This holiday season I was struck by
similarities between the toothless abominable snowman in Rudolph the Red Nosed
Reindeer and an ideology I have been promoting in blog posts on this site for
years. If you haven't watched the animated
holiday Rudolph in a while, the googly-eyed monster has a menacing scream that
appears to mean business, but when his teeth are taken out, he becomes a fairly
harmless character in the scheme of things.
In a recent spirited exchange on the
MBS Live chat (if
you don't subscribe, you don't know what you're missing) I was pontificating on
the need for change and a unified voice to promote industry-driven reform. In a follow up conversation with friend and
MBS Live founder Matt Graham, he pointed out that while my passion was
well-placed, my tirade lacked objective focus.
In his words it was, as yet, a "toothless ideology."
At first I took offense, but when he
pushed for specifics of WHAT I would change, I continued to promote a vague
position about how, as a collective of intelligent veteran originators, we
could likely come up with better alternatives to the current regulatory
At the end of the day, I don't
really know what it is we are passionate about changing. Yes, the regulatory
framework is costing consumers more, but I don't know that we can come up with
an argument that has any...well...teeth.
I'm reading a book on lobbying and
it describes how successful lobbying requires penning a position and showing
how it affects the constituency of the politician you would like the support
of. It involves telling one of those 'life stories' that are so popular
right now. You know, "this law is bad because
little Johnny and his family are suffering as a direct result, and here is
exactly how I can show this in an emotionally heartstring- tugging way." That's kind of tough to do with mortgage
financing, isn't it? At least not on
that same visceral level with which everyone can identify.
Surely there are aspects of the new
mortgage lending landscape that have caused great pain for consumers (some of
them in the name of "protection"), but other aspects don't make for scandalous,
heartstring-tugging headlines. Will consumers want a camera in
their faces to show that eyes-glazed-over-confusion when that 3-page lump-sum
Good Faith Estimate is hastily explained at closing, and then tied back to the
HUD-1? Will they take the extra time to try to remember which page of which
stack of forms vaguely resembled what was just placed under their noses?
While frustrating for all parties
involved, I don't think that scene will produce any sympathy, much less tears
that will move a politician to action.
Yes, the cost of the average
mortgage has gone up several hundred dollars across the board, but is $400 or
$500 per loan going to produce an outrage that is likely to make it all the way
to a cable TV segment?
I have had conversations with
several homeowners who believe the regulation is the necessary consequence for
too little oversight before. I guess
watching their house values go down tens of thousands of dollars had more of an
impact than seeing the closing costs go up several hundred dollars on new
mortgage financing. If the regulations will prevent another big housing
bubble and crash, they say it is worth the extra cost.
Maybe that's a sign that the
toothless ideology could have the same sort of happy ending as the toothless
abominable snowman. He ended up
providing a very important service to the North Pole-he put the star on Santa's
We may lament the lack of teeth
needed to scare up more meaningful mortgage industry reform, but we can still provide a valuable service to the home buying and home
owning consumers if we play to the strengths we still have. At the end of the day, maybe that's
what we need to do: rise above it all, and do what we're best at. We can put the star on top of the tree
whenever we take the time to explain the new guidelines, cost estimates, or
educate a realtor about what can and can't be done in the ever changing
mortgage financing world.