Will McDermott is editor of Scotsman Guide Residential Edition.
Reach him at (800) 297-6061 or firstname.lastname@example.org.
Senior vice president of mortgage finance policy,
Independent Community Bankers of America
By Will McDermott
Ron Haynie is senior vice president
of mortgage finance policy at the
Independent Community Bankers
of America (ICBA). He provides
leadership and guidance for ICBA
on all mortgage finance-related
legislative and regulatory issues that
affect community banks. Haynie has
more than 35 years of experience in
mortgage lending and banking.
He spent 20 years at Freddie Mac
in a variety of roles, including sales,
mortgage-backed securities trading,
credit policy and program development.
Community banks are
returning to the mortgage business
Community banks and credit unions account for about one-third of all residential mortgage originations in
rural communities across the United Sates, according to a recent report from the Brookings Institution and the
Center for Responsible Lending. Nationwide, however, community banks only originate about 20 percent of all
mortgages, down from 29 percent in 1984. Part of the reason for this decline is the cost of compliance, according
to Ron Haynie, vice president of mortgage finance policy at the Independent Community Bankers of America,
a trade group that represents about 5,700 community banks across America. We spoke with Haynie about the
issues facing community banks today.
How are community banks faring in the residential mortgage industry today?
When the CFPB [Consumer Financial Protection Bureau] came out with the Qualified Mortgage rules and then
the servicing rules — and then then you had TRID [consumer-disclosure rules] — you just had one massive regulation after another. There were a fair amount of community banks that just threw up their hands and said, “We
don’t do enough mortgage loans to make this worthwhile, so we’re just going to get out. We’re going to quit.”
But now, we’re seeing some of those folks saying, “maybe we should look at this again and maybe we should
explore it.” Probably the fact that there is some really good technology out there that can help community
banks implement this stuff, that can help them be compliant. … I think you’re seeing that bring some of these
folks back. I think there’s also been certain correspondent investors out there that really want to focus on the
community bank sector … that are trying to grow new producers in the community bank space. They provide
a lot of hand holding and training and some fulfillment work that works well with the community bank model.
What challenges are community banks still facing in mortgage origination?
It’s still a scale business, and it’s always going to be that. The cost of origination and servicing have gone up anywhere from two to three times from pre-crisis. Even if a community bank isn’t retaining servicing on loans they
sell to an investor, they still have to comply with a lot of the servicing rules. They have to comply with all of the
origination rules — so TRID and HMDA [the Home Mortgage Disclosure Act] and everything else adds to the cost.
I’ve had several conversations with bankers over the last month or so who are struggling with trying to hire
good mortgage loan originators who can work in a community bank environment and not cause additional
compliance problems for them. It’s hard. In many cases, they can’t compete with some of the nonbanks that pay
really high commissions on originations.
How is originating different in a community bank setting?
In a community bank business model in the mortgage world, it’s not like you’re just an originator out there for
yourself. If you work at a nonbank, you’re pretty much out there for yourself. You’re using the company’s logo
and generating business for that company, but you’re pretty much a lone wolf. A community bank environment is different. You’re part of the bank. We want you to originate mortgages, but we also want you to bring
customers to the bank. We want you to enhance existing relationships, whether that’s on the consumer side,
commercial side or small-business side, so it’s a different mindset.
What do community banks want to happen with GSE reform?
Quite honestly, they would like to see the GSEs [government-sponsored enterprises] become fully recapitalized.
In our paper, we call for having their charters converted to a financial utility with regulated returns and heavy
oversight and supervision from the FHFA [Federal Housing Finance Agency], which I think is there today.
And changing the guarantee to the mortgage-backed securities as opposed to guaranteeing the entities.
That’s about it. We don’t really want to see a lot of major structural changes to the GSEs. They work very well for
community banks right now.
What mortgage regulations are community banks concerned about?
We are pushing to have the small-servicer threshold increased. Right now, it’s at 5,000 loans, but you have a lot
of community banks that service more than 5,000 loans, and their servicing staff is at best 15 people, yet they
have to comply with the same rules that Wells Fargo does, which has thousands of people in their servicing
department. So, we’re trying to get that raised to 30,000, and that is in some of the reg-relief bills. n