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Originators call for level playing field after CFPB vote

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Mortgage Professional America | 17 Jul 2013, 06:00 AM Agree 0
The Senate has confirmed Richard Cordray as CFPB director, while the industry pleads for a 'level playing field'
  • MA broker | | 17 Jul 2013, 09:19 AM Agree 0
    You know what happens to a plan based on 'hope'? You get squashed.
  • Norma Minnis, Texas Mortgage Broker | | 17 Jul 2013, 09:25 AM Agree 0
    For independent small business mortgage brokers...the struggle continues. It would help if I felt we had FRIENDS in high places in CFPB.
  • Ralph LoVuolo Sr. | | 17 Jul 2013, 09:28 AM Agree 0
    What is a level playing field supposed to look like? I think we all would LIKE it, but how is it possible? But seriously, what does a level playing field look like?

  • Eric M | | 17 Jul 2013, 09:31 AM Agree 0
    I see nothing that will make me feel "Hopeful" that there will ever be a level playing field between banks and brokers again". This is just the final straw to break the camels back with the CFPB moving forward to put brokers and small businesses out of business. Make no mistake about it, Obama has proven without a doubt he can do whatever he wants to do and know one can or will stop him, this just helps to prove it. History in the making...
  • Mary | | 17 Jul 2013, 09:42 AM Agree 0
    MA broker; I picked up on that as well.. 'hope'- just a desire...brokers are the arms and eyes of the Banks and Bankers, nothing more. We vow and take what ever compensation is dished at us, as if we can survive this additional cut in pay. Everyone knows the Banks have grown even bigger after the Dodd-Frank was set in motion. Rules seem no to apply here.
  • Larry Lechel | | 17 Jul 2013, 10:03 AM Agree 0
    Everyone's comments are right on point! Brokers will be crushed and the banks will get bigger. Even the correspondent lenders will make profits for most banks as many of them get their Lines from them. It's sad that so many hard working small business owners will be put out of business. We have survived despite the differences in regulation, fee disclosure, no SRP's, etc...
  • Anne E James | | 17 Jul 2013, 11:09 AM Agree 0
    Is this a 'done deal?' My wholesale rep is telling me 'it will be worked out.'
  • Larry Lechel | | 17 Jul 2013, 11:20 AM Agree 0
    It's not a done deal yet as there are two pieces of legislation out there although they have not been adopted. Any wholesale A.E. that is representing a position in the matter is not informed as we are on pace for 300bps fee cap to come into play in January and most closing costs factor into the 300bps. This will kill the broker and sad to say I am one of those! :(
  • Debbie | | 17 Jul 2013, 12:04 PM Agree 0
    Has anyone considered the impact the 3% rule will have on consumers ability to access mortgages in the Southern states, Louisiana, Mississippi etc. In my market the average sales price is 150K, do the math. We are not California or New York. The brokers will be forced out because we cannot make enough money to handle the overwelming CFPB regs and the number of mortgages needed to pay for all the additional operating expense. Many of our 1st timehome buyers are 1st generation homeowners, they need more than a order taker, banker to walk them thru the process. The brokers are important to the health of the Real Estate Markets. Who is going to protect the consumer from CFPB?
  • Paul | | 17 Jul 2013, 12:18 PM Agree 0
    Complaining is one way to ensure mortgage brokers go out of business. We know the big banks have the money and power to effect changes. I look at what happened when BofA was to implement the fees for the use of atm cards, and thousands of signatures against this plan foiled it with bad publicity. Let's look for solutions. We have the power to band together. As a group we will be heard, as individuals, we will be out of business.
  • Alette, CA Mortgage Broker | | 17 Jul 2013, 12:48 PM Agree 0
    I never dreamed Obama would support destroying small business people that have establisted business for 30 years. We provide an alternative to banks and thus stop price fixing and all kinds of monopolistic practices. Not to mention offer the consumer licensed experienced expertise where you rarely run into that at the banks. This benefits the consumer how? The CFPB and this administration has put the face of mortgage brokers as responsible for all of the credit crunch. This is blatantly wrong.
    No one is standing up for our careers. This is not what I thought the American way was all about.
  • DT, Mortgage Broker | | 17 Jul 2013, 01:59 PM Agree 0
    God help us all. More government bureaucrats who know nothing about the mortgage business running the show.
  • Alette, CA Mortgage Broker | | 17 Jul 2013, 02:53 PM Agree 0
    The 3% fee cap is a done deal come January, 2014. Once that happens mortgage brokers can basically give up their career because no one could afford all the regulations that are required and to work for that small a fee.
