I was told to read Lee Iacocca’s most recent book “Where Have All The Leaders Gone?” by a friend in the mortgage industry. He said I wouldn’t regret the time spent and he was right. The book is provocative and thought-provoking. It’s a must read with several implications that can be drawn to the state of the mortgage industry. How you might ask?
Iacocca opens the book by saying, “Am I the only guy in the country that’s fed up with what’s happening? Where the hell is the outrage? We should be screaming bloody murder. We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car. But instead of getting mad everyone sits around and nods their head when the politicians say, “Stay the course.’”
Yes, Iacocca is blunt, and that section is just the first paragraph. What a book! Along the lines of thought put forth by Iacocca here, I think we can all agree the mortgage ship has already gone over the cliff and now the government is trying to put the pieces back together to build a new one for this industry. We all know how things turn out when the government gets involved. But in this case there was no choice, someone had to step in.
So I ask again, Where have all the leaders gone? Why did people from within the mortgage industry permit this to happen? Why didn’t anyone see it coming? And why didn’t those that did say or do something? You may respond back, “Who cares, we’re here now and we have to move forward.” I’d say you’re right, but if the industry doesn’t realize its mistakes, and everyone made mistakes from the borrower, to the broker, to the lender, to the investor, to the government, how can this industry move forward in a meaningful way?
It’s time to get involved. First, lenders have to step up and more fully utilize technology to create a transparent process that will get investors interested again. For example, I’m writing a story on electronic signatures and one lender after another says they’re waiting for their neighbor to do e-signatures at closing before the try it. Well, here’s a news flash, if everyone waits for the next guy it’ll never get done. Fortunately, there are early adopters like Flagstar Bank and AmTrust that are stepping up. They’re the leaders.
Second, once lenders step up and start actually using the technology out there to create a better process that will save them money, restore confidence and increase customer retention, they have to use a little common sense. Some, to use a word from Iacocca, “bozos” blame technologies like automated underwriting for this mess Well, here’s another news flash, the technology didn’t put in the way-too-lax guidelines that put people into loans that they shouldn’t be in, mortgage executives did that. An AU system can help underwrite a good loan just as efficiently as it did all these bad ones.
Well, now the government is footing the $700 billion bill for what happened in the mortgage industry over the past five years or so years. Hopefully that will fix this problem and get the industry moving again. But if lenders don’t get it and more fully utilize technology in a responsible manner I fear we’ll all be right back here again in 10 years. Let’s hope some leaders emerge that do the right thing this time around and steer us clear of a potential future mess like the one mortgage is in now.
