Thursday, September 2, 2010

Labor Day – 2010 in the Mortgage Industry

By Jonathan Foxx

Jonathan Foxx, former Chief Compliance Officer of two publicly traded financial institutions, is the President and Managing Director of Lenders Compliance Group, the first full-service, mortgage risk management firm in the country.

On Monday, September 6, 2010, we will celebrate Labor Day.

It is a time for reflection. Gone are the tolerance for a child labor workforce, 12-16 hour days, sweat shops, low and subsistence wages, employment discrimination, dangerous working conditions, management retaliation against employees, willingness to accept unequal pay for equal work, massive overtime without due and fair compensation, and preventing employees their right to assemble or form unions.

Our industry, the mortgage industry, has suffered greatly in the current economic environment. And on this Labor Day we should be mindful of the loss amongst our own ranks of members of our fine, professional work force.


It was 1894 and the Pullman Strike had reached its zenith. Due to the panic of 1893, workers at Pullman's train building factories had their already low wages reduced or were downsized out of their 12 hour a day jobs. But Pullman also owned the town in which the worker's lived. Rents and municipal service charges were not also reduced. So workers saw their wages further reduced, or were laid off - but the town kept charging the same fees as if nothing had changed!

Strike broke out and workers around the country refused to handle or work on trains with Pullman cars. It was a show of solidarity that had hardly been seen before, not only by the members of the American Railway Union itself but also across many unionized and even non-unionized companies.

At its height, the Pullman Strike would embroil in this conflict the President, Grover Cleveland, the U S Supreme Court, U S Marshals, and the U S Army. Many strikers died or were wounded. Eventually, the strike was put down by the use of federal troops. Pullman agreed to divest its ownership of municipal services and towns. In the wake of the Pullman Strike, six days after the strike was broken, Congress unanimously signed Labor Day into law as a national holiday.

In the last few years, the mortgage industry has gone through a considerable downsizing of its own. Many mortgage originators have watched helplessly as their wages went down and employees were laid off. Entire companies shut down - some of them amongst the largest originators in the country - with virtually no advance notice to workers, leaving those employees stranded without jobs. Yet the cost of living did not change.

In many ways, the mortgage industry has been decimated. Even the industry associations that have been strong advocates have endured an attrition that has reduced their membership and, by extension, their lobbying clout. No group in the mortgage industry has been spared, including, of course, the compliance community. Recently, I founded a new association for the compliance community, the Association of Residential Mortgage Compliance Professionals (ARMCP), which will serve to support this particular group of industry participants. But the damage to the overall industry has been done, and it will take quite some time for a recovery to take place.

Yet I think it is important for us all to show solidarity with one another in pursuit of a stronger mortgage industry and a stronger country. If you are against wage, gender, race, age, or any other form of discrimination at work, then you are in favor of Labor Day. If you are against an industry's jobs and services being sent overseas, then you are in favor of Labor Day. If you are against the termination of unemployment insurance benefits at a time when there are six applicants for each job opening, then you are in favor of Labor Day. If you are against the federal government's withholding of stimulative ways and means to invigorate the economy, then you are in favor of Labor Day.

We do not live in a vacuum. People working are also people needing mortgages and the other products our industry offers. It is unreasonable to expect the mortgage industry to rebound as long as the economy itself does not substantially improve.

On this Labor Day - 2010, let's give some thought to the difficult times our colleagues have been going through - those who have lost their jobs through no fault of their own, those whose desk nearby is now vacant - and keep hope alive for them, wishing for their welcoming return soon to work.


So What Do You Think?

I would welcome your comments and views.
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Lenders Compliance Group is the first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance and offering a full suite of hands-on and automated services in residential mortgage banking.