TheMReport — News and strategies for the evolving mortgage marketplace.
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Dress code in MBS, creating an overwhelming crowding-out effect. What's clearer is that the policy choices made in 2013 will be critical to determining the health and vibrancy of the private secondary market in 2014 and beyond, so strategic-minded leaders will want to be closely engaged with Washington this year. M // As an advisor focused on the financial services industry and housing finance policy, how have your projections for 2013 changed following the presidential election? Mason // President Obama's reelection, with Democrats retaining control of the Senate, meant from the start that taxes were sure to go up. It also minimizes the likelihood of significant legislative changes to Dodd-Frank and will put the focus on the regulatory rulemaking process. The CFPB is likely to continue to operate in its current organizational structure with limited checks on its authority. That the Republicans retained control of the House, however, means there will be significant limitations on President Obama's legislative agenda, and after a brief honeymoon, we're likely to experience much the same legislative gridlock we saw in the last two years. On the other hand, there's a brief window with divided government and a freshly re-elected, liberal president, where there's a brief opportunity like we've not seen in years to address some of the nation's most intractable policy challenges. Tax reform, entitlement reform, and possibly GSE reform are all on the agenda for 2013. M // What communication and leadership methods are you utilizing to help your team and your clients remain future-focused while operating in an unpredictable marketplace? Mason // With all this potential change, the most savvy business and investment managers won't simply wait to see what happens and react. We are helping clients game out scenarios, understand the likely outcomes, and position to take advantage. We do this by staying on top of developments with a first-rate research team, engaging with the policymaking community in Washington and state capitals, and most of all, by relying on instincts honed over years of serving in government and having a seat at the table for the debates in the past. Today's Market Opportunities Which industry verticals are on track to make strides in 2013? Research from Berkery Noyes indicates that mortgage banking's recovery process is generating added benefits for some market segments. N ew York-based Berkery Noyes, an independent investment bank providing acquisition and capital funding advisory services to companies in the financial, information, and technology markets, is providing insight into mortgage banking's business development and secondary market trends, revealing which industry verticals are headed for a strong start to the new year. The company's managing director, John Guzzo, recently reported on the marketplace's speculative appeal and trajectory for recovery, highlighting opportunities for lenders, vendors, and investors. • he Federal Housing T Administration's refinancing initiatives for limited equity borrowers indicate an "upward cycle" in "volume and dollars." Mergers and Acquisitions Emerging Trends: Tracking acquisition activity in the financial marketplace, the firm observed a 50 percent uptick on a quarterly basis, including sizeable deals in the mortgage industry. Influencing Factors: Macroeconomic Outlook Emerging Trends: With vacant inventory dipping to the lowest level in eight years and home prices on the rise, Berkery Noyes anticipates gradual improvement through 2015. Influencing Factors: • The Federal Reserve's quantitative easing efforts will push mortgage rates downward. • Investor confidence in originations is on the rise. • Ocwen Financial Corporation's agreement to buy Homeward Residential Holdings for $750 million marked the company's entry into lending, displaying anticipated growth for originations. • Regulatory and compliance issues are likely to increase industry dependence on technology initiatives, driving interest in vendors. Analytics and Data Emerging Trends: Companies providing data and technology services to the financial, mortgage, and housing industries are on track for a robust year as the beneficiaries of the market's post-crisis climate. Influencing Factors: • artnerships and acquisition P deals have led to enhanced and more cost-effective solutions for data management. • Originators have an increasing abundance of tools at their disposal to facilitate better lead generation and borrower retention. Consumer Confidence Emerging Trends: Nationwide elevation in home pricing, which Berkery Noyes believes will continue to escalate, is driving increases in consumer sentiment regarding the mortgage and housing markets. Influencing Factors: • Real estate valuations and consumer confidence are working in tandem to produce a symbiotic uptick. • Additional growth in the secondary market will drive confidence in housing and vice versa. About the Company: New York-based Berkery Noyes is an independent investment bank specializing in mergers and acquisitions for a wide range of companies throughout the information and technology industries. About the Survey: John Guzzo, managing director in the Financial Technology Group for Berkery Noyes, authored the report. He has advised many notable financial information technology companies. The M Report | 17