Questions

What are economics and key pain points for participants across the entire mortgage industry (advertising, originating, servicing, investing, etc)?

We want to find an expert who has visibility on key economics, priorities, pain points, regulatory concerns, and outlook for all key participants in mortgage industry - all participants that touch the consumer throughout mortgage cycle.

2answers

I have worked in the mortgage industry for over 20 years. My experience spans origination, MSR, banks and mortgage companies. I understand the current issues with mortgage pricing, servicing, and regulatory concerns. I have a very deep research pool and can provide analysis, commentary, and opinion on the current state of the mortgage industry and the outlook for the players and the industry as a whole.


Answered 3 years ago

These are challenging questions to answer at a high-level because the mortgage industry is hyper-local. This means that the customer acquisition channels, service providers, etc., will all be different.

That said, here's how I'd think about it the ~$8 trillion industry at a high level:

- customer acquisition: how are you going to do this in a scalable, affordable manner? I'd imagine you want some combination of cost-effective online advertising with surgical direct mailings. Partnering with other service providers (RE agents, etc.), while potentially effective, carries compliance risks. In sum, RESPA prohibits joint marketing efforts in sometimes counterintuitive ways.

- funding sources and cost of credit: where are you going to get money to lend? Assuming you want to lend directly, imagine you want to start with a warehouse line of credit. That's a process in and of itself. And, assuming you don't want to carry loans on your balance sheet, you'll need to figure out how to engage capital markets for either whole loan sales or securitizations.

- underwriting: are you doing plain-vanilla qualified mortgages? If so, you're looking at a lot of competition. Want to underwrite outside the box? Size up that opportunity first because there's considerable countervailing credit risk.

- servicing: this is HARD. It's what's got lots of banks in trouble because their servicing efforts were lack-laster. So are you going to outsource it or take on the headache of building out yourself?

- legal/compliance: NOT insignificant. Several new rules came out of 2010, so you want to understand those rules in addition to pre-existing rules like TILA, RESPA, and state-based laws. Again, depends on where you're going to offer your services. States and federal regulators are not going to ignore mortgage originations or servicing anytime soon.

I spent almost six years working on mortgage matters, first with the California Attorney General's Office, then with the Consumer Financial Protection Bureau. Now I'm in-house and see the business issues firsthand.

Happy to speak more by phone.


Answered 3 years ago

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