I started my career out of school with a postgraduate degree in space physics writing mission software systems for satellites for organizations that no one talked about.  The stakes were large, to protect western civilization from a host of external threats.  The dollars were also large, hundreds and hundreds of billions of dollars.  At that time, we had a compliance officer, the person responsible for making sure we adhered to federal and international rules and regulations authored by legislators and bureaucrats who had no real understanding of our operations.   For us, at that time, we saw it as simply a check off and not key to the overall important task of saving the free world.  That was naïve thinking.

In my opinion, when you look at the financial services industry, that same attitude was shared before the market collapse – in Mortgage 1.0 – some individuals ignored the rules at great consequence.

The rebuilding of this market has global consequences.  All of us have friends whose jobs are gone because of the crash even when those jobs weren’t directly related to the financial industry itself.  People are out of work in places as far removed as Thailand and India because of the market failure.  Entire countries like Iceland, far removed from the boardrooms in the U.S., are bankrupt.  Like the world that started my career, the entire geopolitical balance is under severe pressure, this time over economics rather than weapons and ideology.

As it was then, right before the demise of the Berlin Wall and the collapse of the Soviet Union, the stakes are high.  And these days, the regulatory landscape is itself becoming increasingly important in protecting the interests of our citizens.

We as market leaders need to take today’s situation as seriously.  Mortgage 2.0 will not succeed without a new relationship between business and government.  Not only should that relationship be accepted, it must be embraced.  Regulation can be adhered to without undue burden to operations.  In fact, regulation and the government can be our ally.

Dorado recently held its first compliance summit, to discuss RESPA.  Compliance officers from many of our customers attended.  They listened to industry experts from TowerGroup, the Mortgage Bankers Association, and WKFS.  They shared views and built consensus on interpretations of new regulatory requirements.  They exchanged ideas and pledged to continue to communicate with Dorado, and with one another on developing best practices.  They came with the clear support of their CEOs.  The attendees’ purpose wasn’t to find ways around the regulations, but to identify ways to integrate turnkey adherence to compliance into their profitable businesses.  With the most interesting of outcomes being that these changes to the way they worked didn’t need to be burdensome.  In fact, compliance could be integrated in such a way as to add value to the workflow and to enhance profitability.

Mortgage 2.0 is more than capturing new loan volume.  It is about lending profitably and stability.  More important than just generating new loans, it is about creating more profitable loans in a sound manner, using best practices to create cleaner loans.  There are new relationships being formed between lenders, consumers, investors, and the government, and the intersection of these new workflows is compliance.