Two Examples of What’s Right With the Mortgage Industry

Example #1:  Embrace Home Loans Foregoes Annual Sales Rally – Instead Conducts Employee Auction and Raises $20,000 for Haiti

By the way, I love the website on which I found this little nugget.  Do yourself a favor and visit them at  But here’s the point… our elected officials seem to blame everything that’s wrong with the world on mortgage professionals.  In my seven years involved in this industry, I’ve met good people and not so good people – just as in all walks of life.  Today, the numbskulls have largely been driven out of the business – thank goodness.  Now, the rest of us need to come together and earn our reputations back.  I think we took a pretty positive step in that direction Jan 10th through 12th, 2010 at…

Example #2:  Mortgage Revolution

Mortgage Revolution brought together 300+ of the industry’s sharpest.  The speakers were outstanding – and hey, look ma, NO SPAM!!!  Even better was the networking and masterminding going on at the hotel bar.  Old school and new school converged.  Egos were checked at Hartsfield International.  The industry needs more of this, and the Mortgage Revolution vibe is coming to a town near you soon.  You hear me San Francisco???  For the latest MRev news, be sure to join the Facebook Fan Page at  Oh, and I almost forgot to mention – Mortgage Revolution ATL raised over $15,000 for charity too, and our goal for 2010 is $250,000.  Hope to see you in San Francisco!

Live NAMB Webinar Focusing on YSP – Tuesday @ 3pm EST, Noon PST

NAMB announced a major victory in the fight against HVCC yesterday (see the 10/23 TBWS Daily Show for details).  Earlier this week, they published an informative YSP Resource Center on the NAMB site.  I’m extremely proud of the strides NAMB is making not only on Captiol Hill, but also with mortgage professionals if the field.

During our State of the Union Webinar on Oct. 1st, we received hundreds of questions about the future of YSP.  Please join us on Tuesday @ 3pm EST, 12 noon PST for a live Webinar dedicated to answering your questions on that topic.

Register Now

Your Panelists:

Jim Pair, Current President of NAMB
Roy DeLoach, Chief Executive Officer of NAMB
Denise Leonard, Executive Director of Massachusetts Mortgage Assoc.
Yours truly and Mark Madsen will moderate the discussion on the call and on the web.

Critical Note:  Response to our State of the Union was overwhelming and not everyone could participate online.  Please read below for critical details on how we’ll accommodate EVERYONE for this webinar:

1)  The webinar room can hold 1,000 attendees – and it’s the first 1,000 who log into the live session (not the first 1,000 who register).
2)  If you do not get onto the web portion – you can still call in and participate on the live conference call.
3)  We will once again have a live backnoise/chat room and will moderate your comments and questions.  This will be a very interactive webinar.  Please be sure to send us your questions when registering for the webinar.

Emergency State of the Union with NAMB Prez Jim Pair – Oct 1st at 12noon EST, 9am PST

Jim Pair

Jim Pair

I try very hard to read all the blogs, watch the TBWS Daily Show, follow NAMB’s regulatory updates, etc.  Still, I have to admit that I’m more confused by what’s coming down the pike than ever.  How bout you?

  • YSP is going away come January 2010 – or isn’t it?
  • FHA lending will become more accessible for third party originators – or won’t it?
  •  Congress is seriously considering an 18-month moratorium on HVCC – or aren’t they?
  • Register Now Button

    I’m hosting an Emergency State of the Union interview with NAMB President Jim Pair on Thursday at noon EST (9am PST).  We’re opening up to everyone – NAMB members, non-members, brokers, bankers, appraisers… everyone who’s livlihood is at stake during these chaotic times.

    When you register, you’ll see a spot where you can ask Jim a question that’s been on your mind.  We’re going to do our best to get to every single question, either during the live session or by email afterwards.

    A Must Read Guest Column on the New GFE and Elimination of YSP

    Here’s a well articulated email I received today from mortgage professional Jon Bodan of The Perpetual.  I think we should all read, discuss, distribute and act upon it:

    This is insane!!!  (MG notes:  This link was provided on LoanToolBox forum courtesy of Jim Sahnger.  You’ll find what Jon’s referring to on p. 43240 and 43241).

    You need to send this to everyone you know in our industry and encourage them to call their elected officials and RIGOROUSLY show your opposition to this rule-making.

    Where is NAMB and GAMB on this?  Where is the grass-roots movement to make our voices heard?  Their website is still dealing with HVCC which is obviously old news.  Their website’s agenda?  2007.  Are they asleep at the wheel?     

