NMP - December 2016 - 88


Three Factors That Will Drive the
Mortgage Industry in 2017 By Steve DiMarco
n 2016, the nation saw
market conditions that
were ripe for a strong
housing market, with
record-low mortgage rates,
low unemployment and
rising property values. But, of
course, not all of the news was
good. Tight inventory and slow
wage growth restricted
opportunities for first-time
buyers, and despite a robust
luxury market, according to a
recent Trulia report, 11.99
percent of luxury listings
experienced a price reduction in
2016, up from 11.01 percent last
year.
While these factors still bode
well for a strong housing market
in the coming year, they are not
the primary concerns for
mortgage companies looking
ahead. Instead, regulation,
technology and consolidation
are the three main factors
driving the mortgage industry in
2017.

I

DECEMBER 2016 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

88

1. The impact of federal
regulation: Past, present
and future
This time last year, mortgage
companies were in the throes of
navigating new regulations as a
result of the Consumer Financial
Protection Bureau's (CFPB)
enactment of the TILA-RESPA
Integrated Disclosure rule,
commonly referred to as "TRID."
The purpose of this regulation,
also known as the "Know Before
You Owe" rule, was to help
borrowers better understand the
terms of their loans. While the
original intent has been
achieved, it was a significant
undertaking for lenders as the
requirements were extensive,
including implementation of new
online systems. These new
procedures were further
complicated by a lack of clarity
in some of the rule's
requirements.
This past summer, the CFPB
presented "TRID 2.0," which
sought to address some of the
concerns shared by the industry
after what proved to be a bumpy

start for several providers. In the
midst of ongoing concerns,
partnering with advisors and
peers is an effective approach
toward better understanding of
the requirements, building the
best systems and maintaining
compliance. Being proactive in
addressing these matters will
make the continued evolution of
the CFPB's actions more
manageable, particularly with the
bureau's future uncertain under
a new administration. Preparing
for changes in the pipeline, such
as some of the new Home
Mortgage Disclosure Act (HMDA)
amendments to Regulation C,
which won't take effect until
2018, is one example of
considerations for 2017.
When it comes to any federal
regulation, when the intent is
positive for all affected parties, it
is not something that
professional operators fear or
contest. However, entrapmentfocused enforcement is always a
concern for mortgage industry
professionals, and should be
examined closely.
2. Technology's evolving
role
Just as TRID has radically
changed the lending and closing
processes with its use of new
online forms and reporting
systems, technology has also
greatly impacted every aspect of
the mortgage industry. A recent
HousingWire article estimated
that 90 percent of homebuyers
search for a home online, while
only 10 percent of lenders
deliver a digital mortgage
experience from the time of
application through to the
closing. Although it seems
inevitable that the mortgage
industry will become increasingly
digitized, getting there will take
time.
Leveraging technology
effectively in the mortgage
process extends far beyond the
introduction of yet another app
that allows borrowers to
estimate their costs. For
example, in many cases,

borrowers are unable to access
the lender's systems directly,
putting an extra layer in the
application process where loan
officers are transferring
information via e-mail and phone.
Better integration of systems will
streamline the process for
borrowers and lenders alike.
The vendor space for
technology tools is vast, from the
likes of Ellie Mae, to Black Knight
and myriad start-ups large and
small, making it challenging to
distinguish the winners from the
losers. It can at times payoff to
be a fast follower, rather than the
first to partner with a yet-to-beproven provider. But the onus
rests on each mortgage company
to determine what tools will have
the most positive impact on its
business. Finding the right
technology will be a neverending, evolving process, which
in 2017, will be the highest
priority it's ever been.
3. Growth strategies:
Organic versus
consolidation
So what do all of these issues of
regulation and technology mean
for the industry in 2017?
Considering that non-bank
lenders accounted for more than
50 percent of the mortgages
loaned to borrowers in the third
quarter of this year, according to
a recent report by Inside
Mortgage Finance, it's clear that
the industry is changing in
significant ways. That point is put
into sharper focus when noting
that this statistic marks the first
quarter that banks fell below 50

percent in more than 30 years.
The shift toward non-bank
lenders can largely be attributed
to post-recession conditions,
where restrictions and penalties
levied on banks forced the
organizations to adopt more
conservative lending parameters.
But non-bank lenders are not
immune to regulation, and must
also adjust their strategies
accordingly. One strategy
adopted by both banks and nonbank lenders, although more
significantly among the large
banks, is consolidation. While
mergers and acquisitions are
often a sound strategy for
growth, it has also been
executed as a means of survival,
particularly in the post-recession
market.
At my company, the goal for
2017 is to grow closed-loan
volume by 25 percent. This
estimate is based primarily off of
traditional means, such as this
year's loan officer recruits hitting
production strides, creation of a
new affiliated venture, and
further retail branch development
within the company's core
market. Building upon the
fundamentals has sustained the
company's growth for more than
25 years.
While 2017 will see its own
unique challenges amidst
significant regulatory,
technological and strategic
shifts, it will also serve as a year
of transition for a storied industry
that is on the cusp of change.
However, as each mortgage
industry provider positions itself
for these changes, adhering to
the fundamentals of client
service, market differentiation
and strategic investment will
provide a solid foundation to
weather whatever the new year
brings.

Steve DiMarco is president of Chicago-based Key
Mortgage. He has more than 20 years of experience in the
mortgage and financial services industry and is highly
skilled in sales leadership, operations management and
team building. Steve was past president of the Illinois
Mortgage Bankers Association.


http://www.NationalMortgageProfessional.com

Table of Contents for the Digital Edition of NMP - December 2016

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