National Mortgage Professional Magazine has taken the opportunity to focus on one of the industry’s top players in its “Mortgage Professional of the Month” feature. This month, we had a chance to speak with David Wind, Founder, CEO and Chairman of the Board for Guaranteed Home Mortgage Company, an expanding mortgage banker based in White Plains, N.Y. As an attorney, former clerk in the New York State Attorney General’s Real Estate Finance Bureau and a former mortgage-backed securities analyst with CitiCorp, David has one of the most intriguing resumes in the industry today. He recently took time to speak with us about his career and provide his perspective on the industry today. Tell me how you came to choose the mortgage industry as a career, since you began as an attorney? My interest in the mortgage business was a serendipitous one, when I attended a closing representing the purchaser of a home as their attorney. At the closing table, having spent a good six or eight hours working with the buyers and ensuring that everything was nailed down–a check was slid across the table to me for my services in the amount of $500 for what I considered to be a pain-staking and herculean job; and another check for $8,700 was slid across the table to a mortgage broker, who, in my opinion at the time, just earned slightly over an exponential of what I had earned, and I had just got out of law school. I thought to myself, “Maybe I should take a look at this mortgage business.” This was in 1994. How has your experience as a lawyer helped you in the mortgage business? The place it has benefited me most is when I spent time at the attorney general’s office ... experiencing what the folks do who are responsible for regulating the industry. I recognized and respected the folks within those agencies for what it is they had to do with sometimes unclear objectives. We’ve all been dealing with unclear objectives since I’ve been in the mortgage industry, but reasonableness typically prevails. My experience both as a lawyer and as a regulator taught me that, in the end, reasonableness prevails because the people who administer those loans are themselves mostly good, and that I’m capable of communicating with them effectively. You mention regulation. What are your thoughts on the current regulatory environment in the mortgage industry? Is the industry over-regulated? I’m not going to take a position as to whether we’re over or under regulated because I believe this is–in many circumstances–the largest financial transaction that a consumer will enter into in their lives. There needs to be a tremendous amount of focus by both the legislators and the regulators on how that is conducted. But what we desperately need as an industry is some clarity as to how those regulations apply. We’d really appreciate some instruction as to how to make sure that we’re acting compliantly. That is sorely missing. You also spent time early in your career as a bond trader. How has that experience helped you in the mortgage industry? I’ve always been cognizant because of my experience at Citicorp on their trading floor of the vicarious nature of a transaction. It’s given me tremendous perspective to know that the “Miller” loan for $100,000 will make its way down a chain, number one, where everyone will have to take a bite in order to earn a living; and number two, that everyone deserves a degree of responsibility as to the quality of that particular asset and all the other assets that are bundled together. It's that chain that broke down, and, of course, was one of the precipitating events that caused the meltdown that we all experienced. So it has given me some unique perspective as to how the old School House Rock “I’m Just a Bill” song works in the mortgage industry. “There are a tremendous number of fairly sophisticated and well-funded entities and individuals out there that are capable of putting together a viable alternative to the agencies.” With your experience in the secondary market what are your thoughts regarding the potential for private alternatives developing to the GSEs? I think, once again, we dovetail back to clarity and regulation. There are a tremendous number of fairly sophisticated and well-funded entities and individuals out there that are capable of putting together a viable alternative to the agencies. What they’re frightened about–at least the cacophony that I hear at the various functions that I attend–is that they are all waiting to find what a “qualified mortgage” truly is, and whether their portfolio has any liquidity. They are not going to dedicate significant human resources and capital, only to find out that what they’ve done in the past is no longer viable and not liquid. The smoke signals are that the Federal Housing Finance Agency (FHFA) is going to begin to limit–again, it’s only smoke signals–the amount that any given institution can deliver to Fannie and Freddie based on some type of net-worth analysis. So, the example would be that a company that has $7 million in net worth would be able to deliver “X” during a given period of time, and a company with $14 million in net worth could deliver “2X” in a given period of time. This is likely going to drive the community mortgage bankers into the aggregators, which are