As Bill Cosgrove's time as chairman of the Mortgage Bankers Association comes to a close, the experience has shown him how crucial it is for fellow CEOs to get outside the four walls of their companies and be more active in Washington and in their state capitals.
The mortgage industry must "take a page from the real estate community" and be more active in politics, he said.
When Cosgrove was sworn in as chairman of the Mortgage Bankers Association last year, his main priority was to increase the participation of first-time buyers in the housing market.
First-time homebuyers historically are responsible for 40% of home sales. But it was hovering at 29%, a 35-year low, when MBA members gathered in Las Vegas last October for the annual convention.
At that time, the MBA and other housing groups were already urging Department of Housing and Urban Development officials to make Federal Housing Administration-insured loans more affordable. "MBA was a driving force behind that message," Cosgrove said.
As the MBA assembles again for this year's annual convention in San Diego, the first-time homebuyer participation rate is at 32%. "The first-time buyer rate is staring to improve again. And I am happy about that," Cosgrove said.
HUD Secretary Julian Castro announced in late January that the FHA would reduce its annual mortgage insurance premium by 50 basis points. HUD faced a political backlash from Congress, "They were brave to do it," Cosgrove said. "I applaud HUD for doing that."
Meanwhile, the premium reduction has worked. FHA loan endorsements have spiked. And purchase mortgage endorsements have nearly doubled since February to 90,120 in July, while the percentage of first-time buyers has remained around 81% of purchase mortgage borrowers, according to the latest FHA data.
Cosgrove is the chief executive and owner of Union Home Mortgage in Strongsville, Ohio. His company has branches in 12 states, mostly in the Midwest, but also in Texas, Florida and North Carolina.
Heading into the chairman's role, Cosgrove got some advice from 2005 MBA chairman Mike Petrie: "You will work harder than you ever have in your life. It will go fast so don't forget to enjoy the ride," Cosgrove recalled.
During his year as chairman, Cosgrove attended 33 state MBA conferences, enough to take a toll on even the most hardened road warrior. Yet after all the travel and other responsibilities of the job, Cosgrove continues to be enthusiastic about his time as chairman.
"It has been a great ride and a wonderful experience," Cosgrove said.
Based on his travels and experience over the past year, Cosgrove expects the housing market will continue to recover at a slow and steady pace.
MBA economists estimate lenders will originate $1.4 trillion in single-family loans in 2015. Profitability and margins are "rather good," Cosgrove said. Ten years ago, a $1.4 trillion market would have been considered hard times. But today there are fewer lenders and less competition.
He said regulation has chased some of the community banks and independent mortgage banks out of the market and penalties have chased out some of the large institutions.
"It shouldn't go unnoticed that it seems there are a few less competitors in each market and in the long term that probably is not good for consumers," Cosgrove said.
The outgoing chairman also said he's seeing more CEOs becoming active in the political process, but added the MBA still has more work to do on this front. Cosgrove's successor, Quicken Loans CEO and current MBA chairman-elect Bill Emerson, is scheduled to be sworn in on Oct 18 during the opening ceremonies of the MBA Annual.
A few weeks ago, the MBA held an event where Consumer Financial Protection Bureau Director Richard Cordray spoke to 50 CEOs. "There were many people in the room who are very well respected in the industry that I hadn't seen in Washington too much or enough," Cosgrove said.
"We have a great story to tell," he said. "We have a recovery underway. The mortgage industry is doing things the right way. We need to be out front and center to promote that."
