It appears that Florida's housing market is starting to shake off some of the doldrums caused by the mortgage crisis, as buyers start to come out of the woodwork.
That was one of the topics of discussion at a roundtable discussion organized by Origination News during July's Florida Association of Mortgage Professional's annual convention in Orlando.
But this may not equate to good news for the mortgage industry, our panel noted, as a significant number of transactions have been for cash. In addition, while lower values have led to more transactions, they are for lower loan balances.
The panel also discussed FAMP's reunion with the National Association of Mortgage Brokers. FAMP, originally known as the Florida Association of Mortgage Brokers and formed in 1960, is actually older than the national group and was a key player in getting NAMB organized.
These and other issues were discussed by our panelists, including FAMP's new president, Jon Turla, a sales manager for Home Lending Source in Melbourne; Valerie Saunders, FAMP's immediate past president, of RE Financial Services Inc., Clearwater Beach; and Andy Seepersad, FAMP's government affairs chairman, an assistant vice president of the Florida Region of Franklin American Mortgage Corp., in Tampa.
SICHELMAN: What is happening with the Florida housing market? We hear all sorts of bad things nationally, like Florida being the epicenter of all things bad as far as the housing and mortgage markets are concerned.
TURLA: There has been a slight uptick in home purchases in the second quarter. Has it translated to more mortgages being funded? Not necessarily because many are cash buyers, that is what we are seeing. That is what has helped to keep some values up in our area. That is what I am seeing in my market (Melbourne) and possible some of Orlando. I am located in Central Florida.
SAUNDERS: We are experiencing the same thing in Jacksonville, in Northeast Florida. Of course, there are always challenges with getting people to qualify or being given a lot of conditions prior to coming to the closing table. But, yes, we are seeing more interest. I am hearing things in my market from a variety of Realtors who think we are going more into a sellers' market than a buyers' market.
SICHELMAN: Really? That is good news.
SEEPERSAD: The statistics have been showing there have been more home purchases, but the difference now is that values have been coming down. Because values have been coming down, more people have been qualifying that could qualify. But unfortunately there are still a lot of folks that don't qualify under lender guidelines.
SICHELMAN: Are the buyers investors, or people ready to take advantage of low prices?
TURLA: I would think it is a combination of both. In my area there are lots of people who are purchasing from up North, buying their second home here, getting ready for retirement. But there are also investors buying up property at a good price and turning them into rental properties or holding on them feeling the market is going to turn.
SAUNDERS: In Jacksonville, because we're along the coastline, condominiums especially have been a hot cash (purchase) market. You can purchase a very beautiful condominium for less than $100,000. So we do have a lot of people that are coming from other parts of the country, purchasing second homes and paying cash for them. They are obtaining a condo that was not affordable in the past that will maintain its value just because of its location. As far as the rental market, we find a lot of investors are purchasing homes, rehabbing them and then renting them, as opposed to selling them.
SICHELMAN: What are some of the hot issues statewide for FAMP?
SAUNDERS: Quite honestly, we have resolved a lot of hot issues, specifically with regards with regards to changes in our Florida statutes, with regards to the licensing of in-house processors. That was probably our No. 1 hot topic. Florida was one of the few states that required the licensure of all processors. Just recently that changed. Our legislature is in a deregulation mode and our industry benefited from that by removal of licensure for in-house processors.
SICHELMAN: So you are just keeping watch on Tallahassee and hoping nobody does anything damaging?
SAUNDERS: Pretty much, yes. We are dealing with redistricting here in our state, so that has been the primary focus of our legislature. We will have an earlier legislative session in 2012 than we have had in recent years because of redistricting. We will be watching any new bills that get proposed, but we don't anticipate anything earth shattering.
TURLA: Our organization has had and continues to have good relationships with different departments that regulate us and also some legislators. (Editor's note: FAMP member Nancy Detert is a state senator and FAMP past president Ritch Workman is a member of the state House of Representatives.) So I think if something does come down that they feel would be detrimental, we will have a heads-up on it. And with the way Gov. Scott wants to build jobs, I don't think you are going to see too much more regulation coming down that is going to limit our industry.
SAUNDERS: I think also what our primary focus for Florida's originators is to transition them into this first-time process of renewal of their license on NMLS and making sure that they are aware of the time frames and the deadlines. Because I am sure, similar to other states, although we had been putting information out, making people aware of deadlines and time frames, people missed them. Some are still trying to get their feet wet with the NMLS system. So that will probably be our primary focus for the last five months of 2011.
SEEPERSAD: I will add that education is still one of our stronger suits and one of the biggest values to our membership and to the loan originators in the state.
SICHELMAN: I have heard that you are going to re-affiliate with the National Association of Mortgage Brokers. Is that true?
SAUNDERS: Our board last night voted to re-affiliate with NAMB. I personally have been actively working on several NAMB committees. I will also be the chair of NAMB's ethics committee for this year. It has been a long time coming. It has been of negotiations and processes, but we were able to successful come to an understanding between the two organizations.
TURLA: I believe it is great timing, considering many of the federal that are up in the air and/or in place right now, where we can help address with each others' ideas and work together to try and get things done.
SAUNDERS: Also, I think it is important to show unity within our organizations, state and national, because splintering off into a variety of other national groups just shows fractures within the industry. It's a benefit, not only for Florida, but nationally that we all can come together and work as a unified group.
SICHELMAN: When did you leave the fold?
SAUNDERS: We voted to disaffiliate in September of 2009. It was over a variety of issues, a lack of disclosure and questions needing to be answered, and conflicts and not seeing eye-to-eye with (NAMB) leadership.
SICHELMAN: We mentioned underwriting restrictions earlier. Are those too strict and have we gone way too far? Are we losing good buyers because of underwriting restrictions?
TURLA: There are two perspectives. As a mortgage professional, you would tend to think the pendulum has swung too far the other way and it has become extremely restrictive. And there are a lot of good people who can't get loans right now. But, is it that we have gone back to good underwriting to basic guidelines again? I think it is a combination of both. There are some good borrowers that are left out because they don't meet the standards that are in place. But I also think it has helped the industry to regulate itself. And you will see more relaxed guidelines, not to where it was before where if someone fogged up the glass they got a loan, but more common sense underwriting. I don't think anybody is really trying to stop people from getting loans, but they have started looking at it in more depth, to make sure people can qualify for the home. There are people who are very qualified for the loans but because of different investor guidelines or overlays that they have don't necessarily qualify for the loan now. I am talking about professionals who make great money, have good debt ratios and so forth, but they might not have enough reserves because their investments have come down because of the way the stock market is.
SEEPERSAD: I would add prior to the big boom years between 2003 and 2007, we had similar guidelines in place to what they are today. I think the challenge was that in the pre-boom years, the underwriters had some flexibility to make some common sense decisions based on weighing all of the information. Then we went to a time where sometimes there was no sense in the way that loans were made. And now we are back in a situation today where there are some restrictive guidelines the way they were before, except for the underwriters have very little flexibility. To throw another wrench into that, the secondary market is very, very difficult today. We have investors kicking loans back to lenders that they didn't used to. Today, there are loans that are paying for years, then go past due and are getting pushed back to the lender for repurchase.
