LenderNews by Rob Chrisman
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Oct. 28: Notes on tiny houses, a cure for the reliance on credit bureaus, conferences with no age bias

October 28, 2017

Owner’s note
 
This note, from a lender’s owner to its employees, was passed along to me, and is sure nice to see the optimism and team spirit! “I just returned home from four days at the MBA Conference in Denver, the largest mortgage banking conference of the year. After nearly a dozen training sessions, nearly two dozen vendor/partner meetings, and a handful of networking events, I have a lot of thoughts about the challenges facing, and the opportunities available, for our company and our industry.
 
“My main thought though, is to thank all of you for being so great to work with. Over the last four days I have listened to hundreds of people explain that their main challenges were their own staff. Presidents and COOs of major and small mortgage lenders all over the country described employee issues to me that we just don’t have here. Vendors were constantly pitching software and other solutions whose main purpose was to overcome problems cause by employees. I was amazed, repeatedly, how few of these employee issues apply to us.
 
“Every company has ways they can improve, and our company is no different. We are constantly striving to get better. There is definitely some hard work ahead with regulatory challenges and shrinking margins but there are great opportunities available as well. I am grateful for the people here that I have the privilege of working with. From San Diego though Nebraska to New Jersey and from Loan Officers through all of Operations to HR, Accounting and Secondary, I know we have a great group of mortgage professionals here.
 
“I left Denver with a lot of new and helpful information and excitement about what the future holds for our company but mostly I left with the desire to says thanks to everybody for making this such a great place to work.”
 
Conferences for all ages and abilities?
 
Thursday’s commentary had a note about someone under the age of 30 who expressed little desire, or reason, to attend the usual, “Breakfast, sessions, lunch, sessions, cocktail party with a bunch of 35-65-year-olds” and it struck a vein among older readers as well. (“’Why the heck would I want to stand around with a bunch of 45-65-year-old white guys for a couple days?’ There are plenty of reasons, which I mentioned to him… I am merely repeating what he told me. I suggest, however, that he’s not alone in thinking that – and I think conference organizers are taking note.”)
 
Some letters echoed a similar sentiment as this one. “My response to that young man would have been, “Because you might learn something, you arrogant &^%$”
 
Looking at things from a different perspective, ER sent, “I had to laugh at your first paragraph. I don’t attend the conferences anymore because I don’t want to stand around talking to a bunch of 20 to 30-something green-horns, who are tech-savvy, but street stupid!!”
 
“I don’t go the conferences for the same reason. That and there’s absolutely nothing to talk about. While I agree the loose lending standards of yesteryear were a bad idea, we do need some Alt-type products/whole loans/etc. The customary, ‘How is your FHA production?” question kills.
 
And there was this note from a female senior executive at a well-known lender. “It’s funny, but someone asked me yesterday why I don’t go, and my response wasn’t much different than his! They need to make it more informative. Groups going around to meet with groups of people for 15-30 minutes, when 90% of a half hour meeting is social, is no longer productive. Just my two cents. It’s so much better for us to go to each investor and do a ‘one on one’ for a few hours. Years ago, Countrywide invited their top 20 customers and did a round table for a full day with their top people and asked questions and it was one of the best meetings I can ever remember attending. It was informative, they had an iron clad agenda, and I left feeling that I made a difference and that I mattered. I miss those days. Look around and pretend you are someone that wants to expand and learn. What do you learn from standing around a lobby and if you went to these meetings, you would see most are social. Waste of my time going any more. They used to be much better.”
 
“Younger people in residential lending should be involved in the Young Mortgage Bankers group at the MBA. One fellow at our company was telling us there were only approximately 15 people under the age of 45 at the conference. I can tell you that I try to recruit in as many young people as possible because our industry does need some new blood.”
 
Marcelle L. send this story about how millennials are afraid of seniors.
 
“The MBA and state groups need to focus on YPN groups all over the country. The 35-year old and younger originator feels totally out of place at MBA events. Most in attendance are non-producing executives. We are tired of hearing about how many units they closed in 1996 or 2004. It’s totally irrelevant to the way business is done today. My 2 cents, I do attend though as I enjoy the happy hours hosted by vendors.”
 
The MBA’s Marina Walsh contributed, “Did you know that we had MPact events specific to Millennials? It included a tour of the Coors Brewery among other events at Annual. MPact is a new initiative that MBA started for young professionals. Here’s a summary of the events we had for young professionals under the age of 35.
 
Equifax failure and a solution
 
I received this one from one “one industry veteran/gadfly/thought leader.”
 
“The Equifax breach involved virtually everyone in the US with a credit record. The 145 million or so people whose credit information was hacked is more than all the voters in the last Presidential election. Of course, the lawsuits have been filed by the class action bar and the press is reporting conflicting information about what consumers should ‘do’ about the breach. We hear about credit freezes, credit monitoring, and other fee-based services all of which require the consumer to take some kind of action to supposedly prevent damage to their credit. What may have been exposed about the credit reporting industry, however, was much greater.
 
