Loan Think

AN EDITORIAL:

Stagflation, recession, loss of workforces, commodity hyper-appreciation, and market correction has transformed mortgage end-to-end operational foci from throughput to customer identification and qualification — all within a short 12 months. Inside every facet of our business models and technological infrastructures, we struggle with where to find and retain profitable consumers. No individual professional or mortgage operation is immune. No financial results or staffing ranks unaffected. Resembling a Greek Tragedy, with a Shakespearian twist, we beat our breasts and lament “Consumer, consumer, wherefore art thou?” Perhaps they have gone with the nearly 11 million households that possess negative equity, the nearly 11 month supply of homes for sale, or the 8.8% of homes in foreclosure and delinquency?

It’s that time again. The deadline for entering the Mortgage Technology Magazine Awards Competition this year is one week from today, June 30th to be exact. You can enter yourself or your company in one of our seven categories by filling out a nomination here. This competition is about giving industry leading executives and companies a chance to shine for all the good they do.

Former Fannie Mae chief Jim Johnson is nobody's fool. He and his wife Maxine Isaacs have been a Washington "power couple" for as long as anyone in this town can remember. He became chairman and CEO of Fannie Mae early in the last decade and stayed until 1998 before the "Franklin Raines" era began. Mr. Johnson got the Fannie job because of his political connections. He was a former top aide to Sen. Walter Mondale, a one time presidential candidate. One of his chief achievements as Fannie CEO was gaining the confidence of Countrywide co-founder and CEO Angelo Mozilo and roping that lender in as Fannie's top customer. The relationship of Messrs. Mozilo and Johnson are explored, to some degree in a chapter of the upcoming book, "Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis," published by John Wiley & Sons. I'm one of the co-authors of the book along with Mathew Padilla of The Orange County Register. (I'll tell you more about the book next week but for now you can view the cover by visiting: http://www.chainofblame.com/). Unlike Mr. Raines, Mr. Johnson's reputation as both a political operative and businessman remained intact until it was revealed that he received preferential loans from Countrywide under the now well-publicized 'Friends of Angelo' program. (In our book we discuss, briefly, the FOA program.) Mr. Johnson's FOA loan became national news for one primary reason: he was an advisor to Barack Obama in regard to that candidate's search for a VP. Republicans linked him to Mr. Mozilo for two primary reasons: Mr. Mozilo -- whether he likes it or not -- is now the poster child for America's mortgage crisis. The other reason: Countrywide, which has flirted with bankruptcy, is the subject of multiple investigations of its lending practices. Anyway, as I noted, Mr. Johnson resigned from the Obama campaign within 24-hours of the FOA story first breaking. He's that smart. The same cannot be said of Senators Chris Dodd and Kent Conrad, who are still trying to explain how they were recipients of FOA loans and falling all over themselves in the process. As most mortgage industry veterans know, FOA loans are not new. They've been around for years. I know of at least one other top 15 lender that had a "friends" program. Are such programs illegal? Answer: I don't think so unless there's some fine print in the 'quid pro quo' language. Does it look bad for an elected official to get preferential treatment on his or her home mortgage? You bet it does. The daggers are out. It's an election year...

Reruns anyone? I know I’m old and wear a funny bow tie, but the events of the last year remind me of a game show that was recreated on several networks, “Truth or Consequences.” As our prior industry leaders are paraded in front of Congress, tried in the media, and admitting “guilt” in an effort to find the “truth,” will technological improvements be a consequence of the non-truth? Will it improve our social responsibility? How about conformance and auditability? What about investor confidence and the hundreds of billions raised in new capital? More precisely, if we fail to advance the precise, expanded electronic processes and their data isolation modules (DIM’s), what will be our consequences?

In the last edition of this blog I talked about e-signature and e-mortgage adoption. Sure, progress has been slow, but we’ve seen a huge increase in e-notes registered on MERS in the last six months and in the overall number of e-mortgages done in the past 12 months. Now, a prominent vendor has stepped up as well, which can’t hurt.

When Will Mortgages Recover? Let's Talk About Oil

Technology. It is a funny sounding word with widespread connotations across an increasingly sophisticated, global base of consumers. For many of us, Mortgage Technology has more precise denotations surrounding offerings such as AVM, “e” products and solutions, fraud, contact centers, SaaS, SOA, Web 2.x, ITIL, .NET, and the list goes on. It gains further precision when we add in interoperable standards from MISMO, Adobe, and platform defacto leadership products within our discrete operating environments. In fact, one can argue that the collective solution set advancements we have witnessed in the last 18 months have been greater than the preceding decade.

While electronic signature adoption may seem like it’s going slow in the mortgage space, the growth in adoption just over the past year has been dramatic. At an event held by the Electronic Signature and Records Association (ESRA) last week it was reported that this year will be a turning point in the adoption of electronic signatures. Let’s hope so anyway.

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