NAMB President’s Message: May 2015
The State of NAMB
Presented at NAMB Delegate Council ♦ April 13, 2015
►I have pushed NAMB’s board and staff to loftier goals this year. We are moving beyond our comfort zone to achieve new heights. I do not expect more from those around me than the goals I set for myself. This means hard work and sacrifice to accomplish great things. We have a passion for our industry that shows.
►NAMB is providing information virtually every day. Members are updated through e-mails and the NAMB Web site as a direct benefit. When asked at conferences if they are receiving too many e-mails from NAMB, the answer was a resounding “No.” They believed these e-mails are useful information, not just solicitations.
►I am proud to report that NAMB is financially sound. NAMB has sufficient liquid assets in the bank to operate for one year with no revenue. NAMB operates on a budget prepared by our CPA firm. The CPA firm prepares monthly statements for review by NAMB’s board and which are presented at Delegate Council Meetings.
►NAMB is growing, having grown membership by 14 percent last year.
►State associations are reviving. Many state associations are again very vibrant, holding conferences, and participating in Delegate Council Meetings.
►Most wholesale lenders are participating in NAMB events such as our conferences and sponsoring NAMB initiatives. NAMB held its first conference just for the leaders of wholesale lending companies, “The NAMB Wholesale Summit,” which was a resounding success.
►NAMB is driven to excellence. Every area of NAMB is operated with improvements year-over-year. NAMB is the envy of other small trade associations with an interlinked, decentralized base of staffing that is lean and efficient. For the first time in NAMB’s history, we can tell within minutes who is a member, if they have paid, and what our finances are.
►We have set a goal of dozens of new certified members. To accomplish that goal, we have created a CMC/CRMS test prep course. In its rollout at the Legislative & Regulatory Conference, we had 13 people attend to obtain their certification. It will be held again at NAMB National.
►NAMB presented the greatest Legislative & Regulatory Conference since the market collapsed. It was full of useful teaching on the first day, a star-studded cast of speakers on the second day, and more than 200 Capitol Hill visits on the third day.
►NAMBPAC is pushing new levels of participation. We believe it will double the previous year. NAMBPAC allows us to be heard by members of Congress. We have introduced the Legislative Action Fund that allows companies to donate.
►NAMB has created the Diversity Committee that has drawn in minorities and young people to our ranks. The Diversity Committee shows NAMB’s commitment to equal opportunity.
►We have recreated the Technology Committee, which will be working to reinvent NAMB’s Web site and make certain we are using every available technology.
►NAMB has an extremely active social media presence. Between its two LinkedIn sites, NAMB has nearly 21,000 members. Our Facebook posts reach tens of thousands, and we have restarted Twitter feeds.
►NAMB has two widely read newsletters every week. The “Monday Morning Messenger” covers happenings at NAMB, and “News From NAMB” brings industry news geared specifically to the originator.
►NAMB continues to be a powerhouse in legislative and regulatory issues. NAMB added a second lobbyist this year who is also a government-related social media expert. Both of NAMB’s lobbyists have vast experience on Capitol Hill.
►NAMB National is the largest gathering of mortgage originators in the nation. All booths are sold and only a few sponsorship opportunities remain for the coming year.
►NAMB is in media everywhere. The association is quoted or interviewed in every industry trade publication. This year, NAMB was quoted in The Wall Street Journal several times, The New York Times, The Washington Post and other prestigious news outlets.
►NAMB is defending the industry. When Consumer Reports recommended that consumers not go to mortgage brokers, NAMB confronted them. The article was changed to recommend that consumers not only shop mortgage brokers but other non-bank originators. Previously, the article had recommended only going to a bank. NAMB wrote a formal letter to President Obama protesting his broker bashing. We intend to continue to defend all originators in the media and in government.
►NAMB submitted testimony to the Senate Banking Committee and the House Financial Services Committee explaining why various provisions of the Dodd-Frank Act are harmful to consumers, the industry and the economy in general.
►NAMB created NAMB+ to give members discounts on services or provide special services that originators and small companies need. NAMB+ also helps to reduce membership dues by bringing in advertising revenue to NAMB.
►NAMB provides the framework for the largest, most news-packed publication in the industry, National Mortgage Professional Magazine. This publication provides both a national edition and state editions, raising state chapters’ visibility.
