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The news out of Washington D.C. (and San Diego, site of the 2009 MBA Annual Convention) is pretty dreadful these days.  To summarize…

 

Congress/The President/We the People are angry and need to assign some blame for the mess this economy is in.  Since Wall Street/The Fed/W/Take-your-pick-of-scapegoats are made, apparently, of Teflon-coated Kevlar, it would seem that the mortgage industry is squarely within the crosshairs of every regulator and legislator from coast to coast.  The result is a confusing, hastily-assembled, poorly-conceived wave of interventionism that threatens almost anybody and everybody who makes a living in the real estate industry.

 

But rather than rant and rave about the raft of befuddling “safeguards” being assembled by a band of befuddled idiots, I’m going to get off of my soapbox, and talk a little about opportunity.  After all, isn’t the marketing guy supposed to play Pollyanna at times like these?

 

And the opportunity, believe it or not, is for all involved in the process (not just at the point of sale) to begin a dialogue with the consumer.

 

In my humble opinion, the mortgage industry does not articulate its value proposition or purpose very well.  Not to its customers.  Not to consumers (not always one and the same).  Not to regulators or legislators.  Not to family members.  And it’s easy to see why.  Mortgage is confusing.  The industry and process has grown up in a state-by-state thicket of laws, regulations and other obstacles which have essentially obliterated any chance for common sense or intuition to rule the market.  It’s not easy to explain title insurance, purchase agreements, appraisals, inspections, GFEs, underwriting, or how any of them fit together.  So it’s hard to fault the professionals of this industry—they’re too busy working hard just to stay afloat, let alone explain themselves.

 

But the time has come.  While the mortgage brokers kick the appraisal management companies, the AMCs push back, the Realtors blame the lenders, the lenders sue the Realtors and the title companies dive for cover…the dark clouds are only getting thicker above them.

 

This is not a suggestion that all industry segments gather in D.C., hold hands and sing Kumbaya while marching on the Capitol.  Rather, it’s a reminder that people fear what they do not understand.  And I can count on a single hand the number of people I’ve met (outside the industry) who understand how the mortgage process works.  Right now, people do not think kindly of the mortgage industry.  And yet, there’s nobody from the industry speaking back to them clearly as to why some of their fears are unfounded.

 

That’s why it just may be time for the remaining entities within the industry to consider marketing to consumers.  Not just Realtors and lenders, but title insurers, vendor managers, appraisers, etc.  Silly?  No time?  Not my direct customer or source of business?  They won’t remember me anyway—they just use the vendor suggested by the Realtor/lender?  Maybe.  But the spirit of the new tangle of regulations is clear on one thing (if, only in intent, rather than execution):  the process needs to be transparent to the consumer.  The industry may find that it HAS to communicate more clearly with consumers.  Why not use this to one’s advantage?

 

It’s fairly obvious that the average consumer is a bit befuddled by everything taking place in the industry right now.  It probably runs together in their minds, something like this:

 

Freddie/MBS/predatorylending/fraud/subprimemeltdown/default/foreclosure/FDICFridays/ARMresets

 

…or something like that.  I’m fairly confident that few have a real grasp on the complexities of the state we’re in, or how the mortgage industry plays into any of it.

 

But as things settle in—and, though it may take years, they WILL settle in—it will be time for all actors in the space to reach out to the consumers.  You see, at the end of the day, they have the real power.  Not that they use it often.  But without the consumer, there are no home sales.  There are no Barney Franks in office.  There are no bailouts.  I’m using simplistic terms, but my blog is already long enough.

 

It’s probably time for actors within the industry to start incorporating an educational element for consumers.  There are a million ways to do it, and they don’t have to be altruistic.  People do business with trusted advisors.  For years, the trusted advisor has been the family lawyer (hold your cynical remarks, please), the Realtor or the mortgage broker.  Why can’t it be the title agent or underwriter?  Why not the vendor management company or L.O.?  Probably because, at least right now, nobody knows who they are until the time of closing (except the L.O. of course).  But that can be changed.  Think about it.

 

It’s time for a traditional industry to break a few traditions.  Things are changing whether we like it or not.  The ones who survive will be the ones who adapt.

 

Disagree with me?  Tell me!  Let’s hear your opinions.  I welcome a discussion.