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   ARTICLE   |   From Scotsman Guide Residential Edition   |   May 2009

You've Got to Fight for Your Right to Broker Loans

By joining national or state broker associations, you can make a positive difference in the industry

r_2009-05_VonTalge_spotIn the mortgage industry's boom years, many brokers likely felt that they could let the industry take its course. They were confident that whatever happened wouldn't affect them -- or would affect them positively.

After all, lenders were prominent, mortgage insurers were prevalent and news outlets had other issues on which to focus. In addition, for many brokers, business was booming.

Those times are gone, however, and there now seems to be an all-out assault on the mortgage-broker industry. It seems like everything imaginable is thrown at brokers, and so many are still helping clients achieve the goal of homeownership and doing things the right way.

Indeed, most of the industry's bad actors have likely gone out of business as the U.S. government, consumer-protection groups and consumers took action to rid the market of these unethical mortgage brokers. The onslaught continues, however, making even the most ethical, hardworking and relationship-based mortgage broker consider leaving the industry. But as competition dwindles, prices and costs likely will increase. This ultimately could hurt consumers, the economy and the mortgage industry as a whole.

Mortgage brokers are in a prime position to help protect the industry, consumers and their businesses, however. By joining industry associations such as the National Association of Mortgage Brokers (NAMB), other similar national associations and their state associations, brokers can learn more about the issues facing the industry and take steps to defend it against regulations that may harm the profession and consumers. There also are numerous business benefits brokers can see from joining these associations.

Key issues

The purpose of many of these broker associations is to see the industry grow, to hold mortgage professionals to the highest standards and to protect our profession. These groups stand up for brokers' livelihood by defending brokers' and consumers' interests actively, as well as by fighting laws that seemingly try to make our profession extinct.

Many challenges can affect brokers' businesses. Current issues include the following:

The Secure and Fair Enforcement (S.A.F.E.) Mortgage Licensing Act: NAMB, other similar national associations and state associations were major proponents of this act's passage and some of the language found therein. The federal law, enacted this past July, requires mortgage brokers to meet higher standards and implements continuing-education requirements, criminal-history and credit-background checks, financial-responsibility standards, and an overall flight-to-quality standard for the industry. These associations now are involved in helping the federal and state legislatures implement the act's requirements.

One part of the act -- the Nationwide Mortgage Licensing System (NMLS) -- likely will soon be a household name among mortgage professionals, if it's not already. The S.A.F.E. Mortgage Licensing Act mandates that all mortgage brokers nationwide be registered, licensed or both through the NMLS. Further, the NMLS will issue a unique-identifier number for registered mortgage professionals, which will help track education, loan performance, any fraud-related investigations and compliance. Brokers who weren't required to be registered or licensed previously must be by July 2010.

The Home Valuation Code of Conduct (HVCC): The HVCC, which as of press time is set to take effect on May 1, will prohibit mortgage brokers and other independent loan originators from ordering property appraisals; rather, lenders must order appraisals directly. Broker-industry associations and others, however, are fighting to overturn the HVCC so brokers' businesses, appraisers' livelihoods and ultimately, consumer costs will not be thwarted. This past February, NAMB, for instance, filed a lawsuit against the code's passage to protect brokers' ability to order independent appraisals, as well as consumers' right to low-cost appraisal choices. NAMB withdrew the suit in April but still opposes the code.

Adverse-market fees: This past fall, Fannie Mae and Freddie Mac, former government-sponsored enterprises now under conservatorship, implemented adverse-market fees. Industry associations believe these are increasing consumer costs because some lenders add the fees to borrowers' rates. National and state broker associations are lobbying for the removal of these fees -- or risk-based-pricing standards. These fees have dried up investor-financing programs and penalize individuals with credit scores less than 740 by charging them higher rates.

House Resolution No. 1728: Better known as the Mortgage Reform and Anti-Predatory Lending Act, this bill originated in the House and had entered House Committee on Financial Services consideration as of press time (latest information: bit.ly/ofGww). As originally written, the bill detailed proper disclosure, yield spread, appraisals, liabilities and many other items that will affect your business and how it's conducted. It is more evidence that your voice must be heard and that state and national organizations need your help.

What you can do

The mortgage industry, state and national associations, and congressional representatives need brokers' help, input and expertise. Strength in numbers has an impact at the local and federal levels.

Individual brokers are encouraged to join and contribute their knowledge, time and expertise to an industry that is starving for participation. You can join your state organization, NAMB or similar national associations and become a member of a committee. If that is not your cup of tea, you can contribute money to help fight the battle that our industry is facing.

As a member of these associations, you can help with the lobby against laws or pending legislation that may affect your future. These associations need every broker's help to keep our industry -- and, in turn, your liveli- hood -- alive.

Further, the benefits of joining these associations often outweigh the monetary costs. For instance, you could receive discounts on continuing-education classes you'll need to comply with the S.A.F.E. Mortgage Licensing Act. You'll also gain insight into new, pending and tabled legislation.

In addition, you can meet and network with some of the industry's most-prominent members and leaders. And you'll have the chance to obtain various certifications; NAMB, for instance, offers certifications such as general mortgage associate, certified residential mortgage specialist and certified mortgage consultant.

Making the effort to get one of these designations is a great opportunity to distinguish yourself from your competition. Achieving certification shows that you have knowledge, expertise, training and education beyond what your competitors likely have. Further, these designations will position you as an elite mortgage professional, which could translate into deeper relationships and heightened business.


 


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