My colleague Brad Finkelstein and I held a roundtable discussion with the board of the New York Association of Mortgage Brokers at their annual meeting in Melville, N.Y. Participating were Bonnie Nachamie, treasurer; Mary Ann Pino, secretary; Rick Wilson, vice president; Robert Duquette, president; Richard Biondi, immediate past president; Lou Borsellino, lower Hudson Valley regional president; Susan Kreyer, president-elect; Gene Tricozzi, past president; and John Commons, past president.MARK: The years 2008 and 2009 certainly haven't been great years for the mortgage broker industry. On the national level and in New York, what do you think next year will look like?
ROBERT: There is no doubt that the industry has been hard hit the last few years in every area. Rather than dwelling on all of the issues we've had to face, we are prepared to look at the future and how our trade association and our industry and our businesses are going to be relevant and continue to offer the services we have offered the consumer. I think it's a bright future, we still have challenges ahead of us but we certainly have prepared for them.
MARK: Will originations be stable, improved or down from this year?
RICHARD: In terms of mortgage brokers, we were at over (a market share of) 60% (at the height of the boom). Last year we were at 20%. I venture a guess we are going to be somewhere in the 20% to 25% range next year.
ROBERT: I think we have seen the bottom, not only in the economy but also in our industry. I think a lot of the lenders are starting to relax some of their rules and procedures. We've gone through a big transition. With the education component and the licensing of mortgage loan officers, the mortgage brokerage industry is going to become more and more important. I think people are going to start understanding and realizing the value that we bring to the table, and the professionalism that is our industry and rely on mortgage brokers more and more as a source of professional advice and assistance in obtaining mortgages.
MARK: NYAMB was one of the early proponents of professional education. Do you think it has paid off?
GENE: It's taken the banking department a while to get on board with everybody else, but I think going forward it is going to be a good thing. There is such a backlog (of broker licensing applications) that has to be worked through that we're just going with the flow.
BRAD: Did New York having its own educational requirements prepare the industry for the changes made by the SAFE Act?
GENE: I think that it has, but I think also what has happened was that a lot of the originators have come to the conclusion that there was so much turmoil that maybe they should hold off and see what courses were going to be acceptable and make sure the courses we did take were accepted and would give us credit towards the education requirements. It started off at 18 hours (under the original New York law) and now it is 20.
BONNIE: I think part of the mission of the association and what we strive to deliver to our members is the ability for our members to function more effectively and more efficiently in the current marketplace. By providing education, not only on regulatory and statutory matters but also on how the business functions, we are helping our members to become stronger more robust businesses and ensure their future. We are capturing a larger percentage of brokers as members, hopefully in part for the value we can add to help their business and because we can provide them with the education requirements and the people left standing in this industry are serious about their futures and their businesses.
SUSAN: Another aspect why membership is growing is that the association's board has a talent pool that helps them cope with the constant changes that face our industry. They are using us more as a resource to keep themselves afloat.
BRAD: Have you been able to keep your individual businesses afloat?
GENE: With a lot of difficulty!
ROBERT: I think that most of the businesses have had to adjust in size. Many have reduced their expenses in a number of ways including relocating their businesses. Just like any business that is going through in volume and demand, you have to change with the economics. Going back to education, NYAMB was proposing mortgage loan officer registration and education as early as the mid-'90s. The banking department told us they weren't prepared to support it back then but because of the all of the changes that were happening in the mortgage industry, they were forced by legislation to do it. We thought it was great and we were prepared early on with education.
LOU: As far as keeping your business afloat, no one out there has more experience than your local small business or small broker. We have a client base that has a lot of allegiance to us. They've gotten calls from major lenders but they come back to my firm because of the fact that I work with the community and I deal with people and you have a relationship with them. That is what is sustaining my business right now. (Several in the room voice agreement.)
GENE: And the interesting part of that is even though they have been solicited by other lenders, they still call us back to run it by us, to make sure it is the best thing for them.
