With regulation being this tight, I can't help but wonder if something is wrong with the system--if legislation has gone too far.
By David Lykken
Special to MPA
As I think back on the previous broadcasts of my Lykken on Lending radio show, I realize that much of the conversation has centered around regulation in the industry. I know that this fact isn't all that surprising. But, I don't think I could have said the same thing if I had host the show ten years ago. We truly are living at a time in which our industry is dominated by the changes in regulation.
I go back and forth a lot on regulatory issues, trying to be an objective voice for both the industry and the regulators. I understand, from the point of view of regulators, that more disclosure and transparency is going to be better for the industry, the economy and society in general. But, of course, my heart lies with the industry and struggles it faces to adapt to what can sometimes be overbearing expectations. One thing I've noticed recently is a problem with escalation of home applications.
Typically, up to 30% of applications are initially denied by underwriting and must be pushed up the approval chain. But, in recent years, I've seen 50% become a new norm for many organizations. I've even seen some that are closer to 80%! When I see regulation being this tight, I can't help but wonder if something is wrong with the system--if legislation has gone too far.
I know it's always a balancing act. We need to make sure we are adhering to whatever regulations are passed, but we should surely be lobbying for a more reasonable playing field. Restricting the application process to this extent is going to stifle the industry--and stifle the economy in America.
So, we find ourselves in a tough position. We've got to adapt and, at the same time, fight back to keep the industry alive.
A regular contributor on CNBC and Fox Business News, David also hosts a successful weekly radio program called “Lykken On Lending” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. Recently, he started producing a 1 minute video called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper websites daily across the United States.
Special to MPA
As I think back on the previous broadcasts of my Lykken on Lending radio show, I realize that much of the conversation has centered around regulation in the industry. I know that this fact isn't all that surprising. But, I don't think I could have said the same thing if I had host the show ten years ago. We truly are living at a time in which our industry is dominated by the changes in regulation.
I go back and forth a lot on regulatory issues, trying to be an objective voice for both the industry and the regulators. I understand, from the point of view of regulators, that more disclosure and transparency is going to be better for the industry, the economy and society in general. But, of course, my heart lies with the industry and struggles it faces to adapt to what can sometimes be overbearing expectations. One thing I've noticed recently is a problem with escalation of home applications.
Typically, up to 30% of applications are initially denied by underwriting and must be pushed up the approval chain. But, in recent years, I've seen 50% become a new norm for many organizations. I've even seen some that are closer to 80%! When I see regulation being this tight, I can't help but wonder if something is wrong with the system--if legislation has gone too far.
I know it's always a balancing act. We need to make sure we are adhering to whatever regulations are passed, but we should surely be lobbying for a more reasonable playing field. Restricting the application process to this extent is going to stifle the industry--and stifle the economy in America.
So, we find ourselves in a tough position. We've got to adapt and, at the same time, fight back to keep the industry alive.
A regular contributor on CNBC and Fox Business News, David also hosts a successful weekly radio program called “Lykken On Lending” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. Recently, he started producing a 1 minute video called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper websites daily across the United States.
