The MBA Interview: Joe Murin of JJAM Financial Services LLC
By MBA Insights Staff
May 2, 2017
Joseph Murin is Chairman Emeritus of Chrysalis Holdings LLC and the Chairman of JJAM Financial Services LLC, Pittsburgh. He originally joined Chrysalis as its Non-Executive Chairman in September 2012. Chrysalis Holdings includes companies in the analytics and mortgage sectors. It also operates a university that specializes in the licensing and training of mortgage bankers, which includes NewDay USA Foundation, a philanthropic organization that provides aid and resources to our nations' veterans.
In addition to his Chrysalis Holdings duties, he also serves as the Chairman of JJAM Financial Services LLC, a financial services holding company that owns and operates Commonwealth USA, a nationwide SOC2, Type II audited title and settlement company, which provides a financial consulting service to the mortgage industry.
Murin is perhaps best known, however, for his stint as president of Ginnie Mae., He served as a consultant to the White House until confirmed by the Senate in June 2008. During his tenure with Ginnie Mae took a strong role in the company's affordable housing mission and led the transformation of Ginnie Mae through a difficult time in the housing and mortgage arenas. During his tenure, Ginnie Mae continued to provide liquidity to the industry as it grew its portfolio from $350 billion to $840 billion and grew its penetration in the Asian markets from 30% to 48%. Murin also directed formation of a comprehensive risk management initiative.
Preceding his nomination to serve as President of Ginnie Mae, Murin brought more than 40 years of diverse experience in the financial services, mortgage, and banking industries, including as CEO of financial organizations such as Century Mortgage, Basis 100, Lender's Service Inc., and MSNi LLC. He began his career with Pittsburgh National Bank in 1972.
Murin is also former Chairman of The Collingwood Group LLC, Washington, D.C., co-founded by Mr. Murin and Brian Montgomery, former FHA Commissioner, in 2009.
MBA INSIGHTS: Are you more hopeful or less hopeful on the prospects of GSE reform happening in the 115th Congress?
JOE MURIN: I'm hopeful, but I believe the real question is "how significantly will the GSEs be improved?" Simply making a few superfluous adjustments won't be enough. It's time for us to decide how much of a role the federal government should have in encouraging homeownership. That will take extensive debate and real work. I'm not sure Congress has the political stomach for that right now. So am I hopeful that there will be GSE "reform" in this Congress? Sure. In fact, I'm pretty confident. I'm far less confident, however, that we will fully address the purpose and role of the GSE in federal housing policy.
INSIGHTS: Are you surprised that the GSEs are still under conservatorship?
MURIN: I suppose part of me is. After all, the initial goal of placing them into conservatorship was to stabilize the housing sector and, in large part, the economy in a time of severe crisis. That crisis has long since passed. What worries me most is the prohibition on rebuilding their reserves.
Right now, Freddie and Fannie make a nice revenue conduit for the U.S. Treasury. But without allowing the GSEs to rebuild their capital--which should be relatively simple in this market--the U.S. government is putting itself--and thus, the taxpayers--on the line if and when the next financial challenge arrives. I believe the conservatorship was intended as life support. The patient is now healthy enough to leave the hospital. We cannot continue on with what was intended to be a temporary, stop-gap adjustment.
INSIGHTS: What are some baby steps that Congress could take to get the ball rolling on GSE reform?
MURIN: Let's at least allow the GSEs to partially recapitalize. The Treasury will still make quite a profit, but the GSEs will take that first, important step back toward being able to function relatively independently. Freddie and Fannie are too important to our economy to operate without reserves. Even a minor financial blip on the radar threatens to take us right back to discussion of federal bailout. So let's at least allow the GSEs to protect themselves as a starting point.
INSIGHTS: You ran Ginnie Mae for several years. What should Ginnie Mae's role in the secondary market be going forward?
