The Psychology Behind the Recovery

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18 | Th e M Rep o RT cover story according to Montgomery, is a highly regulated mortgage market, but those same media channels and industry thought leaders can be utilized to get word of the safer, cleaned-up reality out to the home-buying public, which still must do its due diligence. "Whether it is the licensing of mortgage professionals, two RESPA reform efforts in 2008 and 2013, or the creation of the Consumer Financial Protection Bureau (CFPB), today we have more transparency in the lend- ing process and better tripwires around the quality of the profes- sionals within the mortgage industry," Montgomery said. The increased negative media reports and regulatory findings created an "enormous challenge" in reversing pessimistic perceptions of the mortgage industry, according to Chris Zimmerman, default servic- ing principal at Wolters Kluwer Financial Services. Well-established internal controls, monitoring of third-party service providers, and "creating excellent consumer expe- riences will be crucial in changing these negative perceptions," he said. "Lenders do have the opportuni- ty to turn the tables and capitalize on the growing number of drivers to communicate the changes that have been made and the value they're delivering," Wussler said. Jeff McGuiness, CEO of St. Louis-based Lenders One Mortgage Cooperative, points to a silent majority, so to speak, that provides market stability and dependable service to borrowers, an approach that doesn't exactly attract media attention. "There were, and still are, thousands of independent bank- ers who never wavered," he said. "They have 10, 20, even more than 30 years of service to their com- munities, diligently writing good loans of all types. They didn't make the headlines, but they're still here. And they are still the foundation of the industry." Iannitti added, "It's all about the consumer confidence in the mortgage system. When the loan process is easy for the consumer to understand, simple, transparent, and 'feels fair,' the consumer feels confident about his mortgage decision. We all play a part in changing the perceptions of those outside of our industry about the mortgage industry by our contri- butions to getting it right." Lessons Learned "H umility is as good for the soul as it is for the memory" author Patricia Wred writes. The mortgage industry, from executives down to entry- level employees, learned some difficult lessons in the last several years, but they were necessary for implementing best practices to sustain the current recovery and maintaining a healthy view of the industry's role in the economy. The market fluctuates, but for peace of mind, the commitment to applying the knowledge gained should not. "For one institution, it may be that they didn't manage the work- force properly and let too many folks go too fast, which hurt pro- ductivity," Iannitti said. "People reinventing themselves as the mar- ket changes is pretty interesting. What all of us need to remember is that this is a transient industry. Paths will cross again. Be kind and be helpful always." Montgomery says a big lesson from the housing crisis is keeping a steady hand on a financial institu- tion's third-party vendors. Wussler maintains most of the financial institutions his company worked with learned manual processes to manage collateral or portfolio risk simply could not identify all the potential pitfalls. "Unfortunately, learning the les- son and putting that learning into everyday practice is not the same thing," the DataQuick VP said. "Many institutions want to move to more comprehensive, modern systems and processes, but legacy systems and, in some cases, legacy mindsets in certain quarters have either slowed or prevented a move to more effective risk man- agement solutions." Advanced systems and processes are all well and good, but eventu- ally we must return to the human element. Mortgage organizations must strive to put their people in the best position to succeed and be fulfilled so companies prosper and the recovery continues. "The ability to assess and retain those employees that truly add value is a key component of sur- vival," said McGuiness of Lenders One. "Convincing them that, in the midst of upheaval, new career opportunities would present them- selves and offering those opportu- nities to stretch their professional boundaries became part of the dia- logue. The concept of transparency and communication took on much more value than it had before." This critical human resource approach comes in the continued crucible of stringent government oversight and the unforgiving media spotlight. The industry may not be riding on one wheel in a hurricane anymore, but the balancing act is quite challenging, both for company direction and employee morale. "For employees and leadership, we are seeing a type of regulatory fatigue that is more profound than in the past," Wahlen said. "So even in the middle of a significant imple- mentation like Qualified Mortgages (QM)/Ability-to-Repay, people are well aware of wave after wave of very large changes, especially the combined RESPA/TILA disclosures. This regulatory fatigue coupled with the industry image in the me- dia has created additional stress. For some, it has caused them to look to other industries, and for others, it has had an effect on morale." Basic psychology during such demanding times holds that mort- gage professionals will be more positive and productive if they view themselves as an important part of something greater. "What keeps the mortgage professional in the best mental state is when the sense of community is fostered on a micro-level within an individual organization," Iannitti said. "This sense of community is established by creating and sup- porting a true team environment. Great employers will engage people in the cause or mission. They will make sure that the employee or the partner feels genuinely supported by the team both as an individual and as a valuable participant in something bigger. We depend on each other, and that's a good thing." Where do companies thrive, and what modus operandi goes the far- thest to boost the job satisfaction of a financial institution's workforce? A culture of service can be reward- ing, as can others. However, will a closely regulated, largely reactionary approach ultimately detract from the well-being of a mortgage busi- ness and its employees? "I recently had a conversation with a senior executive at a top five lender who said that they were no longer in the innovation business," Wussler said. "They're now in the compliance business. The onslaught of government regulations has sucked a lot of creativity out of the bank. It's a much different environment, where details are more important than ideas. That likely has had a profound impact on people." "A lot of new homeowners will tell you the hard part is keeping the home, not buying it. " —Brian Montgomery, Collingwood Group LLC ≥ Inspections ≥ Rental Data Reports ≥ Automated Valuation Models ≥ Residential and Commercial Broker Price Opinions "Our culture is built around exceeding the needs of the client" Call Us Today! Tami Rund, President • 970.256.6614 • VALU-ations Providing reliable, responsive, scalable and fully customizable valuation solutions since 1995

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