the large institutions. We’re seeing the results in some of those smoke signals now as these larger correspondent purchasers are unable to keep up with the volume that’s being delivered to them and will only become more exasperated as things go on. Are you involved directly with the regulators in trying to clarify rules? Guaranteed participates in a fairly aggressive group that was lobbying on the Hill. This group is comprised of 40-some private and community-based lenders across the country. Together, working with both the Fed and working with members of the Consumer Financial Protection Bureau (CFPB) and the various conference boards of state examiners, we created a comp plan which enables a firm’s–it enables member firms to fully defend the requirements within the LO comp regulations, and also provides a fair amount of flexibility to the sales team. What are you most proud of in your career? I am proud of our ability, as an organization, to be able to change the way we operate as the environment requires, but that our foundational principles have not changed. We are presently in the process of creating an institution that is more bank-like, depository bank-like, than ever before. We are a mortgage banking firm that is taking seriously the requirements that have been placed upon us in regard to items such as the Financial Privacy Act and the anti-money laundering law. And we are requiring that all our staff complete these training programs and get certificates. Four to five years ago, we never would have considered requiring the entire staff–including sales and support team members–to do things like this. But we recognize the new environment that we’re in, and we also understand there’s a price to pay for being a leader in these things because many of my colleagues–I don’t call them competitors anymore because there are so few of us left–have not focused on this issue yet. “I am proud of our ability, as an organization, to be able to change the way we operate as the environment requires, but that our foundational principles have not changed.” What might you have done differently in your career if you could do it over again? What I would have done differently is I would have built a firm, and then I would have taken some of the offers we had and cashed out. Then, I would have built it again, and then, I would have cashed out. Fortunately, I live a fairly conservative lifestyle, and I have the necessary resources to carry this firm through the ups and downs. But when I look across the spectrum at many of my colleagues who use that formula–where they built firms during the big times and then stepped out and then waited for the trough and began again–they seem to be a little bit more –let’s just say that they have full heads of hair, and I use a razor. What issues keep you up at night regarding the mortgage industry? My major concern right now is basically the plaintiff’s bar–that we, as an industry, have yet to see the consumer-based class actions against the mortgage banking industry. The remaining players, who should be congratulated for running credible honorable firms, will pay the price for so many of those institutions, the smaller folks, especially those who are no longer in the game. Are there particular books or people that have had a big impact on your life? I have done a substantial amount of reading in my life, and I continue to be a voracious reader. I’ve also been exposed to some great folks–entrepreneurs and stalwart, conservative investors. But the biggest impact anyone has ever had on me is my father. My father is a successful businessman in his own right. He is a classic accountant-CPA. What he taught me as a child, and what he continues to counsel me today, is that you meet every obligation. You can do things by a handshake. You must be extraordinarily selective with whom you do business. If you do all those things, everything will be fine. So that is the practice that I conduct. How is Guaranteed Home Mortgage Company different from its competitors? I would say that we have created an environment here where we are looking for like-minded professionals to join, but we are no longer a place where loan officers and other professionals can come and go at their leisure. We are taking the position that we are doing something special here, and we are looking to the right candidates–not any and all candidates. We are different than many of my other colleagues–the community lenders–in that we have a “large law firm,” a more institutional environment. I think that it makes us unique that we can regularly invest with our loan officers and our managers, and we have the capability to determine whether a particular investment made sense or didn’t. What else would you like your colleagues in the industry to know? I am strongly encouraging my colleagues at every level in this industry to become more actively engaged in the advocacy of our careers. There are too many of us who take for granted that what we do for a living will remain “as is” without any effort. This is a call to arms of mortgage professionals to reach out to their legislators and make their point heard, whatever their point is. I’d like to see more of that. David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail [email protected].