Well, it’s almost that time of year. Close finishes. Drama. Late heroics. Bubbles bursting for many of the unlucky…
That’s right. It’s almost time for TRID Madness!
Why? Is something else going on in the near future?
August isn’t far away, and there’s some real concern out there about who will be ready for the new TILA-RESPA Integrated Disclosure rule (TRID)…and who won’t. Many of us remember the chaos (mostly on the settlement side, but not entirely) caused by the form change for the HUD-1 in 2010. ”Hiccup” is probably too mild a word for what ensued in the months after the new forms were mandated. But what happened over that frantic period will likely be nothing compared to what could take place after August this year.
Although we’ve heard that the biggest of the big are pretty much ready, and that much of the title industry has been moving on this for awhile, August will reveal which “solutions” work…and which don’t. But when I hear that a good number of businesses on both sides of the transaction haven’t even started testing their systems yet, well, I wonder how August will go. It appears that many didn’t truly realize that this is (and I apologize if you’ve heard this before, but it’s true) NOT a forms change. This is a process change, which will require the businesses making the mortgage come to reality to collaborate in one way, shape or form. This is new stuff.
On top of this, lurking in the background, we have a regulatory and enforcement entity which, to date, has shown little inclination to give the housing industry the benefit of the doubt or a mulligan on mistakes. This ratchets up the tension that much more…so much so that some lenders are privately conceding that if they’re not ready in August, they’ll put a moratorium on mortgage loans until they are. We’ve known since 2010 that big changes were around the corner for our industry. We’ve talked about it and talked about it. Well, it’s here. QM, it appears, was just a tremor…a bit of foreshadowing for what we’re probably about to feel.
Here’s hoping those who have taken TRID lightly don’t find themselves kicked out of the dance too early.
There are some good numbers flowing forth from associations like MBA, ALTA and NAR these days. Numbers that suggest origination volume (and demand) is increasing. Numbers that mean more orders are coming in for the title industry. Numbers we don’t usually see this early on in the dead of winter.
Is it over? Is it finally over? Years of market volatility; seismic change and regulatory scrutiny amounting to a business foundation as sturdy as quicksand….really over?
Well, probably not. But a lot of folks believe we are (finally) grinding our way to a better and newer “normal.”
It may be decades before we see the breathtaking and historic volume we saw earlier this century. It may never happen again. So, right now, your battle is for market share. Yes, we’re likely to see some contraction across the industry as some exhausted owners give up under the burden of increasingly active regulatory changes. But not so much as to counter the “new normal” we’re likely to see in overall origination volume.
So my question to you is, do you have a plan? How will you gain market share? There have been enough changes in our industry to suggest the old ways may not work as well. This is where I make the obligatory “box of donuts” reference. But there’s truth to it. Flyers, phone calls and postcards simply ain’t gonna cut it.
We can all agree that, to keep a client’s business, we need to “provide value.” Yes, the term is a little cliche. Ok…a LOT cliche. But I use it to demonstrate that “providing value” is no longer enough after we’ve won new business. In fact, you probably need to be providing value long before a prospect becomes a client.
Now, believe me, I’m not advocating that we give our products and services away until someone agrees to pay us. But the days of interuption-based marketing; self-promotional communication and counting on the “numbers game” to predict new sales are over. Content marketing is no longer a fad, a trend or a theory. It’s reality, and it’s far more effective (done well) than virtually any of the old tools in the marketing tool kit.
If your marketing isn’t content based today, I’m pretty sure it’s not working. The fact is that your prospects expect something from you long before they start paying for it. And if you haven’t made that correction yet, the market may well correct it for you…
So I have a soft spot in my heart for small business. After all, they don’t come much smaller than my own little shop. I don’t necessarily consider myself an entrepreneur, but rather, a bit of an opportunist. There aren’t many who are willing and able to handle marketing communications for our little industry. I am. Hence…opportunity.
The past year (hell…the past seven years) has been trying for businesses of all sizes in the mortgage, title and real estate industry. We’ve gone from the subprime meltdown and consolidation to the great REO wave to the rise of the CFPB. 2014 has brought QM, ATR and, for the title industry, the spectre of increased costs necessary to meet new lender demands in the name of compliance. Mortgage brokers have all but been purged from the earth. Small businesses are being swallowed by larger firms. Compliance firms are thriving. All the while, opinions, indicators and analysis have been readily available suggesting simultaneously that the market has crashed; is crashing; is about to crash; is rebounding; has rebounded or is treading water. Depending on who you talk to, of course.
