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Florida Insurance Specialists
This is your Spring 2010 news from the MBA of Florida.
|President's Message - MBAF Goes to Tallahassee|
by Howard Nelson
Scott Maxwell, Bob Stobaugh, Jay Ralstin and I, recently had an opportunity to visit with selected legislative representatives while in Tallahassee. Through Eric Prutsman, MBAF's legislative representative, we were able to meet with Senator Garrett Richter, from Southwest Florida and Chairman of the important Senate Banking & Insurance Committee, followed by a dinner meeting with Representative Ritch Workman, newly elected Representative from the Space Coast area and important member of the House Insurance and Financial Services Committee. Our time with Representative Workman was very insightful into better understanding of the value of what industry professionals like ourselves, bring to elected representatives, emphasizing that everyone cannot be experts at everything. As an example, in the latter days of session as many important bills are coming to the floor, many industries bring in their stronger experts, known as "A Teams" to support pending legislation. In between these meetings, we were able to spend some time observing the House actually in session, seeing first hand, the hectic pace of our legislative process at work. A second day, Eric arranged a meeting with Senator Mike Fasano, President Pro Tem as well as Representative John Legg. Both Senator Fasano and Representative Legg had taken lead roles on MBA's Reverse Mortgage related legislation this session. Senator Richter, Representative Workman, Senator Fasano and Representative Legg, are all very important and long term friends of the Mortgage Bankers Association of Florida and our Industry.
It was a very timely visit, as the Florida Realtors and the Florida Home Builders Association had scheduled their legislative conferences in Tallahassee the same week. As a result, we were able to once again, strength partnerships with these important industry trade partners. As an example, there was a press conference by the Industry Coalition supporting the Sadowski Trust Fund. There is pending legislation which would in essence remove the cap, thus freeing funds for what the Fund was originally intended for...Affordable Housing and Down Payment Assistance Programs. We are proud to be one of many industry partners associated with this important source of mortgage funding which is currently being threatened by State budget pressures.
As I ponder the value of time spent in Tallahassee, I must reflect on my theme this year...Strength In Partnerships. It is clear to me the importance of the investment of our time and involvement by building relationships, not only with our Industry Partners, but our elected officials as well...at local, state and national levels. Together, we can and are...making a difference!
Lastly, just wanted to once again, acknowledge Eric Prutsman, as MBAF's Legislative Representative! As we visited with each elected official, it was clearly evident that Eric is highly respected by each, many of which we would not have even had opportunity to visit, had it not been for the strong relationship that Eric has forged over the many years he has tirelessly served MBAF in Tallahassee. He is not only a respected professional, but is highly sought out for advice and opinion on mortgage and banking issues. Thanks again Eric, for all you do...you truly are a valued member of our team!!!
Howard Nelson, President
Mortgage Bankers Association of Florida, '09-'10
|Legislative Update |
by Eric Prutsman, Esq., MBAF Legislative Representative
The good news is, the 2010 Session is half-way over, the bad news is that the 2010 Session still has four weeks to go. At the Session mid-point of Week Five the expectations of a tumultuous legislative session have been realized. The House and Senate passed budgets attempting to address a $3 billion deficit, or nearly 15% of the general revenue budget. Although the budgets passed by the respective chambers are preliminary, it is clear that the budget conference process will take extra long this year due to considerable differences between the House and Senate proposals. The arrival of almost $1 billion in new federal stimulus dollars for Medicaid will assist in reducing the severity of cuts in some areas of the budget, but elimination of certain health care and education programs is almost certain.
The intense focus placed upon the economy and budget crisis will keep the Legislature from addressing many other issues. Fewer bills are being heard by legislative committees and those bills that have been heard are moving more slowly than usual. The exception to that rule is the reverse mortgage legislation sponsored by Senator Mike Fasano as SB 1532. The Senate bill which establishes a series of Florida-specific provisions that mirror federal guidelines on reverse mortgages is designed a preventive measure to make sure all lenders are "playing by the rules." The House companion to the Senate reverse mortgage bill is HB 845 and is making its way through the House Committee process while the Senate bill has already passed the Senate.
