Saturday Cup of Joe: a mortgage and tech(ish) newsletter

Friends & Colleagues:

Good Morning! A lot going on this week. A Presidential debate. Wells Fargo back on Capitol Hill (this time on the House side). Red Sox clinched the AL East. Looking forward to playoff baseball. Last night, we saw Leon Bridges at The Fillmore here in Detroit. Amazing concert.

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The Fillmore, Detroit MI, 9/30

This weekend is a sport’s weekend, we have English Premier League (game of the weekend is Man City v Tottenham), college football, The Ryder Cup and, obviously, NFL week 4 (starting at 9:30 AM thanks to a London game).

This week we look at:

· Cohousing might be the way of the future (Of Interest)

· The new Rust Belt (A Look Ahead)

· ALTA’s CD survey (Quick Hit)

· A lesson from my (grand)father (Today’s Thought)

Of Interest: If you’ve been reading Saturday Cup of Joe from the beginning, you know that one of my interests is the evolution of housing formation. The mortgage finance industry is starting to talk a lot about housing formation in the context of multi-generational housing and the academics and sociologists continue to talk about it in the context of communal and co-housing among peers. In both cases, it represents a fascinating exploration for our industry and our society. Case in point, The Atlanticpublished this article tying cohousing to a trend among millennials. If you have any interest in the historical context for housing formation, this article is for you. I think the relationship between the American dream is key to the whole discussion. I was at a leadership retreat in DC earlier this week and heard from some of the CEOs leading our industry. At one point, I made a note that the American dream had gone from an aspiration to a promise and with it, the expectations of the American people shifted. Viewed as a promise, the American dream is a right instead of an opportunity. Here’s what Ilana Strauss wrote in the article to explain what the next stage of the American dream might look like:

Homeownership is still viewed as a central component of living out the American dream, but the ways that many present-day Americans are pushing back on modern living arrangements closely resemble what came centuries, even millennia, before in other parts of the world. Family members, relatives, neighbors, and strangers are coming together to live in groups that work for them — a bit like medieval Europe.

If the cohousing begins to become the norm for a variety of sociological, or even ethical (i.e. efficient use of environmental resources), reasons, then a shift in the American dream and housing finance is inevitable. But there is value in fostering a sense of community that is understated or dismissed in discussions of the American dream. In cohousing, the sense of obligation to the village is a stronger bond that can create valuable contribution(s) as well as explain (or rationalize) necessary sacrifices and compromise. In a world of divisions and disagreements that might be the biggest pick up of all.

The Takeaway: No takeaway this week. Just an interesting thought on how we look at these changes as we shift from one highly influential generation to another.

Have you heard?: You might be participating in Fintech revolution…possibly without even knowing it. Politico identified 5 practices that are common among millennials or “disruptors.” It’s funny because disruptor has become so fashionable that everyone is now using it glowingly. I just got back from DC this week. Many consumer advocates and policy wonks were suggesting that housing finance needs a disruptor. I couldn’t help but think that’s the moment ‘disruption’ was no longer a guarantee of entrepreneurial authenticity. At the same time, many of these technologies — Venmo, Bitcoin and GoFundMe — are still not household names. These are companies pushing the envelope, as the article suggests. Rocket Mortgage being grouped in with them may mean it is the type of traditional product (i.e. a mortgage) delivered in a new and productive way (i.e. entirely electronically).How many did you get?

Got Me Thinking: If you receive Rob Chrisman’s Commentary, you saw yesterday that ALTA released a new survey asking consumers about the disclosures involved in the loan closing, including the Closing Disclosure (CD). Here is a link to the report. I just have a few quick observations. I agree with Rob that it is troubling for any trade group to have research that shows consumers still feel taken advantage of. Much of the industry news yesterday was around the finding that the Closing Disclosure remains confusing to consumers. I didn’t draw the same conclusion as many others that consumer confusion proves anything to the CFPB. Further, I wouldn’t think the CFPB views it as a reflection on the Closing Disclosure but on the industry. The industry views the survey (and consumer confusion) as a reflection on the CFPB and the CD itself. The facts, as cited in the survey, that consumers do not feel like the CD can act as a receipt (of the transaction) or allow homeowners to compare actual costs might end up being worse news for lenders. Likewise, I was not pleased to see how the survey makes it seem like realtors are the best source of information about the transaction (and therefore, the CD). According to the survey, real estate agents ranked highest on the question phrased as “who may have helped you (or you expect to rely on)” and lender/loan did not even come close to #1 but did finish safely in second place. The concern is about incentives and subject matter expertise. For instance, the survey does not dig into who the consumer trusts at what point in the process, instead it focuses on home buying, settlement providers and title insurance calculations. It is informative, yes, but does not fully flesh out the relationship between the consumer and the CD.

