Shhh... Frank & Brian Speak: Policing Ourselves

by 13 Apr 2010

It’s 11:30pm on Sunday the 21st of February 2010 and we’re sitting in the Sacramento Airport waiting to catch the redeye to Washington DC for the National Association of Mortgage Brokers 2010 Legislative & Regulatory Conference. Both of us were very curious as to what we would come away with from the conference however, our discussion at the airport mainly revolved around how silly the pairs figure skating costumes looked while we watched the Olympics from the bar. Brian says “they may as well make standup comedy an Olympic event”. He can be a little critical after a couple of whiskeys.

Having been to a conference or two in our careers, we had typical expectations. You know the good old “hang in there” “you’ll get through this” “only the strong survive and that’s YOU” kind of stuff. But NAMB managed to line up a cast of speakers that shed some very interesting light on real status of our beloved mortgage brokerage industry. In fact by the end of the conference we came away with some sobering realizations and in all honesty, a glimmer of hope.
The first thing that was very apparent was that NAMB has its problems. The bombshell that’s ripped through the industry has taken its toll on them for sure. They’re down to little more than 5,000 members and to make matters worse, there’s plenty of turmoil between NAMB and the state associations. To say that tensions were high in their delegate council meeting would be an understatement at the least. To give you an example, there were several people from the California Association of Mortgage Professionals (CAMP) present in the room, but they were not represented as part of the council. Recently CAMP and NAMB have had a falling out, which is unfortunate, since now is a time for the industry to be as united as possible. The leadership at NAMB does realize that they need to find a way to restructure and revitalize the association and it appeared to us that NAMB is fully aware that membership is critical to their effectiveness. Even FHA Commissioner David Stevens remarked that NAMB needs “more weight” behind them when it comes to getting things done in congress. This is pretty apparent considering that although they have been successful in getting some amendments into a few bills, NAMB hasn’t been able to stop or change any of the recent thorns in the side of the industry. It certainly doesn’t appear to be from a lack of effort, but would seem that it may be due to a “lack of weight” as David Stevens implied.
The next thing that became pretty clear was the fact that HVCC doesnt seem to be going anywhere. We attended an HVCC panel featuring Al Pollard, General Council for the Federal Housing Finance Agency (FHFA) who made it pretty clear to us that even though HVCC is due to sunset in November, the GSEs are content with the code. In addition, FHA Commissioner David Stevens was very direct in telling us that the days of the broker ordering an FHA appraisal are over. Now before you wind up quivering in the fetal position, it might help to look at things from a different angle.  As we all know, the only entity investing in our Mortgage Backed Securities Market right now is the Federal Reserve. This has kept rates artificially low, which has helped the housing market maintain a pulse. A huge part of our recovery is getting foreign and private investors to invest in MBS rather than the Feds. Stevens told us that there is pent up capital waiting to invest in MBS, but they simply dont have the confidence to do so. He said he literally has had China in his office grilling him on whats going on with FHA because they want to invest, but not until they feel comfortable. So if you think about it, HVCC and the new FHA appraisal ordering process, along with giving YSP to the consumer, NMLS and everything else that is causing us pain, are all items that the feds can point at showing foreign and private investors the efforts that have been made to ensure that quality is being restored to the MBS market, which in turn would inspire enough confidence for them to invest. Unfortunately it also means getting any of this stuff removed or changed, is going to be pretty darn tough at best.
On a positive note Stevens was clear that the mortgage brokerage industry was here to stay. He said that the mortgage broker is critical to the industry as they can mobilize to bring lending to a community much more quickly than a bank. He did however use a quote to describe our situation saying, “everybody wants to go to heaven, but nobody wants to die”. In other words, everyone is for fixing the problems via regulation as long as it doesn’t affect them. Seems like a pretty good way to describe what we’re going through. Okay, so where is the glimmer of hope we mentioned in the beginning? Well first of all even though NAMB has its issues, there were a lot of people there that truly care about the industry, who do want to unite and have a strong voice, and we believe that someway somehow they’ll make it happen. Next, we heard loud and clear what‘s needed in order to restore confidence not only to the MBS market, but confidence in the mortgage industry as a whole, and that would be “quality”. Well, what can we do as individuals to achieve that? Here are a couple of things. First, make sure that you do your very best on every single loan you originate. Don’t do anything that can be even remotely considered fraud in any way. Cross all your “T’s” and dot all your “I’s”. Deliver good clean files and work with your investors to satisfy any concerns. Another action we can take is to “report the bad guys.” Don’t just get pissed off when some predatory lender tells your borrower that they are going to get a 30 year fixed rate at 3.5%, report them. In order to restore confidence in our industry and to reestablish our reputations, WE need to take the bull by the horns and police ourselves. Let’s face it, there is only so much fraud enforcement out there. But if we all act as enforcement, we can get the bad guys put away a lot faster. And just think about what the media will say when good mortgage people are the ones busting the bad guys.
We at TBWS are very interested in busting the bad guys. We have a big enough voice right now to cause grave damage to a predatory lender very quickly, so if you see anything that needs to be addressed, report them to the authorities and send us an email. We’ll do our best to expose them and rid them from the industry. To report predatory lending contact:
The Federal Bureau of Investigation (FBI)
(202) 324-3000 – National FBI Financial Institution Fraud Unit.
So keep it clean out there and remember, change is up to you on every file you do. (TBWS) was founded in 2007 by a group of highly successful real estate and mortgage industry entrepreneurs. Born in the most battered market in the real estate and mortgage industrys history, was conceived after decades of observing how the most successful professionals always seem to work smarter not harder. Frank & Brian can be reached at



Should CFPB have more supervision over credit agencies?