The issues of foreclosures, especially as it is related to distressed condominium unit owners, continues to loom large over the legislative session with dozens of bills filed to address foreclosures. House Bill 1523 and Senate Bill 2270 create a Homeowner Relief Act that proposes a fast-track foreclosure by sale process that would remove foreclosures from the court system. Based upon the Uniform Non-judicial Foreclosure Act drafted by the National Conference of Commissioners on Uniform State Laws in 2002, it would allow a lender to have a choice whether to seek foreclosure through the courts or through a foreclosure by sale. The House bill has started to move, however the Senate bill has not received a hearing to date.
Additionally, legislation is also moving through the process related to the public records exemption of credit report data for the licensing of mortgage brokers and mortgage lenders (SB 1576 and HB 7017), and is on track to be passed by the Legislature. The failure of this legislation to pass last year caused considerable concern, and the passage of these exemption bills will address the issue.
We'll continue to keep you informed on issues that impact MBAF and its members.
'The taxpayer: That's someone who works for the federal government but doesn't have to take the civil service examination.'- Ronald Reagan
Do you know who your Representatives are and how to contact them?
LET YOUR VOICE BE HEARD!JOIN THE MORTGAGE ACTION ALLIANCE!
The Mortgage Action Alliance (MAA), Inc. ® is a voluntary, non-partisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association. MAA is dedicated to strengthening the industry's voice and lobbying power in Washington, DC and state capitals across America. Get involved with MAA to play an active role in how laws and regulations that affect the industry and consumers are created and carried out by lobbying and building relationships with policymakers. It only takes a moment to get started, and you do not have to be a member of MBA to enroll.
|Educating Our Legislators|
by Jay Ralstin, MPAC Chair
Over the past three years, I've received a few call calls from Eric Prutsman asking, "Are you wearing a suit today and can you meet me at the Capitol in about 15 minutes?" At first, this was a little intimidating, but after a few times it became more enlightening as I realized two things. First, this involvement was a great way to stay at the cutting edge of what's happening in our industry.
Second, it is a truly scary how little some of our legislators know about the mortgage business.
I've been fortunate enough to represent our association at the Capitol six or seven times. The opportunities have ranged from Alex Sink's Financial Action Team, to answering questions for a panel representing the Insurance Consumer Advocates. As our elected officials struggle to keep up with all the issues, and make intelligent decisions regarding policies and laws, we need to have an audience at every opportunity. Eric, last year's Brown L. Whatley award winner, does a fantastic job for us, but we can all help in many ways. If you have the opportunity, write or call your representatives and senators. Let them know how upcoming policy decisions will affect our industry and those we try to help. The more stories and examples they have from us will help to influence their attitudes and decisions. Simply making MPAC contributions can help us to get an audience with our policy makers.
Responsible Lending, and Strength in Partnerships, have been the themes of our most recent and upcoming conventions. As our industry continues to be scrutinized by those looking to place blame for our current economic state, these concepts have never been more important than they are today. Please stay active and involved with our association and help educate our legislators to make wise and informed decisions.
|Chapter Highlight - MBA of South Florida Gains Momentum
by Brenda Thomas
As your Executive Director I hear a lot of what goes on around the state and I am kept updated on various events. I was sent a report on the progress of the MBA of South Florida. On Monday April 12 Barry Habib gave a 2 hour presentation at the MBA of South Florida. He focused on the market and rates. The event was held at Don Shula's hotel. They had 80 participants. The new board is invigorated, had a great turn out and many new participants. At last count they had 120 individual members. We can safely say South Florida is back!!!
As one member reported, the entire board assisted in bringing in participants but Rob Porges and Don Rosenthal are our all star recruiters. Everyone has done their part but we most definitely have had a great President in Claudine, she has given 1110%.
The chapter thanks everyone for all their support and they could not have done it without everyone's support and participation.
