on how to best implement these practices is wide and varied and depends on who you talk to. What is apparent is the CFPB will be an integral agency involved in the implementation of change and it will weigh heavily in enforcement actions when consumers’ best interests have been ill served.
While these changes may seem restrictive, we must look at the situation as a juncture to improve the industry.
The first step to seeing this as an opportunity for growth is to park divisive attitudes at the door, and embrace the potential opportunity to remediate flaws in servicing operational models and improve the situation.
Though having government auditors come in to our shops may be a source of trepidation, it is also a chance to open up and say we know this is not perfect but here is what we are doing to fix the problem.
The simple admission of an inadequacy opens up the other party to engage us in a meaningful way and work towards mutually beneficial solutions. So yes, it is time to quit whining, quit joining groups that are counterproductive and instead utilize the skill sets many of us possess to get the housing industry back in gear.
Diane Gozza is executive vice president, business development, Integrated Mortgage Solutions, Houston.