The only thing we really know about the housing market right now is that, well..it’s uncertain. That’s a tough climate in which to do business for anyone, but especially for the little guy, the small business–the company without the volume or cash reserves to stay afloat when revenue dips.
I don’t have an easy answer as to what to do. I’m a PR/marketing guy, you see. And I suspect a self-supporting pitch to hire a PR guy right about now won’t go over real well with a company just trying to keep the lights on. I do strongly believe however, that change always brings opportunity somewhere. Again, my little business will never be mistaken for the Apple or Google of title/mortgage marketing. But I can say that it has been successful–in spite of the market and economy over the last five years. Much of the reason has been my ability (or luck, perhaps) to spot the next wave and ride it. More or less.
Consider this a vote of confidence for the small business owners in our industry. In many cases, YOU are the innovators. YOU are the ones who don’t go “by the book” when the market shrinks. YOU are the ones who show the rest of the industry new ways to do old things. YOU are not (always) driven by fear, but rather, opportunity. This will get better. Keep it up!
We’ve all been hearing about consolidation, “the new normal” and other varieties of the end-of-the-world-as-we-know it now for about six years. There’s no doubt that the mortgage industry (including its satellite in the title and settlement services world) has changed. We have a new sheriff in town with a much bigger sidearm. We’ve got a lot more attention focused on us. And we’ve had a market turbulent and inconsistent enough to make most of us believe that “upheaval” would be a calmer state than what we see now.
And yet, through it all, I’ve seen a tremendous number of players sticking to their guns, playing the game the way it has always been played.
Until this year.
Although you’d have to be living under a rock, lodged under a larger rock in the back of a cave, not to have heard about the changes happening now (ATR, QM, soft market/impending purchase market) and in the future (possible GSE “reform,” RESPA/TIL disclosure form change), there do seem to be some cave dwellers out there when it comes to compliance. That’s not meant to be disparaging. But it’s the truth. I’m hearing things like “August, 2015 (the date the RESPA/TIL forms become reality) is a long way away. I have to find a way to stay in business until then, first.” A good number of title professionals I talk to are paying attention to the regulatory changes affecting their operations and doing their best to comply. But they’re much, much more focused on where the next orders will come from. Compliance is affecting the market. And while the CFPB or any state regulator can put you out of business for failure to comply, a lack of orders will put you out of business. Period.
Which leads me to believe that maybe, just maybe, we’re not dealing with cave dwellers after all, but rather, reality.
It’s tough making a living in the title industry these days. Compliance is not an optional course, but if you’re struggling to keep the lights on, preparing for next month or next year’s rule may not seem realistic.
This is the point, of course, where I should be telling you that now’s the time to figure out how to cut costs. There’s great tech out there, legitimate outsourcing and other ways of optimizing your business to ensure you’re not wasting a dime. Most of this, however, can be expensive and/or painful in the short term. One doesn’t just snap one’s fingers and awaken to a whole new way of business. Then again, the alternat
However, it appears to me that, this time, a “new normal” really is emerging. Hunkering down no longer seems to be an option. While the mortgage lending industry will indeed stabilize eventually, it won’t be going back to the way it was in 2006. And those who survive will really be those willing to make some life-changing decisions now.
If you’re a part of the mortgage industry right now (especially on the settlement services side), you’re aware that the Consumer Financial Protection Bureau has proposed yet another “simplification” to the HUD-1, somehow incorporating the Truth in Lending statement. I’m not a title attorney, but even I know that you may want to consult with one or get up to speed quickly if this is the first you’ve heard of the proposal. Big change (think about the last form change, and now add teeth to it) is coming. Again. more
So, it has admittedly been a little while since my last post. Okay. A long while. This is the point where I tell you I’ve been busy, and you, my loyal reader or readers, admonish me for using that tired excuse.
But an interesting thread has popped up in one of my industry LinkedIn groups, and I think it merits comment and consideration. more
As I sit here today and sign off on checks directed to my federal, state and local governments, I have to admit I’m not humming “God Bless America” under my breath. In fact, like many, I’m muttering something I hope my four-year old son doesn’t hear. But it’s not because I don’t believe I should have to pay taxes. more