On the night of Dec. 9, 2012, Don Fader was not at the NAMB National meeting at the MGM Grand in Las Vegas with other successful members of what he affectionately calls “the varsity” of the independent mortgage professional channel. He was at home in Kinston, N.C., a town of just over 20,000 in the mostly rural eastern region of the state recovering from open heart surgery. Nevertheless on that special night “the varsity,” and in fact, all independent mortgage professionals, celebrated as Don was named NAMB Mortgage Professional of the Year for 2012. John Councilman, vice president of NAMB—The Association of Mortgage Professionals and the leader of the Award Selection Committee put it this way: “Don’s influence inside and outside of NAMB is just overwhelming. Very few people in the organization have not been touched in some way by Don. When his name was called as the Mortgage Professional of the Year, there were few dry eyes in the room. Don simply deserved to be Mortgage Professional of the Year.”
When asked of his thoughts on honoring Don Fader, NAMB President Don Frommeyer noted, “Don Fader has been involved with NAMB for numerous years. He has always gotten involved having held several committee chair positions, board positions and state positions. He has also worked very hard on state problems in North Carolina. He is very unselfish in honoring his commitment to NAMB. I could not think of anyone else that has put forth his time and effort this year for both NAMB and North Carolina, other than Don Fader. As this title is the highest reward that we give to anyone, he has definitely earned this honor of NAMB Mortgage Professional of the Year.”
I recently had the opportunity to speak with Don Fader about his career, the independent mortgage professional industry, and how it feels to be honored by his peers as NAMB Mortgage Professional of the Year.
Tell us about your early days working for a savings and loan.
Don Fader: I began in the mortgage industry in 1985 with a savings and loan. They had an opening for a loan officer. It was a unique and a substantive way to be a part of the community—building the community and serving the community. It just seemed to be a natural fit for my disposition.
Unfortunately, after a few years, the S&L crisis came about and the S&L that I was working for was seized by the Office of Thrift Supervision (OTS). I stayed with them during part of the transition process, but soon left and joined First South Bank as vice president of their mortgage production. I stayed for three-and-a-half years, convinced that I learned everything that I needed to know about mortgage lending. Boy was I wrong! It was in 1996, when I left First South to open SMC Home Finance that my education truly began.
You are a passionate advocate for the independent mortgage professional channel. Why?
Don Fader: Just yesterday, a lobbyist asked me how viable the independent mortgage professional model is today. Here is how I answered him: “The small professional has one product to offer … a mortgage loan. I cannot finance your car. I cannot do a personal loan for you. I cannot finance your boat. Mortgages, that’s all I do, so I have to do a better job or I am out of business.”
The unique thing about the mortgage industry is that the David’s of the industry you can compete on an equal footing with the Goliaths of the industry because we can provide a higher level of service. We can provide a greater amount of product options and can do it despite the apparent economies of scale disadvantage. In reality, the mortgage industry works with a reverse economy of scale situation. Non-depositories assume operating risk that large originators are unwilling to take on. We provide the services and facilities that make homeownership possible and we do not have executive or middle management. We don’t maintain an IT department or human resources department, so these cost savings allow us to operate a more effective and efficient loan platform.
How would you describe the relationship between independent mortgage firms and wholesale or correspondent bankers?
Don Fader: Our relationships with wholesalers or correspondent bankers, now more than ever, are relationships that are vetted, and are based on a large degree of trust. It’s no longer enough that you are licensed. You know you have to be able to prove yourself to your wholesaler or correspondent, and they have to have confidence that the product that you are originating is going to be a sellable product. It’s going to be well-originated. It’s going to be free from fraud. The correspondent or wholesaler is going to write a check for $250,000, for example, based on a file that you have put together. They must have the confidence that that file has been put together in such a way that protects their interest, as well as the borrowers.
From your perspective, how important is the service you get from the banker?
Don Fader: Service is absolutely critical to us because the borrower never sees the wholesaler … they never see the funder. Anything that goes wrong in that process is our responsibility because we are the professional in the transaction and we have selected that company. We have to stand behind our wholesaler and they have to stand behind us. Those relationships are a lot closer than they were 10 years ago. On both sides of the third-party origination channel—independent professionals and wholesalers—the firms that remain are those that are committed to the model. That makes for a great partnership.
