“It’s a great industry. You really are able to help people with their biggest decision in their life, which is buying a home,” said Mike Fontaine, chief financial officer with Plaza Home Mortgage.
His tenure with the San Diego-based company goes back to 2004, so he was around through the downturn and is able to speak to how Plaza weathered that storm and subsequent smaller tumults. He spoke with Mortgage Media’s Eric Souza about that and other issues during the California MBA’s recent Western Secondary Market Conference.
The Need for Diversity
During a panel with other industry leaders at the conference, Fontaine said, a major issue raised was the need to explore and promote diversity within the companies in an aging and predominantly white male industry — including in management positions — to more closely reflect the customer base.
“Part of it is just engaging the younger people to want to get into the mortgage industry,” said Fontaine, who is on the California MBA board of directors. “That’s something that we’ve been focused on a lot at Plaza, and trying to educate and train and bring people up through Future Leader programs, through the California MBA or the national MBA. He noted that Plaza in recent years helped form a group called the Young Mortgage Professionals Association , in an effort to try to get young people involved in the real estate professions — mortgage, escrow, and the like. As he put it, at heart, it’s an exciting business, helping people with what’s likely to be their biggest monetary decision.
The beginning of the year looked sketchy for the housing market, prompting worries about a potential downturn, but the environment — specifically, the low interest rates — is much more encouraging now.
“It’s definitely swung around,” Fontaine said. “We’re seeing nice increases in volume on both the purchase and the refinance side of the business. I think the rates have gotten some people off the fence that were thinking about buying, and either now the rates have dropped where they can afford it again, or they feel it’s the right time to pull the trigger and actually go ahead and make that home purchase” — or to take advantage of a somewhat lower payment for refinancing. Plaza itself focuses primarily on the purchase business, he noted, zeroing in on helping first-time buyers.
The third-party origination market, of which Plaza is a participant, is growing as Fontaine had predicted earlier in the year — maybe not as fast as some had predicted, Fontaine noted, but there’s been definite growth in the broker and wholesale channels. And there have been a number of individual loan officers move over and become brokers — many were entrepreneurial by nature anyway, and the current climate has given less barriers to entry. The transition is helped by some of the software available now, plus help that companies like Plaza can provide, he added.
Like many industry leaders, Fontaine is doubtful that any major GSE reforms are going to be seen all that quickly under the current political environment. The new FHFA director certainly has an interest in pushing it along, but the impetus for major change is going to have to come from Congress. And “I don’t think that this current Congress is going to be able to push GSE reform through very rapidly. We’ll see,” he said, adding “there’s a lot of headwinds to doing that and it’s going to take, literally, an act of Congress to make something happen, and I’m not so sure if that’s going to happen very quickly.”
FHFA is able to make some executive decisions as to the course reform takes — but in a limited manner, Fontaine said: It requires congressional action to make major things happen, like new capital or shifts in the charter. And that may take some time.
Weathering the Storm
A 15-year career with Plaza means Fontaine was around when the business was booming, then during the housing crisis and corresponding downturn, and in the years since. How did Plaza weather the downturn?
It was and is a matter of staying focused, doing what one does best, and living up to a reputation for reliability, Fontaine noted.
“Before the downturn we were all third-party origination and afterwards we’re still all third-party origination,” Fontaine said. “I think staying with what you know is important. While the business is different today, it’s still the same in a lot of ways. It’s still a relationship business. Third-party origination is about relationships. It’s about having the product offerings at Plaza.” The company offers renovation products, reverse mortgage products, and significant training for the customer base, he noted
“So you provide the expertise, you provide the certainty of and knowing that the underwriting is going to be consistent and that you are going to produce on time,” he said, characterizing the focus as a “do what you say and say what you do” mentality.
“I think that’s what we do and we’ve always done that, and that’s one of the reasons we’re been successful … that and just sticking with the discipline of being a third-party originator, so we’re not competing with our retail customers out there,” he said.