Edi­tor’s Note

National Mortgage News - - Contents -

the mort­gage in­dus­try has spent the past cou­ple of years get­ting ready for the mas­sive over­haul of Home Mort­gage Dis­clo­sure Act re­port­ing re­quire­ments, which take ef­fect in just a few short weeks.

The ex­panded data re­quire­ments and new tech­ni­cal spec­i­fi­ca­tions come as the Con­sumer Fi­nan­cial Pro­tec­tion Bureau as­sumes over­sight of col­lect­ing HMDA data from the mort­gage in­dus­try, re­port­ing it to the pub­lic and us­ing the data to mon­i­tor lenders’ com­pli­ance with fair lend­ing laws. The new col­lec­tion re­quire­ments take ef­fect in 2018 for loan data that will be re­ported in 2019.

To be sure, this up­date has taken con­sid­er­able ef­fort from lenders, their tech­nol­ogy ven­dors and com­pli­ance pro­fes­sion­als, and has se­ri­ous con­se­quences — es­pe­cially con­sid­er­ing how much more data the CFPB will have at its dis­posal to mon­i­tor lenders’ ac­tiv­i­ties.

But what if all that work to meet these com­pli­ance re­quire­ments could be put to use as a tool for gen­er­at­ing more loan vol­ume? As this month’s cover story ex­plains, some lenders are do­ing just that.

By com­par­ing HMDA data with other de­mo­graphic and loan per­for­mance trends, lenders are find­ing gaps in their cus­tomer bases that they focus on to fill de­clin­ing vol­ume and grow their mar­ket share. Like­wise, by tap­ping into the lo­cal ex­per­tise both within and out­side their or­ga­ni­za­tions, lenders are cre­at­ing new op­por­tu­ni­ties to pro­vide loan prod­ucts that meet the needs of the con­sumers in their mar­kets.

But that’s not all. An­other way to re­spond to the shift­ing de­mands of to­day’s bor­row­ers is to work with sec­ondary mar­ket play­ers like Fan­nie Mae and Fred­die Mac to pi­lot new loan prod­ucts and test changes to un­der­writ­ing guide­lines that open up the credit box with­out tak­ing on un­nec­es­sary risks.

These strate­gies are es­sen­tial at a time when orig­i­na­tion vol­ume is strug­gling to main­tain pace dur­ing the shift to a pur­chase-driven mar­ket. The in­dus­try will likely orig­i­nate just un­der $1.7 tril­lion in loans in 2017, down 18% from a year ago. Vol­ume is ex­pected to fall again in 2018, to $1.6 tril­lion, and not re­turn above $1.7 tril­lion un­til 2020, ac­cord­ing to pro­jec­tions re­leased at last month’s Mort­gage Bankers As­so­ci­a­tion An­nual Con­ven­tion & Expo.

It’s im­per­a­tive for lenders to be nim­ble and cre­ative in seek­ing out un­der­served mar­kets and adapt­ing to their needs. Not only will these strate­gies help lenders get through the cur­rent de­cline in vol­ume, they also make good busi­ness sense in the long term, given the rapidly chang­ing de­mo­graph­ics of the U.S. pop­u­la­tion.

Austin Kil­gore Ed­i­tor in Chief

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