[David] Alright, let’s get over to Alice Segment. Alice, there is so much with these executive orders. I’m really interested in your perspective on this.
[Alice] Okay, great. Yeah. Hi everybody. Give us a. Yes there are two as the MBA reported on their segment. The first one I was telling Dave before the show, I really tried hard to find out what, in this executive order. It’s a little more broad about the industry with changes in construction and different federal programs. And I went, was going down each of the sections trying to find something that I really thought would make a difference in housing. And I just, I don’t see it. I don’t see. Big changes. So I’ll give you an example. So in one section it is asking HUD to go out and work with state and local municipalities to streamline building codes. And when I read that, I go HUD’s never involved in that. You’re like, you’re asking people to go do stuff that they don’t do Usually with HUD programs, even in the multifamily world and different grant programs, they might make a statement about it needs to be in compliance with zoning requirements, but that’s about as far as they go. So in the one executive order I see more, maybe the builders can dig something out of it if it truly does come up with reducing some of the permit costs. So that’s that one. The second one that’s titled the access to mortgage credit. We’ve talked about these a little bit, where they, it has this segment in it for a TR and qm. So again, going more over easing the regulatory burden, which is great, right? No one wants to fall easing regulations. That’s terrific. But if you change a trade rule, I’m not sure that changes housing supply and demand. Actually, I know I’m being facetious. I know it doesn’t, it has nothing to do with nothing. So we love the idea that they’re gonna take a look at this. There are some great pieces for community banks and I thought maybe this is a great group to talk about. What do the community banks really need? Mark, I know that’s near and dear to your heart even right now. So one of the things I really liked in the mortgage credit piece was that they, he’s, so the president of this is an executive order, which would then take each of the regulatory entities like CFPB and CUA. To make changes in how they audit against a TR and qm, which is the ability to repay and qualified mortgages, which kind of restricts and or causes some challenges for portfolio lending buckets. I spent a lot of years with community banks, so did a lot of consulting with them and did a lot of analysis for them on if they, had an auditor who came in and said, Nope, you’re not in compliance with A-T-R-Q-M. And the auditor was just going by technical requirements as opposed to this bank had great history, they’d been lending to this particular underwriting criteria for 20, 30 years, and their default rate was 0.001. They were they knew what they were doing. Yeah. And they knew their neighborhoods. And so that’s probably one of the things I think if you can really get a boost on the ground that regulators stop trying to box check and really get to understand a community bank’s purpose and understand that they do have prudent underwriting as based on their default rate, not based on a technical checklist. That is the one piece I really do like in this mortgage credit access. And, so just for example, I looked up now this is a AI and I will double check and if I have to correct next week, I will. But in the last five years, do you know, there have only been let me get back to my number here. There have only been nine community bank failures that needed FDIC intervention and zero in 2221. That was, those were some good mortgage years, so I thought that number was low. And I think that’s a huge perspective in audit. Auditing community banks easing up on that, or revising capital requirements on other restrictions because they know their market. Because I think the numbers show that they’re not failing right now based on they know their market.
[David] Yeah. Yeah. Great perspective, Alice. They’re very much
[Alice] That’s my 2 cents on that, where we’re at. We just have to see what actually comes out of it now. Yeah. It’ll be interesting. I was disappointed in the executive orders, quite honestly. I thought it felt like a nothing burger. As we as quote Trump. I think there’s so many aspects of this. Administration is strong, really strong. Unfortunately, I am not have confidence or I’m not as bullish or positive about the, I’m not saying their intent is bad, but the administrations the part of the administration responsible for housing is not as strong as other. Areas of the administration and so I would like to see some more leadership kittle. It’s time for you to go back to DC and start doing, make some, make a difference. For example, your letter, the difference you’re making at your age old age, you’re sending in letters. You’re providing great ideas, everything. Alice brought this up when we were talking earlier before the podcast, do things like what Kenrick recommends. Alice contributed to that letter and helped on that, but it’s really well done. Thoughts?
[Kittle] Yes. I just one word for that. No, look, it’s your word for the day. Yes. That’s,
[David] He just drove across the country with his wife’s car. He doesn’t have much language left.
[Alice] Was that what you were saying in the car the whole time? Yes, honey. Whatever you need, let’s just get whatever you say. He was practicing a new role as,
[Kittle] It’s amazing. She could be on her computer the whole way and say, you’re supposed to turn there. I said, I gotta. Map GPS in front of me. I know where I’m going. He says, you’re not in the airplane. Follow the roads. I go back to what Alice said just a second ago, and we have really lost our way. I know we’ve got AI and automated underwriting and AMCs and all this appraisal stuff. When you lose touch in your market, you lose touch period. Yes. And that’s why community banks and independent mortgage companies outperform the big lenders in my opinion. They can talk about their volume and all the rest of that stuff. Yes. But it’s relationship banking is what she’s talking about. And they make loans ’cause they know the people. And you can’t take that away with bad executive orders or anything else. You have to let people have the flexibility to underwrite and make good credit decisions based on history and the people they know and they know ’em better than some computer or some guideline. And
[David] It’s pretty interesting. Mark, look at your feedback. Thoughts. Oh,
[Alice] I’m hoping I teed up a good one for you, mark.