MURIN: I may be a bit biased, but I think it should remain significant, if not even growing a bit. I've repeatedly advocated a GSE reform model that replaces Freddie and Fannie with a Ginnie-like model. I believe the Ginnie guarantee is more practical and safer in times of economic challenge. I also believe that government-backed loans like the VA or FHA will continue to be workhorses in the housing market.
I suppose Ginnie's role will depend in large part on what we decide the federal government's role should be in supporting homebuyers. If we determine it should be a sizeable role, then the Ginnie model has proven itself over and over as a fantastic way to inject liquidity into housing markets when needed as well as stabilizing anxious investment communities.
INSIGHTS: Why should Ginnie Mae be separated from HUD's budget? Where should Ginnie Mae be in the federal government?
MURIN: I've been shouting about this for years. When Ginnie was created, government-backed mortgages were bit players in the market. Securitization was not as widespread and complex as it has become. Thus, placing Ginnie within HUD's budget probably made some sense.
Today, however, we live in a dramatically different world. Ginnie has passed Freddie as a force in the secondary market, taking on a much, much larger role in the mortgage industry and, perhaps, the economy itself. Yet Ginnie is still an afterthought when the time comes to budget. As a result, we're asking an understaffed entity (Ginnie, in fact, is increasingly relying on outsourced resources to manage its portfolio) to manage and oversee a sizeable portfolio. Furthermore, as that portfolio leans more and more to non-bank lenders, we take on greater risk. We keep asking Ginnie to do more with less--which is an unsustainable mandate. It's well past time for Congress to remove Ginnie from HUD and give it an appropriate budget.
INSIGHTS: Why does Ginnie Mae seemingly fly under the radar?
MURIN: That's a great question, and one I'm not sure I have a great answer for. Maybe some are holding on to the perception of its role years ago, when the FHA or VA mortgages were not nearly the workhorses they are now. They still think of it as some kind of "little sister" to the GSE model. Maybe some simply don't understand what Ginnie does. Maybe it's because we haven't seen the level of crisis at Ginnie that we have in the past at the GSEs. I will say, however, that if we don't provide more resources to Ginnie in the very near future, we're taking an unreasonable risk as the Ginnie portfolio grows without the resources to manage it.
INSIGHTS: What are some other housing market priorities the Trump Administration should address?
MURIN: I can't say it enough: we need to start by addressing a root question we've avoided for years. To what extent should the government participate in encouraging homeownership? It was truly astonishing to see the same Congressmen, Congresswomen and "thought leaders" who had advocated for "The American Dream" during the re-fi boom of the early 2000s do an about face to blast our industry for making credit available to high risk segments of the population in 2008.
They can't have it both ways. If there's a spectrum out there with "keep credit risk low" at one extreme; and "put as many Americans into homes as possible" at the other, where should we fall on that spectrum? I think that's job one. From there, I'd like to see a less hostile regulatory posture. Yes, the mortgage industry needs to be regulated. But the relationship has become almost adversarial on many fronts. It is possible to balance consumer protection with a healthy market which allows for calculated risks and innovation. They don't have to be mutually exclusive.
INSIGHTS: Do HUD, Ginnie Mae and other federal housing concerns have the technology capabilities to keep up with the rapidly changing housing marketplace?
MURIN: Unfortunately, right now, they don't. HUD, in particular, is using a fairly outdated system. I do think HUD and Ginnie are doing the best they can to keep up with what is really a sweeping transformation. But I don't see them doing enough to lead the way into an era of digital mortgage lending--a necessary and even long overdue transformation.
On the other hand, I think the GSEs are doing a pretty good job there. I see them conducting research and collaborating with lenders and providers to build an environment that supports an updated perspective. I know that Ginnie would like to be a part of that transformation, as many of their non-bank lending partners are racing ahead with new technology. Unfortunately, there's not much Ginnie can do without the resources to make needed investments. I'm hopeful that the new administration will make that technological investment a priority in order to keep up with the market.
(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 Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at email@example.com.)