►I have spoken at many state conferences this year and have many more upcoming visits. I personally return all e-mails and send an e-mail to every member who is late renewing by more than 30 days. I believe the NAMB president should be accessible and responsive.
The CEO Perspective
A Message From NAMB CEO Donald J. Frommeyer
It is hard to believe that we just finalized the fourth month of the year. We are just starting to come into the summer months and that means that everyone is going to get busy. This year seems to be setting up for one of the best years I have seen in a long time. If only the inventory can stay active, we are going to be closing a lot of loans.
I continue to work hard on several different things as my job as CEO of NAMB. First and foremost is the completion of our first Wholesale Mortgage Summit that took place in March. We are just completing the wrap up of putting everything together for those who were there and getting ready to have a conference call to go over all of this with them. Our goal with this Mortgage Summit was to bring together a diverse group of wholesalers and open the discussion. I think we more than opened up the questions and the continued meetings and conversations will continue for the minimum of two years we are willing to put this together and promote the wholesale industry.
I am currently in the middle of finalizing the nominations for the new NAMB board. The committee is very hard at work interviewing, analyzing and having conversations with all of the candidates. To hear some of the comments that were discussed with these people is impressive and I am glad to see the open minds that are expressing interest in the success of our association.
The one slot that is automatic is the president-elect to president transition. Rocke Andrews is slated to be the next president of NAMB and he has already begun to gather his facts and start putting his year together. Rocke will take office at NAMB National in October and you are going to want to be at this event. Later in the month of May, we will be opening up the registration and hotel reservations for you to make your arrangements. We are going to have an outstanding agenda along with education for the CMC/CRMS designation testing. The first class in Washington, D.C. at the Legislative & Regulatory Conference was a big success. At the time this article was written, we have had several people take the test and pass it after taking this class. Rocke Andrews and David Luna did a fantastic job as instructors.
I continue to travel to several conferences across the nation, and John Councilman and I will be traveling to your state as time will permit. John is attending the St. Louis Conference, the Oregon Conference and the upcoming New Mexico Conference. If your state is having a conference, please let us know so we can get you on the list. We want to attend your conference, but unless you let us know, we cannot be mind-readers.
As a final note, the Executive Director Call is held the third Tuesday of every month. If your state does not have an executive director, the president of the state should participate in the call. This is a great call to pass along a lot of information to the states and you need to be on it. Mark your calendars for May 19 and June 16 for the next two calls. I will be mentioning this in my Monday Morning Messenger with the contact number to get on this call. Remember, your state wants you to be on this call so you get all of the information that is being transferred to them for your states.
And one last thing, please join NAMB by visiting www.joinnamb.com. The cost is minimal and you do get so much more. And if you are a member, THANKS for being a member, and if you are not a member, please join today!
Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professional. He may be reached by e-mail at [email protected].
Join America’s Homeowner Alliance and Get $10 Gift Card
By Rocke Andrews, CMC, CRMS
America’s Homeowner Alliance is the only non- profit to represent American homeowners in Washington, D.C. It is the first ever national advocacy and member benefits alliance representing the exclusive interests of homeowners and aspiring homeowners of America.
Those of you who attended the Legislative & Regulatory Conference in Washington, D.C. in April had the chance to hear America’s Homeowner Alliance Chairman and Founder Phil Bracken speak of his passion and goals for betterment of our nation’s homeowners. They are firm proponents of the mortgage interest deduction, low downpayment mortgages, less government-sponsored enterprise (GSE) add-on fees, and less government domination in the mortgage credit arena.
By joining now through their alliance with NAMB, you get a free first year’s membership and a $10 gift card once you sign up for E-Bates on the Web site. E-bates is a consumer rebate program where you get discounts and rebates on most of your online purchases, up to 12 percent cash back.
In addition, through your NAMB membership, you can offer the same terms including $10 gift card to your employees, family and customers. What a great reason to e-mail all of your past customers.
There is a link and explanation of the program on the NAMB home page at www.namb.org. If you have questions or need help, you can also reach me by e-mail at [email protected]. This is a great organization representing the homeowner in Washington and a way to get a great rebate program for you and your customers.
Rocke Andrews, CMC, CRMS of Lending Arizona LLC in Tucson, Ariz. is president-elect of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (520) 886-7283 or e-mail [email protected].
