January 2017 - The World's Local Bank

TheMReport — News and strategies for the evolving mortgage marketplace.

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Page 17 of 67

16 | TH E M R EP O RT COVER STORY W hen the hous- ing bubble burst and caused the housing crisis in 2007, the mortgage industry was turned upside down. But now that market metrics—like foreclo - sure and delinquency rates, for example—are reaching pre-crisis norms, lenders are looking for ways to change the game when it comes to mortgage loan origination and promoting homeownership in gen - eral. The ever-changing regulatory landscape, however, often poses a hurdle for this innovation, and in this environment, it's only the lend- ers who can master the artful bal- ance of compliance and customer service who truly stand out. Serving the Customer, Playing by the Rules T hough industry regula- tions have certainly become stricter and compliance more carefully monitored in recent years, these increased quality control measures can actually help lenders better serve their customers when done properly. In fact, according to Raman Muralidharan, EVP and Head of Mortgage at HSBC USA, they play a big role in establishing con- sumer trust in a post-crisis world. "Regulations ensure outcomes are good," Muralidharan said. "They build trust between cus- tomers and lenders. That trust— during the financial crisis—was broken. Rebuilding that trust is really important." The industry's top lenders have put a lot of focus on rebuilding consumer trust since the bubble burst, hoping to encourage a stronger housing market and a higher homeownership rate across the country. Government agencies, such as the Consumer Financial Protection Bureau and HUD, have played a critical role in this, implementing policies and regulations that assist both the consumer and the lender. "I think the compliance and the regulations are good," said David Gates, Head of Mortgage Sales and Originations at HSBC USA. "In the short run, they're a little costly to implement and may be a little challenging for the consumers to understand, but at the end of the day they're good for the industry." Thanks to this increased regu - latory presence, lenders are now being held to a higher standard when it comes to loan origination. This helps to stabilize the market and ensures only the best, most successful mortgages are doled out to homeowners. But these regulations also pose a challenge for lenders on the back end. Staffing, technology, and budgetary concerns all play a role in how a lender handles new compliance regulations—and many are finding it difficult to keep up. "In the short run, some of the challenges or some of these chang- es in the process that have taken place across the entire industry as it relates to regulations, consumer transparency, and disclosure are just a little more difficult to digest right now," Gates said. "I think that that is a challenge that the whole industry's struggling with." Muralidharan echoed that sentiment, but also says that new regulations may take a little time—and tweaking—before they're just right for the industry. "Whenever you make large changes to a system, there are always unforeseen consequences which are not necessarily what you wanted," Muralidharan said. "With a large regulation like TRID, there are going to be issues. As long as the regula - tors and industry participants work together to see those issues, fix them, make changes, iterate our way through large pieces of legislation, then make sure we get it right over two or three cycles, I think we'll be in a great place." The HSBC Difference T hough recent regulatory changes aim to improve the customer experience, for those in the mortgage origination division at HSBC, this type of dedication to the consumer is nothing new. Muralidharan says he, along with his team, have been working to improve the customer experience for years. When you ask Jeremy Balkin, Head of Innovation at HSBC USA, what sets Muralidharan's team apart from the competition, he says they've always had central focus on the customer experi - ence—and for good reason. "If you have a happier cus- tomer," Balkin said, "they might do more business with you." In order to improve a damaged industry reputation, Balkin says the work has to start internally, and that begins with having a genuine love for the mortgage industry and what it stands for—giving consum - ers the ultimate American dream of homeownership. Balkin says it's this love for the industry and the customer that make Muralidharan's team stand out. "They love serving customers," Balkin said. "And that kind of philosophy starts from within. If you don't have a happy, cohesive team, with a dynamic leader who inspires, then it's highly unlikely that you'll externally be as happy and cohesive as you are internally." Gates agrees, saying that, in his tenure at HSBC, one of the elements driving his love for his job has been the people he works with every day. He says that's Keeping Consumer Centric HSBC execs share their secrets for pleasing the customer while staying compliant in today's ever-changing regulatory landscape. By Kendall Baer

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