The end of the year can mean many things depending on whom you ask. For some, it means colder weather and fall colors. Others may remark about the holidays and the opportunity to see family and friends. Invariably, this time of year brings thoughts of the New Year’s resolutions and promises to make change on Jan. 1. As thoughts turn to 2020 and all that may happen, it is equally as important think about what has happened over the last year and how it will impact your plan for the upcoming year. In the mortgage business, and specifically in compliance, it is all too easy to allow this exercise to become an uncomfortable task. There are so many macro factors that shape our business. None of us can predict what will happen with the election, interest rates, the regulatory environment, or the economy. Besides, 2019 was a decent year all things considered. Won’t 2020 be more of the same?
Don’t kid yourself. As Yogi Berra once said: “If you don’t know where you are going, you will end up someplace.”
If you want to avoid “end[ing] up someplace” you should take the time now to think about the upcoming year. An effective way to tackle planning, to avoid the distraction of the unknown, and to prevent being lulled into complacency about how the year will evolve is to divide your objectives and views into three categories:
►Things you have the power to change;
►Things you can seek to influence; and
►Those which are completely outside of your control.
Within each of these categories are a series of important questions that you can, and should, ask yourself to help shape and formulate your 2020 plan.
Power to change
When thinking about areas within your control, it is important to look at opportunities to change behavior and to question the status quo at the macro level. For instance, ask yourself the following questions: Are there meetings we have that may be redundant or unnecessary? Do I have access to the data I need to help make better decisions? Is there a better process that can be implemented to align on decisions that impact the business?
If the answer you receive to any of these questions is “no” or “that is how we have always done it,” then you know this is something that requires a closer look. The mortgage industry has evolved drastically over the last 10 years. New regulations have drastically changed the landscape for how loans are originated and serviced. Technology is turning existing norms in this business on their head. Borrowers expect better financial guidance from lenders and a quick and easy way to manage their experience online. Ten years ago, no one could have imagined applying for a mortgage or managing payments on your phone in real-time. Today, this technology is considered table stakes.
For a compliance organization, there are a number of additional questions that come to mind. What is your plan to tackle regulatory change in 2020? Does your organization effectively communicate the impact and change by educating internal stakeholders about what new regulations mean to old processes? Are there practices that have been accepted as standard operating procedure that require overhaul? Have you asked business leaders outside of the compliance group for feedback on how the process could run more smoothly? Are there information gaps that can be closed through better reporting or communication? A key component to success with this exercise is to look outside of your immediate organization for candid feedback on areas that can be improved; to gloss over this process runs the risk of perpetuating practices that are neither healthy, nor useful.
Another area that requires careful reflection is your audit plan. Have you taken the time to reflect on what you learned from your 2019 audits, and have you applied those lessons to your approach for 2020? Are there areas of your business that you know pose heightened regulatory risk and require closer examination in an audit? Audits can be challenging and time-consuming endeavors, but they also can reveal problems that might otherwise be overlooked. Taking the time to get this process right will help limit risk to the business, as well as ensure that efforts to stay compliant are not lost in the shuffle.
Potential to influence
Second, look to those items you can seek to influence. As you are looking to exert a degree of impact in these areas, consider what needs to be done to help persuade others of your views. Items in this category can be both inside of your organization, as well as outside of it. If you are seeking to influence something within your organization, ask yourself the following: Is there a way to promote the adoption of best practices or share views through dialogue with key stakeholders? What is the right forum to promote this change? Who are the stakeholders or key influencers needed to help be a catalyst for change? If you are seeking to do something differently, have you done the work needed to help educate the organization on why this is the preferred path and have you properly prepared yourself to defend your position? If successful in persuading others to align with your way of thinking, you will also need to prepare for the next step: Implementation.
Seeking to promote change outside of your organization requires a different approach. In the compliance world, one area where there is always a demand for outside influence is around the shaping of the laws, rules, and guidelines that impact our industry. In order to maximize your impact, ask these questions: Are you following proposed rule changes? Do you have views that you can share with policymakers to influence a better outcome? Are you appropriately engaged with trade groups or other industry associations to help amplify your voice? What is informing your perspective on a given issue and how might you test your logic to increase your chances of success with those outside of your organization?
Each of us is able to proactively engage in our community. If you didn’t make enough time for these activities in 2019, what is your plan to become more engaged in 2020?
Outside of control or influence
Lastly, it’s important to separate and recognize those things which are entirely outside of our control. We know there is a lot that can change the landscape of our business in 2020: Including Presidential and Congressional elections. Changes in the regulatory landscape. A recession. No single person can influence the outcome of all of these things. What you can control are your reactions to such events. Is your business ready for the next downturn? What happens if there is a sudden change in the regulatory landscape? If rates went up 150 basis points tomorrow, how would you respond? You might not like the answers to these questions or even have a difficult time accepting the fact that you cannot influence certain events. However, it is important to consider these possibilities to avoid becoming overly complacent. Part of preparing for the new year is asking yourself the uncomfortable questions today to avoid being blindsided tomorrow.
There are just a few weeks left in 2019. Make sure you use the remaining time to ask yourself the questions that will directly impact the shape of your 2020.
Matt Tully is vice president of agency affairs and compliance at Sagent Lending Technologies. At Sagent, Matt oversees the company's relationships with the GSEs, Ginnie Mae, CFPB, and state regulatory agencies and also serves as the company's head of compliance. Prior to joining Sagent, Matt was the head of government and industry relations at Essent Guaranty, a mortgage insurance company. He began his career in Washington on Capitol Hill.
This article originally appeared in the December 2019 print edition of National Mortgage Professional Magazine.