A Look Ahead: People keep talking about millennials and jobs. This week, LinkedIn chimed in placing Detroit #3 on the list of Top 5 cities for millennials. One of the most interesting aspects to the list is that Detroit and Cleveland — two “Rust Belt” cities — made the list. It’s not surprising to see cities like Austin or Charlotte (usual suspects over the last few years). I had a conversation after NEMBC with John Gray that perhaps we can come up with a better name than Rust Belt for cities like Detroit, Cleveland, Cincinnati and Pittsburgh. See my contributions below.

It seems to me there’s a ground swell among entrepreneur, work-anywhere types that favors high value cities. High value, meaning, young professionals can live a “bigger life” for less money than places like SF, NYC and Boston. Less glamor, more grit. If you combine cities like Louisville, Milwaukee and Minneapolis into the mix, you can see a trend toward greater access without draining your bank account. These cities tend to have older buildings with some character, lower rents/home prices and easier time getting into the hottest restaurants and bars. Admittedly, there are fewer options but limited options tend to be high quality. Pittsburgh has growing restaurant scene. Detroit and Minneapolis have theater and the arts. Cleveland has a world renowned orchestra and othermusical landmarks. Cincinnati and Louisville have beer and whiskey respectively as well as seasonal college basketball. My pitch to millennials is write your own story — live big!

Update to “Rust Belt.” Here are the two current front runners around the office –

Would anyone like to submit their own?

A Look Way Ahead: On the way home from Ann Arbor last week, we stumbled upon a herd of bison grazing in a field next to the highway. It was exciting and it was also the reason I clicked on a headline “How Bison Will Take Over Suburban Wasteland” while surfing the web this week. What followed was a fascinating view of how we can live much more integrated lives with natural ecosystems. The possibilities are endless and the renderings within the article paint a beautiful portrait of how we can work and live among habitats that simply do not exist right now. If you were looking at the long, long term trends of residential and commercial real estate, I think you have to factor these concepts / designs into the mix. Really interesting stuff.

Quick Hit: CFPB has proposed a rule related to expanded information sharing between the Bureau and state agencies, particularly state AGs. It is hard to tell whether this is a big deal. The proposal has not garnered much attention. On the other hand, those are the ones to worry about. Increased information sharing between CFPB supervisory observations and state enforcement officials is typically a bad sign. Being against it could be viewed as overly suspicious of the CFPB. You decide. Like I said, it’s hard to figure out whether this is a simple codification of a common / typical practice or an attempt to increase both influence and pressure on lenders. Another arrow in the quiver, so to speak.

Sidenote: It is often said that compliance folks or lawyers, especially, can never be creative. I disagree. It is all a matter of perspective. Part of why I wanted to do this email was to be a little more creative in how I stay connected with my friends and colleagues. I also use this exercise each week to think creatively about leadership and management issues. For me, it is a really nice outlet. Larry Kim, founder of WordStream, put together 9 Simple Ways to Dramatically Boost Your Creativity. Despite the obvious click-bait title (which worked on me), I found the article to have some useful nuggets about ways to stretch creativity and maintain balance in your day. Taking walks, thinking about problems in the inverse, or simply setting aside time to let your mind wander are all ways to grow creatively but also healthy steps to mitigate burnout. Here’s an article that provides a reminder about burnout which is always good for perspective, especially if you are traveling or working a lot this time of year.

Today’s Thought: My grandfather used to carry a card with him reminding him of what he called “proper business judgment.” My dad replicated the card and carried it with him for years. He gave the card to me and I’ve brought it with me to several jobs since. Here’s what it says:


Don’t Panic

Don’t Jump to Conclusions

There are no such words as “Good Enough”

Right or Wrong — — Be consistent

Don’t Guess — — Ask

Don’t Over Extend

Check, Check, Check and Double Check

In a world of Instagram memes on motivation, following your passion and ‘living for today,’ the history and simplicity of this message makes me smile. Hopefully you find something valuable in it too.

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Quote: “The most rewarding things you do in life are often the ones that look like they cannot be done.” Arnold Palmer, 1929–2016

Continued Success,

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

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