Florida has been a bellwether state for the housing crisis, but for all the wrong reasons. The state was among the top for foreclosures and fraud. But it is also a bellwether state for a good reason.
The state’s legislators and regulators there were among the first, if not the first, to create a comprehensive education and licensing program for mortgage originators. The Florida Association of Mortgage Professionals (back then known as the Florida Association of Mortgage Brokers) embraced the challenge, offering education courses in various places, including its annual convention.
In Origination News’ discussion with the officers of FAMP at its annual convention in Tampa, national housing correspondent Lew Sichelman asked how the changes to federal law have impacted the state’s education requirements and how conditions are in the various markets that make up this very diverse state.
Participating from FAMP are: 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, RE Financial Services, Tampa.
Besides the topics discussed below, the panelists said that housing has to be part of (if not the leader) the U.S. economic recovery process; how the tightness of mortgage underwriting guidelines right now might be holding back that recovery (if the borrower cannot document every source of income, it cannot be used in qualifying); how appraisals and appraisal management companies are impacting loan origination volume, and what might be “a happy medium,” as well as situation with appraiser compensation.
SICHELMAN: Florida was one of the first states to adopt education requirements for mortgage brokers. What has been the effect of the Nationwide Mortgage Licensing System has had on the community? Certainly there are a lot fewer brokers in the state.
SAUNDERS: As far as the effects of the NMLS and transition from the state overseeing our education to federal oversight, there has been a financial increase in the cost to the association to hold these courses. Because of the dollar amount charged just to get a course approved, then we have the NMLS reporting fees, plus it’s become more burdensome to create the courses themselves to maintain compliance with NMLS. Florida had required 14 hours every two years, so to have eight hours every year has not been a significant burden on an originator, they were used to it.
SICHELMAN: Is the industry better off for it?
SAUNDERS: The industry is better off in that some things have become standardized across the country. Of course, in Florida we were used to education, but other states didn’t have licensing even, or didn’t have any requirements for education. So I think in that aspect, yes. Being that you can’t take the same course in two consecutive years, you’re always going to broaden the areas of information you obtain and the knowledge you receive and that is only going to help the consumer.
NORIEGA: We as an association feel that continuing education is an important component to the professionalism of the industry, so having it here as we do as part of our association is highly beneficial.
SICHELMAN: You mentioned the cost burden. Over the years, won’t that be spread out?
SAUNDERS: No, because every single year we’re having to increase our library of courses. There is a dollar amount to submit a course, to get it approved. We have to pay someone to write the course or purchase a course from an outside source. This year alone we probably spent $10,000 on our courses and getting them approved.
SICHELMAN: Valerie, during your opening remarks at the conference you spoke about mortgage brokers hiring. What is the case in Florida?
SAUNDERS: The licensing numbers we see are steadily increasing. Of course, we are not to 2007 or 2009 numbers, but going from the low of 2010 to where we are today, we see more people who may have tried to make a decision for themselves as far as whether or not they wanted to take on the challenge of becoming state licensed through the NLMS process and maybe at that moment choose to go to a bank and they are transitioning back into the industry. It is higher than it was in 2010 and I anticipate that to continue.
SICHELMAN: I think it was National Association of Mortgage Brokers president Don Frommeyer who said he’s hearing brokers can’t find enough people to hire who can pass the test.
SAUNDERS: I think the system that has been created by the SAFE Act and transitioning into NMLS has the potential of making the loan originator a dinosaur. Coming out of college or being young in your career, if you try to go work for a brokerage business chances are you would not be hired because you have no experience or education. If you don’t have the capacity to get the experience or education, you cannot pass the test. So it almost creates a system where you have a potential of eventually getting to a point where there is nobody else that is qualified.
TURLA: Having the personnel come (from the banking side) straight into (a broker’s) office you can’t do, because that person would have to go through education and training.
SICHELMAN: The Mortgage Bankers Association is trying to get licenses to be transportable. Do you support that?
NORIEGA: We would like that to happen, but that is not the case. The transitioning from a banker to a broker is not in existence at this time. Individuals wanting to leave a bank and come on to the broker side, there are challenges at this time.
SAUNDERS: No offense to Carl, but I do not agree with that statement. I do not think there should be a transitional license. If you’re going to be licensed as a state-licensed loan originator and its federal mandated on what you need to do, then that’s what you need to do. To create a system where it enables somebody who does not have a license to be able to work during the time they are trying to transition into obtaining a license, only opens up the possibility for fraud and other problems that are going to create issues for consumers and the companies that hire them.
SICHELMAN: So you wouldn’t favor a “learner’s permit” or a transitional apprenticeship type of license?
TURLA: Lew, would you want someone on a learner’s permit doing your mortgage? If I were a consumer, I would want somebody who is a professional and knows the ins and outs to get me a mortgage nowadays. Being a licensed loan originator and having the background and history goes a long way.
MULLIGAN: I see both sides. If you are going to have any sort of transitional license, there has to be some standards set on the banking person moving over, such as how long they have been in the business, how long have they originated, what sort of product did they originate, what does their credit look like, what kind of training did they get at the bank? Some banks—I used to work at a bank—have pretty extensive training. I would want to make sure that those are validated—so there would have to be a high standard.
SICHELMAN: So you have gone from fighting the NMLS to using it protect your franchise?
SAUNDERS: I don’t know if we ever fought against the NMLS. We’ve always talked about being on a level playing field. We all need to be subjected to the same minimum standards. It is something that we yelled “yippee” and “yahoo” when it started? No. But in Florida we had another licensing system that had a lot of the components that NMLS has. So for us the transition was not overwhelming.
SICHELMAN: What is happening in your individual real estate markets right now?
TURLA: I’m in the east central Florida area, there is quite a bit of activity happening now. Inventory is down considerably in our area. A lot of purchases are happening, but many—68%—are cash purchases. So it makes it difficult to compete for the remaining 32% that banks and loan originators are vying for.
NORIEGA: I am from South Florida and the market is different than most markets in Florida as we have a lot of foreign investment. Foreign investment has created a huge demand in South Florida. It has made the supply diminish substantially. We see a lot of growth; the builders are coming back out.
SICHELMAN: How much of that business are mortgage brokers getting?
NORIEGA: We’re not getting a lot of it because it is a lot of cash coming in and they have banking relationships. But it is starting to come, we’re seeing people wanting to leverage their capital and utilize a foreign national mortgage.
SAUNDERS: I’m in the Jacksonville area and things seem to be turning the corner there as well. I know a lot of Realtors have been making comments that their inventory is dwindling. We still have a large number of cash purchases, but things do appear to be coming back around.
KANE: I’m from the Cape Coral-Fort Myers area; we were one of the first areas hit hard. We are recovering quite well. Most of the area is going up in value. Inventory is shrinking. Cash deals are getting close to less than 50%. A couple of years ago it was 85%, 90%.
MULLIGAN: I am in South Florida, but in Broward-Palm Beach. There has been an increase in some of the property values. The short sale aspect, the banks are actually faster in getting those short sales approved, although they are giving us very little window to finish the origination, like two weeks do or die. But the short sales have actually stabilized a lot of those pockets because you don’t have too many foreclosures. Even though a short sale hurts the value to a certain extent, the foreclosure hurts it worse. ◆