[Marc] I’m gonna make a couple comments here. And they’re relative to a bunch of people on the call. There is absolute nothing in the world, more valuable. And Mr. Kettle’s boots on the ground experience in his tenure with MBA and dealing with the mortgage industry at an executive level. He has seen and experienced things a lot of us would only dream about doing and I salute him for what he is doing now, writing letters and making a point about things. ‘Cause I found out recently that our value is not what we do on a day-to-day basis. A value is how we represent. What our values are at other people and what we think is important to stimulate their thought and growth over time. And Mr. Kittle iss doing that through a, his letter. I do that through different kinda letters. I just wrote a letter to United Airlines wanting to know why is it I gotta pay $150 for a pet each way to rent the same space I’m already written to put my feet in? Something’s wrong with that. There’s just something wrong with that, for those people who have pets, understand what I’m talking about. If we’re not verbal and I’ve become, maybe it’s a part of aging, I don’t know, but I’ve become more verbal through my writing than I ever have before. And if we don’t all do that, more of that, all the wisdom we gain for all these decades is just gonna go by the wayside. So I just think we can make a difference, but we gotta continue to step up. And we do not know any political party that’s ever been perfect. Okay. There hasn’t been Nope. And they’re not gonna answer all the questions overnight. All we can ask for ’em to do the best they can. And David, I agree with you a hundred percent. I think that one of the big pieces that’s been lacking in this administration is the banking mortgage stuff is really been lacking.
[David] And it’s not because of, I’m not speaking of Illit intent or I mean it’s just the leadership. Yes, that’s right.
[Kittle] Hey, so lemme just did something here. Name me an administration of the last eight, go back 25, 30 years that’s had a housing policy. That worked. I mean that worked. Yeah. We have not had a housing policy in this country for decades. Yeah. Around growth, around programs. You can say, programs. Popped up in seven, eight, and nine. But that’s not what I’m talking about. I’m talking about they come from the administration. It’s real policy going forward. And we haven’t had that. You can go all the way back to Jimmy Carter. That’s when CRA lending came in, which led to bad lending. When you try to force a market into a market to lend they’re gonna find a way to do it by hook or by crook, and it ended up being by crook.
[David] Yeah. There’s not a better CRA lend. The whole CRA program intended is one of those classic examples. We’re from the federal government and we’re here to help, and all they did is muck it up. Royalty bill, thoughts?
[Bill] Yeah, so I got a bunch of thoughts. The first one, so as I’m. Reading through this.
[David] He’s got that look. And there’s, if you could see the video, you could tell them. So he’s about ready to cough up a good one, guys on this one. Okay.
[Bill] So there, there’s a comment in there about right of rescission and it’s exempting rate and term refinancing, and then says in parentheses, including cash out refinancing from rescission rights. So that tells you the level of knowledge Yeah, basic knowledge about the industry to whoever wrote this.
[Kittle] Wow. Who did write it, right? Is it at all?
[Bill] Alice has that gr that says she saw the same thing.
[Alice] Yeah. Oh yeah. That’s in there. Yeah.
[Bill] So the other thing that I think is way more substantive is there’s a realization in here that A RQM, Dodd-Frank, that was all written to address. The, I’m originating and selling a loan, so I don’t really care what happens down the road approach. That doesn’t work if you’re holding it in portfolio. And that goes back to David Kiddo’s commentary of you. And without getting into the merits of Bob Frank and everything for loans you’re selling, if you’re knowing your customer and you’re putting the right blocks together to say this is a good risk and you’re willing to hold that risk, that should count for a lot. And that’s where I think community banks, credit unions have gotten boxed in. And the other thing to David Lichen’s point is a lot of that boxing in is because the folks that are doing the reviews are following the letter of the law. And even if you try and take a TR for example and make it. Work for what you’re doing. You’ve exposed yourself to checklist risk. And I would challenge pretty much anybody other than some of the folks on this call, who would, you know, but go to a community banker and say, okay, do you understand the difference between rebuttable presumption and safe harbor? They’re gonna look at you later, scratch, head and go, huh? They’re like I just wanna do good loans for my customers.
[Alice] And unfortunately they’ve had to learn that. So the community banks I would work with, they had to sit there and try and figure out how to write underwriting guidelines that, didn’t fit the box checking that we’ve been talking about. But still supported that it was a good loan decision without it being asset. So today we still can’t, we can’t lend on collateral. But they had a good person they, some, you get the stories of Yeah, I see his kid in the grocery store every day. That’s part of their thought process. And it show their delinquency rates show that it’s working however they’re doing it.
