Now that the Consumer Financial Protection Bureau has become established and actively writing new regulations, there are those that are seeing a surprise benefit—growth in the mortgage broker industry.
That is being seen in Florida, where the state trade group’s annual convention recently took place in Orlando.
The Florida Association of Mortgage Professionals (formerly the Florida Association of Mortgage Brokers) is the oldest trade group in the business; it helped to form the National Association of Mortgage Brokers.
While no longer having as large of a show as during the boom time of the brokers in the 2000s, the Florida Association of Mortgage Professionals has managed to sustain the organization by becoming an educational and regulatory resource for its members.
Now as the qualified mortgage rule and other requirements are impacting the business, anecdotal reports state people are looking to move down from mortgage banker shops and become mortgage brokers.
At the Florida Association of Mortgage Professionals’ convention, Origination News managing editor Brad Finkelstein sat down with Florida Association of Mortgage Professionals president Valerie Saunders, an industry consultant with Origination Compliance and Consulting in Jacksonville; president-elect David Kane, senior loan officer at Fairview Lending in Cape Coral; and government affairs chairman Kimber White, managing partner at United American Mortgage, Oakland Park.
The first part of the discussion appeared in the Aug. 19 issue of National Mortgage News.
FINKELSTEIN: Has the new regulatory environment taken a toll on the number of members in the organization? Or has the opposite happened and people are deciding they want to be mortgage brokers again?
SAUNDERS: We do see our membership is starting to grow. People are interested now in beginning the process of learning of what they are going to do. They are beginning to see again the need for networking and relying on industry partners in order to be able to have a successful company.
FINKELSTEIN: Someone had suggested to me that some small mortgage bankers are interested in downsizing and getting rid of their warehouse lines and being brokers again, rather than have to deal with the rules of being a mortgage banker.
SAUNDERS: Quite honestly, the federal rules which will go into effect in January in my personal opinion favor the smaller shops. Because when you have a limit on your earning potential, you need to eliminate overhead.
FINKELSTEIN: If you are a mortgage broker/owner, your new job is chief compliance officer.
KANE: Compliance and risk management.
WHITE: When you are talking about becoming a member of FAMP, this is a big part of it. Just having updates, you need someone to help guide you through this and that is what FAMP does. We are a partnership, we are a team, we work together.
FINKELSTEIN: Is there anything on the horizon regarding regulatory changes in the state?
SAUNDERS: We are working with the Florida Office of Financial Regulation on the opening of our state lending law in the next legislative session. All of these federal changes necessitate changes to our state laws so that we don’t wind being more restrictive than an already restrictive federal law.
FINKELSTEIN: State statute 494 (the Florida mortgage lending statute) is more restrictive than federal law?
SAUNDERS: If we don’t change certain things within 494 that are based off of prior RESPA and TILA changes, we have the potential to be even more restrictive than federal law, which could create issues within the marketplace here in Florida. So we don’t want to see our lending law wind up hampering growth or the potential for our mortgage industry to grow here in the state.
WHITE: Some of the forms are redundant because we already had them in place.
FINKELSTEIN: Education has been a big part of the FAMP convention for many years now. Is Florida stricter than what federal law calls for?
SAUNDERS: We match what the SAFE Act required as far as education goes. The one thing our state has not connected with is the Uniform State Test.
FINKELSTEIN: Any reason why? In New York last year, the regulator seemed dead set against approving it.
SAUNDERS: We were one of the last states to transition over to NMLS and I think they want to see how it goes with other states before we start changing our lending law.
FINKELSTEIN: In some states, Realtors have been complaining there is an inventory shortage (of homes for sale). Is that true in your parts of Florida?
SAUNDERS: That is definitely true in Northeast Florida.
WHITE: Definitely true in South Florida and it’s getting worse.
KANE: It’s becoming true in Southwest Florida.
SAUNDERS: That is the one huge piece we are missing in this state is people to start listing their homes in traditional sales. I think we will see a much more rapid return to a more normal market.
KANE: There is some bank inventory that they are holding back on.
WHITE: A lot of the bank inventory been sold to investors who are holding on to it and renting, waiting for the market to come back up. In my opinion, when this hold meltdown happened banks foreclosed on everyone which shoved prices down. I think they got smart and now are holding some properties so that the market will come back up.
SAUNDERS: Hand in hand, once you start getting these more traditional sales, then you are going to see these investors say “now is the time” to sell.
FINKELSTEIN: Are there any issues that you would like to touch on that we haven’t discussed yet?
SAUNDERS: What we want to stress is that for the first time in a long time we feel optimistic about growth in the organization, about new originators coming back into the market and really working towards putting ourselves out there as the place to be as a resource for what is going on, government affairs-wise, and just networking with mortgage professionals.
WHITE: The thing I am seeing, and you are already hearing so much about the changes in federal laws and the QM rules. Those of us who have been in the business are going to make it. It is an opportune time for the brokers and for small broker shops. We’ve survived the worst; we’ll get through this. It is not as bad people make it (out to be). I hear “you should become a lender.” There is a lot of talk out there this week. No, you should say a broker.
KANE: A few years ago, when the SAFE Act came in, a lot of people migrated over to work with the mortgage bankers. Now they are thinking about going back in the other direction. There is a good, positive energy out there now, where a few years ago that wasn’t the case.
WHITE: Those of us that are still in the business, we are in the business because we love it, we want to help people and we have a passion for it. The people you will have attrition for are the people who were in it for the money. I say that with all due respect; those people will probably get out, because they are not going to make it. But those of us who make our living and our livelihood and see this as our profession will stay. Nothing’s changed.
SAUNDERS: There is a lot of misinformation that is being almost as marketing tools with regards to the upcoming legislative changes. I want to stress that I think QM is definitely going to wind up being a boom for small mortgage broker businesses. So don’t be afraid, dip your toe in the water.