    I think that is their intent. Despite all the hell we have already been through this will be the final nail in the coffin.
  • Debbie | | 17 Jul 2013, 03:19 PM Agree 0
    I made 15 years as a Broker in April, 35 years as an industry professional. I think we must get the truth out to the American public because if we fail to be Brokers, they will be the ones that ultimately are hurt, Rich and Poor alike. If the starter homes are not purchased then the move up buyers cannot purchase and so on.... Where is the Realtor support.......... ? Put the Broker out of business! Who do we give credit to for such a foolish move???This is silly...The banks cannot handle the volume that is why the Brokers exist. We are the marketing and mortgage specialist, we do the work. This 3% rule is OK but to single the broker out to be treated unfairly is wrong and unjustified. I wonder if the consumer avocates really understand the impact this will have on the very people they claim to represent.
  • Mary | | 17 Jul 2013, 06:15 PM Agree 0
    Seriously contemplating on not renewing license; saving on those fees; stop originating all together and move to a different line of work. This is in protest to the excessive regulations put in motion against the broker. Do I have the courage? I have a passion for our Industry, but I feel this is unfair competition. Does anyone else have the courage?
  • MI Hard Money Lender | | 18 Jul 2013, 10:54 AM Agree 0
    The 3% rule will kill all of us except the big lenders and banks, no surprise when they're all in bed with law makers. And what other industry does the government cap their profits? Been in this business for over 25 years and this will be it for me, not renewing my license. Good luck to you all...
  • Jana | | 18 Jul 2013, 02:00 PM Agree 0
    Brokers, do not give up. Keep fighting for what you believe is right and make your voices be heard as one. The Lenders you broker to will find a way to structure your mortgages. This is their 'business', too. Unless you charge more 3%, there are ways to skin this cat.
  • Alette, CA Mortgage Broker | | 18 Jul 2013, 02:22 PM Agree 0
    The 3% is a cap for all fees not just the mortgage broker. The fees that they count don't allow you to even make 1%.
    The rule is final. We will not be allowed to make enough to even pay our overhead for what is required now.
  • Frank Demarais | | 19 Jul 2013, 06:15 AM Agree 0
    As a nonprofit mortgage broker, a Neighborworks Organization, we see a vacuum of lending in lower income neighborhoods in Washington DC. We have shut down broker activity due to bank wholesale shut downs, and other brokers, coorespondent lenders and retail originators don't want to work on $150,000 mortgages in a market with $500,000 median sales prices, abandoning these markets. The impact of the 3% rule and the other compensation caps will eliminate the limited LO and processing resources available to these markets, and damage will take years to reverse if changes are ever adopted. CFPB and other regulators need to act quickly to avoid further decimation of homeownership in lower income areas - where ownership monthly payments is 20% cheaper than renting, but speculators and slumlords will dominate again like they used to in those areas.
  • Debbie | | 19 Jul 2013, 10:40 AM Agree 0
    We need to fight! Today I decided to launch a grass roots effort to get the word out to the broker community in Baton Rouge LA. At lunch I contacted 10 Brokers as a start. None knew anything about CFPB, 3% rule or the CFPB audits. In addition, I am talking to Realtors about a world without their favorite Mortgage Broker. So far, no one I spoke has heard anything and all believe CFPBs actions are wrong and unfair. I am planning on having all my clients for the last 15 years comment on the importance of the mortgage broker. We need to fight before we let anyone steal our business and our profession from us. If we do not then do not be surprised if they come after our 401ks. This was to be my retirement.
  • Traci | | 19 Jul 2013, 11:46 AM Agree 0
    Every broker remaining in business today have constantly and wrongfully been looked at as the scourge of the housing collapse. As you know independent mortgage brokers like ourselves are “licensed” not simply “registered” as other originators are. If Congress wants to “level the playing field” then they need to get an accurate level. Because having independent brokers take 20 hours of pre-licensing courses; 8 hours of CE every year thereafter; finger printed with an FBI background check; credit reports reviewed; pass a state exam; and pass a national exam; plus undergo routine audits from our State Securities Departments is not on the same level as simply registering your name and employment history in the NMLS. Granted there are some LOs who do more, but the simple fact is they are not required to, whereas we are. But the underdogs/brokers have as the Marines are proud to say Adapted and Overcome!! We are still here and yes, there are still bad originators in business today. Whether they are independents, work for a mortgage broker, a mortgage banker, or a federally insured bank; just as there are bad folks in every line of work.

