I was born in the mid 1960s in Detroit, MI. I was part of the last generation to cruise Woodward Avenue on Friday and Saturday nights. Now we just reminisce about those days with the nation's largest nostalgic street cruise, the “Woodward Avenue Dream Cruise.” I love sitting around talking to friends about the good old days when we could pop open the hood of our cars and show each other what we had done to the motor over the last few days.
It was a simple time for the auto industry and the backyard mechanic reigned supreme. Then came the oil embargo of the mid 1970s, when Uncle Sam stepped in. The government has ever since been increasing the regulations on the manufacturers, pushing for ever greater mileage standards, and better disclosure to the consumer of how and where their car was made — and even stiffer penalties for not following the rules!
Thus, I can no longer open the hood of my car and tell you much more than, “Yep, there’s a motor in their somewhere. And boy, she sure is fast! But if you want to know how to do more than change the oil, see my specialist.” So what does this matter to a credit union executive worried about providing for membership? Well, it’s like I said, “It’s not your father’s mortgage anymore.”
Much like the auto industry, not only have financial institutions undergone immense regulatory changes (burdens), those credit unions offering mortgages have had a big bullseye on their backs, and the government is taking aim. And hitting their mark, I might add. We know the far-reaching effects of just QM and how it has put a damper on those members who really need, as I like to say, “the credit union touch.” Which, to me, is just our ability to listen and find a successful way to help membership.
And the statistics bear this out — overall, credit unions have done a good job of making mortgage loans. That’s part of the reason there have been so many Johnny-come-latelies to the credit union mortgage dance — it's good business. And while we know it, the venders know it, and the bankers know it, the government on the other hand ... well, maybe someday they will understand us.
“But, John,” you may say, “I’ve heard there has been some crackdown on the CFPB in recent days. Things are going to change.” While that is true, and even if the ruling stays, so will the CFPB and its regulations. Let’s even suppose that the president and both houses of Congress want to make changes. It’s not going to happen overnight, and it’s not going back to the way it was — and it shouldn’t, at least not completely.
So, most of what we have will be here in some fashion and we must continue to roll with the punches. And to that end, let’s bring this to point. I once heard that a mortgage is like a marriage. There is the dating phase, shopping for a home and rate, the wedding day, and the honeymoon — when you move in, then the next 30 years, making payments, and servicing the loan.
So, let me circle back for a moment. We know that we credit unions and CUSOs do a good job of lending, and while we still have our bumps in the road, our defaults are low. We also know the CFPB and other regulatory agencies will still be around. While they will have an effect on the dating and wedding day phase of a mortgage, it’s really all about the 30 years of marriage to that mortgage that matters. And the rules are still going to be there and they are going to continue to be ever changing.
So, let me ask you this: When you open up the hood on your mortgage servicing, do you really know how it all works? More importantly, do you have the time and staff to keep up to date?
Maybe it’s time to get a “specialist” to service your portfolio. At MMS, Member Mortgage Services, we have been doing credit union mortgage servicing right since 1987! We're long past the honeymoon stage and we’re still married to our partners. Let’s see if we can be of service to you.
John P. Marchione is national accounts marketing director for Member Mortgage Service in Farmington Hills, MI.