[Bill] Yeah. How about, community banking, underwriting 1 0 1, if you can prove you don’t need to borrow the money, I’ll lend you the money. If you have a million dollars in the bank, I’ll be happy to lend you a hundred thousand dollars. But they can’t do. Yeah.
[Alice] No. And I think this goes after too, some of the appraisal pieces which I like also. So trying to modernize some of the appraisal requirements. That was another piece that I think would also help community banks. Yeah. Knowing that we had, is that on top of the 2-year-old appraisal modernization that is kind of still stuck in first gear. That’s why I’m not given any dates. Yeah. On when this will happen. Because it’s who picks it up and runs with it.
[Bill] And the other thing though, it’s serious consideration is you, some of these things undoing legislation takes time. Yes, you want to create momentum, but not create unrealistic expectations. And the other thing is, once you get the changes done from a regulatory perspective, there are things in here that undoing. What’s in a loan origination system is not a small undertaking either, No, it is not. No, hearing you talk reminds me of a slide that I saw that Wier Brodsky law Firm did at one of the in industry events back when Dodd-Frank was just rolling out and he went through and showed how many different regulatory bodies were being rolled together inside A-C-F-P-B and what a cluster he predicted what a cluster this is going to be. And then it won’t, you won’t be able, there’ll be a ball of tape, double stick tape. You will not be able to unravel. It’s almost like we just have to throw it all away and start over again
[Kittle] One, one last comment while you’re saying that David is, think about this. We haven’t heard squat when you bring up the CFPB. From Pulte head of FHFA in months. Yeah. I know every, he got slapped down by Bessette, but by be I get this as soon, got down there, you don’t hear about anything from Fannie Freddy. Nothing from this guy. Yeah. So there is no focus on single family housing.
[David] That’s why I thought this was a nothing burger. I appreciate Alice’s reporting on this thing. It’s good what you said. I’m coming back to the bigger, broader issue of leadership in the administration, Alice.
[Alice] Yeah, whenever you’re done with this topic, Dave, I do have one more thing to report on.
[David] Good. Yeah. Good, good. Yeah. I think we’ve wrapped it up with that. I don’t want to, and I think, I’m Pulte. I know he’s well intending. I know all of that. But I gotta tell you I kinda keep one eye always on cent over a treasury as far signaling who’s gonna be doing what. He’s the alpha dog in the room when it comes to anything finance. So anyway, Alice, go ahead.
[Alice] So the last thing to make sure we touch on in the legislative update segment here is the the Road to Housing Senate bill that was passed. And so we have the Senate bill and we have the house bill now that have both passed. And the next step is that they have to go to committee and they have to reconcile the differences. The Senate bill had several amendments added to it that aren’t in the house bill. And so this is going to be a, this is not gonna go smoothly for them to reconcile. And the two that are in the Senate are the ones we’ve talked about on previous shows on that institutional investor limit on investors purchasing homes and the Senate also has that build to rent regulation that we talked about last week that has the seven year you must. Sell. Who the heck’s gonna manage that? How’s that gonna work? It is. So the Senate bill has some crazy stuff in it that should really just be removed. But they wanna keep it because the president said that those things should stay in. So anyway, they have to go reconcile that in committee. Then from there, if they can get that reconciled, which could take a while. Somebody was saying I thought I heard the president isn’t gonna sign anything until he gets the voting bill through. I learned something new. I had forgotten from my civics class that if the Senate and the House reconcile a bill, send it to the president and he’s in the, I’m not signing anything until the voter bill comes to my desk. Did you know it automatically becomes law if it sits on his desk for 60 days? Unsigned? No Really? Yes, I’d forgotten that. I had forgotten that. I don’t know that I ever, I must have slept that part of procedurally, he can’t really do that. If it’s already been reconciled and we have a reconciled bill and it’s sitting on the president’s desk then we’ll watch for that moment.
[David] I vote for Kittle to go back to Washington. That’s good. Good reports, man. Lots there too. Good stuff. I vote for Kittle to go back to Washington, dc get involved in this thing in a bigger way. Follow up your letter to hand, deliver it into the administration. Kittle more leadership in that letter than we’ve seen. And again, I’m very try not to look like I’m attacking poey in this, but I am really disappointed. So anyway, that’s going on. I’ll say this, listeners, there is such a change going on across global economics. We could put this segment, this little comment I’m making here, probably around in the market. But go check out Rupert Lowe and the movement that is exploding in Britain called Restore Britain. It has reached a level of adoption that is absolutely stunning. All the politicians back there. So you check it out. Alice’s mom’s side of the family is from Britain. I have friends in Britain. There’s a revolution going on and it’s going across the Danes, the the Swedes, the Italy, all of them are, there’s back to nationalism. We are seeing something happening in, in our world that we have not seen in decades since World War ii. And so it’s, there’s a phenomenal fundamental changes going on. What does that mean to mortgages? Maybe lower rates. I don’t know. Stay tuned. Just get, just work on the, what Bill said, work on your pipeline timeframe, which is 60 days max.
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!