- 11 hours ago
The mortgage industry has spent years debating credit reform, trigger leads and affordability. Community Home Lenders of America’s (CHLA) President Taylor Stork is now taking those conversations to Washington. In this episode of Ten Minute Talks Allison LaForgia sits down with Taylor days before he attended key meetings on Capitol Hill to discuss how industry concerns are becoming a policy conversation.
Stork breaks down where lenders see opportunity, where they risk, and why implementation could fundamentally change mortgage workflows. The conversation also tackles housing affordability, manufactured housing and why CHLA is pushing policymakers to focus less on headlines and more on making first-time homeownership realistic again.
Stork breaks down where lenders see opportunity, where they risk, and why implementation could fundamentally change mortgage workflows. The conversation also tackles housing affordability, manufactured housing and why CHLA is pushing policymakers to focus less on headlines and more on making first-time homeownership realistic again.
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NewsTranscript
00:10I'm Allison LaForgia, and joining me on this episode of 10 Minute Talks is Taylor Stork,
00:16the president of the Community Homelenders of America. Taylor, thank you for sitting down with
00:20me tonight. Well, thank you for 10 minutes. At the Gathering by HousingWire, there was a panel
00:25that focused on credit modernization that Robert Zimmer was on. They talked Trigger Leads, FICO
00:30Direct, FHFA, and FHA announcements, and new credit score models. How is that going to be addressed
00:37in DC this week? Yeah, so that's a great question, and that's a very, very wide-ranging question,
00:44right? So the director of FHFA and Secretary Turner gave a joint press conference where they announced
00:53the adoption of Vantage Score and where they previewed, or, God, you know, you're going to
00:59have to do some edits on this video, just for the record. I'm going to back up. So the director
01:05and the secretary of HUD held a press conference where they announced the adoption of Vantage Score,
01:15and they previewed that they're going to be adopting 10T soon as well. I think that when we go to
01:21Washington DC, we're going to be talking to a lot of people about how that's going to work,
01:25what the impact on lenders is going to actually be, what the impact on the consumers that we serve
01:31is going to actually be, and how that can all be leveraged to increase homeownership.
01:36Is there a desire from CHLA members to adopt Vantage Score 4.0? And if so, what is needed for
01:42adoption?
01:43Yeah. So this is a really complicated question that gets into the weeds. And it's principally why the
01:49pilot is being done before broad scale release of access to that scoring model is being put out.
01:57The answer is yes. There is a huge desire to add a new credit model, credit scoring model,
02:03into the mix. And there are a number of different reasons. Some reasons are that we think that it's
02:09going to open up homeownership opportunities to a segment of borrowers that are not currently served.
02:13Some of it is that it's going to introduce competition into a space that has been largely
02:20ignored, not ignored, but that has been largely left alone for the last 20 plus years. We're
02:27currently using a scoring model that's over 20 years old and hasn't changed. It has not had the
02:32opportunity to keep up with the changes to how credit actually works in our society. And so
02:40lenders are very anxious to add a new option into the mix. They are also anxious to add a newer
02:47version
02:47of FICO as well, 10T. So there is a big appetite to add those. In fact, I have members of
02:54our organization
02:55that were not chosen to be part of the pilot that are proactively reaching out to obtain information
03:00about how they can join the pilot. Now, in terms of what a lender needs to do to get ready
03:07and
03:07getting into the weeds of how it's actually going to work, some of those things we're going to figure
03:11out as we go through the pilot process. The current technology that lenders use was not built for a
03:20two score model, right? So now we're going to be adding in three new numbers for every single borrower
03:29that we haven't used in the past. And so there's going to be some technology programming that has
03:34to take place in the LOS, the POS systems that lenders use. Lenders need to think through workflow.
03:41They're going to need to think through how their pricing engines are going to operate to digest
03:47this new information and then present pricing options. Most lenders operate on some sort of a best
03:54execution structure where they are determining where that loan is going to go based on the
04:00characteristics of the loan combined with the best price that they can obtain for their borrower.
04:07And those models are all going to have to be shifted. And when you think about the permutations
04:12that go into effect, there's a little bit of math that has to be done. There are some workflow
04:17challenges that have to be done. It's all very conquerable, but it's certainly going to require
04:23lenders to rethink some of the ways that they've done business in the past. And frankly, this is
04:29an opportunity for lenders to rethink things and find new ways to add efficiencies into their workflow
04:36in the first place that then can produce perhaps a better result for some of the borrowers that apply.
04:42So there's a lot to do, but a conquerable problem and more to come after the pilot program.
04:49Yes. And more to come during the pilot program. I think that in the first few weeks, we will learn
04:54a lot about how this will play out moving forward. So I'm very excited about it.
05:01The panel also touched on trigger leads. What changes have you seen post-legislation and looking
05:07ahead, what impact are you expecting and what are you looking for?
