Q&A with Mark McElroy of Pavaso
MBA NewsLink Staff
MBA NewsLink recently posed questions to Mark McElroy, president and CEO of Pavaso, Plano, Texas, a provider of services for closings and the rest of the homeownership life cycle. He can be reached at email@example.com.
MBA NEWSLINK: What should a lender look for from a vendor partner in lessening uncertainty surrounding the Consumer Financial Protection Bureau's TILA/RESPA Integrated Disclosures rule?
MARK McELROY: This industry has been under tremendous pressure to develop solutions in haste without a clear understanding of how TRID impacts the entire origination process. The result is a surfeit of products that work in the most literal sense, but that don't fit the way business is performed on a routine basis. For example, there are more than 20 TRID solutions in use by the lender community--yet it's completely impractical for a title company who serves a large portion of the community to learn and operate them all. Often the most difficult part of being a vendor is standing strong when you know what the customer is asking for won't be effective--and won't really serve the customer in the long run. Because so few vendors have been successful in taking this stand, we now face a challenging environment, and it will require a healthy dose of "truth" to fix what is not working.
NEWSLINK: CFPB regulations keep drawing the industry toward greater collaboration. What are some of the real and imagined barriers to collaboration?
McELROY: For more than 30 years, mortgage lending was a transactional business that required very little collaboration. Lenders didn't need a deep understanding of the title business--and vice versa. Several generations of leaders never had reason to change, learn or collaborate together.
Now that regulators have shifted more liability to lenders, lenders are anxious to understand what the other participants in the process do and how they do it. This represents a major challenge, as 30-year-old paradigms must be overturned and false impressions overcome in order to make progress. We find ourselves in a deadlock where lenders don't yet have a clear path forward, title companies wait on lenders to take the lead and realtors continue to do what they always have.
The road to change begins with companies like Pavaso who provide a platform that accommodates each stakeholder's perspective. As new processes evolve with one stakeholder, they can be easily shared with the others; the platform serves as a bridge that allows everyone to meet in the middle without the need for lengthy and costly IT projects. One barrier that's more imagined than real is the belief that a resolution to our industry's challenges doesn't exist or is still light-years away. To keep our eyes on the prize, we must appreciate that borrowers see mortgage lending as a single process--not three or four--and that we all have a responsibility to provide solutions that align with the consumer's view.
NEWSLINK: What strategies should lenders consider to address the "consumer experience gauntlet" thrown down by the CFPB?
McELROY: TRID's purpose is ensuring all lenders provide consumers with consistent and comprehensive disclosures; in other words, TRID is about producing a superior product. But products are only one side of the consumer experience equation; how those products are delivered is just as important. Lenders must collaborate with stakeholders to deliver a seamless consumer experience. Instead of each stakeholder taking the lead for one or more discrete parts of the process, they all must come together so the consumer experiences interactions in a single place. And while some lenders will be tempted to place themselves at the center of this new universe, that's just not practical; what's required is a global solution that allows each party to participate on their own terms, not an internal website. Consumers have always wanted a better solution, but without the catalyst of regulation they were forced to participate in a painful and inefficient process that should have been reformed long ago.
NEWSLINK: Through its public commentary, the CFPB has telegraphed its desire for the industry to make substantive changes beyond what's required by regulation (i.e., letter of the law versus spirit of the law). What initiatives can lenders undertake to demonstrate "above and beyond" effort regarding the consumer experience?
McELROY: First and foremost, lenders should appreciate the "C" in CFPB. This organization is not just the voice of regulatory and legal compliance, it's the voice of the consumer who is the heart and soul of our business. A focused customer strategy that includes education, transparency, participation, collaboration and fairness produces consumers who truly understand the process from start to finish, have a choice in the matter, and are happy with the outcome of the deal. The lender must take the lead by pulling each and every stakeholder into a single consumer interface--like Pavaso--that provides all the tools needed to accomplish the transaction.
NEWSLINK: As a participant in the CFPB's eClosing pilot, what insights can you offer on making the transition from the current closing process to one that more closely mirrors the CFPB's desired state?
McELROY: We all face the same challenges and need to realize that how we have performed business is changing dramatically. It starts with a willingness to work together in new ways to accomplish the same business differently--and better. It no longer matters how you used to do it or what your process has been; we must coexist together in a world which presents itself as a singular process.
We must open ourselves to the concept of change and care about how each of our processes works in concert with one another to achieve this singularity. We must see beyond the status quo and find the common ground or platform that allows us to work both cohesively and independently. If we can do this with a steadfast consumer focus governed by the basic principles of education, participation, collaboration and fairness, we will achieve new levels of service and value never before witnessed in this industry.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at firstname.lastname@example.org.)