The Mortgage Counselors

The Mortgage Counselors

What to Expect in 2021

The coming year will bring many changes to our industry and our country. Although the past year more than proved the adage that one can never predict the future, there are several trends that look to be on track and others that may take some time to manifest fully.

The COVID-19 vaccines are great news and should eventually bring significant improvements to the way we have all been living our lives in 2020. But most Americans will not be vaccinated until at least sometime in the spring, and many things will not go back to the way they used to be for some time after that. Masks, limited indoor gatherings, and physical distancing are likely to be the reality for a while longer. But by sometime in the summer, many workplaces may be back to “normal” as the risks decrease and more employees have been vaccinated.

The bigger question marks, in our view, concern the health of the economy and of our society.

While those individuals who have been able to work remotely have fared well, too many of our fellow Americans are out of work or otherwise struggling. They will feel the effects of these difficult times for a while, including barriers to home ownership. Political polarization makes it hard to fix these problems and others, and make it hard to compromise on things like the budget and the debt, which could have inflationary effects down the road.

Politically, the change in administrations will shift regulatory and enforcement priorities, and after an initial lull caused by the change in leadership of each relevant federal agency, we expect enforcement overall to pick up. Consent orders and other resolutions of enforcement actions will be more likely to include consumer redress and higher penalties. And a more conservative judiciary will keep things interesting from a litigation perspective, including a promising case the Supreme Court recently granted that has the potential to clarify that class actions should not include class members who suffered no actual injury.

Assuming a late push to privatize the GSEs is not completed before January 20th, GSE reform is likely to go back to the drawing board, particularly given the likelihood of divided government and the other, more pressing issues that will face the incoming President and Congress. This continuity, as well as the CFPB’s recent QM fix, should mean stability and predictability in the mortgage market at least in the short- and medium-terms.

Although our judicial system performed admirably in the aftermath of the election, a series of high-profile assaults on the rule of law and on the very idea of factual reality raise two concerns for our industry going forward: if the rule of law is weakened, will lenders be able to enforce loans and security interests? and if facts matter less than politics and power, how will companies get a fair shake when the government brings enforcement actions? Ultimately, the rule of law means that the law and the facts dictate the outcome, when we like it and when we do not, whether it helps those we support or those we oppose. For now, at least, the rule of law remains strong.

Considering all of this, what should you be doing as you look ahead to the New Year?

First, we imagine that, like us, you are giving thanks, and giving thought to how you and your company can help your employees, customers, and neighbors in what is still a very difficult time for so many.

Second, you should take this opportunity to pause and review your regulatory compliance and corporate governance to make sure that you are satisfied with how your company is complying and functioning in a high-volume environment with many people working remotely. We should all heed the lessons learned in 2009: like now, with a Democratic administration incoming and during a severe economic crisis, when regulators were preparing to increase compliance scrutiny, and investors and others were preparing to try to shift the losses of the crisis to those from whom they had obtained loans. Make sure that your loans and your documentation are clean and well-organized, to meet those challenges.

Third, apply the lessons that you have learned through the challenges of 2020: the restrictions, the uncertainty, and the volume to keep innovating. Innovate in technology, in process, in marketing, and in products, and include compliance at every step while you do. Innovation will continue to be key as we embark on a new year and the many challenges ahead.

Mitchel H. Kider

Michael Kieval

Mitchel H. Kider is the chairman and managing partner and Michael Kieval is a partner with Weiner Brodsky Kider PC, a national law firm specializing in the representation of financial institutions, residential homebuilders, and real estate settlement service providers.