05:12Yeah. So the biggest issue with trigger leads was the noise that was created for a borrower.
05:19And CHLA got involved with this much, much earlier than I think the legislation that actually came
05:27through. We got involved with it and got behind this concept of banning trigger leads when one of our
05:34members shared a story with us. And the story was that she had an applicant
05:41whose wife went into labor the same day that he completed the application process.
05:47And so while his phone was blowing up from God knows who, the phone calls from the hospital didn't
05:55get through and he missed the birth of his child. That's horrible.
05:59Yeah. And so that is when we said, okay, this is a problem that we got to start thinking about.
06:03And look, I've been making loans for 25 years, maybe longer at this point. We've always had
06:09trigger leads, but it was like two or three people randomly calling our borrowers, not 50 or 60 or
06:17a hundred and not 50 or 60 or a hundred text messages at the same time. So the borrowers were
06:22just inundated.
06:23And, and the, the way that the calls and emails started coming in have changed. We using technology,
06:31using AI and some of these callers pretending to be the actual lender where the application was made
06:38legitimately, you know, this, this stopped being about stealing a loan and it started being about
06:45uh, unscrupulous organizations pretending to be lender lenders trying to steal data. And so we were
06:52very pleased that legislation was passed. We don't think it's a perfect solution to everything. Um,
06:59but in policy and in regulatory action and in laws, there's, there's rarely a perfect, you know,
07:06solution for, for a common problem. Um, we've definitely seen a decrease in some of those bad
07:12actor communications. They're not, they're not completely eliminated. Um, but we've seen a
07:17decrease and we've also seen a pretty aggressive response from the bureaus to put new guardrails in
07:24place for who can acquire that data in the first place. And those guardrails just fundamentally
07:29weren't there before, like they are now. So I think we're making huge progress, um, and very,
07:34very rapidly. And I think that over the course of the next year or so, we'll see a very,
07:39very different environment than we have seen for the last several years.
07:43Now we have to ask a spicier question. We have to talk about tri-merge.
07:47Tri-merge.
07:47We have to talk about tri-merge.
07:49Yeah.
07:49What are you hearing from the current administration and Congress as it relates to tri-merge?
07:54So, you know, Secretary Turner testified in front of the House Financial Services Committee not too long
08:00ago. And he was asked a very direct question, um, by Congressman Garbarino, who is out of New York.
08:08I think he's in Long Island and it's interesting that it was him. He was formerly a real estate
08:13attorney himself before he went to Congress. And he asked the secretary,
08:19will you abandon the tri-merge gold standard? And the secretary said, no.
08:26It was very simple and it was very straightforward.
08:29What we are hearing is that there is concern in Washington that this is a divisive issue in the
08:38mortgage industry itself. And our experience is that when the policy makers see a significant
08:46amount of disagreement amongst industry leaders on a topic and there is no clear consensus in the
08:52industry, when that happens, generally the policy makers want to stay away from that topic for a
08:58little while.
08:59Now, what I would tell you is anecdotally, we don't think this is going to, we don't think that a,
09:06a
09:07migration away from a tri-merge credit report is going to take place during this administration.
09:12Certainly it could happen, you know, in the future, but right now this administration is pretty heavily
09:17focused on a few other issues. And, you know, the, the, the political machine and the regulatory,
09:25the regulatory machine, they can all only focus on so many changes at one time.
09:29Right. So bringing out the vantage score is obviously a priority. Moving on from there to FICO 10T is a
09:38priority and the potential monetization of Fannie Mae and Freddie Mac, um, monetizing the government's
09:46interest in those two organizations is a priority and bringing in new elements that could, that could
09:55add destabilizing features into the housing industry right now is just, Washington doesn't
10:01really have an appetite for it.
10:03Now, Secretary Turner was at Housing Wire's event and was on stage talking about several
10:08different initiatives.
10:09Yes.
10:10Of those, what are you the most interested in?
10:14Yeah. So it's interesting because he talked about the rescission of the FHA requirements for
10:20new construction to meet certain green standards of construction, right? The IECC standards.
10:28And I was very, I was very happy to hear that CHLA was adamantly opposed to the introduction of that
10:35requirement when it was created in the previous administration. I personally sat with the former
10:41commissioner of the FHA and explained how this created challenges for lenders.
10:47Uh, the fact that lenders are not qualified in the areas of construction to determine whether a
10:54house meets green stand green standards in the first place, but that principally it adds significant
10:59costs to the housing stock and potentially starts to move some of this housing stock out of reach for
11:06first-time home buyers. And our primary focus is first-time home buyers. So we were aggressively
11:13opposed to the introduction of that requirement in the first place. We vocalized that through letters,
11:19through person, in-person meetings. When I heard secretary Turner formally announce that on stage,
11:25there was kind of a, yeah, there was kind of a high five moment that, that, that occurred at that,
11:29at that point. So we're thrilled with that. Um, but beyond that, you know, he talked about the,
11:33the removal of the, of the requirement for a chassis on, um, on modular homes or some,
11:41I'm sorry, manufactured homes. Um, we have long seen manufactured homes as a way for another way
11:48for both first-time home buyers, but also those in the underserved community to enter into the housing
11:53market and, um, maintaining that chassis requirement. It's a very outdated requirement.