    As brokers we meet one on one with each of our clients (at least I know many of us do), we work long hours, and meet our clients after the normal 8-5 business hours of most institutions. Many of us small business owners are like realtors, if mortgages don’t close there is no other income stream and no one gets paid. We are invested in our clients getting the best mortgage program at the best interest rates; having as smooth a mortgage process as possible; and becoming a financially sound home owner. Those who cannot qualify are educated to improve their financial situation to become a home owner. We don’t simply deny a client and send them down the road to figure out for themselves why they couldn’t qualify.

    Those sub-prime mortgages of the past were created by Wall Street and the large lenders. Brokers didn’t submit NINA or NODOC mortgages and hope some investors would create a channel for them. They put the programs out there and then solicited those types of mortgages. Yes fraud happened and still continues to happen. Appraisal fraud has increased despite the HVCC and AIR, even though brokers don’t have any control of the appraisal process. Crooks will continue to find ways to commit fraud – sadly. Just look at how many CEOs are being charged with misappropriation of funds and the TBTF are still being fined for their past and present actions. Corruption and greed are still rampant in our society – it’s a sad state of affairs. But there are those of us fighting hard to let people know there are still honest, ethical people with integrity fighting the fight and working hard every day to help their American Dream of Homeownership become a reality.

    We’ve managed to meet every challenge thrown at us. But like so many small business owners – when is the government going to back off and let us do our jobs and compete with each other instead of picking and chooses who it wants to see succeed??!!
  • Greg C | | 22 Jul 2013, 08:41 AM Agree 0
    The mini correspondent channel is a viable option for the broker and should be explored as a strategy. The investor underwrites the credit package and you have a 3rd party compliance firm handle the closing. You close in your own name and the YSP is not disclosed. There are risk involved yes, but you are talling about the survival of your business.
  • Larry Lechel | | 22 Jul 2013, 10:12 AM Agree 0
    Commenting on "Mini-Correspondent Channel" this arena is fraught with risk in addition you are limited to placing the file with the investor that sponsors you. Not a viable solution in my opinion.
  • Greg C | | 22 Jul 2013, 01:16 PM Agree 0
    Well I would say fraught is a bit strong. But it is a viable solution or the banks would not have the mini corr channel. Reading this blog your other options are:
    1) Hope the 3% rule does not take effect
    2) Quit the business
    3) Work for free
    You deliver the mortgage to the bank that underwrites it, your risk is compliance and you can outsource that. You can correspond with more than one bank. You can also keep your broker relationships.
  • Being Human | | 24 Jul 2013, 04:16 PM Agree 0
    The CFPB will realize they made a mistake when all Brokers, Lenders and Banks will not be able to afford to process any mortgages under 150,000. if most mortgages take 10 hours to process and close, 15 for FHA and VA. And there is a 100 per hour cost on most mortgages. Plus regulatory fees and audit costs. Not including what the mortgage originator is getting paid. Smaller mortgages, just won't get closed.
  • Alette | | 24 Jul 2013, 04:43 PM Agree 0
    But if you don't take smaller mortgages under $150,000 then they say you're discriminating.
  • Being Human | | 24 Jul 2013, 09:33 PM Agree 0
    If you post on your website. No mortgages under a certain amount. and put the rule to everyone. then you aren't discriminating. Since the rule is to everyone. In Texas, I have to post no cashouts under 250,000 due to the 3% cash out rules. Since the Texas title companies take close to 2%. I can't aford to have a 3% cap. So I just don't do cashouts that are less than 250,000. I have had it on my website for 7 years. And have never been called on it. Since it is for everyone. None of the auditers have said anything.
  • Tim K | | 26 Jul 2013, 10:04 AM Agree 0
    The CFPB doesn't care about the brokers. They want us gone. In one of their comment papers they specifically said they knew this would be especially harsh to the broker community but still went ahead with it.

    Read the writing on the wall - they are doing this on purpose, they know it is going to kill us.
  • Brian Gordon | | 27 Jul 2013, 07:18 AM Agree 0
    You are in the mortgage business the hours are what they are, the difference between a bank originator and a broker like yourself is minimal. Taking the NMLS state exam or the National test doesn't mean you are more or less capable. You fail to recognize that bank lo's take compliance training which is mandatory. There should be one exam for everyone that will end the constant bickering that bank lo's are treated more fairly.
  • Bayview Mortgage Inc | | 28 Jul 2013, 03:05 PM Agree 0
    We have all worked for a bank once in our life time. Everyone knows their compliance is the equivalent of an open book test with the answer code in-front of you to cheat on. The NMLS school is only 20 hours. the banks should require their employees to take the course and test. I for one. Wouldn't want an employee that couldn't pass a 20 hour course and the test that goes with it. This just shows how low all the banks over all standards are. That their employees can't even pass a test the brokers have to take. The Banks make their insurance employees take the standard insurance test that all agents have to take. They should do the same with their originators.
  • Debbie | | 29 Jul 2013, 07:47 AM Agree 0
    My market has an average sale price of 150,000, so where do we make up the loss revenue? The South and Mid West will not be able to operate on such slim margins.
  • Joseph Morizio | | 09 Aug 2013, 12:43 PM Agree 0
    My understanding is that the 3% cap rule isn't even out of committee yet, and it has to go through the House, and Senate, then it ends up on the President's desk to sign. My question is, can the cfpb just make a final rule, and circumvent the process? Anyone know?
  • Alette | | 11 Aug 2013, 03:39 PM Agree 0
    It's a CFPB rule. It's been finalized. It never was in "committee" and it doesn't have to be voted on. They have finalized the rule. They have also come out and said that they know it will unfairly affect brokers and that they're okay with it.

    First appraisers have their careers decimated by the government and now it seems clear they've decided brokers must go.
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