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52 authority'—the power to make laws and legally bind people—to Congress and Congress alone. Once a law is passed, the relevant federal agencies create detailed regulations through rulemaking. e ideological polarization that we are currently dealing with means that the political parties agree less and less on policy—so it can be harder to get things done where compromise is required—and fewer laws get passed ever administration. e legislative breakdown forces a workaround for rulemaking." While some rules and regulations seek input from the industry prior to crafting, Rood notes that some rely on "unconventional methods" to educate themselves on targeted issues. "When regulators lack guiding and binding legislation for them to follow when developing and promulgating rules they rely on a host of unconventional methods, e.g. executive orders, blog posts, speeches, RFIs, APMs, MLs, notices, etc.," Rood said. "Regulators from different agencies start to develop rules that fit the current administration goals and priorities versus binding legislation. e lack of legislative criterion can result in contradictory rules from different agencies that often work at cross- purposes with one another. e challenge for me and the industry is that, number one, it is incredibly difficult to reconcile and operationalize rules developed through these one-off methods; and secondly, the rules can and do easily change materially from administration to administration. In the end, just when an organization has all the disparate rules from all the disparate agencies in mortgage and consumer finance implemented and fine-tuned … the rules change and you're back at step one." And as the industry has worked in concert with regulators to keep Americans in their homes during the pandemic, will there be unintended consequences in the end? "e government continues to expand its enormous footprint in the mortgage and residential real estate markets, as both markets are central to economic and social equality in America … for better or worse," Rood said. "We learned from the nationalization of the student loan industry in 2010 that well-intentioned policies can have enormous and dire consequences: e.g., the explosion of aggregate student debt outstanding due to credit and collateral (approved universities) policies being expanded and loosened; tuitions mushrooming as financing becomes more available and cheaper; delinquencies spiking as riskier borrowers struggle and poor-quality universities fail; and defaults jumping as borrowers feel the government will eventually forgive student debt with no consequences to economically vulnerable debtors. Should a government-dominated or nationalized market for mortgages ignore the case study of the nationalization of the student loan market, then we can expect big challenges ahead for our industry." However, as Rood points out, the underlying factor in the end will be if business is back to normal and the industry is enjoying a healthy flow of volume as the market continues to seek normalization. "e issue most top-of-mind for all industry players is volume … can it be found organically, or does it need to be manufactured out of sensible and sustainable loan product development," Rood asked. "We need to be vigilant that new entrants to the non-QM market are using sound credit and pricing models to avoid self-harm and/or consumer harm. We have a huge presence in the non-QM market—from insurance to fulfillment or QC to pricing and securitizations, and we do our best to ensure the market has the benefit of our insights." THOMAS SHOWALTER, Founder & CEO, Candor Technology Candor Technology offers the services of its Loan Engineering System (LES) as a SAAS (software as a service) to mortgage lenders. Led by omas Showalter, Candor LES performs the highest quality underwrite as part of a portfolio of fulfillment services that Candor offers to mortgage lenders. "Our biggest challenge is helping our customers understand the difference between automation and innovation … automation can only take what you currently do and do it faster or with fewer steps," Showalter said. "Candor's focus is on helping our clients survive and thrive in this challenging market, and we are doing everything we can to provide them with the technology and insights they need to get through this downturn and succeed well into the future. To help with this, Candor will be extending its offerings from the fulfillment space to the POS/direct-to-consumer space, and in parallel also take its services to the due diligence arena with pre- and post-close due diligence services that are fully automated and tremendously more robust and consistent than conventional services, which are manual and suffer quality, cost, and speed problems." Continued cooperation with regulatory bodies is a huge step that Showalter feels the industry is taking in the right direction. "It's a fair expectation that increased regulatory scrutiny lies ahead, despite the recent performance of the mortgage market," Showalter said. "e CFPB is signaling extensive underwriting reviews concerning the way servicers treated COVID-19-linked loans in forbearance. And of course, servicers are naturally looking to level up the consumer experience. So, there is a growing duality of expectations from the underwriting services. We recognize that without an expert system, the initial servicing purchase or the transfer of servicing rights consumer data can get lost or diluted. e corrupted data presents an additional challenge when the CFPB reviews the loan, keeping in mind the CFPB is naturally on the side of the consumer. Ready access to this vital information is not only crucial for both the lender and servicer, but additionally helps with predictive analytics to adjust servicing strategy in real-time." RICH SMITH, Chief Marketing Officer, PenFed Credit Union Beginning in 1935 as the credit union inside of the Pentagon, PenFed Credit Union's mission was to support financial services for government employees and their families. Eventually, PenFed grew across the country into all 50 states, including Puerto Rico and Guam. It wasn't until about three years ago that the credit union increased its focus on consumer lending. In 2019, PenFed's leadership decided to enter the mortgage space, which included hiring more talent to grow in that sector. At that time, PenFed had approximately 1.8 million members, and is currently sitting at 2.9 million members and growing. Cover Story By: Eric C. Peck

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