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An Interview with Vanguard National Mortgage and Title CEO Michael Knight

May 31, 2004

At the Halfway Point: NAMB President Glances Back and Looks ForwardMichael SimonArmand Cosenza, National Association of Mortgage Brokers, HUD Proposed Rule, Sometime after National Association of Mortgage Brokers President Armand Cosenza Jr. iterated the phrase level playing field for the first time during our interview at the Long Island Marriott Hotel in Uniondale, N.Y., a woman who had been sitting nearby politely interrupted our conversation. As the only area in the foyer where smoking was permitted, she wanted to know if we could help her find an ashtray. Apart from the three of us, the hotel was particularly empty, as we sat at a yet-to-officially-open bar-me with a tape recorder and steno book; him with a few scribbled notes for the afternoon's conference call; and the woman with an unlit cigarette. "I'm usually pretty good at these things," he said as he scoped the area for an ashtray, even climbing the bar at one point for a closer look. "I guess not today." It's hard to believe that Armand wouldn't be good at finding anything, even an ashtray. In his six-month term, he has had to endure unyielding legislative pressure, reaching back as far as July, just one month after he had taken office. It was then, when the U.S. Department of Housing and Urban Development issued its Proposed Rule regarding the Real Estate Settlement Procedures Act, something that Armand and NAMB had been supporting and lobbying for years, under the moniker of comprehensive mortgage reform. However, the problem doesn't necessarily lie with the effort, but rather in the execution, returning to the same level playing field that he had begun speaking about before being interrupted for an ashtray. "HUD knew that they didn't have the authority to regulate secondary market transactions, so all Mortgage Bankers were exempt. That left the other half of the industryus. Mortgage Brokers originate more than half of all the loans in America, and they try to propose this most onerous rule on us ... Why would you legislate 99.5 percent of the people for a half-percent of the problem?" Under Cosenza's term, the 99.5 percent of non-predatory brokers in America have united in groundbreaking numbers. At last count, nearly 50,000 letters had been received by HUD on NAMB's behalf, and although some states seem to have issue with his "multifaceted governmental plan of action," the membership has largely banded together in record numbers, thanks to Armand's steady hand. "There's so much fear. They're so afraid that if [the current Proposed Rule] does come out, the playing field will be too uneven to work out. At least 40-percent of brokers out there cannot get a warehouse line in order to be exempt. If the lender-paid credit to the borrower' re-characterization of yield spread premiums is implemented, it'll be a trial attorney's dream. That's the problemthe fear of the unknown." But for the time being, what is known at NAMB, is that it's business as usual. As part of Armand's 2003 plan of action, NAMB is planning to "categorize and departmentalize all of these different agendas which have taken a back seat since the Rule was announcedwe're going to have people working on the Model State Statute Initiative; we're going to have people working on predatory lending issues. You need a license to be a manicurist, yet we still have states without licensing requirements. It's absurd." Licensing and continuing education aside, NAMB has quickly become a force to be reckoned with, at a time when such a force is desperately needed. "There's no doubt that we have taken giant steps in the last three years. HUD called us to meet with them; we have finally arrived at a different level, but it's an uphill battle ..." As Armand reaches for his notes, his cell phone rings. As if on cue, it's Ohio Association of Mortgage Brokers Lobbyist Rick Baird on the other end, whom Armand promises to call back shortly. "It never stops," says Cosenza. "Take our Web site [] for example. Here's a perfect medium for information, and when I took over, it was disgraceful. The headline was still, Joseph Falk Testifies Before Senate Banking Committee' from six months prior. It's a benefit of membership, and there were new members who weren't even listed in our directory. We changed all that. Now, the biggest complaints I receive are from non-members, asking why they're closed out from accessing the site." However, despite its strides, NAMB still has to confront the issues at hand. If not handled properly, no amount of online information will be able to save them. "There are those at HUD who believe that we add no value to the system, that all we do is enter the borrower's information, press a button, get the answers, and charge a couple points. It's a case of the squeaking wheel getting the grease. It's all they hear, and I think Secretary Mel Martinez really believes that he can make a difference. He has the right intentions, but the Rule was written without industry input ... After all, we're the ones getting paid to make these accurate, thoughtful and proactive decisions. "My dream is to stand alongside HUD, once [the Rule] is finalized, and say, It's a good, fair product for the industry that we can live with.' Then, we can go back to the real problem of predatory lending." And with that, Armand Cosenza Jr., who was just hours away from boarding his 115th flight of 2002, may have been filled of ideas and hope, but for now, was off to rally his troops and prepare for the second half of what has already been a challenging term.
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