    Because of the mortgage & financial meltdown, Bernanke has proposed that the Federal Reserve outlaw broker & LO compensation from YSP or other indirect compensation from a lender.  This will potentially do one of a couple of things: 

    1. Put us out of business due to cutting our revenue on every loan, potentially by 50% or more.
    2. Cause consumers’ costs to increase because we have to charge upwards of 2% on every file on the front.
    3. Potentially cause thousands of people in our industry to lose their jobs.  Unemployment is already at 10%.

     The fact is, brokers and banks have had an unlevel playing field for years.  As a broker, we are required to disclose multiple times to the borrower, in many different formats, that we receive YSP for doing their loan.  Banks have not been required to disclose it, even though they earn the same thing, in the same way – it’s just called SRP or “servicing released premium:

    Here are how we have to disclose this information:

    1. On the current GFE as “YSP 0-5% POC by lender to broker if applicable”.
    2. On the new GFE going into effect on 1/1/10 it is included in our origination fee, and then backed out as a credit, which is MASSIVELY confusing to look at, even to me. 
    3. On the Mortgage Loan Origination Agreement.
    4. On the Brokerage Business Contract
    5. On the HUD-1 Settlement Statement
    6. On the Attorney Closing Instructions that borrowers normally have to acknowledge.
    7. On the Reg Z disclosures that the lenders send to the borrower after application.

    I think the consumer gets it!  The fact is, they don’t care.  You tell a consumer “we get paid by the banks to place your loans with them; there are many lenders that compete over my business as a broker, and so they pay us in some cases to put your loan with them”.  They simply don’t care.  I have been in this business for 15 years.  Not one client has had a problem with this, and I tell them upfront in every case that it happens. 

    America is a capitalist society.  It is based on people providing goods & services to consumers and businesses that the buyer values, and they pay for it.  This proposed rulemaking, at its core, is an attack on capitalism.

    If you go to Kroger and buy a can of corn, the grocery store probably paid $.25 for it wholesale, but they sell it to you for $1. Why do they mark it up?  Because they have a big, fancy store with overhead and employees to pay.

    If we do a loan for someone, we buy the money at wholesale at the “par” rate, and we sell it to our clients at retail, thereby earning YSP.  This keeps us from having to charge the borrower more money upfront which they typically cannot afford.  Everybody wins, we make a fair amount for our efforts, and the borrower is happy with the deal they got, ostensibly (and if not, it’s their responsibility to go somewhere else that will make them happy, that’s their right as a consumer).  But we have the same overhead, offices, professional liability insurance, FHA renewal audits, licensing fees, bond fees, in GA we have to W2 every employee so we can’t save the FICA and etc, and the list goes on. 

    The argument is made that “a mortgage is the biggest financial product that a consumer will ever purchase” so it’s wrong for the loan originator to make money on doing the loan.  

    This argument is illogical and flawed.  If you go to Kroger, and you can’t afford the can of corn at retail, you don’t eat.  But food is obviously a requirement for life.  So why would it be any different in the mortgage industry? 

    Owning a home, or having the lowest imaginable rate on a mortgage is not a right.  It is a privilege that a consumer can earn through proper & wise financial management.  The professionals that help this happen for a consumer are providing a much-needed service for the consumer by guiding them through the mortgage process – especially now, and more than ever before.  It seems that the proposed rules are geared towards not steering a borrower to a “risky” loan product.  The fact is, though, there are no “risky” loan products now.  Everything is done via the agencies.  There are no negative-amortization or subprime loans in the marketplace, and there have not been any for about 3 years now.  The only options available to the average consumer are Conventional, FHA, VA, rural housing, and at a low loan-to-value a highly qualified borrower might be able to obtain a home equity line of credit. 

    As usual, the government is years behind the curve on this – the MARKET corrected the excesses of the past by ceasing to offer those products.  Why shoot and kill the horse when it’s out of the barn already?  This proposed rule makes absolutely no sense at all. 

    All of us need to put our heads down and fight this thing.  The Federal Reserve already more/less owns our banks & financial markets.  Are we going to stand by and let them own us too? 

    Contact your elected officials:

    Mortgage Blogging: What's In It for Me?

    Most mortgage professionals are skeptical about Mortgage Blogging.  To most, it looks like a waste of time.  If you’re in this camp, don’t feel bad. I was too for 2 1/2 years.

