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Retiring industry leader Corso shares his outlook

Glen Corso, executive director of the Community Mortgage Lenders of America (CMLA), recently announced he was retiring at the end of December. Corso, one of the more visible figures in the industry during his three-year tenure as leader of the small-lender trade group, also previously served in a senior position for the Mortgage Bankers Association and was general counsel for several mortgage banking companies. He also founded and managed a public-policy group representing independent mortgage banking companies. During an interview with Scotsman Guide News on Thursday, Corso discussed the Republican tax overhaul, reform of the government-sponsored enterprises (GSEs) and the next big story for the mortgage market.

Just to get this question out of the way: Why did you decide to retire?

glencorsoI’ve been at this for 42 years now, and I will be 67 years old next year, and it just seemed to be the right time to retire.

Any plans?

Strictly family and doing some volunteer work. Those are my plans.

Before you leave, we wanted to get your parting thoughts on a few key issues. First off, what is your impression of the impact of what looks like a major tax overhaul coming?

It sure seems like the favorable treatment that homeownership received under the tax code previously will be diminished with the changes. Whether or not that will have a significant negative impact remains to be seen. I look at the research from the National Association of Realtors, and it leaves me with great concern that it will have a negative impact.

Are your lender members concerned that home values could decline and the housing market could suffer a downturn?

Frankly, I think most of our lenders are still trying to assess it [tax reform], as far as what the impact is going to be in the local markets that they lend in. Some of them feel that, because they do a lot of what I would call very average type of lending — that is, their borrowers are moderate to middle income people for the most part as opposed to the upper end — they are hoping that those markets will escape the worst of the impact.

But others point to the fact that the market is kind of a whole. If you think that the negative impact is going to be confined to one segment of the market as opposed to affecting the entire market, you are kidding yourself. They point to what happened to subprime lending in the pre-2008 era, when everybody felt it is just the subprime market. That is not part of the main market, and we’ll be fine. Of course that turned out to be very, very wrong.

Switching to housing-finance reform, do you see an end coming to the government’s conservatorship of Fannie Mae and Freddie Mac?

It certainly looks like momentum is building for congressional action in the first part of 2018. But, of course, we have seen this before with the Corker-Warner effort and the PATH Act effort. Whether or not this time there will be a resolution is very difficult to say. Certainly, all signs are pointing to congressional activity in the first part of next year.

What kind of system do you think will emerge?

With the statement by [House Financial Services Chairman Jeb Hensarling, R-Texas] the other day, conceding the need for a federal guarantee in order for the process to move forward, I think that may very well be a settled issue. That is, there now is momentum behind the idea that a federal guarantee is important and necessary. What form that may take is still very uncertain. That looks like it is an issue where both sides are in agreement.

Will we still have a system dominated by Fannie Mae and Freddie Mac?

It seems like the idea that there should be more [enterprises] than just Fannie Mae and Freddie has gained some momentum. But I think the big issue there is small lenders and many others will strenuously resist that, if there is any possibility that the big lenders, the big banks, could use that for vertical integration in the market. That is, they dominate the primary market and dominate the secondary, and use their domination in the secondary to enhance their competitive posture in the primary market. That will be the big issue around whether there will be multiple guarantors.

Are your lenders confident about the economy and the state of mortgage market?

The lenders that I work with are cautiously optimistic, but they are anticipating that origination volumes are going to be somewhat lower in 2018 because there will be such a severe drop off in refinance activity. Yet, some of them say, I have been hearing this for the past ‘X’ number of years, expect a lot less refinance activity, and somehow there is always something that happens that keeps refinance activity at a higher level than we anticipated at the beginning of the year. It seems like the death of the refinance market is always a bit exaggerated. Most of the lenders that I work with are braced for lower refinance volume next year, but still a strong purchase market.

What is the next big story for the mortgage market?

That is a good question. Perhaps it will be GSE reform. On purely the business side, I really see — and I see it among the lenders I work with — a huge shift underway to fully making the entire mortgage process electronic from start to finish. The momentum is there, so I think next year is going to be the year of the e-mortgage. We have been talking about it for such a long time. I think next year you are going to see it all over the place.    


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