The mid-term elections are over and many new politicians are getting ready to settle into new offices in Washington and many other state capitals, cities, towns and boroughs across the country. Political upheaval is often the byproduct of over-promising change and the lackluster delivery of the same. The new crop of politicians will learn this lesson soon enough, a lesson that most successful loan originators learned long ago. As they do, they'll learn that the sweet smell of success that comes from winning at the polls often has a pretty nasty aftertaste.
If you search for the terms “public service” and “thankless job,” you will find that a great many people have spent time voicing their disdain for the combination of political work and extremely low constituent satisfaction that seems to go into the making of every public service cocktail. Shaken or stirred, it still tastes bad. On the one hand, the American public seems to want government to do everything for them. On the other, they want government to work from a very small footprint and cost nothing. Swish that around in your mouth for a while.
Of course, if you're a mortgage lender, you know exactly what this tastes like. On the one hand, mortgage originators were told to get every American they could into a home and to get as much mortgage product as possible into the conduits that connected them to the big Wall Street firms. After successfully completing that task, the nation's largest investors wrote down all the reasons that they would be given when they asked lenders to buy some of this product back. Meanwhile, the customers, who were never given any weight at all in the mathematical equation of success (as long as they were alive and capable of providing their signature on a bunch of documents) have now emerged as a powerful political and public relations force that is drawing all sorts of negative attention to the firms that survived the crash.
The firms that did the very best job of meeting the success criteria in place during the early years of this century are in the most trouble now from the plaintiff's bar and legislators who demand to know why so many corners were cut and why the system doesn't make more sense to borrowers. Doesn't taste so good, does it?
Of course, politicians and lenders aren't the only professions that typically suffer from chronically low customer satisfaction. Just about any “necessary evil” pursuit falls into the category: the undertakers who bury our dead, the people who put our pets down at the animal shelter, the mechanic who smiles as he hands over the estimate for our most recent car repair. We'd never visit any of these folks if we had our way. In fact, we only do when we don't get our way, which tends to make us mad.
I think it was Garth Graham, back when he was working at Mortgage.com, who first put the thought into words for me. He said, “Rick, nobody wants a home loan. They just want the home.” It's true. The Miracle on 34th
Street would have ended quite differently if, instead of a perfect new house the new family found on Christmas day, it was a shiny new pre-qualification letter from a local mortgage lender.
There's a very old saying that suggests that misery loves company. Perhaps that's why legislators are spending so much of their time focusing on the mortgage lending industry. When they get done tinkering, we'll have a brand new agency focused, in part, on the regulation of mortgage lending. We'll also have a shiny new report detailing all of the causes of the financial crash. We'll have a new rule book for the government-sponsored enterprises (I seriously doubt they're going anywhere). We'll have a bunch of new rules, covering just about every part of our business. And, we'll likely have a lot more REO, despite the best efforts of a bunch of attorneys who will at least be well compensated for those efforts.
All of these changes will carry with them a promise that the American public will take to mean that the evils that came to their homes during the most recent financial meltdown will never visit them again. That may smell sweet to many Americans and make many politicians proud, for awhile.
It won't last. Qualifying for a loan will get tougher, costs will continue to go up, the cost of compliance will drive more firms from the business. Trying to solve a communication problem by layering on additional compliance steps in typical government fashion will succeed about as well as it ever has and, eventually, politicians and homeowners will learn what most mortgage lenders already know. There's a nasty aftertaste that will doubtless follow that thankless job.
Rick Grant is veteran journalist covering mortgage technology and the financial industry.
Follow him on Twitter: @NYRickGrant