Brian Call, president of Rubicon Mortgage, steps into the role of president of the Minnesota Mortgage Association at a particularly challenging time for the industry. Coming out of the recession, the industry has faced a near overhaul of its underwriting and disclosure processes. The new year promises to be no less turbulent as the industry adapts to these new rules and a more challenging and competitive market. The latest regulations, for example, are aimed at making the homebuying process more transparent and have been launched by the Consumer Financial Protection Bureau. They are called Know Before You Owe, and their recent implementation has been blamed for a decline in home closings in November as brokers struggled to comply. Here are Call’s thoughts about the issues he will face in his new post in 2016:
Q: Lawrence Yun of the National Association of Realtors blamed Know Before You Owe for delaying closings, causing a steep decline in home sales in November. What will be the biggest issues facing the industry in the coming year?
A: Operational impact resulting from wide sweeping regulations that challenge the “old” ways of doing business. While much of the regulation is helping customers to better understand their loan options and terms through revised disclosures, it has had significant impact to legacy industry systems and technology.
Ensuring full compliance with all lending regulations, while being nimble in meeting the needs of prospective home buyers and the real estate community, is the single biggest issue we are currently and actively addressing.
Q: What did you do before founding your own company?
A: I started my career with Norwest Financial in 1997. I worked through the Wells Fargo acquisition in 1998 here in Minnesota and held a variety of consumer lending, marketing and management roles through 2005 in Ohio, Iowa, and Minnesota.
Q: What brought you to the mortgage industry?
A: The mortgage industry is exciting and ever-changing, and one of few industries that help people achieve the American dream of homeownership. I believed there were too few mortgage companies that focused on the importance of educating their prospective customers, viewing their role to be that of a teacher in the mortgage loan process.
Q: The average 30-year fixed-rate mortgage right now is hovering around 4 percent, which is much lower than anyone expected, but there’s a lot of speculation and concern that rates will rise in the coming year. What’s your bet for where rates will land by the end of 2016?
A: Although this is uncharted territory in our industry’s history, I believe we have started what will be a slow-but-steady rise in mortgage rates. I am not in a position to project where rates will specifically be at the end of 2016, but would not be surprised if we are nearing 5 percent.
Q: What kind of impact will that very minor increase in rates have on the housing market?
A: The largest impact that we expect to see from increasing rates is a reduction in refinance originations, which are projected to fall by as much as 35 to 40 percent in 2016. Assuming continued, increased consumer confidence and job and wage growth, we are projecting a 10 percent increase in purchase originations in 2016. We believe that 2016 will be an active year for home buyers, who will still be provided the opportunity to finance homes at historically low interest rates.
Q: What are your priorities for your time as president of the MMA?
A: First and foremost, to continue the storied legacy that the Minnesota Mortgage Association has had in helping to shape responsible lending practices in our local communities. I am committed to a strong and safe mortgage industry, where mortgage professionals can confidently serve the needs of their borrowers each and every day.
We will focus our efforts on providing our members access to the tools and resources necessary to provide their homeowners, and prospective first-time home buyers, ready access to mortgage financing.
Q: There’s been a lot of talk about how to cater to younger home buyers, or “digital natives.” Will that be a priority? And how do you think the industry will adapt to serve this market?
A: Although I don’t believe there will be major changes in the immediate future, I believe the next generation of younger home buyers will want to be a very active participant in studying their options, including 24/7 access to home finance information and education.
This will challenge our industry to rethink their marketing approach, and expand their service offerings through multiple channels of engagement, many of which might be new and atypical to more traditional ways of interpersonal interaction.
Q: What mortgage-related issues keep you up at night?
A: While our resources have been strained in implementing and maintaining policies and procedures that comply with all lending regulations, that we never lose sight of the importance of providing our customers boutique-level service quality.