A Matter of Trust
In their great book, The Trusted Advisor, David Maister, Charles Green and Robert Galford provide a comprehensive review of the subject of “trust” and a roadmap for businessmen and businesswomen who seek to develop trust-based relationships with their clients. In the first chapter, they provide a list of “Traits Trusted Advisors Have in Common.” While the list reads as almost itemized common-sense, each of the 22 points is important, and its absence would diminish trust in any business relationship. As I thought about the list, I realized that trust is being broken by some lenders.
The modifications to the Home Affordable Refinance Program (HARP) that have become known as HARP 2.0, have been dramatically successful in enabling tens of thousands of homeowners to refinance who were previously ineligible. Statistics show that up to 20 percent of all originations are currently HARP related. Clearly, the changes made to extend eligibility have met a real need of American homeowners. Yet, while the demand is clearly present, many lenders have limited their acceptance of HARP loans, or imposed restrictions on loans they will accept that go beyond the program requirements. For an industry that desperately needs to rebuild trust, these actions seem poorly chosen at best.
Three of the 22 “Traits Trusted Advisors Have in Common” seem particularly relevant to the current situation with HARP originations:
2. Trusted advisors “are consistent (we can depend on them)”
11. Trusted advisors “are in it for the long haul (the relationship is more important than the current issue)”
17. Trusted advisors “are reliably on our side and always seem to have our interests at heart”
Despite being supported by all taxpayers with billions of dollars, the big banks have chosen to limit their HARP refinances to loans already in their portfolio. On top of that, these big banks have also eliminated their wholesale mortgage operations, greatly reducing access points for consumers to this program. These actions appear self-serving and short-sighted, and do not appear to be a solid basis for developing trust.
Even some independent mortgage bankers have curtailed their acceptance of new originations, citing capacity and service issues. Moreover, many of these mortgage bankers have also placed overlays or additional requirements on borrowers that go beyond program guidelines. These actions also appear out of step with a desire to build trust.
These decisions by big banks and some independent, non-depository mortgage bankers slow down the process of repairing the U.S. housing sector and the balance sheets of average Americans. The risk is that mortgage rates will rise before tens of thousands of Americans will have the opportunity to refinance, costing them dearly and placing additional, unnecessary risks, in the housing system.
There are hundreds of thousands of additional American borrowers who still fall outside the eligibility requirements for HARP 2.0. Voices are growing for a Version 3.0 of the HARP program that would extend it to responsible borrowers with non-agency loans. What will lenders do then? Find ways to service these American homeowners and citizens or place additional roadblocks in their path?
My firm is a wholesale mortgage banker with direct approval status with Fannie Mae. We have made it a companywide priority to seek out and serve as many American homeowners as possible with the current version of HARP, or any subsequent versions that may extend the program. We add no overlays to the existing program guidelines. Yes, this requires that we work harder and longer, but we see this as common-sense. It is good business to build trust with our clients—the mortgage brokerage community and to empower them, in turn, to build trust in their communities and with homeowners.
Al Crisanty is vice president of national wholesale production for 360 Mortgage Group and is responsible for overseeing regional sales managers as the company seeks to expand operations to all 50 states. Formerly the national wholesale director for Caliber Funding, Al was responsible for the development and expansion of Caliber’s wholesale production channel. Additionally, Al served as executive vice president of national production for American Home Mortgage, successfully transitioning the 500-member production team from Capital Commerce Mortgage Company. Al may be reached by phone at (916) 761-1624 or e-mail email@example.com.
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