Implementing Technology in an Election Year

Not so many years ago, during the run-up to the historic subprime lending crisis, our industry had front-row seats for a detailed exploration of the concept of Irrational Exuberance, or economic bubbles.

Made popular by the American economist Robert J. Schiller in his 2000 book of the same title, it was first said by Federal Reserve Chairman Alan Greenspan in 1996, when he warned us about investment dollars flowing into dot-com stocks. That bubble burst right around the time Schiller’s book came out.

Today, the subprime crisis and the COVID refi boom notwithstanding, we are a bit more careful about these things. Case in point is the cautious optimism we saw from consumers in the wake of the Fed’s December comments about interest rates falling in 2024.

Kudos to all of those who didn’t expect to see mortgage interest rates immediately fall below 5% because that didn’t happen. And it may not happen for a while, though that may not be what we hear from politicians this year.

Getting straight answers in an election year

If there was ever a time to avoid irrational exuberance, it would be in an election year. Fortunately, we’re seeing many in the mortgage industry react to information like we saw coming out of the Fed with something more akin to skeptical optimism.

That’s exactly what we would expect to see during an election year when  candidates hope to convince voters that they have  the answers to what will make everything betterjust vote for them. However, reality never works that way.

This is not to say that lenders should ignore politics or the politicians’ rhetoric this year.

Much of the information coming out of Washington this year will likely be political advertising or chaos and distraction. Some of it may actually have a real impact on interest rates, what happens with the bond markets, and what happens with the macro economy.

Lenders can’t afford to ignore politics. They must take the information coming to them and process it appropriately.

Mistakes lenders must avoid during an election year

Information overload, which always occurs during an election year, can make it difficult to decide which actions to take. This lulls some into a “wait and see” position, which increases their risk.

What happens during this presidential election cycle will likely impact consumer confidence and will certainly affect how quickly the industry completes its recovery.

If consumers flood back into the market due to changing conditions brought on by the election, lenders who wait around will already be behind. Now is the time for preparation, planning, and ensuring that you have the most efficient lending operation when loan volumes tick up.  Because they will.

We’re already having great discussions with lenders who don’t want to find themselves late to the party when the next administration is ready to get to work in Washington. Some of these lenders have already committed to switch to the Mortgage Cadence MCP LOS and that work is already underway.

This is not the time to be irrationally exuberant. Rather, it’s the time for cautious optimism and preparation for a stronger real estate and mortgage market in the months ahead. To find out more about how we can help you plan for a better future, reach out to us today.

By Jim Rosen, Head of Product Management & Services at Mortgage Cadence 

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