The broker-wholesaler relationship as strong as it was during the period when it was the dominant origination channel, according to New York mortgage brokers. Higher quality loans are being produced and legacy issues are no longer a drag on lenders, they say.
Bill Dallas, whose nonconforming mortgage banking firm
New York mortgage brokers are open to working with those who elected to withdraw from the channel. Holding a grudge could backfire because there are several lenders now restoring their broker loan purchase operations in New York and brokers want to keep their options open.
Market conditions across the state dominated this segment of Origination News’ discussion with the board of the New York Association of Mortgage Brokers. Joining managing editor Brad Finkelstein are NYAMB president Louis Borsellino, president-elect Martin Pfeiffenberger, vice president Irene Amato, treasurer Bonnie Nachamie, legislative chairman Gene Tricozzi and education chairman John Commons.
FINKELSTEIN: What is the current status of the broker/wholesaler relationship? Has it improved over the past year with all that has gone on in the business?
AMATO: They’ve been there for us. The ones that are in the market now have been there through thick and thin and even the ones which have left the market, there is no tension between us. I respect that as brokers, it was just that that was their decision.
COMMONS: There was a large exit in the New York marketplace due to the Department of Financial Services becoming regulators of subsidiaries of federally chartered lending institutions. Instead of going under DFS’ auspice, they backed out of the state, so they could find the best way to attack it nationwide. DFS said as of last week there is an influx of subsidiaries coming back into New York State.
NACHAMIE: I think the wholesaler relationship with a good, solid, entrenched broker is probably healthier now than ever. The wholesalers’ expectations for package delivery, file integrity and professionalism are much higher. The brokers in the business are providing a much better quality and it is still less expensive than the wholesaler could do it on a retail basis. That is what the expectation is going to continue to be as we go forward with all of these new rules and regs. The level of competency, professionalism and knowledge of the broker is better it has ever been and it is continuing to expand.
BORSELLINO: One thing I want to touch on is the affiliated business rule. I don’t think there is any industry that says if you are related to somebody, if it’s a spouse, a brother or a cousin, that is an affiliated business. I just don’t understand why that is in there. It bothers me to no end.
FINKELSTEIN: How is the mortgage business doing in your different parts of the state?
AMATO: Knock on wood before you talk! In Westchester County, my market has been fantastic. We had a couple of slow weeks towards the beginning of September, which is common with kids going back to school. My business has doubled in the past six months. So we’re doing fantastic.
PFEIFFENBERGER: I’m upstate. Year-over-year we were up, we were definitely down in September, it is a slower month. October is back to norm. There was a little slowdown when the rates kicked up. We mostly do purchases; we are a 75% purchase shop. September is always slower, but it was much slower than normal.
TRICOZZI: I’m from upstate as well. In my area servicemen are coming back so VA loans have become really popular.
BORSELLINO: The problem I have right now is rural housing loans [because of the government shutdown at the time].
COMMONS: Things are the same here on Long Island.
AMATO: I don’t think that rates going up a little bit were causing people not to buy. In my history September is slow because people back off from looking [for homes] with the kids going back to school. I’ve always had a slow September. I don’t think people said “rates went up a quarter, so we are not going to look this week.” If rates go up, people still buy homes.
COMMONS: At 13.5% back in 1987…
AMATO: I bought my first house at 10%.
BORSELLINO: When rates went up almost a percentage point in May, when it shot up like up like that, it definitely affected the market.
COMMONS: A 5% interest rate isn’t going to put anybody out of business.
PFEIFFENBERGER: If rates are at 6% and unemployment at 3.5%, it means everybody is working and the economy is vibrant.
COMMONS: It is a (psychological) thing, “What’s your rate?”
PFEIFFENBERGER: I am in the state capital (Albany), which is highly dependent on the public works sector. With the state laying off workers and consolidating, it had affected our area. For a while the employment levels were down.
TRICOZZI: The job market has really increased in our area (he also is from the Albany area) because of global companies. One company has already applied for expansion on their plant; they are saying 4,000 additional jobs.
BORSELLINO: Albany is booming.
AMATO: I think it is important to get out to consumers is buying a house is one of the largest financial decisions that somebody is going to have to make. I think they should understand that they have a certain level that they should be treated at, and they should be able to discuss it and talk it over and get advice prior to (entering the process). A lot of loan originators will just brush them off until they get a house. We need to get out (to consumers) that you have the right to sit down and talk to somebody. If they don’t want to talk, you go to somebody else. It is an important factor, understanding what they are going to buy. I had a woman the other day (who said,) “You mean I could get a mortgage only putting 10% down?” They just don’t know. They are not educated and the real estate agents are not loan originators.
FINKELSTEIN: I think all of the talk about needing to have 20% down (in the original qualified mortgage rule proposal) has confused people, and they are not aware of options like private mortgage insurance and FHA.
AMATO: A lot of people don’t know they can do 97% financing conventional. They think they can only do it FHA. With the guidelines changing for FHA where most of the loans have the mortgage insurance premium on for life, (some) people are shying away from buying right now. They’ll turn CNN on while they are getting dressed, hear one thing, run out the door and that’s what they’ve put in their head. So education for them is key.
BORSELLINO: The association is working hard for its members and for the industry to keep them informed about what is going on.
AMATO: If there are consumers out there that need to know something, they can call the association. The association will channel them to one of the brokers within their area.
