Laura Escobar on Unsung Heroes– #MBAServicing24
(Laura Escobar speaking at #MBAServicing24)
ORLANDO–Mortgage servicers are the backbone of the industry, according to Laura Escobar, 2024 MBA Chair-Elect and President of Lennar Mortgage, Miami.
“I’m just stating a fact,” Escobar said here at MBA’s Servicing Solutions Conference & Expo 2024. “When I say you’re the unsung heroes who brought America through the worst of the pandemic, no one can argue.”
Escobar noted Lennar Mortgage does not service the loans it originates. “That makes us different from most lenders,” she said. “But it also gives me a special ability to fight for you. [So] when I make clear that you need simple and sustainable policies, I’m not asking for anything for me. My focus is 100% on you.”
The Mortgage Bankers Association fights for servicers every day, Escobar said. “And more importantly, I want to show how we’re delivering for you, in so many ways.”
MBA’s overarching vision is simple. “We want servicers to have the flexibility that comes with common-sense rules,” Escobar said. “We want you to be able to support borrowers at the highest level. And when it comes to achieving this vision, we do two things. We tackle policy threats that stifle you, while promoting reforms that empower you.”
For example, Escobar said FHA proposed changes to its loss mitigation rules last year. “We all know there’s a need for reform in this area,” she said. “Specifically, we need a better way to provide payment relief for seriously delinquent borrowers in the current environment of sky-high rates.”
MBA worked closely with FHA on its Payment Supplement proposal – a novel loss mitigation concept to help borrowers afford their regular payment – while also pushing to preserve the flexibility servicers got during COVID, Escobar said.
“We initially joined with the American Bankers Association and the National Mortgage Servicers Association to recommend a better approach for loss mitigation. We laid out three specific adjustments that FHA should make,” Escobar said. “First, it needs to simplify its proposal, so it’s easier to implement and far less costly. Second, it should increase the allowable incentive to protect servicers’ liquidity positions. And finally, servicers should have enough time to adjust their operations before they must comply with a final policy. These reforms will protect servicers and borrowers alike.”
On Wednesday at the conference, FHA Commissioner Julia Gordon announced a new loss mitigation alternative to a traditional loan modification. MBA President and CEO Bob Broeksmit, CMB, said he supports this additional tool, which will allow servicers to better help struggling borrowers avoid foreclosure in today’s high-interest rate environment. He commended FHA for its transparency and engagement with industry stakeholders throughout the proposal process.
“FHA has heard industry’s call,” Escobar said. “And the good news is that federal authorities have adopted many of our servicing recommendations, especially since the start of the pandemic. We’re confident we can keep making progress–at FHA and across D.C.”
On another note, MBA is also fighting to simplify and streamline existing regulations from the CFPB, Escobar noted. “Last year, we formally requested amendments to Regulation X, with an eye toward preserving the flexibility [servicers] gained during the worst of the crisis,” she said. “They enabled you to help a stunning 8 million borrowers over the past few years, and while the pandemic is over, there are always borrowers in need of help. The best flexibility should be made permanent.”
MBA has laid out a “common-sense” reform vision, Escobar said. “We support new regulations that will serve the legitimate needs of borrowers while maintaining credit access and mortgage assistance,” she said. “We support protecting borrowers’ procedural rights, so they have a fair opportunity to engage with servicers and be evaluated for available loss mitigation options. Finally, we want to encourage borrowers to contact their mortgage servicer. It’s key to helping them understand their options and the best path forward.”
The association is also engaged on VA’s Veterans Assistance Servicing Purchase Program. “We have called for a permanent partial claim program, and we work every day to ensure that policymakers understand that servicers carry the cost of implementing their programs and their voluntary foreclosure moratorium,” Escobar said.
MBA also continues the fight on Basel III, sometimes called the end-game proposal, Escobar noted. “It’s a direct threat to the liquidity and stability in the market for mortgage servicing rights,” she added. “Specifically, D.C. wants to increase capital requirements on MSR assets for large regional banks, but that will only drive them away from the market. There will be less demand for MSRs. That makes them less valuable for other institutions. And that means less liquidity in housing finance–which means less servicing, origination, and options for borrowers.”
If Washington, D.C. wants to diminish America’s housing market, Basel III represents a great way to do it, Escobar said. “You deserve better—and so does our country. Basel III was supposed to involve minor tweaks to regulation, not introduce major chaos to the entire market. If it isn’t stopped, we’ll see higher interest rates and lower homeownership, especially among low-income and minority borrowers. If D.C. doesn’t change course, it’ll hurt the very people we all want to help. We’ll keep sending that message until our nation’s leaders do change course,” she said.
