[David] Alice Alvey, I’m looking at a headline in the National Mortgage News. CFPB firing line, DOJ moves to acts half of the bureau staff. Now. I was reading that firing more than 600 employees slashes the workforce by 53%. Now there’s a little bit of a cynical part of me that goes, yeah, but didn’t we build this department up by a significant amount? I want to, do you have any sense, Alice, of what the CFPB is gonna be looking like? Is it back to where it was before the Obama or it’s actually more during the Biden administration. We, that thing expanded dramatically in the Biden.
[Alice] It really did. Yeah. In the beginning too. You have to remember when they first came out, they had all of Don Frank to implement and set all that up. I don’t think it’s a apples to apples comparison for what we have today. What I think that article did go on to say I don’t have it pulled up in front of me, but if I recall correctly there were definitely some people who were gonna be staying more in the area where they will be able to still do analytics and research and a certain level of enforcement. And getting it back to half the staff where I think there was a proposal to get it down to, almost nothing to a shell. And there was a one area that may be getting a few more people. So I think you have to really see the ultimate details as to where are those people going to be and what is the enforcement going to look like. I think more importantly than the number of people is that. It does seem like some of the proposals they’ve put out there, will be working more with lenders in just analyzing what they have as opposed to reverse engineering if you’re in compliance or not. There was always a lot of talk about trying to back into what a regulation, whether someone was in compliance. So I think let’s wait and see as where I’m gonna be at right now to see how many people they actually end up with and what type of actions are actually moving forward with lenders. So we’ll let, we’ll just gonna have to, yeah.
[David] What’s your report you have for us today?
[Alice] I added the Basel three that we talked about briefly before the show. And I had two things. The Basel three end game which has been going on for years now the actual date is set to, be in, it is set to be completely implemented by 2028, but there is a piece that’s open 2028. Okay. Yeah. But there is stuff that’s going to be starting this June or July of 2026. At the same time, there is also a proposal that’s out there from the Fed, the OCC and the FDIC on capital requirements that aligns with this. So I do encourage everyone who’s involved in this aspect of it to get out and comment on this. The comment period is open until June 18th, 2026. So there’s still, I think a lot to actually be worked out, but in the end it does appear that they are trying to open up so that it is easier for banks to be more involved with MSRs and change the risk classification for that. I’ll let you know Bill and the CPAs comment in more detail Yeah. On that, on how they feel about that.
[David] What’s really interesting about that is had a conversation with Bobby Nicely, Alcova mortgage earlier, and he listened to a podcast that had Bill Dallas on there. And Bill is saying, Hey guys, mortgage industry, that we have these cycles. We’re ending the cycle, which has been dominant by the IMB. He’s citing the Basel changes to be the fact that it’s gonna make it more adaptational for banks to come back in. We talked about, you look at, I’d love to get your thoughts on this Bill and Marc, because we look at the advantage, how we watch the pendulum swing. It’s, 37% of all loans at one point in time B of A touched at some point. You still look at these statistics. We certainly have had some pretty wild swings. Any thoughts, bill, , you work for a bank, you run the mortgage division for a bank pinnacle. What’s your thoughts on the appetite of banks to come back in?
[Bill] It’s cautious right now and a lot of it is really just. They gotta figure out how to put the pieces together and what it really comes down to is how they can make the servicing side of it work. And whether that’s, the classic do they have a small group internally, do they leverage a sub-servicer? That’s really the part that still gonna scratch their heads and get around. I don’t think that it’s gonna materially change portfolio appetite that much. Interesting. But it, just ’cause I think in the community bank landscape, they’re still looking at, okay, residential mortgage can be good, but how does that on a portfolio product side stack up against higher yields that they can get on home equity, heloc. Certainly commercial activity, right? They’re gonna be less capital constrained, but they’re still I think, have a hard time on the residential side of making that the winning play, if you will, versus some of the other options they have. But it’s creating a lot of discussion, no question among folks.
[David] I think, Marc, you, we were coming the servicing aspect of this, your opinion, you’ve been both with, some of the largest banks in the space, Washington Mutual before their demise. You were running servicing for all of them. Your thoughts on what the new Basel rules, when they finally get implemented or could do the landscape?
[Marc] I think it’s gonna have an effect, but I think we will deal with it. Over the years, David I’ve just watched all the things that people try to do that were gonna affect servicing, whether it’s priority homeowner dues or liens, whether it’s revising how we calculate escrow, whether it’s how we do disclosures and now how we value servicing and Basel and all that stuff. And, we got a bunch of people out there that really don’t understand our industry that’re letting things happen to us over the years. I don’t see that any different here, but I don’t see a major effect on it long term. I really don’t. I just think we’ll learn to deal with it and roll on. We always have.
[Bill] One other piece trend in, in community banking that we’ve seen for years is not gonna change. And that’s the number of banks, dropping fairly significantly every year. But the other half of that equation that folks don’t really pay enough attention to is the amount of deposits the community banks hold is not changing commensurate with the number of banks. So community banks are by and large combining with each other. While you can look at the number of community banks over X amount of time dropped by 50%, the amount of deposits held by community bank really that timeframe did not change that much. So The super regionals, the big guys, they’re not picking up the community bank deposits. They’re staying within that ecosystem, if you will, and that’s where you may start to get that combination. Plus some of these changes may get some folks to look at it and say, now we can actually originate enough loans that retaining the servicing probably does make sense, number one. Number two, what I’ve been telling folks in, in this space is I think they really need to figure that out because selling servicing released in the past, folks always talked about retention and it was a joke, right? So the banks really didn’t have to worry about their customers getting picked off by the servicer, right? That’s changing dramatically right now. So my advice to banks is you don’t wanna. Your customer base at risk. You really need to look harder at the economics of servicing just to be able to keep your customers in house.