Embrace the Change
By Linda McCoy, CRMS
Change is inevitable. Whether we like it or not, things change. If you are reading this article and your business is involved in the mortgage industry, then you know this is far too true. Honestly, since the housing crisis of 2008, it has been a challenge for me, from time to time, to keep a positive outlook on the mortgage broker industry. Those of you who know me, know I absolutely love being a mortgage broker and providing a personal, viable option for my clients when it comes to their home financing needs as I am sure you do as well. For me, being an active member of the Alabama Mortgage Professionals Association (AMPA) and NAMB has been my power supply throughout our industry changes. Month by month, year by year, the mortgage broker has learned to embrace the changes our industry has experienced since the housing crisis. This is something each of us in our industry should be extremely proud of. Together as mortgage professionals, we need to communicate and work together throughout this next change we are soon to experience.
The TILA-RESPA Integrated Disclosure (TRID) Rule goes into effect Aug. 1, 2015, and with this change comes a wonderful opportunity. We have the knowledge and history that led to this change, and now we get to implement it and share it with each customer. Many of us have looked at the new Loan Estimate Form that replaces the current Good Faith Estimate (GFE) and the initial Truth-in-Lending (TIL), and we all have our concerns with how the transition will go with this change. However, our mindset should be that it is a disclosure that is easier for our customers to understand and it presents them the information they want to know. In this “transitional phase,” I think mortgage professionals need to take a lead role in the communicating process throughout to assist in smoother closings. I have learned with each transitional change our industry has faced over the years, things move much easier if I “embrace the change!”
Linda McCoy, CRMS is broker/owner of Mortgage Team 1 Inc. in Mobile, Ala., a member of the NAMB Board of Directors and serves as NAMB Industry Partners Committee co-chair. She may be reached by phone at (251) 650-0805 or e-mail [email protected].
NAMB’s Legislative & Regulatory Conference Recap
By Fred Kreger, CMC
The anticipation–April 10, 2015
It begins with making my way to Washington, D.C. for NAMB’s Legislative & Regulatory Conference. This has always been an exciting time of the year for me and more than 100 other members converging on Capitol Hill to advocate on behalf of the mortgage originator. In my previous article last month, I pointed out that no matter where you derive your money to lend; we all have the same issues when it comes to ensuring our clients get as many choices as possible when it comes to homebuying and borrowing.
This is the greatest time for all of us to tell our stories. The stories of how we as originators help our economy and place congressional member’s constituents into home and communities. Once in these communities, they spend money and participate in their dreams of homeownership. We cannot allow other groups to speak for us or allow painting us in negative light. In the past, we were thought of as greedy mortgage brokers who took advantage of everyone. We know this is not the case.
When you have dialog with your congressional members, you need to tell them that you are helping their constituents and community. Do not be quiet about your role.
Each year, this conference brings me hope and optimism. Especially these last couple of years. I know this statement may surprise you, but we do have members of Congress who get what we do for our clients and their constituents. They want to know what we think as originators on how to fix the housing problem and get people into homes. The past Congress did bring up the Dodd-Frank Act because of past transgressions of the banking industry as a whole. Now, they want to know how to lessen the blow that this act and the new agency, the Consumer Financial Protection Bureau (CFPB), has controlled every aspect of lending money in the U.S.
Gratification–April 15, 2015
I am now writing on my way home from what I can say was a great and rewarding Legislative & Regulatory Conference. The Conference lead off with great updates from both the VA and FHA. Along with a dynamic panel of housing professionals. Our members were treated to members of Congress, both Rep. Sean Duffy from Wisconsin and Rep. Bill Posey from Florida. Great to know that we and homeowners have some great champions on the Hill. NAMB truly appreciates our congressional members who stand out and really help fulfill the American dream of homeownership for some many Americans.
Our Government Affairs team had more than 100 NAMB members descend upon the Hill on Tuesday to address three key concerns, and quite frankly, as I hoped and for and am happy to confess, were met mostly with overwhelming support.
Our talking points were:
1. Correcting how compensation flowing from a wholesaler to a mortgage company is counted in the current qualified mortgage (QM) rule. We presented that this compensation is already counted in the interest rate received by a consumer and thus should be eliminated from the points and fees test in a current QM rule.
2. We asked Congress to initiate legislation to correct the decrease in VA loan limits. By allowing for current limits to go back to the 2014 VA loan limits, they would help our 84 counties in the U.S. that were impacted by this reduction.
