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Mortgage technology & beyond: Mortgage Coach Community

National Mortgage Professional
Oct 17, 2008

The rise and fall of the brokerBrian Kossmortgage brokering, small entrepreneurs, real estate, refinance It is frequently said in America that we have a collective short memory when it comes to history. It is said that we will jump on the bandwagon of whatever the newly appointed star or savior is and ruthlessly forsake yesterday's star or savior with great passion. You see us do it with stars in sports and entertainment. You see us do it with successful businesses and their CEOs who were anointed into superstar status. We love to see people become a success. It validates for us that it can happen to anyone, maybe even us. But the tides always turn, and we are compelled to tear those down whom we have heralded. Watching Roger Clemens self-implode—as clearly the most dominant pitcher of an era, maybe one of the greatest of all time and a shoe-in for the Hall of Fame—reminds me a bit of the press and public tearing down the giants of our industry. Stock brokers in the late '90s rode a path of fame and fortune, and we loved them, only to see the industry shredded after the bust. And so is the rise and decline of the famed Mortgage Broker—once a hero and friend, the industry now shares the spotlight of the fallen. But as with history, when things settle, the craft will return to its day of favor and respect. Mortgage brokering is an industry of small entrepreneurs who are helping friends and family live the American dream of owning real estate. For decades, brokers have filled the voids left by banks by bringing the money to the people. In the past, if a person wanted to buy a home, they went to a bank during the banker's hours and sat in a lobby hoping to see the vice president of lending. If they weren't there, they were sent away and told to come back after making an appointment, or they were told to come back after they found a house so the bank could work with real figures. The potential buyer then would spend months looking at homes, fall in love with a home, make an offer, get it accepted and then proceed to the bank with much excitement. The banker would then tell that person they couldn't afford their home due to their credit history, tax returns or lack of downpayment. Brokers became the advocate for these buyers by opening up the closed society of banking to the public. Brokers met with the buyers after banker's hours. They talked in common vernacular, explaining how to work the system to fit their situation. Brokers had the brilliant idea to figure out how much buyers could afford to pay before they would go out looking for a home. Brokers decided to save everyone the time and embarrassment and review credit reports, income and assets before a real estate agent or builder wasted any time with a potential customer. This proactive, deal-making attitude endeared local brokers to their local real estate agent/builder partners. Brokers brought a value to all; the customer had an advocate putting them into the home of their dreams in a way a banker couldn't, and in the end, the banker/investor got an asset for their books with no hassle. As the real estate market boomed, our membership soared. Many new folks came into the industry without the understanding of the broker's role of advocate and the cruel cyclicality of our business. When the refinance booms hit, the growth of brokers and volumes of loans were exponential. Everyone knew a few Mortgage Brokers in their personal circle, and they were amazed at their success. Too many brokers were living large off their new found success in an ostentatious way that offended the common man. The expensive sports cars, bling, trophy homes, loud dinners, big vacations and strip club outings all found their way into the papers and cocktail party circuit. So when sub-prime began to crack, the rabid public had their opening to begin tearing. One of the great shames in this "mortgage meltdown" is the bringing down of Angelo Mozillo. Yes, I said it; he has become the poster child for the excesses of our industry. Why? Maybe it was because of his constant presence in the media over the last 20 years? Sure, he had the limelight, but he deserved it. He built the strongest, independent mortgage banker that could take on the banks. Plus, he had the chutzpah to say what we were all thinking. As sales people, we admired that audacity. Angelo called the bankers on the carpet for not doing enough to help the underserved enjoy the privilege of homeownership. He stood in front of the American Bankers Associations Community of Bankers Conference and said: "We have some of the greatest 17th century minds in this room." Needless to say, many bankers were happy to see him go down and didn't lend a hand when Countrywide (CW) was bleeding. Angelo was competing with these same bankers in the early '90s, by doing all the deals the bankers were too lazy to do. CW was doing primarily Federal Housing Administration, U.S. Department of Veterans Affairs and state bond loans when there was little Wall Street creativity because the banks wouldn't touch them. The banks hated dealing with the mind-numbing paperwork of government loans, but these programs existed to help the common man get into a home, and CW was their advocate to navigate the process. During these years, Angelo wasn't drawing down the big income. He was building equity in his company that he could cash in later. Like Clemens, earning a total of $1.1 million in his first three seasons in baseball (years when he set records and earned Most Valuable Player honors), Angelo reinvested in his business and kept his nose to the grindstone. Now, we don't remember a butcher's son from the Bronx who started in the mortgage business at 17 and grew the most successful lender of all time. A company that grew so large that it was able to grow a top 20 bank from scratch. A man who was recognized for these achievements by the Horatio Alger Award. We remember the perfect tan, the sharp suits and the country club memberships, overlaid with a swagger and confidence bordering on arrogance. It is a shame to only see Angelo and CW as poster children for what went wrong when they did so much right, especially for our industry. Before our memory fades, we need to see how a scrappy kid from the Bronx assembled other scrappy, hungry kids from state colleges and built a great company doing all the things that those blessed with better educations and family bank accounts didn't want to do. As the banks now become filled with confidence, the solid brokers remaining need to remember Angelo's lessons and find those areas where banks' arrogance prevents them from succeeding and fill that need. Brian Koss is the executive vice president of the Mortgage Network in Westford, Mass. He may be reached at (978) 399-1300 or e-mail bkoss@mortgagenetwork.com.
Published
Oct 17, 2008
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