Companies
Long-time Mortgage Bankers Association executive Steve O’Connor recently retired after working with industry leaders for four decades. We asked Steve to share his observations about what industry professionals should be focused on right now.
Gate House: What changes in the marketplace could mortgage lenders be anticipating in the current environment?
O’Connor: President-elect Trump has promised to create more opportunity for the business sector. Lenders should definitely watch for proposed changes in tax policy. We know the new administration intends to work with Congress to renew the tax cuts that are due to expire. Mortgage professionals also should be following issues that may not, at least on their face, seem to be directly on their own agenda. Take three high profile issues from the campaign: immigration policy, tariffs and deregulation. Stricter immigration requirements could have an impact on the labor force in the construction trades. That could affect housing supply which affects the cost of housing which affects the mortgage sector. As for tariffs, that could create increases in the cost of building materials. And we all remember how the sharp rises in the price of lumber affected our own industry just a couple of years ago. On the regulatory side, we could see changes to Basil lll and a potential sidelining of CRA reform. No one can predict the future, and everything is going to require careful monitoring, especially for senior management whose responsibility it is to look ahead.
Gate House: What longer-term things would you say are a priority for them?
Well, let’s just look at the demographic changes that are already well underway. Between 2020 and 2030, the U.S. will have created 8.5 net new households, of which less than half a million will be white. The person of color will be the future homebuyer. That means you have to build a more diverse workforce. And not just your production staff and sales team, but also at the management, compliance, marketing and servicing levels.
Gate House: What practical steps can mortgage firms take to operationalize this new reality?
O’Connor: Do the things you need to do to create a future pipeline of buyers. Often the industry focuses heavily on the mortgage-ready consumer, those who are qualified. That’s the low hanging fruit. People often lean into only the short term, understandably so, when they’re having to make payroll and bring in revenue. The higher and quicker return of course is going after those mortgage-ready borrowers. But to build that future pipeline and of the near-ready or not-yet-ready borrowers, you can become a trusted partner with local nonprofits, the community development corporations, housing counselors and others. Working with these community partners will help you reach those emerging clients and get them ready to become new buyers. That’s going to sustain you in future purchase markets. Play the long game.