An NFM TV Interview with Bob Broeksmit, President & CEO of Mortgage Bankers Association
2020 12-22 | NFM TV
In this episode of “My Voice Matters”, we spotlight Branch Manager, JC Jimenez from our Vienna, VA office. Originally from Colombia, and having immersed himself in the area Hispanic community, JC understands the distinct needs and challenges his neighbors may face when qualifying for a home loan. Tune in to see how JC and his team focus on helping first-time home buyers achieve the American Dream.
Full Transcript is Below:
- It has certainly been an interesting year in mortgage circles. It's been a tale of two very different years. And joining us right now on NFM TV, we're so honored to have Bob Broeksmit. He is the president and CEO of the Mortgage Bankers Association to talk about what a wild ride we've been on and what we have to look forward to in the future. Bob, thanks for being with us on NFM TV.
- Thank you Greg. I'm delighted to do it.
- Well, let's start with about mid-March when margin calls were coming left and right, and Mortgage Bankers were on the ropes. Take us back to that window and what that was like.
- This was the, I suppose the most memorable part for me. We were down, I was down with my family. We have a place outside Charlottesville, Virginia and I was sitting on the front porch at 11:30 on a Saturday night and convened my team on the phone and said, the Fed and Treasury have got to zoom in and fix this, or nope, we're gonna open for business Monday and no one will buy any mortgages. And then no one will be able to put out a rate sheet. I mean, this was dire. It was hard to imagine. So we developed a strategy and I sat on that porch on my laptop and I click-clacked out a letter to Secretary Mnuchin and to Chairman Powell and said you gotta ride in and buy all this paper or we're gonna not have any mortgages to make. So it was after midnight by the time I finished and hit send, which is why I call it my midnight missive. And then I remember driving back to the office. I had hoped that on Sunday, because in past crises sometimes the Fed would do something Sunday afternoon before the Asian markets open to reassure the world markets. Nothing happens Sunday. So boy I was sweating it on my way in on Monday morning. I was listening to CNBC or something and then I got the news. They were gonna buy an unlimited quantity, which was just an amazing intervention by the Fed, but really a necessary one.
- You had just gotten to the MBA 20 months prior to this huge event. It's one thing to know you've got a great team behind you. It's another thing to actually see them in action when the building is on fire. What did you learn about your staff at the MBA through it all?
- Well, what I learned is, there's not a better group of people to be in the foxhole with you and boy that's high praise, right? Because when the chips are down and the stakes are high, that's when it really counts. If things are kind of going well and things aren't that hard, it's nice to have a good team, but boy, when it's a crisis you really get to know your people better than you can ever imagine.
- So 3.3 trillion, a little bit North of that is going to be the number in aggregate of mortgage loans done in the residential space in 2020. And in 2021, we're looking at a forecast from the MBA of 2.5 trillion, which is still a huge number. And some people are gonna look at that and go, wait, it's going down by 800 million, but in your eyes still pretty substantial? I think 2.5 trillion is just a spectacular year. If you'd have told me when I took this job a little over two years ago, that the 2021 originations would be two and a half trillion, I'd say, whoa, how could that happen? That's just a huge number. It's only not huge in the context of 3.3 trillion, right? So it's gonna be a really strong year. They're still, believe it or not, people who will benefit from refinancing. I was just looking at some exchange with our chief economist and one of our lenders. And they believe that the jumbo rates are too high and are gonna come down. And you're gonna see a wave of jumbo refis which we haven't seen as much so far and FHA refis will continue to be very strong. So in addition to that, the purchase market is gonna continue to be red hot both based on demographics and a continuing imbalance between demand and supply on the housing side. So I expect it's gonna be just a terrific year.
- All right, we have a Democratic administration, we all know, coming along in late January. Let's start with the CFPB, sort of took a back seat under the Republican administration but there is some thought that maybe the CFPB will get ramped back up, maybe get more aggressive with enforcement. What do you see through your crystal ball?
- Well, I wanna give a quick shout out to Kathleen Kraninger, who's been a tremendous CFPB director and her probably final major work in the mortgage space are the QM rules that just came out, which turned out beautifully for the industry and for consumers. So I wanna acknowledge her great work at the Bureau. Your summary of the Bureau is probably how Democrats view it. And I do believe there will be an increased enforcement focus at the Bureau, but the thing that mortgage professionals need to remember is that the Bureau looks after a whole lot more than mortgages. And I think they're gonna focus first on things like payday lending, student loan servicing, debt collectors, those sorts of things that they believe were given a pass under the Trump administration. On the mortgage side however, they will look very closely at mortgage servicing especially as it relates to how people exit from forbearance to make sure that people who were harmed by the pandemic are given every opportunity to get back on their feet and resume paying their mortgage or have a good modification that works for everybody.