    In the video below, Mark Madsen and I set out to explain the benefits of Mortgage Blogging.  This event is the first of many online classes being brought to you free of charge by NAMB.

    If you’re a NAMB member – thank you!  Maybe you could bring aboard one more member in your town, perhaps a vendor?  If you’re not a NAMB member, will you please join today?  They are fighting the good fight for you – and for the consumer.

    Elite Originators Aren't Elite Because They Wear Nice Ties.

    I’ve had the good fortune of working with some the mortgage industry’s sharpest and most successful originators over the past six years – and I’ve taken notice of a few irrefutable facts I’d like to share with you today.

    1) Elite originators never relax.

    If you’re not interested in taking your business to the “elite” level, this article may not be for you.  You see, the originators at the top of the food chain are always working on their business. Their passion for success just seems to consume them. Twelve hour days are not the exception, they’re the norm.

    2) Elite originators consistently reinvest profits back into their business.

    If you look at the world’s great brands: McDonald’s, Coca Cola, Gillette, all of them have built sustainable competitive advantages over the years by reinvesting profits back into the brand. Top producing mortgage professionals have the same mentality.

    3) Elite originators have multiple channels for new client acquisition

    I can’t stress this fact enough. Success in the mortgage business should not be solely measured by how many loans you’re closing per month/year. The better, and more accurate litmus test is to measure your production in comparison to your peers. Elite originators consistently execute on their business plan, picking up chunks of market share month over month… year over year.

    Several years ago, I began teaching our clients a simple concept I like to call “Three Channels for Client Acquisition”. It’s not rocket science, but very few originators execute on this concept properly. You should have three mutually exclusive mechanisms in place for driving new business. My recommendations:

    Channel #1: Religiously Mine and Communicate With Your Database

    This is something you already know you need to be doing.  Yet, most originators fail to execute properly.  You should have a mortgage crm system that integrates postal mail, electronic mail, social networking, blogging and data mining.  Many of the originators I meet who are stuck at an “average” production threshold execute on these strategies when they have time or when they’re highly motivated.  But in order for your crm system to bear consistent fruit, it must be harvested consistently.

    Elite originators rarely, if ever, fail to harvest their database.

    Channel #2:  Establish a Diverse and Loyal Network of Referral Partners

    Again, this is something most every originator knows he ought to be doing.  Yet again, most fail.  The simple reason most originators fail at Channel #2 is because they cannot answer one simple question:  What Makes You Different? Elite originators not only invest profits back into their business, they also invest vast resources into deepening their knowledge base.  It’s not enough just to ‘know what you’re doing’ anymore.  You must be able to clearly and confidently articulate your competitive advantages.  This takes preparation, practice and repetition.  If you’re managing a pipeline and putting out fires all day, it becomes difficult to divert your attention to deepening that competitive advantage.  Elite originators know this, and they use it to distance themselves from their competitors a little bit every day.  Hey, I already said they’re working 12 hours a day – you don’t think they spend all 12 hours putting out fires do you?

    Channel #3:  Find Your Passion, Time Block and Experiment

    I like to refer to Channel #3 as the “wild card”.  There are so many awesome ideas out there, many of which we’ll be teaching at Mortgage Revolution in November 2009.  Brian Brady is a master social networker.  Derek Egeberg just held a first-time homebuyer seminar that yielded 287 attendees and has filled his pipeline with prospects.  David Lukas hosts a radio show in his hometown and expertly integrates referral partners into the mix.  I could go on and on with examples of how elite originators are investing their energies into unique channels of customer acquisition.  You’ll never know which one is right for you unless you pick one and give it a go.  You might want to come and see for yourself what your peers are doing to dominate their market in November.

    In conclusion, the true difference between the average and elite originator comes down to one thing:  execution.  The average originator “knows” what they ought to be doing.  The elite originator actually does it.

    HVCC Immediate Call To Action

    Attention all Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers:

    After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, James Lockhart, Director of FHFA (GSE Regulator), and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.

    In order for this “Call to Action” to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing everyday, until advised to stop by NAMB. This will NOT be a one day action!

    Who will you be contacting?

    NY Attorney General Andrew Cuomo’s Office:
    (212) 416-8000, Internet Complaint

    Federal Housing Finance Agency (FHFA)
    (866) 796-5595 or

    Fannie Mae
    (202) 752-7000 or

    Freddie Mac:
    (703) 903-2000, Internet Complaint

    Senators, Representatives and Governors:
    Click here for contact information.

