Joe Puthur of Mortgage Coach: Fair Lending Compliance is a Competitive Advantage
Joe Puthur is a leading mortgage technology expert who has played a prominent role in shaping the digital mortgage landscape during his 20-year career. As president of Mortgage Coach, Puthur has developed software solutions that help thousands of lenders meet the unique housing finance needs of millions of American consumers annually.
While neither the housing affordability crisis nor the growing racial disparity in homeownership are new issues, the most influential groups governing the mortgage industry are now tackling these challenges head-on by vocalizing support for policy changes that move the needle on housing equity and setting goals that increase loan purchases for minority and low-income people.
For example, recently the Federal Housing Finance Agency outlined a bold quota to increase its low-income home purchase goal to 28%, its low-income refinance goal to 26% and its minority census tract goal to 10%. This came on the heels of Fannie Mae’s announcement that it will begin factoring positive rental history into underwriting calculations on September 18 – a move that further advances FHFA acting director Sandra Thompson’s push to expand credit to low-income and minority communities. Even Fed Chair Jerome Powell has entered the chat, stating his support for subjecting non-depository lenders to Community Reinvestment Act (CRA) requirements in May of this year.
Savvy lenders recognize that creating a more inclusive housing finance system will not only enable a whole new swath of consumers to build generational wealth as homeowners, but it also presents the industry with an unprecedented opportunity to build relationships and finance homes for a whole new community of creditworthy borrowers.
Yet, as industry events are getting into swing, an unfortunate, but familiar sentiment echoes in conference halls – a longing for the days of decades past when lenders with deep pockets or special contacts could dance profitably in fair lending gray areas while key borrower communities remain underserved.
Those days are over regardless of who is elected into any office this round or next. Homeownership is the cornerstone of financial health and retirement savings for the vast majority of Americans, and the regulatory spotlight is again on mortgage accessibility.
A modern, level playing field is what inspires innovation and fosters healthy competition. This decade, innovators, regulators, industry leaders and most importantly consumers have honed in on the mortgage as a cornerstone of financial health, not a one-time sale. Lenders who empower people with homeownership set the stage for a long-term financial relationship.
Strengthening mortgage accessibility industry-wide is not a burden, but an opportunity that should be embraced. Every qualified loan is good business and new affordability goals and programs instantly broaden the marketplace of eligible buyers.
Unlocking homeownership for a new wave of borrowers, now
There is no need to wait to foster relationships with underserved borrowers. There are qualified consumers in every neighborhood who just need a mortgage advisor to show them the path to homeownership.
For many borrowers, interacting with a loan officer serves as a practical financial education with an introduction to terms, calculations and options they have never heard before. True modern mortgage professionals have a mastery of the terms interest rate, mortgage insurance, appraisal gap, property taxes, escrow, home equity and amortization – concepts that are not in the daily lexicon of most homebuyers. Lenders who commit themselves to providing the best educational experience will earn the trust that converts a first-time customer to a long-term relationship.
The lender that seizes an opportunity to make a distinct, helpful and clarifying impression on their customers via an educational approach will find themselves with a loyal book of business from clients who recall a relationship that felt more like a conversation with an advisor than a salesperson. Borrowers who feel this inspired and insightful connection with their loan originator will look forward to a repeat experience when the time comes.
Empowering Veterans, introducing down payment assistance options, educating student loan holders and reaching out to minority communities is a win-win that generates profits while simultaneously creating a pathway to stable, affordable homeownership.
A brighter future
The shift to greater financial inclusivity can serve to vitalize the industry and early indications show these policies are effective. 2021 set new benchmarks, with records set for the a) number of homes purchased by single mothers, b) number of loan applications by first-time minority borrowers and c) amount of equity used to reduce consumer debt.
This success is not by chance and is a direct result of the industry following new guidelines, embracing affordability programs, implementing technology innovations and funding key demographic loans. These new borrowers are creating long-term, profitable relationships with mortgage advisors and lenders that proactively engage over the life of the loan for repeat and referral transitions, a fantastic outcome for the brands choosing to lead with inclusivity.
While this a good start, results could be even better. To increase support for expanded affordability initiatives, more stakeholders will need to become involved in policymaking and the regulatory process. While many of today’s initiatives are succeeding, many more could be implemented, and more cost-effectively, if the wisdom, experience, and perspective of industry experts were better represented. Missteps, such as billions of unused dollars in rental assistance, could be avoided if mortgage industry lenders and leaders were more involved in rulemaking. Far too few leaders attend MBA Advocacy, join the Mortgage Action Alliance (MAA) or are active in MORPAC. If there are regulations and rules you know could be better, get involved.
It has never been more important for our industry to help lead economic growth with more loan volume, which FHFA goals, new affordability programs and industry-wide inclusive policies are meant to achieve.
A more accessible and affordable homeownership future has arrived. Will your brand maximize volumes while leading the mortgage industry through the transition from price to advice, or get left in the dust reminiscing about a Wild West long gone in our modern inclusive world?
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)