[David] Yeah. And I think that’s the extent that the banks should and will play at that, especially with these new rules. I think you’re seeing more of that on the SR side of it. So let see them hold onto it. Alice, any other information you have that you’re tracking for us?
[Alice] Yes. A couple things, and actually one of ’em plays into Alan’s space. So first of all, just a reminder that the Department of Labor rule for the classification of someone as an employee that comment period is open until April 28th, so you still have time to get in on that one. Another quick thing Fannie Mae just issued a very big announcement on changes in their quality control requirements. They’ve eased up on several things that will make the process a little more efficient. I don’t see a corresponding memo from Freddie Mac yet. Usually those two stay very well aligned, so we’re. Crossing our fingers that they will come out with something very similar in the areas where they still aren’t aligned because it is nice to have those two doing the same thing in that regard. But please check that out. It’s very lengthy. Too much to go over on the show here. Just go ahead and pull up that off Andy selling guide bulletin and there’s a full page table that will help you get through it and I’m sure you can use AI to get it done in a day. So that’s my segue into ai. Yes. We used to have to wait months to get the national HAMDA data. So the HAMDA data was just published, it’s now basically live for 2025. And I was just playing around with Claude a little bit this morning to, because it says you need special software to download all the national data. And I just asked a few questions, gave it a little bit of time, and Claude can actually get a hold of the API and actually then make it easier if you want your own data. Now, this is not gonna compete with something like a Hum vision software by, is it Polygram? I’ll get the name in a second. But they, have a fabulous system with lots of graphics, but if you say, I need some data for compliance as well as marketing, this is huge data to use to establish marketing. Know what your competitors aren’t doing. There’s so much in HAMDA data and AI is going to make that like it’s an intern project now, as opposed to needing some high level people in waiting in line for your IT department to get to it. Because, when you list off all the IT stuff, Hamda is usually at the bottom of the list for what has to happen this week. True. So I love that. So Alan, I’d love your thoughts on that because what used to be a huge effort, if I wanted to get into some hum to data and report on different where it’s at compared to this year and last year that is just ripe for AI efficiency.
[David] Oh yeah. So true. Allen. Thoughts.
[Allen] It’s true. And Alice is gonna become very dangerous because everybody else anyone can have access to these tools. Or for a simple $20 a month, you can have, further, more broad access and you can do these things. Claude Code and Claude Cowork and even Claude Cobrowse all of these tools are just wildly easy to use, very efficient. There’s ongoing releases coming out every day, and yes, you can. There was something I spoke about last week, David I think when Alice was CO was hosting for you. There was an article out there that was is SaaS dead and, anyone can, why would you pay for A CRM if you can just build a new one in a couple days? You get exactly what you need and you have access to the APIs and you can integrate with them. I’ve got a few platforms that, that I’ve worked on in the last year. One of them is actually in the middle of a pilot right now with hundreds of loan officers and the entire platform is built without an engineering team. And I’ve been building software with engineers for 20 something years in this industry. And the IT department of another company I’m talking to, I introduced them to a tool and they’re using it right now. And they actually took n ML s data and they completely automated the entire process of being able from their own internal system to query and get all the data they needed. And they eliminated an entire vendor. They’ll pay for the data. There’s a price to get the data, but the savings and the control are way completely outweigh another vendor, another security review, another process, another implementation, et cetera, et cetera, et cetera. So we are at a point. Where we are going to see an unbelievable growth in the next 12 months of what’s going on in this industry. It’s actually, you guys teed it up great. Some of the things I’m talking about today. But instead of just jumping right to that, we’ll come back to it. I got a bunch of other things here to talk about, but I should pause for a second, David. Yeah. Because Alice teed that up so well and you always have some nice, nice additive or something well to say there. So I’m gonna throw it over to you real quick.
[David] Yeah, I can’t wait ’cause there’s a bunch of questions I have for you as well. Alice, anything more? I noticed another headline is respite cases are rising as states fill the CFPB void. And so I think we’re seeing a another, we’ve talked about that before, where the states are stepping in, it’s making for a lot of new headaches because we now have a 50 headed CFPB. In other words, one for every state is what’s filling in the void and creating a lot of, consternation for a lot of lenders trying to manage the risk of compliance. ’cause it’s getting just that much more difficult.
[Alice] I just wanna clear, it’s Polygon research that has the polygon division. That’s right. Yeah. I just wanted to clarify their names so that people know what I was referring to. And then just to Alan’s point, yeah. It’s not software as a service anymore. It’s a platform as a service.
[David] Yeah. Very good. Yeah. By the way, Alice, thank you. You did a great job of posting again. Got caught moving in a move where I had this delay my move back to Tennessee by one whole day and Alice stepped in, did a Marvel stop again. Thank you Alice. Alright, welcome. You bet.
Alice Alvey, Master CMB
She handles development of their World Class Training program designed to support UHM partners and organizational effectiveness.
Prior to UHM, Alice served as Senior Vice President at Indecomm leading the Indecomm-Mortgage U division, Internal QA and Compliance and SaaS technologies. Indecomm acquired Mortgage U in 2013, where Alice was President/Co-founder, providing training and consulting since 1996. Prior to MU she served as SVP of Operations at a national bank overseeing operations for wholesale, retail and correspondent from underwriting through servicing, and compliance.
She has been in the trenches of mortgage lending operations from application through servicing for over 30 years. Her authoring work in training content, policies and procedures and the FHA/VA Practical guides illustrates her ability to bridge regulatory requirements with day-to-day operations.
Alice has been a weekly contributor to the Lykken on Lending show since its beginning in April 2009 and has made her weekly contributions to 450+ episodes!