Are you concerned that new regulations will hurt the independent professional’s ability to compete with the large depository lenders?
Don Fader: The one size fits all regulatory strategy threatens to eliminate the small professional channel. Now that should not be construed to mean that we are asking for a pass. You know we don’t have an inherent right to exist. Our value derives solely from our ability to provide borrowers with the services and products that they expect and deserve. Our size makes us nimble and our knowledge makes us invaluable. The channel deserves consideration in the regulatory scheme. What we hope is that the regulators are well-intentioned, and as we move forward, that they can understand the value of the small channel.
For example, I live in a town of 20,000 may be 21,000 people. We have eight or nine banks, savings and loans and credit unions in this town. There is no resident mortgage loan officer in any of those institutions. Let’s just say a borrower walks into the lobby of a large money center bank here in my hometown. If he has a credit score of 800, plenty of W-2 income and a 20 percent downpayment, they will make arrangements for a mortgage loan officer to meet them there at their convenience. Now if you walk in with a 680 credit score, three percent downpayment, income from a number of jobs, and maybe he has had a couple of jobs over the last two years, they are going to draw a map on the back of the deposit slip to the bank in the next town over where there is a mortgage loan officer.
Compare that to our approach. We are going to sit that customer down and we are going to walk them through the entire process. The banks are losing their commitment to consumers, especially in rural and small town areas. When 70 percent of the independent market disappeared, you lost a tremendous amount of capacity, especially for first-time homebuyers. Your small customer … your FHA customers … they are being underserved and in general access to credit is diminished.
How important is it for a mortgage professional to be involved in their community?
Don Fader: Being involved in the community is a critical issue. I have got an advantage. I am 57-years-old. I have lived in this town my entire life. I am doing loans today for the grandchildren of some of my early S&L customers … the third generation that I am serving. You know I cannot walk into a grocery store or into a mall without running into a customer. I constantly get bombarded with questions about where rates are right now, and is this a good time to refinance, or is this is a good time to buy.
We are members of the community organizations and we actively participate. Our firm was awarded the small business of the year by the Chamber of Commerce 2010-2011. People who have known me and the business that we run are gave us that award. We are mighty proud of that. I got a little chocked up when I accepted the award because this is home.
You just simply cannot take from a community. Some business models lose sight of the fact that, not only, are they originating loans, but they are also creating opportunities like financing the purchase of a home, a cash out refinance to help pay for college tuition or to enable the start a new business. We are literally changing lives for our friends and neighbors.
What else would you like your fellow independent professionals to know?
Don Fader: My wife retired from teaching school after 30 years. I was able to speak at her retirement party and I looked at her and said: “You may not have realized this, but I have always been envious of you and the work that you do. Every single day that you taught, and in some small, and sometimes even profound ways you touched the future.” I cannot think of anything more important than that.
I am not particularly eloquent. I am not very smart, but I am passionate about the mortgage industry and the work that we do. I hope that at some point through our various state associations and NAMB’s leadership on the national front, we will be able to touch the future by finding the balance that I think is required on the regulatory front to protect borrowers, but still promote the dream of homeownership.
In the meantime I am very, very proud to be associated with the professionals that I have met all across this country. There’s nothing else that I can achieve in this industry more important than this award. I am truly humbled and honored.
Don Fader’s Accomplishments
►Served as president of the North Carolina Association of Mortgage Professionals (NCAMP)
►Named North Carolina Broker of the Year
►Served on NAMB's Board of Directors
►Served as Interim Vice President of NAMB
►Chaired the NAMB Membership Committee and the Bylaws Committee
►President of NAMB+, the NAMB sister entity that finds new business partners for NAMB
►Named to the Mortgage Advisory Council in North Carolina by the State Banking Commissioner
►His firm, SMC Home Finance, was named Small Business of the Year in Kinston, N.C.
►SMC Home Finance was North Carolina's first accredited lender
►Holds the Certified Residential Mortgage Specialist (CRMS) designation from NAMB
David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail [email protected]