3. Asked for support in the delay of enforcement of the new TILA/RESPA Integrated Disclosure (TRID) rule being implemented Aug. 1. We do not want it delayed because NAMB likes the new disclosure, but wants industry participants to not halt or delay transactions for a better understanding of how this rule will be implemented come Aug. 1.
From the feedback after our meetings on the Hill, we were pleased with the positive and supportive results from our talking points. We also heard from our members that the engagement from our NAMB members with their congressional members led to some fantastic dialog on housing. This is why we show up and why over the last couple of years, we have led the charge for changing the perception of mortgage originators with lawmakers.
This is also why I am so committed to advocating on behalf of our consumers and our industry. The results we get are a resurgence of faith that our system of advocacy works and we can affect change for the better. We saw what happens when we remain quiet and let others trample over us, we get things like the Dodd-Frank Act and non-consumer-friendly aspects of the bill. Yes, we needed the industry to change, but we did not speak up and give our opinion on consumer protection as it relates to mortgage origination. Instead, we had the consumer groups and others paint us in a corner of the bad actors in the tale of downturn in economic downturn.
We learned our lesson, and now we can come out and tell our side of the story. We are the partners in our client’s lives who advise them in good faith on how to get into their first home and remain in that home for years. We are the mortgage professionals and I am proud to call myself one and will continue that advocacy for every mortgage originator in front of Congress and our nation’s consumers. I look forward in seeing twice the amount of originators next year and thank everyone who came out of their busy offices to Washington, D.C.
Thank you and Namaste.
Fred Kreger, CMC is branch manager at American Family Funding, a Division of American Pacific Mortgage. He is also a past statewide president of the California Association of Mortgage Professionals (CAMP) and currently is the vice president and Government Affairs vice chairman for NAMB—The Association of Mortgage Professionals. He may be reached by phone at (661) 505-4311 or e-mail [email protected].
Scenes From the 2015 NAMB Legislative & Regulatory Conference
April 11-14 at the Hyatt Place Hotel in Washington, D.C.
NAMB President John L. Councilman, CMC, CRMS with Edward L. Golding, Principal Deputy Assistant Secretary, Office of Housing
NAMB VP Fred Kreger, CMC; NAMB Secretary Rick Bettencourt, CRMS; and NAMB Lobbyist Roy DeLoach provide some talking points to NAMB members prior to Lobby Day
Wisconsin Rep. Sean Duffy discusses industry issues with attendees of the NAMB Legislative & Regulatory Conference
Phil Bracken, America’s Homeowner Alliance’s chairman and founder, discusses his firm’s programs with attendees
NAMB President-Elect Rocke Andrews, CMC, CRMS discusses the upcoming TRID rule in Washington, D.C.
NAMB CEO Don Frommeyer, CRMS welcomes attendees to the 2015 NAMB Legislative & Regulatory Conference
Jonathan Foxx of Lenders Compliance Group breaks down regulatory issues prior to the march on Capitol Hill
Rep. Bill Posey from Florida took time out of his schedule to meet with the NAMB members on hand for the Legislative Conference
NAMB CEO Don Frommeyer, CRMS welcomes Terry Clemans, executive director of the National Consumer Reporting Association (NCRA) to the Legislative Conference
Is It Safe to Advertise? (Part II)
By John L. Councilman, CMC, CRMS
Last month, I discussed the pitfalls of media advertising. If you missed that article, you can read it online at http://goo.gl/ofajfK. This month, I will warn about the many other forms of advertising and promotion.
Perhaps the most dangerous type of advertising today is the Marketing Services Agreement (MSA). This is where a mortgage lender or broker enters into an agreement with another provider of settlement services to advertise or promote the mortgage company’s products. Typically, mortgage companies pay a real estate office to have a presence at the realty office that will drive customers to the mortgage company. However, it can also be where the mortgage company receives money to promote some other product such as title services.
Over the years, we have seen many attempts at MSAs in varying forms. Very common over many years was the “desk rental.” The mortgage company would rent desk space or even a room at the realty office that would grant their originator complete access to that office. It was a very effective way to originate loans. The problem that arose from this type of arrangement was proper valuation of the space rental. If the realty firm was paying $5,000 per month to rent their 5,000-square-foot space, the rental of a desk may only legitimately be worth two percent of the monthly rent or $100. Mortgage companies often were paying thousands of dollars for these arrangements which is a recipe for trouble.
