Founder and CEO of AmeriCatalyst and EuroCatalyst

Toni Moss

The inspiring CEO of AmeriCatalyst and EuroCatalyst shares her insights on the future of the mortgage industry,  state of the global economy, and what she’s doing to promote awareness of present and future economic conditions.

NAWRB: Your early career started in venture capital with a focus on tech start-ups before moving to the mortgage industry. What sparked your interest in the mortgage industry to make the switch?

Toni Moss: It was more my corporate intelligence background that led to my interest in the mortgage industry, although my experience with tech start-ups did help. In the early 90’s, I was working for one of the world’s largest multinationals, which was losing money in their financial services division. Ultimately, we found that it was due to a software glitch in their servicing platform. That piqued my interest. At the same time, I met a brilliant underwriter who had an idea to create a cutting-edge due diligence firm with bleeding-edge technology. I initially made an investment in the new company, and ended up immersed in it myself. We specialized in evaluating and acquiring non-performing loan portfolios primarily for Wall Street firms. We were also chosen as one of the subcontractors on the HUD Single Family Loan Sales, which were the largest series of loan sales in history. The more I saw in terms of the dysfunction of servicers, the more enthralled I became about making a difference. Everyone viewed the servicers as the “back office” of the originators, while I saw them as the front office for investors and borrowers. I had the benefit of being an outsider, which always makes you see things differently.

NAWRB: Our focal point within the women’s trade association is to work with the Office of Minority and Women Inclusion, National Women’s Business Council, other women’s trade associations, and government entities to bring awareness, opportunities, and access all under one roof to women in the housing economy. With that being said, is there anything in your genre that can relate back to our mission core?

Toni Moss: I previously founded a group of my own called Women in International Housing Finance. Our purpose is to place women in positions of power. It’s been ongoing for the past 12 years and mostly active in Europe. I think the only way to really change things is at the top. What we’re focused on is getting women on the board of directors of the banks, the large real estate firms and all of the significant finance companies.

NAWRB: What do you feel is missing in the industry?

Toni Moss: I think what helps most is having access to information, the present level of information that’s provided is sorely lacking. In particular, we need to understand the big picture because a lot of women don’t understand the layout of the playing field. They only see what’s in front of them and don’t necessarily see what’s around them. I’m very much a big picture person.

NAWRB: I love what you’re doing and the fact that you’ve taken the bull by the horns for over a decade now. You have your conferences and an established voice. I also saw that you created a nonprofit. What inspired you to create the nonprofit, nonpartisan AmeriCatalyst Idea Lab?

Toni Moss: I think that women, in particular, really want to make a meaningful difference in their own lives and the lives of others that does not involve making a profit. I tend to live in a world of ideas. Although I (try to) get paid for those ideas through our main company AmeriCatalyst (and our European firm EuroCatalyst), most often I blurt them out in a fit of inspiration and give them away for free. Some ideas, however, are more difficult to execute and require a lot of resources behind them. I created the Idea Lab as a vehicle to aggregate, evaluate, and generate new ideas to help stabilize the industry, as well as help create a more sustainable future. One of those ideas, for example, is placing social workers in servicers so that they can bring a more holistic and empathic approach to working with distressed homeowners than traditional collections and foreclosure departments. Right now, we’re working with the University of Texas School of Social Work to create curriculum to include counseling around stressful financial issues, and a pilot program to place these social workers into two large servicing operations. When you consider the tremendous stress that families go through in buying a home, losing that home, or incurring insurmountable debt in general, it seems to me that this is really something that a clinical social worker can help with more than any other professional.

NAWRB: That sounds like an excellent program to assist people in housing. With housing being the second largest contributor to the U.S. GDP behind consumerism, do we as an industry have the capacity to salvage the housing economy without another fallout?

Toni Moss: “Another fallout” implies that we are past something that is now over. I don’t think that we are anywhere near a recovery, nor do I think that a “recovery” is possible. What is happening right now is what we are left with – an economy of diminished returns, and a more diminished way of life with less wealth moving forward. People don’t realize the massive, unprecedented wealth transfer that has occurred in this crisis, from the poor and middle class to those with extreme, and mostly inherited, wealth. The stock market is in no way indicative of a recovery because you already have to have a lot of money in it to reap profits from its rise.

We should be lobbying to increase the minimum wage so that consumers at the low end of the market can at least have a fighting chance at buying a starter home. It is consumers, after all, who create jobs through their consumption – not corporations. If we took the tens – and in some cases, hundreds – of millions of dollars in executive pay and spread that across the lower workforce in those companies, more people would be able to buy better homes. Study after study has shown that there is no correlation between executive pay and actual performance. We should be investing in education by providing low cost student loans so that those kids can graduate, find a job, and buy a home. And we should be fighting like hell to close the corporate loopholes on taxes so that we, the taxpayers, do not have to continue to subsidize the corporations. There’s the real welfare. Think about it. Even when you talk about facts, you can’t avoid the political implications, which is unfortunate. But we sure have lost our moral compass on fairness in this country.

NAWRB: Moving to a more international level, the global housing market tends to look to the U.S. housing market for what not to do. What can we learn, if anything, from the international housing market’s policies, successes, failures, and motivations?

