The leading issue facing mortgage brokers in California is the same as the one facing all industry practitioners nationwide, which is dealing with the latest interpretations of the qualified mortgage and qualified residential mortgage rules and what they mean for originators.
George Duarte, who was recently installed as president of the California Association of Mortgage Professionals, said in an interview with Origination News that one of the big items is finding out what QM’s 3% cap on points and fees actually includes so the industry can get a better handle on compensation.
And part of that remains the different treatments regarding compensation of a brokered loan versus one made by a direct lender, he said.
Duarte is a veteran of the mortgage industry, and is currently the broker/owner of Horizon Financial Associates, an independent mortgage brokerage located in Fremont.
Other issues include the continuing tightening of guidelines for the Federal Housing Administration program. For many years that program was moribund in California because of the difference between its loan limits and what houses in the state were being sold for, but the changes to help mitigate the housing crisis (as well as the crisis itself) brought it back.
In the last few years, Duarte noted, FHA has been pretty important for the state’s housing market.
With the rise in interest rates starting this past spring, the market has turned more towards purchase business. However, as rates continue to rise, that bump in the purchase business is going away and the market has plateaued in the state, he said.
The market is now coming back in to balance, he continued, as the inventory shortage has been alleviated. Property appreciation has restored equity to many homeowners and as a result, they are less underwater or not even underwater anymore.
But there are still concerns on how rising rates will impact the market, especially as the peak buying season winds down with the start of fall, Duarte said.
California merged a number of its state departments, and the primary regulator of mortgage brokers, the Department of Real Estate is now the Bureau of Real Estate. But there hasn’t been any major change to the regulations or methodologies, so in the near term there hasn’t been any impact on the industry, he added.
At the CAMP convention, Duarte rolled out a new marketing plan that looks to show the group’s members “have a shared value and vision,” and that they are already positioned to be the “most professional, most experienced, most educated” mortgage loan originators in the marketplace.
“We are like the Marines. We are looking for a few good people” to join the organization, he declared, those who share CAMP’s vision and values. The reason its members have survived is because they have delivered a consistent level of service to the consumer driven by a high level of competency and professionalism that is not given by others.
CAMP is now looking to emphasize this fact, which it hasn’t done in the past. It is the organization’s foundation for moving forward, not just in recruiting new members, “but in terms of relations with the outside world, the media, regulators and legislators, by saying this is the foundation of our organization and the values and ethical principles we believe in.” It will also be consumer-facing as well.
Duarte said this is something the organization has always had, but now it is doing so in a more high-profile manner.
“I am more convinced than ever that our business model of the highest professional practice and service to the consumer, based upon” experience and ethical practice is in demand now more than ever, he said.
The job is to get that message out to the consumer. He said he has seen anecdotal evidence that consumers are not having their needs met at the retail level by other originators. They go to those originators like the big banks because they are driven by advertising. The vast majority don’t know where else to go.
Duarte said “the consumer will always find a higher level of professionalism working with our member,” and the plan is to increase the amount of consumer outreach and visibility.
That being said, Duarte is looking to make CAMP membership “more exclusive.” It is important that new members share the values of the association. That will be the “lynchpin” for growing the group’s membership.