Next, we have the joint advertising MSA. An example of this type of agreement was the mailing of a flyer that costs $5,000. If the flyer primarily promoted the real estate company with just a little space for the mortgage company at the bottom, this is considered a RESPA violation. Any form of advertising falls under this same type of assessment.
An absolute no-no is any agreement where there is any relationship between the amount of business that is generated by the arrangement. An example of an illegal referral would be where the mortgage company pays $100 for every loan that comes from the realty office. The Consumer Financial Protection Bureau (CFPB) has taken that one step further in the Lighthouse Title consent order. If the agreement even considers the value based on a certain number of expected referrals, it is illegal. According to the CFPB, if “the companies, on average, referred significantly more business to Lighthouse when they had MSAs than when they did not” it was a problem. Are we to assume that you should not expect more business from a realty office where you are advertising?
MSAs should never be entered into between individual real estate agents and mortgage originators or even mortgage companies. It appears there is no reliable way to have this type of agreement not violate RESPA. We were told at NAMB’s Legislative & Regulatory Conference that the National Association of Realtors (NAR) has said publicly for individual Realtors not to enter into MSAs. Only companies should be parties to MSAs.
Legal gurus are advising that both parties should contract with an outside evaluation firm to determine what the fair market value of the advertising in an MSA is worth. Simply looking at what other people may be paying still may not be enough unless that is commensurate with what general market advertising rates charge.
The CFPB broke new RESPA ground in a consent order with New Day Financial. New Day bought leads from a “mortgage broker” that was, in reality, nothing more than a lead generation company. The lead generation company had rights to use the mark and names, addresses and e-mails of Veterans of Foreign Wars (VFW) members. What was different in this case was a third-party lead generation company sending clients for a fee was construed to be a violation of RESPA. This could mean that any lead generator who is paid for each lead or referral would be violating RESPA. Normally, this had been considered a form of advertising payment. Attorneys are especially concerned about live-transfer leads for this and other reasons.
Another interesting twist to this case is the charge under the Dodd-Frank Act’s UDAAP provisions that an omission of a payment for services is unacceptable. The VFW claimed it was endorsing New Day for its quality of service, when the consent order says it was because New Day was paying the VFW. This is considered an unfair and deceptive practice by the CFPB.
I can understand why the CFPB failed to implicate the VFW in the wrongdoing since they had relied on the lead generation company to sort out the legality of this arrangement. What I don’t understand is why the lead generation company was also not fined since they allegedly accepted, and apparently demanded, an illegal kickback. In both the Lighthouse case and the New Day case, only the company paying the referral was penalized. When Chase and Wells Fargo were deemed to have received kickbacks from a title company, they were fined $37.5 million.
It is clear that listening to your lead generation company for guidance is not a good idea. It is surprising to me that lead generators who pose as mortgage brokers are not being fined. They are taking sensitive personal information with no intent to actually broker a loan. Many lead generators make no attempt to be licensed although they appear to be lender or broker in their online advertising. We will have to wait and see where this takes us.
Affiliated business referrals need to be closely checked. Realty South had put in their contract “Title Insurance. Seller agrees to furnish Buyer a standard form owner's title insurance policy issued by TitleSouth LLC in the amount of the purchase price." That phrase was construed as requiring the borrower to use TitleSouth and resulted in a fine of $500,000. Even though borrowers were allowed to opt out, the fact that the wording implied a requirement to use the title affiliate was enough to trigger a violation.
This is hardly an exhaustive list of possible violations of the many laws and rules that exist regarding advertising. With UDAAP being thrown in, virtually anything could be construed as unfair and deceptive. There is no question that marketing that we took for granted as legal a few years ago may very well be illegal in the CFPB’s eyes.
You will notice that most of these practices involve larger companies attempting to make extra money from a borrower or use their considerable financial strength to gain a marketing advantage. As long as the CFPB heads down this road, it tends to level the playing field for small companies who do not have the resources to enter into many of these agreements. As large companies are forced to stop leveraging their wealth to gain an advantage, it opens opportunities for smaller companies to compete. As they say, “Every cloud has a silver lining.”
John Councilman, CMC, CRMS of AMC Mortgage Corporation in Ft. Myers, Fla. is president of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (239) 267-2400 or e-mail [email protected].
This article originally appeared in the May 2015 issue of National Mortgage Professional Magazine.