Florida was one of the earliest states where the mortgage broker business had a significant presence. The state trade group, now known as the Florida Association of Mortgage Professionals, actually predates the National Association of Mortgage Brokers and provided seed money for its creation.
National Mortgage News’ national housing correspondent Lew Sichelman met with the following members of FAMP at the group’s annual convention in Tampa: president, Carl Noriega, Source One Mortgage, Pembroke Pines; vice president, Tina Mulligan of the Boynton Beach office of The Mortgage Firm; treasurer, David Kane Jr., from the Cape Coral office of The Mortgage Firm; immediate past president, Jon Turla from the Merritt Island office of The Mortgage Firm; and past president and current president of the FAMB Education Foundation, Valerie Saunders of RE Financial Services, Tampa.
Florida was also among the first, if not the first, to create a comprehensive education and licensing program for mortgage originators. During the session, portions of which were published in the August edition of Origination News, among the topics discussed were the education requirements as they now stand because of Dodd-Frank and whether there should be a “transitional license” for those who currently work for commercial banks looking to join mortgage banker or mortgage broker shops.
Other issues that came up later in the conversation include flood insurance (important in a state which has a large amount of coast line), as well as giving grades on how well the Consumer Protection Financial Bureau has done in its first year of existence (one person gave it an “A” for effort, but also questioning some of the actions it has undertaken; another panelist said it was too soon to give a grade) as well as discussing a court ruling from a case in Washington state on whether loan officers are exempt or not exempt from overtime payments.
SICHELMAN: It is being said this is the only recovery in which housing will not lead the way out of the recession. But it seems to me with the economy improving slowly and the housing market starting to improve somewhat more rapidly that housing could end up leading the country out. What do you think?
TURLA: Housing has to be part of the recovery process. Whether it is going to be the leading indicator, maybe or maybe not. But it has got to be one of the upper echelons to help move it forward. Real estate is still a good investment, especially now as many of the values become stable or even started going up some. It is going to be part of the economic recovery process.
NORIEGA: I agree. The recovery, housing is going to be a leading indicator, it always has been. The government has to do some more initiatives. There is some concern relative to the economy. If they can participate with the Federal Reserve purchasing mortgage-backed securities, that will be an enhancement for liquidity. I think that would be a huge step in a positive direction for us in this profession.
KANE: The length of time it is taking the economy to recover is because housing is struggling so much and as housing starts to recover, the economic recovery will have to follow suit. Because everybody is still going to buy refrigerators, washers, driers and all the things they buy when they move into a home. So housing probably will still bring us out of this recession, it just might take a while.
MULLIGAN: The only thing I wanted to add to that is housing always spurs the economy. Unfortunately, if you are going to spur the housing market—not that you have to get back to any leniency in your underwriting guidelines, however the pendulum is so far over to the right, you literally are getting the borrower’s first born. There has to be a fine line in the middle. I’m not trying to get the pendulum back to the left; I am trying to get it to the middle.
SICHELMAN: Other than high FICO scores, where have they gone too far?
MULLIGAN: Sourcing every single large deposit in a checking account, unless its payroll. When you have to sit there and scrutinize a borrower—I understand money laundering, but set a bar, if it is $1,000, anything over $1,000 you have to document, I’m good with that. But there are so many widespread guidelines when it comes to document large deposits that people are literally going for the smallest deposits ever. And if the borrower can’t document it, you can’t use their assets (to qualify the borrower). And that is the pendulum to the right for me.
NORIEGA: The concern that we have is appraisals, the appraisal management companies and how that has been impacting us for quite some time. There are a lot of issues with AMC using appraisers not local to the city the home is in. They are using appraisers from other counties which is not fruitful for anybody in the transaction. That is a hindrance and that needs to change.
SICHELMAN: Has the situation with appraisers improved at all?
MULLIGAN: By using a management or at least a form of the management company it has uprighted an incredibly bad thing that happened in the market. I think that there were a lot of appraisers that were being manipulated into valuations. There is a happy medium between the management companies (and lenders), as long as they have appraisers within the territories you are loaning in. We at our company, we have the same kind of rotation, you have to rotate the appraisers, you cannot pick and choose your appraiser. That is a really good practice as long as Carl says they know the neighborhood. I don’t think I would ever want to see it back where there is that much control in the originator’s hands on the value of a property. Speaking as a lender, I want to be protected.
TURLA: One of the things we see is when an underwriter receives an appraisal, they review it and say this needs to be addressed. Since many of the appraisal management companies do not pay the appraiser very much of the fee, it is hard for them to basically do the appraisal over and over again if they have to. The appraiser is asked to do more and more work for less money. Also what is happening nowadays is there are a lot of review appraisals; this is one of the underwriting criteria. It is hard to find a reviewer, whether it is a desk review or a field review. That is another cost encumbered by the borrower. Very few appraisers are willing to take this on because they are critiquing another person’s subjected appraisal. They are being paid less for the same amount of work.
KANE: I had an appraisal come in $2,100 short. The seller was Fannie Mae and they wanted to challenge the appraisal. I went and did the homework to see if there were other comps and I couldn’t find them. The deal ended up falling through because they wouldn’t lower the price.
NORIEGA: The concern with appraisals from my standpoint is the appraiser has a relationship with the AMC. When they get an assignment, they are taking every precaution to come in at a conservative value, from my standpoint. I guess it is because they are nervous about losing their position with the AMC.
SAUNDERS: I’ve had a couple of deals in the last couple of months where the appraisal came in high. The lenders did appraisal reviews and completely blew the transactions out of the water; the values were reduced by $50,000.