ROBERT: Many times people get a call or a letter in the mail or see an ad on TV, they always call and ask Lou or Bob or Gene or whoever it is, "Look, I got this call. Can I save money? Tell me what do I have to do?" Even people who have followed up on those inquiries and found that the cost or the rates wasn't (what they expected) and go through the whole process, they'll come back and say, "Gee, I should have thought of you but I got this good-faith estimate in the mail and I was told the rate was going to be low and there was going to be no points but when I look at it, the deal was different." And they come back to you and say, "Will you help me?" It is relationship building.
SUSAN: It is rapport.
ROBERT: And operating your business professionally and ethically.
LOU: And loving what you are doing.
MARK: The Federal Housing Administration is removing the mini-Eagle requirement for mortgage brokers. What are the ramifications for that for your businesses?
GENE: The concern is that if they are going to remove the responsibilities from the broker and put that on the bankers' side in terms of ordering FHA case numbers, ordering appraisals, are we going to be left with not being able to sign 1003s or are they going to allow the broker to operate as a mini-Eagle? The mini-Eagle would take the mortgage application, process the loan and send the completed file to the lender for approval. So the question is, are we just going to be filling out 1003s for the bank and forwarding it to them?
BONNIE: More than that, is the benefit to the consumer going to pan out in the sense that a mortgage broker who has made an investment in a community to provide service to the members of that community, will no longer have that control and be able to perform the service and guidance to the consumer? If that throws it over to the banks to make those processing and all the associated services, are the consumers going to get the service and guidance they've come to relay on from the local mortgage broker?
GENE: Part of the concern also is, that as a mini-Eagle - I've been mini-Eagled for 11 years now, I've had to supply audited financial statements every year to continue to be approved with them as well as having a minimum net worth to be met - for us to be tossed aside. We played by the rules, we jumped through all the hoops they put in front of us and for now for them to say "thanks a lot, see you later." That is a concern. We know the process, we know what to do. Now if a broker comes in that has never done an FHA loan, and the lender is going to be responsible for that broker's origination and processing, I think (with) the liability, I think the lenders may say, "We're a little bit concerned about that. We have originators out their originating FHA programs that never did it before and we're liable for them."
ROBERT: On the other side of the coin, what I would say is the bright side of the coin, as a mortgage broker who is not a mini-Eagle, I originate VA and I am approved by VA to do that, I originate USDA-guaranteed loans, SONYMA-guaranteed loans. Just because I've chosen not to participate in what we all agree is a very expensive and burdensome (program) with FHA, I don't think that is fair. What the FHA old rules did, they limited competition, they limited the players who could originate and help consumers understand the FHA program. If they open it up and they do it on the same basis as VA and some of the other programs that are government-guaranteed out there, it should be a win-win situation for the consumer.
SUSAN: I don't think anybody would disagree with that, as long as those of us that are mini-Eagled don't lose the current benefits that we have. From the association perspective, it would be a wonderful thing for all the brokers to be able to originate FHA mortgages, provided we didn't lose the ability to stay involved with the loan through the entire origination process through closing. Because at that point, you are limiting our ability to provide the service we have been providing all of this time. And that is where (NAMB president) Jim (Pair's) statement, "the devil is in the details," means, "Let's see what the program is."
JOHN: It is a double-edged sword. It is great to see the market open up to more product for the mortgage brokers, who in this environment, are starving for product. With the new loan limits, it's opened up to new areas, which hadn't heard of FHA before. They held the mini-Eagles' hands to the fire. They made them responsible and jump through hoops to be able to do this kind of business. If you are going to open it up to everybody, there better be some serious oversight. If there is some significant oversight, that we don't make the same mistakes we've made in the past, I think that it is a wonderful thing.
ROBERT: We should tread lightly as John said, and make sure all of those details are covered. But I think it is a wonderful thing for FHA to come into the same realm as the other government products.