Next up will be to schedule a legislative presentation with Eric in May.
|Walking Away from Your Mortgage - Strategic Default|
by Howard Nelson
NOT a good idea in my book...!!! I recently missed an opportunity to participate in a national business syndicated show that was being done on upside down mortgages and those borrowers who were just walking away from their mortgages and their homes. The program was precipitated by a recent legal study done and published by a University Law Professor on this related topic. The essence of the study, while trying to be objective from many viewpoints, made conclusions that I interpret to support and encourage home owners, in many circumstances, to simply walk away from their mortgage and ultimately their home - a Strategic Default.
To no surprise, following this published study, several national newspaper and magazine syndications picked up on the topic of strategic defaults, debating the various positions further, all the while concluding and justifying why it should be acceptable in certain circumstances to make a decision to just walk away from your home and subsequent mortgage obligation. In most cases, this study and subsequent other related articles, was not talking about delinquent homeowners with financial hardships who had a desire to stay in their homes, (many of these homeowners have and are finding equitable solutions with their lenders and loan servicers). The various articles and study were primarily focusing on homeowners that were not delinquent and were simply weighing a perceived current negative equity situation as the rationale for their calculated "business or investment" decision to simply walk away.
John Courson, President of the Mortgage Bankers Association was recently quoted in a Wall Street Journal article on the subject. The essence of his comments related to having a responsibility to make good on our commitments, our promise to pay. He wasn't speaking of homeowners with economic hardships, Mr. Courson was referencing an increasing number of homeowners who continued to be financially able and voluntarily making a decision of strategic default.
After reading this study and various related articles, even with what some would imply as convincing arguments, in my personal opinion, both as a mortgage banker, as well as a homeowner, I must conclude...still not a good idea...for many reasons;
- A mortgagor signs a "promise" to pay. I can recall my father and grandfather keeping their promise, even on just a hand shake. I also can recall being taught, "Son, let your yes be yes and your no be no". It was more than just a character/moral issue, it was about honoring a commitment made, especially when you have the means in which to do so. As a mortgage banker, we are proud to be a homeowner's financing partner and helping fulfill the American dream of homeownership, however this does not makes us an investment partner. In taking out a mortgage on a property, a borrower is in essence, "asking the lender" to finance their home purchase and willingly signs the promise to pay.
- Borrowers, particularly those who have the ability to pay their mortgage, need to think long and hard about walking away from their obligation. The note and other related loan documents detail lender remedies in the event of default and foreclosure that should not be ignored.
- Clearly, loan defaults and foreclosures results in adverse credit ratings, which have potential negative impact in many areas, other than just future credit.
- To me, my mortgaged property is my "home" for my family. I would like to think that most borrowers see their property as more than just an investment, that they see their property as a home and homes make a community.
- The impact of foreclosures cannot be ignored. Every foreclosure has a negative impact on the community, as empty unkept homes attract crime and other undesirable elements.
- Foreclosures directly impact neighboring home values, driving down values of everyone around you and thus having a negative impact for governing localities. The resulting economic impact hurts schools and other community services.
- I do not recall a guarantee in any of the loan documents, guaranteeing future property appreciation. And who is to say that the perceived negative equity today is not recaptured over time. There are many economic reports that are showing positive signs of more stable values in many markets. A strategic default today effectively would lock in a loss on the property, eliminating the ability to recover their loss when the real estate market rebounds.
Conclusion...bottom line, I am unable to support the various claims and justification that others have made for Strategic Defaults. Again, I'm speaking primarily of the homeowners who have the ability to pay and are voluntarily choosing to just walk away. I believe the homeowners, who are truly experiencing financial hardship and desiring to remain in their homes, will find hope and help with MBA's lender and servicing members.
HOW DO YOU PRICE YOUR SERVICE?
"Our goal is to never lose your business over price."
by Mickey Carlton
We hear this comment on television commercials several times per week (per day, if you watch a lot of television). It comes from more than one local business.
