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The US Mortgage Bankers Convention: A Time of Transition Requires Staying Positive While Managing Through the Downturn

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8 November 2022
Craig Focardi

I expected that the US Mortgage Bankers Association (MBA) Annual Convention (https://www.mba.org/conferences-and-education/annual-convention-expo) in Nashville from October 23-26, 2022 to be similar to the October 2001 convention after 9/11, and the 2008 convention after Lehman’s collapse and the ensuing subprime mortgage crisis. However, amidst the reality of drastically declining origination loan volume and revenues was the sense that hard work, staying positive, and staying focused is the way to survive through the downturn and position for future growth.

Conference attendance was down from the pre-COVID 5,000+ range to approximately 4,300 attendees. This was no surprise since interest rates are at 20-year highs (surpassing 7.00% on Oct. 27, 2022 for the first time since 2002, Source: Freddie Mac) and the number of new mortgages originated expected to be 56% lower in 2022 than the 2021 peak year (Source: MBA), with a further 16% decline forecast for 2023.

While the MBA’s economic and industry outlook presented a triple-decker reality sandwich of plummeting loan volume, persistently high operating costs, and negative net income, I felt that there was also a strong feeling of resilience among long-time industry participants. We’ve been here before, we’ll get through this, many will survive, some won’t.

However, I did not hear during the keynote sessions about a silver lining in the currently dark mortgage lending cloud because the MBA Annual Convention is more focused on loan origination: the mortgage loan servicing business is improving because higher interest rates increase customer retention and servicing asset values. In addition, delinquencies remain low for the time being. For the good news, see the MBA Mortgage Servicing Convention: (https://www.mba.org/conferences-and-education/servicing-solutions-conference-expo).

While there was a lot of interesting news at the convention, here I’ll focus on a summary of major mortgage industry announcements, what they are, and what they mean for the industry and technology investment.

Celent at the MBA Convention

I participated in a CGI breakfast briefing moderated by Andy Schmidt of CGI and with panelists from the Federal Housing Finance Agency (FHFA) and Clear Capital. We discussed The Convergence of Technology in Mortgage Lending: The Importance of Intelligent Automated Processing in the New Environment. There were three subtopics within this overarching theme:

1.Today’s mortgage market is challenged along multiple fronts; lenders need a more flexible, tech-driven mortgage banking model and a platform to support it

2.Lenders must utilize a growing volume of data and analytics to manage and leverage new and existing data sources

3.The new mortgage bank is living in a hybrid cloud, multi-cloud world, and mortgage lenders need a platform to tie that together

This exhibit summarizes the third subtopic that focuses on mortgage technology platforms that are simultaneously secure, open, and compliant.

For a copy of the CGI breakfast panel presentation at the MBA Convention, please contact me at cfocardi@celent.com, and if you would like to discuss the issues above or mortgage industry trends, strategy, and technology in general. I look forward to speaking with you.

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