Imagine that data quality and appropriate manufacturing of mortgage loans really do matter. Think about this quote from the NYTimes Opinion piece, Breaking Laws in the Mortgage Bubble.
“The trial against Nomura and R.B.S. rebuts the widespread notion that banks’ greed during the bubble did not amount to lawbreaking, that somehow it was the housing crash, and not deceptive practices, that caused the bonds to collapse.”
Classically misguided underwriting, flawed underwriting policies, inadequate documentation, and ignored quality control were all covered up with a strong economy or solid appreciation. The real estate crash exposed the industry’s excesses, flaws, and sadly deceptive practices. The results we all see.
Practices are changing, including servicing transfers, due to litigation settlements, regulations and fear of losing one’s reputation or even freedom.
Bonnie Sinnock has been covering our industry for… well let’s just say a long time and through many cycles. She is a quality journalist that does her research and knows our industry.
Her recent article, “Five Signs of Trouble in Servicing Transfers,” concisely shows servicing transfers are finding the pain of change. She quotes our CEO, Brian Fitzpatrick, who is leading LoanLogics to bring scalability, reduce cost and increase liquidity through transparency.
Responsibilities and roles in the securitization process for Private Labeled Securities (PLS) are becoming more defined, but there remains much uncertainty due to legal risk and reputational risk. Firms that embrace quality and sound business practices are winning on today’s new playing field. The game has truly changed. Play different.