LAS VEGAS—The National Association of Mortgage Brokers has a lot of fight left in it.
Down to just a few more than 5,000 members and no longer with a full-time Washington staff, the group still plans to challenge the Federal Reserve Board’s compensation rule and hopes to persuade the new Congress to revisit the SAFE Act.
All while trying to help mortgage brokers comply with regulations it sees as grossly unfair, leadership said at the NAMB West conference last month in Las Vegas.
“We are going to forge ahead with a rigorous agenda,” Michael D’Alonzo of the Creative Mortgage Group in Maple Glen, Pa., told an audience of about 250 at the MGM Grand.
“It’s been a tough couple of years on all of us, but those of us who are left are serious professionals who have been in this business for years and plan to remain in this business,” said D’Alonzo, who was installed as NAMB’s president to replace an ailing William Howe after just five months in office.
But board member Michael Anderson, who chair’s NAMB’s government affairs committee, said the rules that regulators are placing on mortgage brokers are making it more and more difficult for them to originate loans.
“The way we do business today is being flushed down the toilet,” said Anderson, who is president of the Essential Mortgage Co. in Baton Rouge, La. “But I, for one, refuse to go to work at Wal-Mart.”
The organization has many problems with the Fed compensation rule, which takes effect April 1. One “big flaw” is that it treats mortgage broker firms the same as loan originators, Anderson told a conference session. Another is that it does not allow originators to lower their commissions “to get a deal in the door.”
Roy DeLoach, the NAMB’s former executive vice president who recently started his own lobbying firm but retains the NAMB as a client, said the rule is based largely on the Fed’s philosophy that mortgage brokers do not compete with banks. And in some cases, he added, it is in direct violation of the Real Estate Settlement Procedures Act.
“They’re confused, and they’re confusing the market,” he said. “It’s terrible.”
The NAMB leadership said it is going to try to convince the Fed to delay implementation of the compensation rule for a year. But if it fails, the group might challenge the rule in court—”if it is financially feasible to do so,” said Anderson.
The latter step will be expensive, the Louisiana broker conceded. But he added that several small mortgage bankers who fear for their own existence might join in the effort. “A lot of folks are upset about this.”
NAMB also has plenty of issues with the SAFE Act, which was supposed to bring uniformity to the way states license and regulate mortgage brokers but has failed to do so, said Denise Leonard of the Constitution Financial Group in Medford, Mass.
“It’s not a national standard,” complained Leonard, a member of the American Association of Residential Mortgage Regulators’ industry advisory council. “It’s not even close.”
Leonard, who chaired NAMB’s government affairs panel prior to Anderson, said the only thing the SAFE Act has done is to establish a floor with regard to licensing. Beyond that, she said, many states have set their own rules, with the result that “standards are different in different states.
“In New Hampshire, you can’t get a license if you’ve had a bankruptcy,” she said. “But that’s not the case in other New England states.”
NAMB also has an issue with reciprocity under the law, and believes that requiring loan originators to give the National Mortgage Licensing System permission to pull their credit reports could be a violation of their civil rights. “They are precluding people from their livelihoods,” Leonard told the meeting.
The group believes that with the large turnover in the House, it now has an “opportunity” to win changes in the SAFE Act. But whether it has the political strength to do so is questionable. Of the 147,000 brokers who have been licensed under the law to date, only 5,026 are NAMB members.
But Ginny Ferguson of Heritage Valley Mortgage Co. in Pleasanton, Calif., sees nothing wrong with that.
“I can remember when we got to 5,000 members. We thought we’d died and gone to heaven,” the NAMB treasurer said with a laugh.
