Kenon Chen, EVP of corporate strategy at Clear Capital and co-host of the ClearCast Podcast, sat down for a conversation with Sarah Wheeler, editor-in-chief at HousingWire, during MBA Annual 2021. They discuss new guidance from the FHFA, the current state of industry media, and more.
Kenon Chen
So I am here with Sarah Wheeler, editor in chief for HousingWire. And I’m so excited because I get to ask the questions! This time, instead of me being in the hot seat, Sarah gets to be in the hot seat. So, thanks for sitting down.
Sarah Wheeler
Absolutely. No, it’s gonna be really strange to be the one not asking the questions. So you never know. I might flip it on you at any moment and ask you a question.
Kenon Chen
So you’re the expert. I’m sure I won’t even know what’s happening. Suddenly, I’m the one answering questions, and I’m like what happened? So thank you for sitting down. I mean, here we are at MBA Annual. We’re back! We weren’t here last year. And so it’s fun to I don’t know, have you been having a bit of fun, seeing everybody?
Sarah Wheeler
I have! And, you know, the energy — I think I think we were all so ready. And I know you and I’ve been to a couple conferences before this. So actually, this is my seventh conference this conference season. So traveling a lot, but I love it. I absolutely love it. I love getting to talk to people. There’s nothing in my opinion that can take the place of in person, even though we’ve done virtual conferences. But, this has been great.
Kenon Chen
Yeah. I mean, we were at HousingWire Annual a couple of weeks ago, that went well, right?
Sarah Wheeler
Yeah, we were really happy with that! You were on a panel that we really enjoyed, talking about appraisals and what’s next in the future of valuation, which is a great topic.
Kenon Chen
Yeah, well, I mean, we’re going to talk about it again tomorrow, on a panel, some of the same people will be on there. But this takes us to maybe some of the announcements today, I mean, FHFA…
Sarah Wheeler
Big announcement! So you know, ever since they released their request for input last December in 2020. We’ve been wondering, okay, what does that mean? And at the time, we said, you know, is this the start of we’re gonna see hybrid appraisals, you know, just be the things that happened in 2020, that are going to become more normal, is that going to be the more normal? And so we’ve been listening to it. And so sure enough, they announced today that desktop appraisals, now, that’s a permanent thing that people can do. So, huge news. We sent out a breaking alert. And I mean, everyone I talked to is like, wow, you know, it’s a big deal. I know it’s a big deal for you guys.
Kenon Chen
For sure. Yeah, I’ve read that article already, and it seemed like it was already written. How did you get that out so fast?
Sarah Wheeler
We just have great reporters, we did not have it already written, we did not know that ahead of time.
Kenon Chen
That’s incredible! I mean, you had enough background on there to capture that moment. I wasn’t in the room, but I heard that the audience kind of jumped in like she was, she was continuing on with her speech, and I heard the audience just erupted into applause.
Sarah Wheeler
Well, you know this better than I do that, you know, appraisal has been the pain point, especially over the last 18 months. So I think you have a range of people, I think a lot of people would be really excited about that — to really take the some of the pain out of the process. So, you know, realtors, lenders, different people, even appraisers themselves might be happy if if they got to — you’re laughing — maybe they’re not happy. But, you know, the whole point of automating the process is like then the appraisers get to do the analytical work, the higher level work, and not be the one maybe doing the, you know, the measuring, maybe that’s going to be the real estate agent. So is that such a bad thing if you’re an appraiser?
Kenon Chen
You’re taking my line!
Sarah Wheeler
Oh, I’m so sorry! Maybe your appraiser would be like, no, you’re wrong. But you know, so so I thought it was a huge deal. I don’t even know if that’s the last thing they’re gonna announce this year. Right?
Kenon Chen
You know, it seems like, she is really taking charge. I mean, she’s still acting director, right? But it really seems like they’re making some some bold moves. And yeah, that they have a pretty big agenda for what they want to do. And what they believe will change things. I mean, what do you think could come next? I mean, there’s certainly a lot of conversation around bias.
Sarah Wheeler
That’s exactly what I was gonna say. But I feel like, we’re just at a really interesting moment where there is so much momentum behind the idea of really talking about bias and doing something about it. And now we have an FHFA and a HUD that seemed very, that have been mandated to do that by the Biden administration and are taking that very seriously. So it’s a pretty exciting time to see that there could actually be change in this. So I think the bias question is what we’re going to see next, and I think that desktop appraisals have a — maybe I mean, that’s a question I would ask you, do they not have a part? Is that part of tackling the bias equation? Right?
Kenon Chen
Well, and see, this is where Sarah turns it around on me. She’s Excellent.
Sarah Wheeler
I can’t help it!
