Shamrock Financial Corporation

August 3, 2010
Ranchos Palos Verdes, CA

Note: Lenders One is the nations largest mortgage banking cooperative. (http://alturl.com/gasrz)

Community Mortgage Lenders of America (http://www.cmlamerica.com/) presented three speakers at the Lenders One mortgage banking conference on Monday. Howard Glaser, Rob Zimmer and Clint Rockwell. Their collective remarks centered around the recently passed Financial Reform bill.

Glaser led off by thanking the enormous efforts of Lenders One members in helping launch and support CML of America and naturally expressed that the work is not done and we must continue to be vigilant in having the voices of independent mortgage bankers heard on Capital Hill. He noted that just one year ago, all of DC was perfectly comfortable with a 10% risk retention requirement for all mortgages written in the United States. Glaser insisted that Congress had no idea that the complete destruction of the mortgage industry was at hand if risk retention was part of any financial reform bill. He reported that this number was worked down to lower thresholds but still part of the bill until the final hours, stressing the importance of being at the table for those last minute negotiations.

Glaser pointed out that passage of the 2,300 page bill was not possible without congress “punting” on actual statutes and deferring to regulators to actually define the bill after it was enacted into law. (I’m guessing this is what Nancy Pelosi D-CA meant we she was quoted as saying: “We’ll get it passed and then figure it out.”). This bill itself therefore becomes a bit of a moving target for the mortgage banking industry as we await clarification of literally 100′s of regulations. One thing for sure, according to Glaser, is that there will now be “an ankle weight on lending”.

Given the enormous scope of regulation, Glaser noted that Mortgage Brokers will be put out of business simply because “they are unregulatable”. The feeling being that with the fed so heavily involved in regulating all aspects of consumer lending, a consolidation of players is a must. He also concluded that such a consolidation brings about companies that the fed will come to see as “Too big too fail.” Thereby giving congress even more control over the industry.

Glaser concluded by suggesting the uncertainty of the bills eventual impact means that private capital investment in the mortgage banking industry will remain absent in the market until investors know exactly what these regulations are, how they will be enforced and what their consequences will be.

More later.

Dean Harrington has been active in the consumer finance industry since 1984 and is the current Chief Executive Officer of Shamrock Financial. Dean can be reached at dean.harrington@shamrockfinancial.com .