- How much of a concern is that for you and the impact that unraveling the forbearance is going to have on the greater economy, which if it has a really bad one could then again, spotlight this business.
- Well, I think a really important distinction between now and the great financial crisis is that we entered this period with more home equity in the United States than ever before. And what are home prices doing? They are going up faster than trend, right? So even people who have ongoing hardship from the pandemic and are not able to get back on their feet should be able to sell their homes and move on without without having any sort of loss, right? Because of course, some people in some areas won't have equity, but most people will have some equity. That is a huge difference between now and last time. And the other difference, is that interest rates are so low that modifications will work if people have some income coming back. It's just for those ones who are long-term unemployed who are gonna have to go through the foreclosure process. But I think a lot of it can be forestalled by simply selling the house and taking advantage of the equity.
- All great points and great insight. How about the 50 basis point refi fee? That was kind of rolled out and knee jerk, there was huge pushback. I'm sure with your help, the Association's help you were able to get that delayed. Is that gonna be around for a long time or do you foresee you being able to fight that battle again once a Democratic administration takes over?
- I was especially bitter about that fee for a whole lot of reasons, including the timing, because it was announced in the second week in August when Washington is supposed to be completely shut down and I was flying out to Montana. And so I was really bitter about it for a lot of reasons but that was one of them. And as you saw, we mobilized immediately because that, as I was quoted on NPR, that was absurd at every level, that's the clip they chose to run from our interview. And so the concept itself was terrible, poorly explained. And the timing of it, rolling out with just two weeks notice which would have cost our industry hundreds of millions of dollars in locked loans that you couldn't pass the fee along to the borrower was just absurd and unprecedented. So we went crazy. I personally had nine interviews in one day to the point where we got the White House to publicly distance itself from its own appointee on that. And I'm particularly proud that I negotiated directly with the FHFA to exclude borrowers who could least afford this fee. And that's what led to that exemption for people who have loan amounts of $125,000 or less, and for the Home Ready and Home Possible programs which are geared to borrowers at 80% or less of the area median income. And they are permanently exempted from this fee.
- Fannie and Freddie, what's the future look like? Are they ever coming out of conservatorship?
- Well, we're 12 years in, which is just, I mean, that sounds normal to us, but that's crazy that we're 12 years in, right? And we have just within the past couple days written a letter along with the American Bankers Association, the National Association of Realtors, and the National Association of Home Builders, to Secretary Mnuchin saying look, we are not for an endless conservatorship, but we are also not for a rush to the exits that could upset the mortgage markets in the midst of a pandemic. And we think our recommendations are being heard loud and clear. Secretary Mnuchin has just recently said he has no intention of having them release between now and the inauguration. So the Biden administration, I think, will focus on the affordable housing mandates for Fannie and Freddie. And we will have a new team on Capitol Hill, a new Chair of the Senate Banking Committee. And we expect that, believe it or not, GSE reform will be on the agenda once again. So it's a long road, but it's so important to our country that we have to do it carefully.
- What did you learn from all this Bob?
- Well, I learned that it's really important to listen to members directly and understand what they're going through and then advocate for them in Washington in that way. And we are so much more credible when we don't think about ourselves, but we think about our members and more importantly, the consumers that you serve because that's ultimately what policy makers in Washington care about. So keeping in very close touch with our membership. You may have gotten sick of all of our meetings and town halls and webinars, but we've gotten a lot of good feedback about how important it was to stay connected and having our great team to execute on your behalf. Those are really the two lessons I've learned.
- I don't you speak for us. I definitely speak for all the IMBs out there 'cause anyone watching from any organization in particular C-suite level people, they understand, they know the impact that you and your organization has made. And I would recommend anyone having to do with mortgages that can afford the membership to get in there. Dive in head first as quickly as they can because it certainly pays off. Bob, thank you very much for your time. We really appreciate it. What a year it's been. Maybe we'll do this again next year and we'll have a little less to talk about, nothing but success all the way around. This has been sort of a tale of two halves.
- Well, it sounds great. And congratulations on your success. Really proud of how your company has progressed and all the best for the holidays.
- All right, Bob Broeksmit, president and CEO of the MBA. Really appreciate his time. I'm Greg Sher from NFM TV. We'll see you again next time.