11:59I mean, we're going back 20, 30, 40 years, um, removing the chassis piece makes sense. We think
12:08it makes some of that housing, better housing stock to begin with and more valuable. And we'll
12:13start to remove some of the stigma that's associated with manufactured housing. So we support that.
12:17But more important than that, secretary Turner talked about serving the underserved. He talked about
12:25the fact that if you're too big, if you're too big to serve, you're too small to lead. And I
12:30love that
12:31quote. Um, you know, our organization, we, we support IMBs. We, we support community lenders, but primarily
12:39we support their, their customers, those customers that they serve through our advocacy and efforts to
12:46support our members. And the majority of our focus is on first-time home buyers, veterans,
12:55underserved buyers. When you think about the FHA loan program, you think about first-time home buyers
13:02and you think about the fact that the average age of the first-time home buyer has gone over the
13:07last
13:08not too many years, not too many years from around average of 30 to today, it's around average of 40.
13:14And that is, that is a very, very troubling statistic. And some of that we know is just a
13:20change in the way the population lives. And, you know, some younger folks want to be a little bit
13:26more mobile and want to be able to move from one place to another without constraints. But a lot of
13:29that is also just the impossibility of putting together a down payment and the difficulty of
13:34getting qualified. We have a lot of solutions for getting people qualified. We struggle with solutions for
13:39down payment. And, you know, the current status of our tax system is that it supports and encourages
13:50people to have a mortgage, but it doesn't necessarily support and encourage people to
13:54put together a down payment. So one of the things that CHLA did recently was we released a white paper
14:00and focused on what Washington can do to support housing, principally to support first-time home
14:07buyers. And within there were several suggestions of different things that can be done within the
14:15constraints of the tax code to reduce the tax burden, to enable more money to be unlocked for down
14:22payments. So a great example, and this is something that I learned through, through this process and
14:27this research, I had no idea that if you borrow money from your 401k for your down payment,
14:33that then you can't leave your job. Because if you leave your job, you have to immediately pay back
14:39everything you borrowed. Even though you might leave that 401k at the company, you have to pay back the
14:45loan. So what that does is it creates this bifurcated decision where a potential first-time home buyer
14:52has to decide between maintaining upward career mobility, you know, the ability to take a better
14:58job and get more pay somewhere else versus committing to buying a home and borrowing against their 401k.
15:04So we think things like that can be easily solutioned without impacting the federal budget.
15:10We've got a number of solutions that we have put together or suggestions that we've put together
15:14and included in our white paper. And this next week, we're going to be talking to members of Congress
15:19and other leaders in the administration about how some of these tools could be put into work.
15:25Taylor, we're going to do two rapid fire questions to end this conversation.
15:32And they're pretty meaty. So we're going to go for the fastest take.
15:35Pork roll.
15:37I am team pork roll.
15:38Pork roll.
15:38It's not Taylor Ham. My New Jersey friends will get this. How are you going to take some of the
15:44things that we've talked about here and at the gathering and bring it to DC, going from advocacy
15:49to action?
15:51Yeah. So one of the things our organization does is we actually sit down at the table with the
15:55decision makers. And it's the thing that I love most about being a part of this movement,
16:01actually getting in front of the people that make the decisions and drive policy.
16:06We bring in the lenders. So we don't just bring in lobbyists and bureaucrats and talking heads and,
16:14you know, the folks from K Street. We bring in actual lenders from the communities that make the
16:20loans and we put them at the table with the leaders of the agencies and the leaders of the
16:25organizations that create the policies so that we can talk through the details. We literally get into
16:31the weeds and that's how we put advocacy into action. We actually go do what we say we want to
16:37do.
16:38Doubling down on how CHLA brings lenders closer to decision makers on Capitol Hill.
16:43What are you focusing on for the next six months?
16:46Yeah. For the next six months, I think that our biggest focus is going to be on unlocking
16:52opportunities for down payments for first time home buyers. It's a key area. Look, without a first
16:59home buyer, you don't have a move up buyer. And without a move up buyer, you don't have a housing
17:03industry, right? So there's a chain of events and it is all contingent in most cases on that first
17:12time home buyer entering in to buy their first home. There's a life cycle for housing. And if we
17:17don't have the tools in place to start the life cycle, it can't continue down the process.
17:23So we're focused heavily on getting new resources into place that enable young people to buy homes.
17:33Well, Taylor, we're going to have to wrap there for this episode, but thank you for sitting down
17:37with me on 10 minute talks and good luck next week in DC. Thank you. I appreciate your time.
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