One of the most respected and influential thought leaders in the financial services industry is Kristy Fercho, executive vice president and head of Wells Fargo Home Lending at Wells Fargo & Company (NYSE:WFC). Next month, Fercho will be sworn in as 2021-22 Chairwoman of the Mortgage Bankers Association, the leading trade association representing the mortgage industry.
In this interview with Benzinga, Fercho offers her insight on the state of the housing market and the challenges that lenders face from the wider market and their internal operations.
Q: Congratulations on becoming the new MBA chairwoman. What are going to be your priorities for the coming 12 months?
Fercho: I'm going to extend the focus on increasing minority homeownership that Susan Stewart, our current chair, has focused on. This is work that requires more than one turnout, and I think she's done a really good job getting started – I want to give us another year under our belt at least. So, that's going to be number one.
And number two, I'm also going to focus on helping diversify the industry. As we look to homeownership and where the increases in homeownership are going to be for first-time homebuyers, I think the changing demographics really speak to the need for us to also have the industry mirror what the changing demographics in the country are. Diversifying our industry and getting new blood and fresh blood and new talent in will be critically important.
When I get installed as chair in October, I'll only be the fourth woman and the first Black in the 108-year history of the Mortgage Bankers Association. And in the words of Kamala Harris, I may be the first I won't be the last. I really hope that we can diversify the industry and infuse, help, support and nurture that talent so we can better serve our customers.
Q: In terms of diversifying the mortgage industry, the average age of the loan officer is somewhere in the mid to late 50s. Is mortgage banking a good profession for young people come into? And how is it that more young people aren't coming into it?
Fercho: I think it's a great profession. I tell people it's still the only professions where you can make a really good living without a college degree – although I don't encourage that.
I think people don't know about it because nobody grows up saying ‘I want to be a mortgage banker when I grow up.’ I love asking people like what their stories are and how they got into the industry, and most people fell into it – it was just happenstance or they had a neighbor or their uncle or somebody they knew who was in it. So, they did it as a summer job, and then the next thing they know, it's been this 30-year career.
I think we have to be intentional of talking to young people about this as a viable career option and making sure they know about it. Purchasing a home is the single largest and most complicated financial transaction that many people will ever do, but there's no preparation for it before you enter the process.
Q: Where do you see the state of the housing market in the 12 months going forward?
Fercho: We're coming through the darkest days of the pandemic and the mortgage industry is thriving – the housing market led the recovery, which is obviously very different than what we saw in the last crisis.
I think what we've learned over the last 12 to 18 months is that home has never been more important. We've all been in our homes, being able to obsess about what works and what doesn't work, and I think fueled the purchase market – all of a sudden, the home is the school and the gym and the office and we need offices versus working in the spare bedroom or at the kitchen table.
But it created a supply and demand issue where affordable housing supply has come under challenge, and that's why you see home prices increasing. People are going to continue to want to get into homes and I think interest rates are going to continue to be low. But over the next 12 months, I think we're going to see that increase from these historic lows, but they'll still be low relative to historic levels.
Q: This month marks the 13th year that Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC) have been in federal conservatorship. If we reconnect at this time in 2022, will the government-sponsored enterprises (GSEs) be autonomous again or will we be observing the 14th year of conservatorship?
Fercho: I think it's going to be interesting. Mark Calabria, the last Federal Housing Finance Agency director, was very focused on getting the GSEs out of conservatorship and creating a capital framework that would allow them to be sustainable and would attract private capital. He was very, very focused and diligent on it.
With the change of administration, Sandra Thompson now is acting director and it's rumored that there's going to be a new director. I think you’ll see the focus continued on how to ensure that the GSEs are productive and supporting the market. The recent announcement while mitigating the risk of preparing them to exit out of conservatorship.
I can't predict what will happen, but from the actions I see I think they're very focused on how the GSEs can fulfill their core mission of providing affordable and sustainable access to housing.
Q: Do you see mortgage-backed securities as being a good investment today?
Fercho: Absolutely. I think the yields to the investors have been pretty stable and pretty significant. The fact that we've just come through a crisis and this asset has continued to provide a very strong yield to its investors reinforces that it's a good investment.