This statement always makes me wonder how much respect the advertiser has for his or her products or services. If the promise to never lose business over price is true, it implies that the product or service is of so little value that pricing is not an issue. If the statement to never lose your business over price is false, it implies that the business relationship begins with a lie. Either way, such statements do not make me eager to do business with the claimant.
Have YOU ever made this claim with respect to your mortgage services?
Are you truly willing to sell your time and your technical knowledge for the lowest rate the client can find as a comparison? Keep in mind that the public's perception of "today's rate" is the lowest rate he or she has ever seen in print or heard fall from a relative's lips. For the most aggressive rate shoppers, there is no rate low enough to convince them that they got a fair price.
Some loan originators justify lowball rates by convincing themselves that their borrowers will be deliriously happy, resulting in many referrals "down the road". In fact, borrowers rarely refer because of price. Borrowers refer because they trust you as a professional. They sing your praises to others because of the value they place in the overall relationship between themselves, you and your institution.
Before you make a concession to a comparative rate quote, consider that an ethical transaction is an equal trade of value between informed parties. We, as mortgage consultants, trade our knowledge and advise for the client's ongoing interest rate payments. We owe our clients the kind of care and attention that suggests they have some rare disease and we are the only specialists capable of healing them. In return, we deserve equal value in the form of reasonable compensation.
If your attitude is to price to the competition, you will always work for minimal compensation. If, on the other hand, you truly value and respect the service you provide, you will always be compensated in a fair and equitable manner.
Provide great knowledge and service. Recognize the value you provide. Price accordingly.
Back to the Future or Back to the Past:
Is it time to return to the "Four C's"?
By Derrick B. Gruner, Esq., The Pinkert Law Firm
Amidst the receding tsunami of near global financial collapse, it seems like everyone has an opinion in one hand and a remedy in another. In the nearly 20 years I have participated in the industry first as a banker now as an attorney, I have seen many dynamic, exciting, and occasionally frightening changes in the way we do things. Many wonder, as I do, if the days of the "new economy" and going back to the future have really and necessarily brought us back to the past.
Consider that the basic premise of lending is to identify those persons or entities that have a need to borrow and then lend prudently and profitably. This process often begins with an evaluation of the borrower's credit or character, capacity to repay, capital (down payment), and the collateral against which the credit extended is to be securitized. While there are several variations on this theme, those of us who have been in the industry long enough were probably first taught to refer to these criteria as "the Four C's" Long before the advent of credit scoring and automated desktop underwriting, loan officers, account executives, processors, and underwriters had to make lending decisions based on the Four C's.
The formula was fairly straight forward. First, we looked at the borrower's loan application to determine their income, assets, liabilities and the proposed indebtedness at issue. Next, we would typically verify that the job and income stated on the application not only actually existed but were in fact accurate (pause to chuckle here). The same was true regarding performance of the primary housing obligation. Next, we actually looked at credit reports, usually all three major bureaus or a merged verified or factual report. We reviewed at the major secured installment debt performance, such as mortgage and automobile payments, and began a classification based on the amount of times a borrower was 30, 60, or 90 days or more late on these obligations. Next, we turned our attention to major and minor unsecured credit lines, such as Visa and Master Card accounts, and reviewed these accounts on the same criteria as above. With this done, we moved on to public record matters such as collection or judgment trade lines. Finally, we looked at the subject property by virtue of the appraisal along with compensating factors such as the time in a residence or on the job. In short, we actually made real life credit decisions based on tangible and verifiable information.
Then came credit scoring. While it is true that credit scoring is a wonderful predictive tool to enhance underwriting, it is also true that the use of credit scores was often abused as a substitute for underwriting, or worse, ignored entirely. Predictably, files that were actually underwritten by a trained credit analyst outperformed those applications that were merely scrutinized by means of a credit score, desk top underwriting, and basic verifications, if any. These loans were then bundled and sold to investors that all too often had even less understanding of the likelihood of performance (or, for that matter, default), than those responsible for extending credit in the first place. Against this backdrop, one must reasonably posit the following: is it time to return to human underwriting and the Four C's?