“For example, how is it that this company even had so much personal financial information available to be stolen and why should consumers be responsible to do anything about it? If so many people could have their credit screwed up due to identity theft from the Equifax breach, doesn’t it seem that Equifax (and the other Bureaus) should just do whatever is necessary to fix and prevent the problems from occurring?  Why should over 140 million people have to do something to prevent a problem that was created entirely without our consent or control? Consumer responsibility should be limited to paying bills on time.  At a minimum, we certainly shouldn’t have to pay fees to monitor and freeze the use of this information. Even more insidious is that many of these fees will flow back to the credit Bureaus to ‘protect’ ourselves from the consequences of their security breach
 
“Beyond figuring out what I can do to “protect myself” from identity theft, this has caused some to wonder why we even have these massive data storehouses of consumer information.  Probably only the IRS has more consumer financial data than the Bureaus. In fact, the whole discussion focused on preventing identity theft seems backwards. No consumer ever gave Equifax or any of the other Bureaus the right to hold our private credit data and other personal financial information. Moreover, why should consumers or lenders have to pay about $40 to the Bureaus every time we want get our own credit history? Although it unfortunately took the Bureaus as a given, recently, the CFPB issued a statement of principles about consumer data that supports the idea that consumer credit information should belong to the consumer to decide what they want to do with it. 
 
“Admittedly, FCRA and the Bureaus allowed for cheaper underwriting and availability of credit in the pre-internet age when gathering all of that data would have been almost impossible. Today, however, the collection of all this personal financial information is not only technologically unnecessary, but, as exposed by the Equifax hack, holding all this data in one place is a huge security risk. Technologically, we are probably just one good phone app away from having the ability to gather and provide our credit information directly to new creditors from all our existing creditors. This information could be provided when we apply for credit and would exist only for that moment (like a Snapchat). Hack a cellphone and you only get one person’s credit as opposed to 140 million people (and it would appear that cell phone data security is a lot better than most companies’).
 
“Certainly, consumers should be outraged by the undue risk this places on them, but lenders should be calling for action too. Lenders bear the losses when identity thieves use stolen information to create phony accounts. Consumers are protected by the law (and Reg E from stolen credit card purchases), so the risk of loss falls on lenders who make loans to identity thieves. The real risk to consumers is just that their credit record (maintained by the Bureaus!) may have to get cleaned up, which is a difficult and time-consuming process. Again, this is a problem created by the existence of the Bureaus that doesn’t need to exist. Without the Bureaus, there would be nothing to ‘clean up.’ Paying fees, directly or indirectly, to the Bureaus for problems of their own doing is, an incredible business model.
 
“All of this seems to cry out for a new solution where the consumer controls their own credit data: a new system where lenders gather real-time credit data directly from other creditors and public information sources with consumer consent. This needs to be coupled with new models for evaluating credit risk which bypass the Bureaus. The Bureaus were useful in a different era of data collection and technology. Today, they pose unnecessary security risks, selling services largely needed only due to their existence and imposing liability risks to lenders who lend to identity thieves. The Equifax hack should lead consumers, lenders, politicians and regulators to stop taking the Bureaus as a given and consider a different paradigm for managing credit data.”
 
Tiny houses: Cute, but…
 
A while back I had a story about developments in tiny houses. Blake W. sent, “Enough of this tiny house craze.  When they first came out, they were nothing but trailers pretending to be a house.  Now a company is starting to build tiny hoses affixed to a permanent foundation. That’s great and all, but here in my area (and I’m assuming in other parts of the country), these tiny houses would never get the necessary permits to build because they are too small (i.e., tiny).  Most communities have a minimum sf requirement and these tiny houses don’t come remotely close to that.  Moreover, I thought the agencies have a minimum SF requirement when it comes what mortgages they’ll buy.”
 
Kathy K. sent, “Maybe those small houses are a retirement solution or people who did not get enough equity growth out of their homes and don’t have a large retirement nest egg. Just a thought.”
 
 
(From Florida, thanks to Stephen G. who sent this one.)
There were four churches and a temple in a small town: a Presbyterian church, a Baptist church, a Methodist church, a Catholic church, and a Mormon temple. Each church and the temple had a problem with squirrels.
The Presbyterian church called a meeting to decide what to do about their squirrels. After much prayer and consideration, they concluded the squirrels were predestined to be there and they shouldn’t interfere with God’s divine will.
At the Baptist church, the squirrels had taken an interest in the baptistery. The deacons met and decided to put a water slide on the baptistery and let the squirrels drown themselves. The squirrels liked the slide and, unfortunately, knew instinctively how to swim so twice as many squirrels showed up the following week.
The Methodist church decided that they were not in a position to harm any of God’s creatures. So, they humanely trapped their squirrels and set them free near the Baptist Church. Two weeks later the squirrels were back when the Baptists took down the water slide.
But the Catholic Church came up with a very creative strategy. They baptized all the squirrels and consecrated them as members of the church. Now they only see them on Christmas and Easter.
Not much was heard from the Mormons. The Mormons asked the squirrels to give 10% of their nuts to the church and haven’t had a problem since.
 
 
Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Will User Names and Passwords Go the Way of Thermal Fax Paper?” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.
Rob
 
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