Lopez: Three Critical Areas for Industry Commitment

BOSTON–Newly elected 2017 Mortgage Bankers Association Chairman Rodrigo Lopez, CMB, outlined three key policy initiatives he said would define both his term and the future of MBA.

“In the past decade, the housing industry has experienced dramatic changes,” Lopez said here at the MBA Annual Convention & Expo. “While creating a safer atmosphere for consumers, it has also presented some challenges to the dream of an affordable home or owning and growing a business. Change brings challenge, but with challenge comes opportunity.”

Lopez said his time, effort, commitment and intentional focus centers on three critical areas:

–Affordable housing, access to credit, GSE reform and a balanced regulatory environment;
–Transformational technology; and
–Achieving meaningful diversity in our industry.

Lopez said whether it is owned or rented, every family in the United States should have access to a safe and affordable home.

“Today, the economy has regained its footing after the great recession,” Lopez said. “We are at full employment, which should stimulate meaningful wage growth. However, homeownership in the United States is at the lowest level in more than fifty years. Current home rental data is not any better. Although we are constructing nearly 400,000 new rental units per year, only a small subset of these units will be affordable to lower-income households. The combination of stagnant incomes and rising rents has resulted in an almost 40 percent increase in renter households who spend more than one-third of their incomes on housing. For some, rent approaches nearly half of their incomes; an unacceptable statistic under any circumstance.”

Lopez said the greatest impact is on low-income, working families who can least afford it, forcing them to make difficult trade-offs with other necessities. “This is not the American Dream,” he said “We have an opportunity to improve access to credit, being mindful of the need to balance new regulations with innovation and responsible adjustments to the housing finance system.”

Lopez said the industry and policymakers should use and fully fund direct subsidies to develop, rehabilitate and preserve affordable housing units for the lowest income households and special needs groups. “With a new Congress and a new Administration next year, we have a real opportunity to change the housing finance system, to create a level playing field, one that primarily works for consumers, but also works well for lenders, regardless of size or business model,” he said.

Earlier this year, MBA created the Task Force for a Future Secondary Mortgage Market; its objective is to develop a proposal to address the future of the secondary mortgage market, and, in particular, an end-state model that can fulfill an affordable housing mission while reducing risks to the taxpayer.

“Over the past four years, MBA has repeatedly called for reform that preserves as much of the GSEs’ infrastructure as possible, and as Chair of the task force, I can assure you that we are mindful of this imperative,” Lopez said. “We must achieve a secondary mortgage market that is guided by our core principles: maintaining a bright line between primary and secondary markets; preserving a deep and robust TBA market for the 30-year, fixed-rate, pre-payable single-family mortgage; maintaining a functioning long-term mortgage finance market for multifamily rental housing; including an explicit government guarantee to attract global capital and preserve liquidity during times of economic stress; providing strong and transparent regulation and corporate governance that provides both direct access and a level playing field for lenders of all sizes and business models; and finally, private capital should primarily assume most of the risk, not the taxpayers.”

Second, Lopez said, technology presents a new frontier of opportunity for real estate finance. “We need to be poised and ready to take the necessary steps in strategic innovation, or technology disruption,” he said. “This is the era when people expect information instantly, in the palm of their hand, whether we are talking about outreach to homebuyers, business intelligence solutions for commercial lenders or attracting new employees.”

By embracing new technologies, Lopez said, the industry creates opportunity for tremendous growth. “We can achieve greater efficiency in operations and regulatory compliance, but there is much more,” he said. “New technologies will help us attract and communicate with more customers, but also new generations of employees. Today, one in four workers in the United States are millennials. Adopting relevant technology to attract this rapidly growing segment of our population will improve customer service and our business operations, and help us retain and attract good and creative employees.”

Third, Lopez pointed out that the face of America is evolving. “Over the next decade, there will be 16 million new households in the United States,” he said. “Today’s minorities will become the majority. The millennial generation proportionally has the largest share of immigrants. It is essential that we view these demographic changes as positive opportunities.”

To benefit from this evolution and take advantage of these opportunities, Lopez said, the real estate finance industry must be inclusive in every aspect of its businesses.

“We need to move beyond standard business practices and develop diversity management strategies with dedicated recruiting, mentoring and leadership programs,” Lopez said. “Building a culture of inclusion and diversity in our companies brings more strategic vision to our business plans. A diverse and inclusive workforce allows for better decision making, providing leadership with alternative perspectives. Cultural diversity leads to broader ideas and greater success. Diversity is not only good for racial and ethnic minorities, but all employees derive benefits from being part of an inclusive workforce. And a good, strong workforce is better positioned to serve our rapidly changing and diverse consumer base.”

Lopez added diversity happens as the fabric of the “we” begins to change such that we become less focused on our differences. “Rather, we focus on the goals we share and begin to realize we are stronger and better as we live, work and play together,” he said. “Working together, we have the means and opportunity to advance real estate finance in America to the benefit of our industry, the economy and consumers.”

Lopez observed when we drive a car, the rear view mirror is small, but the windshield is wide open. “As an industry, where we have been is important,” he said. “We do not want to forget the lessons we have learned and the progress we have made in the recent past, but the important work is in the opportunities that lie ahead.”