Recognizing of course that hindsight is always 20/20, perhaps credit scoring and desktop underwriting or the abuse thereof get a bad wrap. On the other hand, even in the "new economy", or what is left of it anyway, there is simply no substitute for sound underwriting and prudent lending. As my grandfather always used to say, there are no shortcuts. Perhaps it is time to return to the Four C's.
Derrick B. Gruner (firstname.lastname@example.org) is the senior managing associate of the Banking and Lending Group of the Pinkert Law Firm, a South Florida-based firm specializing in banking and lending litigation, bankruptcy and professional licensing representation.
Exciting BABY News!
Congratulations are in order!
Alex Castellanos will welcome Noah Ray Castellanos into the world on August 15, 2010. Please note the middle name of Ray, who is Alex Castellanos' father and 2004/2005 MBAF President!
ALSO, on September 3, 2010 Nate Morris plans to be busy himself welcoming a new baby boy into the world too!
This is such good news for you both! We expect plenty of pictures and stories in the next few months.
|Members Only Online
Look for an announcement soon with our new members online service! It is almost ready.
and What is a Certified Mortgage Banker?
The CMB Society has a group page on LinkedIn. If you have an account with LinkedIn, and are a Certified Mortgage Banker, please take a minute to request membership status in this group:
What is a Certified Mortgage Banker?
The Certified Mortgage Banker (CMB) designation is the industry standard of professional success. It symbolizes respect, credibility, ethics, and achievement within real estate finance. Earning a CMB instantly places you at the top of our dynamic industry and makes you a part of the elite group that has achieved the highest level of professional success.
In these tough times, holding a CMB designation can put you at the top of the list for career opportunities.
You can choose to earn a Commercial or Residential CMB. Complete both programs to earn your Master CMB. Achievement of these designations represents the epitome of dedication and expertise in the real estate finance industry.
Since its inception in 1973, the CMB has been the highest professional designation for the real estate finance industry. The CMB community is made up of outstanding industry professionals and leaders. With such a great community, the designation continues to define excellence within the industry.
Currently there are over 1000 CMBs nationwide.
Whether obtaining the designation as a personal achievement in their career, or as a testament to the industry, CMB designees exhibit the dedication that inspires other professionals to strive for excellence. In fact, more than 89% of CMB designees hold the title of vice president or higher, reflecting the level of leadership and commitment designees maintain.
The Tools to Succeed
We have all the right tools to help you succeed. CampusMBA offers award-winning training to help you meet the requirements and prepare for the exam. And you can track your progress with your online transcript.
If you are an individual who would like to demonstrate your commitment to professional excellence and distinguish yourself as a leader within the industry-the CMB designation is the program for you.
When the program was initially developed, professionals who wished to earn the designation were required to learn both commercial and residential finance disciplines before they could earn the CMB. At that time, most lenders had commercial shops within their organization, so it was expected that professionals could, and would learn both parts of the industry.
The growth of the industry necessitated the division of companies to focus on more specialized operations and many new companies appeared on the playing field as a result. Now many successful professionals are experts within their field and may never have the opportunity or need to learn the other side of the business.
MBA has introduced a new Executive CMB program for those individuals with industry experience but do not have the time to attend the School of Mortgage Banking.
Ross G. Bennett, CMB-
Chair, Certified Mortgage Banker Committee, MBAF
1952, the Mortgage Bankers Association of Florida (MBAF) has integrated the
state's diverse real estate finance industry into a unified service
organization. The MBAF is committed to promoting sound and ethical
business practices in the mortgage banking industry; providing a powerful and
responsible presence in Florida's legislative arena; educating its members in
the most up-to-date practices and methods, so members can grow and mature in
their careers; serving as a forum for communication and social interaction
among peers; and adapting to change in a mercurial business environment, in
order to help mortgage bankers succeed in that environment.
Not a Member? You can join today!
Click to Access Membership Application
Please contact Brenda Thomas at the state office with any questions at email@example.com or 407-290-9404