Marc C. Smith, the new president of the Mortgage Bankers Association, has spent 22 years in the business, with one company, Crestar Mortgage, where he is chief executive and president. He outlined his views in an interview with American Banker reporter Karen Talley on the eve of the association's annual convention in New York.

Is this a good time to be a mortgage banker?

The answer is yes, but only if you've got a strong stomach. To a large extent, costs haven't fallen on the productivity side. Since 1993 loan-unit origination volume has fallen 20%, while the industry's head count is down just 7%.

The deterioration in productivity relates, in part, to structural changes in the industry. We've gone from being predominantly retailers originating loans for our own portfolios to a group of origination companies selling the loans to a group of wholesalers. There are costs to that structural shift.

The new structure does have conflicts between the originator and the wholesaler that are still being sorted out. For example, in the race to refinance, servicers and originating brokers both have legitimate claims. Also, we are still sorting through the added complexity to the industry's pricing and quality-control mechanisms.

The same inefficiencies do not exist on the servicing side. This year the number of serviced loans per employee will top 900. That speaks volumes about the benefits of scale on the servicing side.

Where are the opportunities?

Home sales have been improving every year since 1991, and this will remain a strong foundation of business for mortgage banks. And low interest rates are adding a refinance component to originations. That's a plus.

We still have a large group of under-housed Americans, particularly among young families ages 25 to 45, whose rate of homeownership has declined over the past 15 years.

What we are seeing in home sales is catch-up homebuying by families priced out of the market in the 1980s. This should continue at least until we get back to normal rates of homeownership for young families.

What do you want to do for members?

I would like to energize communication and policy deliberations: things like Web-enhanced teleconferences and regular member surveys and homebuyer surveys.

Along business lines, I will continue to sponsor collaborative development of technology for shared use by the members to reduce risks or costs. Mers-Mortgage Electronic Registration Systems-is a good example of harnessing the power of technology for the betterment of all lenders.

We need to make more progress on fair-lending by working more efficiently with secondary marketing participants. We need to settle several key pieces of legislation and regulation, including mortgage insurance, commercial bankruptcy, and the Real Estate Settlement Procedures Act (involving fee payments).

In this era of mega-lenders, how important is it for mortgage bankers to have a solid local presence?

Local-market intimacy can be a defining characteristic and a great competitive advantage for the smaller lender.

The local lender knows what works in his market in a given moment and draws products from wholesalers which fit his need. This is the reason that market share continues to shift to the small mortgage banker or broker, to 56% last year from 55% in 1993.

What irks members these days?

They are discouraged about HUD's inability to deliver clarifying regulation and consistent enforcement over Respa.

We need clear direction about what are and are not permissible fees.

It is most unfortunate that HUD has chosen not to take the step that in their eyes requires a lot of courage but is part of the burden of regulation.

So far HUD's approach has been disappointing. Drafts we see from them contain hyper-technical, confusing, and ambiguous disclosures.

In the final analysis, lenders and consumers need the same thing: interpretive regulation that is easy to understand. Ambiguity and complexity only add value to litigation.

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