Toni Moss: During the beginning of my tenure in Europe – let’s say from 1997 to 2005 – most European countries looked to the U.S. as the model of effectiveness and efficiency that they should strive to emulate. I spoke at so many conferences during those years and kept saying, “Stop using the U.S. as the benchmark!” The reason that I said that is because although housing finance varies in form but not function from country to country, it is inextricably wed to the socio-economic and political structure of each individual country. If you commoditize the housing stock and transfer the risk into a finite global investor base, which securitization inevitably does, you run the risk of disrupting that national market structure and manufacturing global systemic risk. Sound familiar? I get pummeled for saying this and I’ll be the first to admit that I’m not a financial engineer or rocket scientist but history is on my side. Now of course, no one wants to emulate the U.S. housing market, with the exception of Spain. Currently, the government there is looking at the evolution of Single-Family rental as a means of mitigating their overwhelming foreclosure problem. And importantly, Ginnie Mae still remains one of the best models in the world for insuring risk.

There is far too much to write about what we can learn from other markets but I can name a couple. In Germany, the savings banks have a savings product whereby when a child is born, the parents can open a tax-free savings account so that the child can ultimately qualify for a new loan when they come of age. There are some caveats, but this is the basic premise. We could certainly use something like that here in the U.S. In the Netherlands, they have “portable” loans that provide homeowners with more mobility to move to another part of the country without taking out an entirely new loan.

NAWRB: At EuroCatalyst’s 2007 Burning Down the House Conference in Madrid, the focus shifted to the powerful impact that shadow banking could have in each sector. Solutions and steps to recovery were discussed. Moving forward, which sectors were affected the most from shadow banking and what is their current state?

Toni Moss: Our focus has always been on globalization, and shadow banks are a natural outcome of its forces. They exist across a wide spectrum of structures, investments and activities but for the sake of simplicity, they are international, unregulated financial institutions. They are fluid and borderless, and their assets at that time were mostly securitized loans that were high on risk and low in value. It was only in 2007 that the term “shadow banking,” was created and at that time, mostly whispered among the top people at the Federal Reserve, central banks, the IMF, and large institutional investors.

That year, we were actually trying to bring widespread attention to the role that the shadow banks had in creating the crisis, and foreshadow (pun intended) how much larger they would become as the consequences of the crisis played out in the future. Here’s what happened: By 2007, banks were heavily invested in those risky securities because current regulation excluded those investments from the banks’ liabilities and allowed them to hold very little capital to protect against potential losses. When the securities imploded, the banks had to bail them out which, in turn, caused the banks to need a bailout from the taxpayers.

With regard to the non-regulated mortgage institutions, the greatest irony of them all is that the banks have been fortified with taxpayer money and are therefore heavily regulated; they are exiting the mortgage lending space as fast as they can. While much of this is due to heavy regulation, the primary reason is due to a lack of profit. For the banks, the costs of regulatory compliance, litigation, and headline risk just aren’t worth the small profit left in lending and servicing today. Now, the shadow banks are stepping in to fill the void. This is an “unintended consequence” of heavy bank regulation. And this is why you see the phenomenal growth of non-regulated mortgage institutions like Ocwen, PennyMac, and Nationstar. Although these institutions are well-managed, their sheer size and growth have absolutely enormous implications for the industry in terms of their long-term liquidity and the counter-party risk that these types of institutions pose. This is the biggest story in the industry today, which is why it’s again one of the main topics of our event this year.

NAWRB: Speaking of your event, it is upcoming in September, Tightrope and Renting, the Future. Why do you produce the event and what do you hope to accomplish?

Toni Moss: The first event was created in 2002 and was held in Madrid. The reason that I created the event is because I felt very strongly that mortgage markets would implode because I saw the same patterns occurring in 23 different countries. Having had an outside perspective of the U.S. housing market at that time, I could see that it was going to be a global crisis with the potential to change the world as we knew it. I felt that institutions like the World Economic Forum, the Treasury, and the European Commission were better placed to produce an event like this. Because I was one of the only people who knew how to compare and contrast so many different markets, I created an entire program for them to produce. I visited every one of those institutions with this urgency of motivating them to do something, to talk about this. They thought I was out of my mind. When they showed no interest, I decided that I had a strong enough network to do it myself. I didn’t take the approach of aprofessional conference producer. It was more, “Let’s get the smartest people in the room together, have a much higher caliber of dialogue, and move much more swiftly through this information.” I wanted to make it really quirky and unique so, I gave it a soundtrack.

I made it electronically interactive where the audience could communicate with the stage. Since it was invitation-only, we had some very senior people in the audience that wanted to be part of the dialogue. That was the initial reason for doing it. I felt that conferences produced by professional conference producers were really just based on profit. As for trade organizations, events build community and raise money but have censorship to a large extent. They don’t really confront problematic issues. Our purpose is to not only improve the product, processes, and practices of the industry but also look at how the markets are evolving in the context of globalization. Our purpose is more important than profit. We wanted to make a difference in the direction of the industry as our core business is market positioning and strategy. So, we produced this event to reposition the entire industry. When you look at our program, the way that I editorialize and phrase things, it changes the way you look at the industry; it changes the way you structure things and changes the way you act. We have definitely increased the caliber of dialogue and brought a much more intellectual approach to this industry in a way that challenges everybody. I think we have had a huge impact on how processes and practices are done in the industry both in Europe and ultimately, the United States. What’s interesting is that this is an event that appeals to the highest levels of the industry to educate them and this is an audience that feels like they don’t need an education. The best feedback we get every year is from all these top investors, originators, or CEO’s saying, “My God, I actually learned things that I didn’t know.”

NAWRB: I applaud you 100% for doing this because on a smaller scale, that is truly what we are trying to mirror for women in the housing economy. What’s so incredible is that now that you’ve been doing this for over a decade, you have identified the issues so we can look at the front end of this crisis rather than sitting here and asking, “How are we going to resolve the symptoms?” You’re taking action so we can cure the cause and see the direction of where this is going.

To view this article and many others in its original form: Click Here