Tech­nol­ogy, Reg­u­la­tory Re­lief Cre­at­ing a ‘Nexus of Change’ in Mort­gage Lend­ing

With reg­u­la­tory tech­nol­ogy be­ing out­dated, specif­i­cally in mort­gage lend­ing, the De­part­ment of the Trea­sury finds it nec­es­sary to re­think dig­i­tal ap­proaches to com­pli­ance.

National Mortgage News - - Technology - By Elina Tarkazikis

Re­duc­ing un­nec­es­sary com­pli­ance bur­dens will pave the way for eco­nomic growth, larger job cre­ation and greater wage in­creases, and re- eval­u­at­ing tech­nol­ogy will play an im­por­tant role in do­ing so, ac­cord­ing to Craig Phillips, coun­selor to the sec­re­tary at the De­part­ment of the Trea­sury.

Phillips hosted a ses­sion at the re­cent Mort­gage Bankers As­so­ci­a­tion’s Na­tional Se­condary Con­fer­ence in New York.

To make busi­nesses more com­pet­i­tive and cre­ate more op­por­tu­ni­ties for work­ers, the reg­u­la­tory sys­tem needs to be more ef­fec­tive and ef­fi­cient. And with reg­u­la­tory tech­nol­ogy be­ing out­dated, specif­i­cally in mort­gage lend­ing, Trea­sury finds it nec­es­sary to re­think dig­i­tal ap­proaches to com­pli­ance.

“To­day is truly an ex­cit­ing time to be work­ing on fi­nan­cial ser­vices pol­icy.

In many ways it feels we’re at the nexus of change in wit­ness­ing the in­dus­try evolve like some other in­dus­tries from a brick-and-mor­tar branch fo­cus to the im­per­a­tive in hav­ing a strong dig­i­tal foot­print and vast tech­no­log­i­cal ca­pa­bil­i­ties,” said Phillips.

“With these changes come many, many op­por­tu­ni­ties both for es­tab­lished play­ers and many new en­trants, but it also brings chal­lenges. One of these chal­lenges will be to nav­i­gate a reg­u­la­tory sys­tem that was de­signed in and for a dif­fer­ent era,” he con­tin­ued.

New de­vel­op­ments in tech­nol­ogy will help max­i­mize ac­cess to credit while also re­duc­ing the cost of credit by im­prov­ing op­er­at­ing mod­els, and im­prov­ing credit flows will also help im­prove the econ­omy.

“Credit is plen­ti­ful, but not uni­formly avail­able, and not avail­able in the best pos­si­ble terms — which can be achieved if the reg­u­la­tory bur­den was re­cal­i­brated. Far too many qual­i­fied con­sumers, es­pe­cially home­buy­ers seek­ing mort­gages, find it still too dif­fi­cult to get credit,” said Phillips.

In ad­di­tion to grow­ing credit ac­cess, tech­nol­ogy can also in­crease the coun­try’s com­pet­i­tive­ness in­ter­na­tion­ally.

“If we don’t take steps to im­prove our tech­nol­ogy we will fall be­hind com­pared to other coun­tries in the world. With mort­gage orig­i­na­tions in cap­i­tal mar­kets, there’s tremen­dous op­por­tu­nity for in­no­va­tion,” said Phillips.

As far as spe­cific rec­om­men­da­tions for reg­u­la­tion, Trea­sury has sug­gested changes to reg­u­la­tory over­lap, frag­men­ta­tion and du­pli­ca­tion.

Trea­sury was largely fo­cused on mid­sized and re­gional banks since they play such a vi­tal role in reg­u­lat­ing the econ­omy. But, many rules in reg­u­la­tion have trick­led down to com­mu­nity banks and cre­ated hur­dles for these smaller fi­nan­cial in­sti­tu­tions.

Some pro­posed changes from Trea­sury in­clude re­liev­ing some of these pain points by stream­lin­ing reg­u­la­tion for com­mu­nity banks.

Tai­lor­ing is an overused word but ac­cu­rately de­picts a per­sis­tent prob­lem in reg­u­la­tion, ac­cord­ing to Phillips.

Reg­u­la­tory re­quire­ments from the Con­sumer Fi­nan­cial Pro­tec­tion Bureau are also sour top­ics for mort­gage pro­fes­sion­als as they sig­nif­i­cantly im­pact the in­dus­try. But, re­form­ing these guide­lines re­mains an is­sue.

“There’s no magic bul­let to re­lieve this chal­lenge. We very much want to pro­tect con­sumers but we have to have a bal­ance in mort­gage lend­ing in par­tic­u­lar that main­tains high stan­dards but does not pro­hibit the ac­cess to credit,” Phillips said.

Act­ing CFPB Di­rec­tor Mick Mul­vaney re­cently is­sued a re­port to Con­gress with pro­pos­als for leg­isla­tive changes for the bureau. Among those, Trea­sury saw eye-to-eye with Mul­vaney on two main sug­ges­tions: the CFPB should be sub­ject to con­gres­sional ap­pro­pri­a­tion and a sin­gle di­rec­tor struc­ture should be ac­count­able to the pres­i­dent.

Still, Trea­sury’s vi­sion didn’t align en­tirely with the bureau’s.

“We found that the CFPB re­lied ex­ces­sively on en­force­ment ac­tions rather than no­tice and rule­mak­ing, which has re­sulted in an un­sta­ble and un­pre­dictable reg­u­la­tory en­vi­ron­ment for mar­ket par­tic­i­pants,” Phillips said.

This was also a be­lief heav­ily cited from both the largest and small­est of fi­nan­cial in­sti­tu­tions that typ­i­cally com­ply through reg­u­la­tors or the Fed­eral De­posit In­surance Corp.

Craig Phillips Trea­sury De­part­ment

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.