During the trade wars of the 18th century,
bartering was quite common among seafaring merchants who needed laborers to
load and unload their wares at each port. They were willing to trade just about
anything to get strong, loyal workers.
At one port, the captain of a merchant ship
had his eye on a well-built, muscular potential addition to his crew, whose
name was Anwar. He approached Anwar's owner.
"I'll trade you 50 pounds of
course-grained igneous quartz rock for Anwar," he proposed.
"What do you think about the offer,
Anwar?" his owner asked
him.
"If you ask me," Anwar
replied," I don't like being taken for granite!"
Mark W. had some thoughts on False Claims. "Let's
say these companies and individuals fined for the False Claim Act delivered
loans in bulk pools. One must ask themselves if the mortgage industry has
improved processes and procedures on the due diligence when buying loans sold
in pools since the mid-2000s.
"There is too much 'blind faith' given to the
mortgage bankers by the lenders buying these pools. Obviously the statistical
analysis of loans on an excel spreadsheet for a pool of loans doesn't include
all the 'applicable requirements.' But why does it take ten years to fine
abusers? With all the technology enhancements, you would think the mortgage
industry and even the government could create a system that reviews every loan
in a bulk pool quickly and thoroughly.
"I would write an addendum into my agreements for
maximum time the lenders and/or the government can come back to me on loans.
Even if the False Claims Act was above and beyond any written agreement with a
lender, I would still ask for it as a safeguard. Does E and O cover False Claim
Act fines from the government? I would ask my insurer for an addendum.
"It could be a conference topic, with a panel
discussion. 'How to create a bullet proof mortgage banking firm in 2017' would
be a good title. Too many 'What if's.' Not sure it is even possible. What does
'applicable requirements' mean to a regulator?
No wonder so many banks and credit unions stay away from
mortgage banking. As you know, they have dozens of other regulators in their
back pocket. There are so many things mortgage bankers are not thinking about.
How does the owner of a mortgage banker doing a billion a year sleep at night?
But 'applicable requirements' has to have many reading every word in every
contract. Most think in terms of production and defense for the past year or
two, but those that have been around for years have to be thinking 'what's
next.'" Thanks Mark!
Of course, folks have different takes on alterations to
the lending process. Change isn't always such a great thing, and the continued
modifications made by the Agencies, investors, and lenders are hard to track.
Luke Slivkoff isn't alone when he opined, "Just a quick comment regarding
the 'ever changing residential mortgage industry'... Why do Agencies,
investors, and lenders continually relish change? We ALL know what
fundamentals work so why continually tinker with it? The mortgage industry
needs to take a page from the Realtor playbook...it hardly ever changes.
Our industry constantly changes but the real estate side has only a fraction of
changes and seems to fair better year after year and deals with less regulatory
burden. With higher rates, the cycle will now swing toward layoffs, tighter
margins, cost crimping, and more pressure on employees. Guidelines will
loosen to try to accommodate less volume and to keep stock prices up,
etc. Later, it will swing back the other way and the opposite will
happen...It's insanity!
"They just need to 'set it and forget it.'
Borrowers, builders, Realtors, lenders, agencies, investors, and regulators
will then all better understand what it takes to buy a home today, tomorrow,
and in years to come. Consumers will then learn and retain proper ways to buy a
home by managing their credit, saving money, showing verifiable income,
etc...and the mortgage experience will be easier, simpler, and lead to higher
customer satisfaction, fewer CFPB complaints, and more Realtor
satisfaction."
An attorney wrote in with a good observation about the
CFPB's focus. "Speaking of the CFPB doing its job on consumer
complaints...., so, you say the biggest complaint area is "collecting
debts not owed". What's the CFPB doing about the problem of federal student loans? Of course, CFPB (which
is supposed to be an independent agency) has been silent on this issue.
It sure would have been interesting to see them try to punish another federal
agency, though."
On the subject of scams and wire fraud, Tony Butler,
President of Equitable Mortgage Corporation, writes, "Here in Ohio we are
experiencing email scams where someone will hijack an email account
(Realtor or lender) and change wire instructions with a spoofed email address
that appears to be from their realtor and happens just prior to closing. The
link above sheds some light on it and I am sure it is nationwide.
