In last month’s column, I discussed the need for a change in perception. This month, I’d like to talk about the need for a change in perspective … a broker’s perspective, to be precise. The passage of the Dodd-Frank Act has many bemoaning the limits on compensation for mortgage originators, the expansion of “creditor” under the Truth-in-Lending Act (TILA) to include brokers, the increased penalties for non-compliance with the additions to TILA and so on. The final development and implementation of the regulations authorized by the passage of the Dodd-Frank Act leave a lot of unanswered questions, yet there is no doubt that drastic changes are imminent. Once again, the industry is fervently predicting gloom and doom for the future of the broker channel.
This begs the question, “Where was this passion when financial reform was first introduced?” Brokers have had ample time to voice their opinion to sway legislators to adopt their line of reasoning. Now, it’s too late to do anything about Dodd-Frank, and dwelling on that which cannot be changed is simply an exercise in futility. What I suspect is, at the heart of this belated panic, the realization that being a broker today requires much more effort to achieve profits that are not even close to what top brokers were pulling down at the height of the mortgage bubble.
Brokers, ye need not fear. There’s still money to be made in the broker game, but there are lots of hungry new players eager to stake their claim. The astronomical profits of days gone by can no longer be the measure by which brokers gauge success, and those veterans who are willing to stay in the game have to be prepared to work even harder for their money. Like the rest of the country, brokers must redefine what it means to be financially successful.
It’s tempting to look back longingly at a simpler time, but reminiscing on what once was will not make the current situation look or feel any better. However, if the past can teach us anything, it is that there is strength in numbers. The National Association of Mortgage Brokers (NAMB) has lost a lot of its membership due to the misplaced media characterizations that the mortgage broker was the culprit behind the mortgage mess with the resulting economic downturn. Now, NAMB struggles with the rest of us to survive, however, there could be no better time for the surviving and thriving brokers to support NAMB and band together once again for the greater good of all.
For man to survive, political theologian Thomas Hobbes says each must give up his or her right to self-determination and enter into a covenant or social contract for governance in order to protect the rights of all. It’s time for brokers to take a page from Hobbes and re-enter into a contract with each other for the preservation of the channel as a whole. Without any sort of governing body, brokers have no hope whatsoever of fighting reactionary legislation that could threaten the very existence of this vibrant and much-needed origination channel. While the Mortgage Bankers Association (MBA) is certainly active in Washington, D.C. on behalf of the industry, its membership is too diverse to be a truly effective voice for brokers alone.
If brokers ever hope to regain their status as Trusted Mortgage Professionals and protect what moneymaking ability they have left, they must be willing to change their perspective on what it means to be a broker in today’s economy and work both harder and smarter to achieve success for themselves individually and the industry at-large.
Greg Schroeder is president of Comergence Compliance Monitoring. To learn more about how the Comergence Compliance Trusted Mortgage Professional program can help, call (714) 495-4720.