Saturday coffee — a lending/tech newsletter companion to your coffee

This is my first attempt at a commentary originally meant for e-mail format. Please bear with me.

Of Interest: A Fannie Mae report found that nonbank lenders, especially larger ones, have a competitive advantage since the TRID rule took effect.

The Takeaway: This is likely fueled by much of the same competitive advantages that have nonbanks outpacing banks overall as well. Nonbanks, especially those with resources (again, the large ones), were more nimble and more flexible in terms of updating technology, policies & procedures, and remediating issues on the fly. The Fannie report was a subjective survey but if nonbanks continue to gain market share, we can assume TRID did nothing to stop the trend and in fact may be shown to have increased the pressure on banks and credit unions in this regard.

I have always thought that nonbanks had an advantage at the simplest level because nonbank lenders are primarily in only 1 business — mortgage lending. Perhaps some companies are also in consumer lending more broadly, but certainly can be more laser focused than banks which have split attention and resources with many different products and functions. Digging a little deeper, nonbanks also tend to be more sales focused and entrepreneurial in nature. Since nonbanks move pretty quickly anyway, changes such as those that hit our businesses during TRID were absorbed a bit more easily by institutions used to living transaction to transaction anyway.

Have you heard?: I have been working on the 2015 HMDA (data collection and reporting) rule a lot this week and wanted to highlight one key variable that many people are not talking about yet. FHFA is working with industry to finalize a new standard application form (the new 1003). I’m hearing it will be approximately 15 pages long. Last Fall at the MBA’s Annual convention it was up to 8 pages. I don’t know what happened between now and then that has folks estimating 15 pages. That seems crazy to me. However, it will be “dynamic” in the same spirit as the CFPB’s Closing Disclosure. So perhaps there are 15 potential pages but the form will change as certain information is provided or not provided. Because the 1003 is the primary way that lenders can collect HMDA data to meet our reporting requirement, HMDA programming or reprogramming is in a holding pattern at many large lenders because it doesn’t make sense to begin reprograming loan origination systems until you know the final requirements for the new 1003 as well. Hopefully FHFA is aware of the 2015 HMDA rule and using it to template for the new 1003. Stay tuned.

Got Me Thinking: One critical distinction in business is the difference between intent and impact. It’s true in all kinds of different ways in our companies and firms (and our lives, for that matter). Obviously in sensitive areas like HR, issues around an employee’s statements or actions are judged based on impact not necessarily on intent. It is true in compliance around an area such as policies & procedures. Certainly a policy’s intent is important but the impact (ie the procedures and the result of the procedures) is what makes all the difference. In our role as managers and leaders, we should be much more concerned with the impact of our decisions because our teammates do not give us points for intentions if the results are not favorable. I’ve been approaching it like this all week: Impact drives results which lead to value. You cannot get to results with just intent.

A Look Ahead: The folks in Detroit were comparing some of the things happening in Kansas City to some of the projects here. I did some digging and found an interesting article about the upgrades to KC. Apparently the city installed “smart streetcars” which are essentially technology enabled bus/monorail hybrids. Along the streetcar routes will be streetlights on sensors that change based on whether passengers are waiting or a car is coming by. There are wifi enabled kiosks for schedules, local attractions and other information. The city has also been blanketed with wifi recently making for some interesting innovations — a city app that will alert you to coupons and specials for the cafes and restaurants as you ride or walk past. This is not directly lending-related but I think it goes to the interesting things happening in many cities. How our generation and the next respond to “new” urban living could make a big difference for our industry. Being in Detroit, I’ll be watching closely as cities become more creative and innovative whether people end up moving around more, and if so, whether that means renting or buying. Source:

Sidenote: Did you see that Anheuser-Busch InBev will change the name of Budweiser to America between May 23 and the Presidential elections in November? Cans will include the Pledge of Allegiance and lyrics from the “Star-Spangled Banner.” Between the political conventions in July and the Olympics in August, they might just be incredibly smart. So far the best thing I saw on Twitter was “In related news, Bud Light will be renamed Canada.” Thought that was pretty good.

Today’s Thought: Little hinges swing big doors. It has been surprising to me how close most companies are in a competitive marketplace. The key is to find that last 3–5%, usually in execution, that makes all the difference. If we can do the same thing in our own lives, we can make valuable improvements through small changes. That’s where the magic happens.

Have a great week and I look forward to writing again soon if we don’t cross paths in the meantime.

Thinker, curious leader, once an attorney…always trying to answer well.

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