"What is Ohio's answer legislatively? Well, Ohio
will now require any money due at a real estate closing that is over $1,000 to
be only in the form of a wire. A title company will no longer be able to
accept a cashier's check. This is supposedly to combat fraud but it puts
the consumer directly in the path of this freight train and opens more
consumers to loss and fraud that they cannot control. The Ohio
Legislature appears to be protecting the banks and the title insurance
companies from fraudulent cashier's checks (criminal activity) by requiring all
Ohio citizens to only use a wire for a real estate closing! Goodbye
free cashier's checks to the consumer and welcome to a costly wire. The
consumer can no longer use a cashier's check and must track down wire instructions
and send money off to the title company instead of bringing a check. Maybe
the CFPB will need to step in and protect Ohio citizens from the Ohio
Legislature!"
Keeping on with the trends in transferring money, here's a
trivia question for you. What currency gained the most value in 2016? Bitcoin
was the currency that gained the most value in 2016, ending the year worth more
than twice its value when the year began. When trading in Europe ended
recently, the digital currency was worth $1,024. It has since plummeted. I
bring this up because a blockchain is a public ledger of all Bitcoin
transactions that have ever been executed. It is constantly growing as
'completed' blocks are added to it with a new set of recordings. The blocks are
added to the blockchain in a linear, chronological order. It is believed that in
the mortgage process & buying a home the technology could remove cost and
friction from the process, create transaction records that are infallible and
incorruptible, and facilitate near instantaneous settlement. And wouldn't
that be darned cool?
I am no IT whiz, but a blockchain is essentially a
recordkeeping system that can replace a periodically-updated central database -
a design that underlies most financial systems used today - with a clever
distributed database that updates in near real time. This database maintains a
continuously-growing list of ordered records called blocks. Each block contains
a timestamp and a link to a previous block. By design blockchains are
inherently resistant to modification of the data - once recorded, the data in a
block cannot be altered retroactively. So, I don't think there's a
"white out key." A lengthier definition can be found here.
A writer named Oliver Bussmann put out a good description saying it is a
simple way to store information. "It's almost a reference, a database
reference that you can point to. And there is a mechanism in that if you do a
transaction, it's first of all locked, it's recorded, you cannot manipulate
that. Plus, there is a software at the end, making sure that this transaction
only is unique, verifies it. So you don't need a third party to verify your
transaction, but the software is doing that.
"So that business logic is part of that ledger, and
at the end, the whole messaging goes away, you have a direct impact, a third
party is not necessary anymore, and so complexity goes away.
"The low speed of doing business is going away, plus
the accessibility of blockchain and Bitcoin is public ledger at the end, it
makes it easier to access that information from anywhere because it isn't
stored anymore behind firewalls, it's accessible for the different marketplace,
and there's encryption in place to make sure only the relevant parties have
access."
Blockchain technology is particularly interesting for
banks. As billed, this ledger technology could handle zillions of financial
transactions, reduce costs, improve delivery time and lead to buckets of cost
savings. Mortgages are typically local transactions, but it is estimated
that the settlement costs of transferring money using blockchain overseas could
save banks as much as 33% over current methods.
For banks blockchain could also overhaul the way loyalty
rewards programs are managed. It would allow for both the real-time redemption
and exchange of rewards points that individuals earn across multiple vendors,
programs and industries - all without the need for third party administrators.
Removing intermediaries from the equation would not only make it easier for
organizations to securely run rewards programs, but also make it easier for
small institutions, such as community banks, to provide customers with the same
scale of similar programs currently run by major banks and credit card
companies without major development costs.
A recent survey from Greenwich Capital Markets estimates
that organizations with initiatives involving blockchain spent up to $1 billion
in 2016 alone. Given banks and central counterparties are among the biggest
beneficiaries of many blockchain efforts, the two groups have so far been among
the most active investors in such initiatives.
The World Economic Forum projects 80% of banks worldwide will
start blockchain projects in 2017. Pretty much anything that moves around in
the financial world might be automated with blockchain so banks are looking
closely to see how and where it might be used first and most effectively. As
efficiencies are achieved within the financial services industry using
blockchain technology, the outcomes may be felt not only with the largest
institutions, but also down to the community bank level.
Of course the government wants to regulate it. But the big
question is, "How?"
No comments:
Post a Comment