    Also, please contact your local TV and Newspaper outlets.

    Below are talking points and background information to assist in your conversations.  Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties.  For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.

    Talking Points:

    1)   NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over $2.8 BILLION a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.

    2)  Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC.  The original Cuomo investigation involved a federally chartered bank and an AMC.

    3) AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue.  The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.

    4) HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo’s investigation.

    5) No Portability! Consumers are “trapped” with a specific lender.  If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.


    I.  Lack of Portability

    A.  Lenders are not allowing borrowers to transfer appraisals, regardless of the reason.

    B.  Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender.

    C.  In a poll conducted by NAMB, 75.8% of respondents said that 0% of their appraisals are portable since the enactment of the HVCC.

    II.  Lack of Quality

    A.   AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal.

    i.  Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence.

    B.  Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.

    III.  Increased Cost of Appraisals

    A.  The minimum increase we have seen in direct consumer cost is $150 per appraisal.  That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction.

    B.    Cost to Consumers Estimate:

    $150.00 – minimum increase per appraisal
    - avg loan amt of $224,778 at .25% for extended lock period
    $711.95 – average total increase per transaction
    x 3,870,552* – 2007 HMDA report of residential real estate loans originated
    $2,755,639,496 – $2.8 BILLION in increased fees to consumers!

    IV.   Articles Illustrating the Effects of the HVCC

    A.  The Appraisal Bubble – The Center for Public Integrity
    B.   The Cure is Worse than the Disease – Appraisal Press
    C.   Appraisals Roil Real Estate Deals – The Wall Street Journal

    Feel free to forward these articles and/or reference them in your conversations.

    An Unofficial NAMB Regulatory Update on HVCC – Oh, And A Call To Action For All Of Us NAMB Bashers.

    Many of us have been openly critical of NAMB over the past few years, and I’ve certainly been one of them.  I’m about to tell you something that you likely are unaware of:

    NAMB is out there busting their rear ends to keep you in business.

    Did you know that NAMB President Marc Savitt conducted a one-on-one meeting with New York Attorney General Andrew Cuomo this past week?  Neither did I until yesterday – and it was mere coincidence that I learned of his meeting.

    Are you a NAMB Basher?

    I guess you could call me a card carrying NAMB Basher.  After all, I’ve said more negative things about NAMB publicly than I’ve said positive things.  In the process, I’ve figured something out:  I am not doing anyone any favors by complaining unless I’m willing to become part of the solution.  You see, NAMB is a volunteer organization.  For it to be successful, it requires the involvement and participation of its constituents.  Here are a few quick and easy steps on how you can get involved – and become part of the solution.

    1)  Are you a Member of your Trade Association?

    It amazes me how many NAMB Bashers are out there that aren’t even dues paying members.  As far as I’m concerned, you’re part of the problem and you need to do either one of two things:

    a)  Join NAMB today or

    b)  Shut up until you’ve satisfied point a).  In my mind, you have no right to criticize an organization’s shortcomings when the greater shortcoming lies within.  And if you’re a NAMB member, maybe you can go that extra step further and find out if your supply chain are NAMB members:  appraisers, title companies, credit companies, etc.  For NAMB to succeed, it needs our funds and our participation.

    NAMB Has A Communication Problem That’s About To Be Solved.

    Put yourself in Marc Savitt’s shoes for a minute.  You’re a mortgage professional out of Martinsburg, WV with a primary responsibility to run a mortgage business and provide for your family.  Oh, and by the way, you’re also responsible for representing an industry that the mainstream media single-handedly blames for the economic crisis we’re experiencing right now.  So you spend half your life in an airplane touring the country.  You get beat up by regulators one day and your constituents the next.  And each day, you’re asked to put that smile on your face and dodge bullets.  Just think about the life of Marc Savitt right now.  Would you want his job?

    My answer:  hell no.  I feel sorry for the guy.  And today I’m officially becoming part of the solution.

    Mr. Savitt, what can I do to help you?

    Marc, welcome to the wonderful world of “Web 2.0″.  It’s intimidating at first, and it takes time to find your style.  But you won’t find a better platform to drum up awareness and support for a common cause.  I’m asking you to embrace this medium and make it a small part of your day.

    Help Me Help You!

    When I think about the life of Marc Savitt, I always come back to this classic 20-second clip from the movie Jerry Maguire.  It really says it all. If you’re out there reading this, let’s send a welcome message to Marc Savitt. Let him know you read this article and you’re appreciative of what he’s doing for you.