On November 6, President Barack Obama won his reelection bid over Governor Mitt Romney. While most economists point to the housing market as a key to the economic recovery, the presidential campaign was surprisingly quiet on how each candidate would address the industry’s challenges.
Now that the vote has been cast, the mortgage and banking industry’s trade publications are speculating on how the election results will impact their industry. Below is a snap-shot of some of the immediate responses to the election results.
First up, an American Banker poll (http://www.americanbanker.com/issues/177_218/poll-results-the-election-s-impact-on-banking-1054304-1.html) finds 63 percent of respondents believe the results will have a negative impact on the banking industry. Another 20 percent of the respondents are also cynical, since they don’t think anything changes.
American Banker also posed five questions (http://www.americanbanker.com/issues/177_216/five-post-election-questions-on-bank-policy-1054208-1.html?zkPrintable=1&nopagination=1) now facing the banking industry, and three of the questions directly impact mortgage lenders:
- What happens to the mortgage interest deduction?
- When will Obama and Congress take up housing finance reform?
- Does Dodd-Frank implementation speed up?
To that last question, the paper determined that 2013 could see some major new laws passed:
Regulators are widely expected to move forward shortly on many outstanding issues, including QM, its sister regulation defining “qualified residential mortgages” and the Volcker Rule ban on proprietary trading.
“What we have from this election is a reinforcement of the Dodd-Frank Act, and that we will continue down this path,” said [Isaac Boltansky, an analyst at Compass Point Research and Trading]. “… it means this year we’re going to have QM and QRM done. … We were going down a road yesterday and there was an exit off of the Dodd-Frank rulemaking highway. Americans decided to stay on the highway.”
However, ‘National Mortgage News’ columnist Paul Muolo (http://www.nationalmortgagenews.com/blogs/hearing/mortgage-bankers-do-not-love-obama-1032948-1.html) sees opportunity for more fee income, even amidst the increased regulatory environment. He acknowledges the counter-intuitive fact that profit margins are incredibly high this year and adds, “But here’s my advice to those of you who are staying in mortgage banking, banking, financial services: All the coming rules under DFA are a pain the neck. Hire some attorneys and compliance officers and pass the cost onto the consumer. You heard me right: pass the cost onto the consumer. And when he/she and the regulators whine about it, tell them why you did it: higher compliance costs.”
Finally, the New York Times (http://dealbook.nytimes.com/2012/11/07/with-an-obama-victory-wall-street-pivots-to-plan-b/) takes a look at how Wall Street is adjusting its strategies in the wake of the reelection.
“Wall Street is going to work now to recalibrate its relationship with the president and his administration,” said Tom Block, an industry consultant and former head of government relations for JPMorgan Chase. … The financial industry will have to strike a conciliatory tone. On Wednesday, financial lobbying groups circulated statements calling for cooperation with the White House.
The article goes on to remind readers that in the end, the results of the election do not change the direction of laws already passed and being implemented: For all the hand-wringing, Mr. Obama’s second term is unlikely to present a doomsday situation for the nation’s biggest banks. Many institutions had already resigned themselves to Dodd-Frank, and many new rules are already baked into corporate strategy.
Regardless of which party you supported, our take is that Congress and the regulatory agencies owe it to the mortgage banker to ensure that the rules passed are clear and well-defined. The primary reason lenders fear regulatory change is the uncertainty involved – it is impossible to accurately calculate risk when you don’t know the rules of the game.
And at DocuTech, we’re here to remove as much of the headache as possible. We track all of the new laws and ensure that your documents are updated and current. In addition, we’ll work to ensure that you are educated on the requirements and implications of the industry’s top compliance issues.