Kenon Chen
So, certainly right? I think that the idea that there’s a bit of distance, you know, between the appraiser and the occupants of the home, it just clears things up a bit. So obviously, we’re not focused on blame right now, we’re not trying to find, you know, whose fault is it? You know, which appraiser is racist? That’s not what we’re trying to solve here. We’re trying to look at the entire system, and what works better for the borrower. So I think this gives them some options, right? You know, that allows technology to be used — data to be used and to allow capacity to change as well. So if we can solve multiple problems with the same solution, let’s do it.
Sarah Wheeler
Well, and, you know, maybe this solves some of that — you know, we’ve known there’s not enough appraisers coming in to replace the ones going out and so, you know, why did they allow this and other things to have so many appraisal waivers during, you know, 2020. There is no way that the industry could have absorbed that amount of volume. So, you know, going forward and then looking at that going, “Oh, gosh, that kind of worked pretty well, like, why don’t we do that?” Sorry, I do, you have to wonder how this would have played out if we didn’t have, you know, COVID really pushing us in some areas. Just a terrible time for our country, but but in this way, you just think, wow, it really pushed for the innovation, or at least the idea that we could do something different.
Kenon Chen
Yeah, I totally agree. So besides appraisal, are there any other major trends or announcements they’re talking about?
Sarah Wheeler
So many! Yeah, I think mortgage rates are always huge. And so you know, we had recent news that the FED is gonna start tapering, their buying. So everyone is saying, you know, we’re expecting mortgage rates to rise not like, huge, but that’s about to start. And so that really, it actually throws a lot of other things into the conversation. Actually, Sandra Thompson, you know, she also talked about affordability today and, some things that they announced about refires for low income borrowers. So when you think about mortgage rates rising, that will probably call off some demand. But it also makes you know, what’s the balance between the home prices, which we’ve seen have risen more than 20% in a year? And then and then the higher rates? And how is that going to be? And so I do think that the idea of expanding homeownership to underserved groups is another huge focus of this administration and also just to mortgage people who want to find more people who need to have a house So these things are top of mind for our readers. We know mortgage rates is huge. And then also the affordability and home prices.
Kenon Chen
Wow, so any surprises today? Anything that you weren’t expecting to hear that jumped out at you?
Sarah Wheeler
I do think the appraisal thing was a surprise — the timing of it. I don’t think that the actual thing, you know, I mean, when you look at it’s like, by the end of this year, I expected something. But but also I mean, we’ve been expecting — here’s some extra drama — we were expecting them to name a new acting a new director of the FHFA. So a couple weeks ago, we had sources that were like, this is going to happen, and so we wrote up a story. We did all this stuff, we waited, we waited, we waited, and then we called them back. They’re like, yeah, there’s been some changes there. So um, but I think that one of the things was people thought that Sandra Thompson was doing a great job. So she had a lot of support already and so people were like, why are we…? I’m not in those rooms or in those circles in DC. I just hear from some people who are maybe in those circles.
Kenon Chen
yeah, I kind of thought with with HUD right, with that selection being made, you know, what’s the holdup?
Sarah Wheeler
And the Ginnie Mae president. That was the day we expected the FHFA. So yeah, I love that inside baseball stuff. I think it’s really interesting. But I really think for the mortgage industry, if you’re even if you’re just an MLO out there, this, this is affecting you every single day, whether you realize it or not. And I mean, just to have someone like Thompson, like Fudge, who have a certain mindset and are very active and have been given the green light. It’s a huge difference. Huge difference this time this year than the last four years.
Kenon Chen
Yeah. Well, I love seeing that there’s action. I love seeing that there’s change happening, right? Because that means that we have the opportunity to evolve. And we’re not just stuck in place anymore. I think that’s been like maybe one of the issues, right? There was such a focus on getting the GSEs out of conservatorship over the past few years, that the change we wanted to see along the way, wasn’t happening, right? We’re just waiting to see some big event at the end. But those incremental things that would make things, you know, maybe different and give us the opportunity to innovate, and some of the things weren’t happening. So, I guess it’s exciting.
Sarah Wheeler
That’s a really good point. Yeah, I think the only thing I would say on that is that you again, then see a lot of regulation coming in. And so you know, in the past, regulation did not always equal innovation. You’re having to make sure your hand doesn’t get slapped. When you’re trying to innovate or you’re putting all your money towards compliance. So it’s, you know, it’s a double-edged sword really.
Kenon Chen
Yeah, audit first and figure out stuff like yeah, I gotcha. Well, I sincerely appreciate the time and letting me interview you for the first time.
Sarah Wheeler
Well, thank you so much. It’s fun to be interviewed!
Kenon Chen
This is good. We should we should we make a tradition out of this, you know, at least once a year I get to interview you.
Sarah Wheeler
Let’s do it.
Kenon Chen
Perfect. Thanks for for joining us!
Sarah Wheeler
Absolutely.