Editor's note: This select print feature originally appeared in the October 2016 issue of MReport magazine.
Edward L. Robinson was named SVP and Head of Fifth Third Mortgage, a division of Fifth Third Bancorp, in July 2016. Now that he has had time to settle into this role, we thought it fitting to get his thoughts on the industry in honor of our issue dedicated to the “Best in Origination.” His distinguished career in banking has also included serving as SVP and as VP of originations with PHH, one of the top 10 mortgage originators in the country. He has held various positions of increasing responsibility with Genworth Financial and General Electric and served 15 years in the U.S. Army as a Special Operations team leader, during which time he successfully completed elite technical and leadership training and completed four combat tours, operating in 15 countries. Robinson recently spoke with MReport about his new role with Fifth Third and the current state of the originations market.
M // What are your priorities in your new position as Head of Fifth Third Mortgage?
ROBINSON // I want to continue to drive innovation through products, process, and customer service, by keeping the customer at the center of all we do. We are actively engaged with the industry, our communities, our customers, and community organizations to listen to the voices of consumers so that we can tailor our business to best meet their needs. Striking a good balance between disciplined growth and continued process improvement and process excellence capabilities is another priority. Though I am focused on growing the business—volume, revenue, and profitability—rather aggressively over the next few years, I recognize that sound growth can only come by ensuring we provide excellent customer service. We utilize tools such as Lean Six Sigma for continuous process improvement, and we maintain discipline on growing in the markets and segments upon which we’ve built our strategy for the next few years.
M // What are the biggest challenges you face when overseeing a servicing portfolio of more than a MILLION loans?
ROBINSON // The single largest challenge facing any servicer today is in default management when a borrower becomes delinquent in making his or her payments. Since the financial crisis, the regulatory environment has changed immensely, particularly in the area of mortgage servicing. Though these changes have proven helpful for borrowers in ways, such as single point of contact case managers to aid throughout the term of delinquency or having added assistance in obtaining loan modifications, the rules vary widely from state to state. And many of the rules, both state and federal, are written in rather ambiguous language that leaves wide interpretation of process. This lends itself to process variation, confusion by consumers and servicers, a poor customer experience, and sometimes mistakes. We are dedicated to doing what is right for the customer at all times, but due to the varying requirements by state and federal regulators, as well as investors who buy the loans from such places as Fannie Mae and Freddie Mac, it unfortunately is easy to make errors and cause angst for all. Sound execution of any process requires attention to service, quality, and speed. The unfortunate reality is that regulatory and investor requirements are generally changing faster than servicers can keep pace with. So servicers have to consistently wrap technology with manual workarounds, which is not a recipe for success in the long term. The servicing community, regulators, and investors must collaborate to determine how to create sustainable processes and technology advancement if we truly want to do what’s best for the customer and ensure compliance.
M // How are mortgage origination and servicing today different from mortgage origination servicing a year or two ago? Other than more regulation that requires more compliance, are there any differences?
ROBINSON // The most substantive changes are taking place in technology. I’m a firm believer that technology advances, particularly in the realm of workflow management, is the differentiator for high-performing mortgage originations and servicing. Given the complexity of rules and regulations, we need to ensure files and activities are queued up directly for the professionals writing or servicing mortgages. There have been significant advancements in incorporating workflow directly into mortgage loan origination systems. Some technology firms have found a niche in developing tools that wrap around core mortgage servicing systems. Workflow drives speed, quality, service, cost, and most importantly compliance. Another way that both origination and servicing differ is the fact that lenders and servicers are actively performing primary market research to truly understand how to better directly serve consumers. Using Voice of the Customer helps us actively engage our customers and consumers more broadly to understand their needs and to devise methods to better serve those needs.
M // How hot (or not hot) is the refinancing market right now?
ROBINSON // The refinance market is still doing well due to the prolonged low interest rate environment. According to the Mortgage Bankers’ Association, the industry is expected to produce approximately $857 billion in refinance originations for the full year 2016, an increase of nearly 15 percent from 2015 refinance originations of $749 billion. The market is anticipated to shift significantly from refinance to purchase beginning in 2017 as refinance originations are expected to decline by approximately 47 percent to $455 billion, as well as an additional decline of 34 percent to $301 billion in 2018. This will be partially offset by increases of purchase originations increasing from $981 billion in 2016 to $1.085 billion and $1.446 in 2017 and 2018, respectively.
M // What, if any, effect have the low interest rates had on the mortgage banking business?
ROBINSON // Low interest rates are always viewed favorably for the mortgage industry. It is almost a natural hedge for other areas of the banking business that are hurt by a low interest-rate environment, like capital markets. In January of 2016, the Mortgage Bankers’ Association expected loan originations to be down 7 percent and for the 30-year mortgage rate to grow as high as 4.6 percent by fourth quarter. They are now expecting originations to be up 13 percent and the 30-year mortgage rate to grow to 3.7 percent. That’s a pretty big swing in expectations. Forty-seven percent of the originations are projected to be refinance volume, similar to 2015. Obviously, this is good for the consumer, as they get the benefit of making the largest investment they will make at historically low rates; it helps generate revenue for the mortgage industry as a whole. While there are some negative impacts in the mortgage industry that we could get into, like the impact to our $70 billion servicing or capacity to get loans closed, a low-rate environment will bring very good opportunities that we can benefit capture from as long as we are operationally sound.
M // How are you reaching the low-income buyer or encouraging home buying in low income tracts?
ROBINSON // We have an overarching Community Economic Development plan designed to assist low to moderate income buyers and those buying in low to moderate income tracts, including a commitment to originate more than $10 billion in mortgage production from 2016 to 2020. In certain areas we have mortgage loan originators who are solely focused on originating loans in low to moderate income tracts or on assisting low to moderate income buyers. We’re expanding the number of these MLOs, as well as assembling teams of MLOs, processors, and underwriters solely focused on these loans. We have designed products geared for these needs, including our Down Payment Assistance Program. We know the biggest obstacle to home ownership is the down payment, and this program deals directly with this obstacle. The program pays 3 percent of the total loan cost, up to $3,600, for low-income buyers and those buying in low-income neighborhoods. We’re continuing to evaluate consumers’ evolving needs and creating products to meet those needs.