NAMB President Invites Consumer Reports Editors to See How Industry Actually Works
Plano, TX, March 16, 2015: John Councilman, President of the National Association of Mortgage Brokers, has challenged the editors of Consumer Reports to spend some time with him “in the field” to see the real value mortgage brokers bring to the real estate transaction process. Councilman made the invitation following a recent article published in Consumer Reports that asserted potential homebuyers should avoid using mortgage brokers, shop for mortgages online, and deal directly with large banks.
The Consumer Reports article advised against the use of mortgage brokers while making unsubstantiated allegations of mortgage brokers steering consumers and not making the effort to find the best deal for the consumer. The NAMB has sought to publish a rebuttal on the Consumer Reports website, where the original article appeared, but have not received a response to date.
“In its March issue, Consumer Reports magazine recommended that borrowers not go to mortgage brokers. That is an amazing statement from a magazine that purports to be a resource for consumers. The story is based on misinformation and outdated concepts. In truth, recent surveys show consumers would have saved money, received better service, and had greater consumer protections had they gone to a mortgage broker rather than to one of the too-big-to-fail banks the story recommends. NAMB will not stand idly by while misleading information is spewed into the media, no matter what the source.” stated NAMB President, John Councilman.
“While it would be great to be able to trust all large banks, and to believe everything you read on the internet, we believe it makes infinitely more sense for a prospective homebuyer to work with a highly qualified and credentialed mortgage professional when purchasing a home,” said Councilman.
“I have not heard of any government actions taken against brokers who are violating the laws referred to in the unfortunate Consumer Reports article, but there have been severe sanctions and huge fines imposed where lenders were allowing their retail originators to steer clients to more profitable loans,” added Councilman.
The National Association of Mortgage Brokers has proactively engaged in legislative and regulatory lobbying efforts to clean up the mortgage industry. As part of those efforts, mortgage brokers have advocated successfully for making their profession the most highly qualified in the mortgage origination process.
“Consumers should be aware that bank originators are not licensed, tested, or required to have the same amount of education as non-bank originators,” said Councilman. “They have even less stringent criminal background standards.”
“The leadership of NAMB and I are willing to host the editors of Consumer Reports in seeing how it really works out in the field and we also hope they will publish our rebuttal to the ill informed piece they published in the March issue of their publication,” concluded Councilman.
To read the Consumer Reports article please follow this link: http://www.consumerreports.org/cro/magazine/2015/03/home-sale-mistakes-that-cost-you-money/index.htm
About NAMB – The Association of Mortgage Professionals:
Since 1973, NAMB-The Association of Mortgage Professionals has been the voice of the mortgage broker industry, representing the interests of mortgage professionals and homebuyers. Its mission is to promote the highest degree of professionalism and ethical standards for members through programs and services such as education, professional certification and government affairs representation. In addition, NAMB members subscribe to a specific code of ethics and best lending practices that foster integrity, professionalism and confidentiality when working with consumers. For more information, visit www.namb.org. Follow NAMB @NAMBpros
Monday, March 16
What a week this has been. Business is really getting better and I am looking at a lot of customers getting pre-approved for new home purchases. It looks like 2015 is off to a great start for the mortgage business. If you are not busy, you need to get out there and start visiting real estate brokers and agents and expand your sphere of influence. In my opinion, rates are good and this is an excellent time to refinance and buy that new home.
We held a NAMB Delegate Council meeting this past week and I must say, I was a little disappointed that we didn’t have more people on the conference call. All of the states have the ability to have 2 delegates attend the meetings, either in person at the 2 meetings we have annually or on the teleconferences scheduled at other times. I hear that the reason some states do not attend the in person meetings is because of cost, but a teleconference? It is only about time invested. We should have had over 100 people on the call and we only had 38 plus Board Members. States need to devote time for this meeting and those chosen to represent their states need to take this seriously. NAMB Delegate Council is the way that NAMB keeps the states involved and provides a conduit for the states to communicate with NAMB. Even if you do not have a state association, get the NAMB members in your state together and elect 2 people to represent you in the meeting. It is not a waste of time. You pay your dues to have a voice and you should demand this of your state or other state members. And if no one wants to do it, step up and do it yourself. It is very hard to conduct business is no one attends and asks the questions and add your input. If your state does not have an association please contact me at firstname.lastname@example.org and I’ll be happy to provide you with the contact information of other NAMB members in your state. Together we can make a difference!
Valerie Saunders and her NAMB Bylaws Committee are in the process of updating them to reflect up and coming changes. To pass these, we need our NAMB Delegate Council to approve them so we can take them to the NAMB membership to approve them them. That will happen with a discussion at the NAMB Regulatory and Legislative Conference (for more information on this conference please CLICK HERE ) in April and to the membership at NAMB-National in Las Vegas in October (for more information on NAMB-National please CLICK HERE ). So if you are feeling like you are not being represented, talk with your state leadership and hold them accountable for their attendance. It is your right as a State member and a member of NAMB.
Some startling information this week was that we received a list of new state members from a state of 46 new members. That was great, but only 3 were adding NAMB with their membership. I am asking that every state promote the ability to join NAMB with their state membership. NAMB sends all new members that sign up on the NAMB website for NAMB, information on joining the state they live in. We need the states to be equally pro-active in promoting that new state members concurrently join NAMB with their state membership. I thank you in advance for your support on this issue.
Next weekend is the first NAMB Wholsale Summit in Orlando, Florida. We have 15 wholesale lenders and 1 compliance company participating with over 60 people attending. Our agenda is to grow market share for wholesale lending, compliance and profitability while concurrently working on ways to improve how mortgage brokers and correspondents do business with wholesale lenders. It is going to be a very intense and comprehensive day working together for you. So next week, make sure you read my Monday Morning Messenger for information on this outstanding event and what went on. My thanks to Joel Berman of the National Mortgage Professional Magazine and Vince Valvo of Agility Resources for all of their help in putting this summit together.
As I stated last week, the NAMB Nominations have been extended to April 3, 2015. One of the reasons is that we have scheduled a training class to take your CRMS (Certified Residential Mortgage Specialist) and CMC (Certified Mortgage Consultant) test. If you are going to do this, please go online into the certification area of our website and print out the requirements and application and get this completed to make sure you qualify. Then you take the class during the NAMB Legislative and Regulatory Conference scheduled for Saturday 4/11/14 to Tuesday 4/14/15 in Washington, D.C. (for more information on this conference please CLICK HERE ) then schedule to take the test. I took this class years ago and I assure you that it will help you understand what is on the test and what information you need to study to pass the test. So don’t wait. Go complete that application and submit it today so you are ready to take that class. For more information on CRMS and CMC exams please CLICK HERE.
There is still time to get your name into the NAMB Nominations Committee to be considered for election to the NAMB Board. We need good people. We currently have 9 people that have submitted their names for the positions that are open. The nomination form can be completed by you. For the nomination form please CLICK HERE. Please scan and e-mail me the completed form at email@example.com and I will get you on the list. You will get a letter from me after nominations close and will have until May 1, 2015 to get me all of the required documents to be considered by the NAMB Nominations Committee.
I was given some interesting information this week about our FaceBook results. We have had a 3000% increase in our Facebook looks and this is great. Please continue to follow all of our social media areas for the most up to date information on what is going on in our industry today.
I would be remiss if I didn’t wish everybody a safe and enjoyable St. Patrick’s day. Being part Irish myself, I plan on enjoying a little of my heritage with my wife. So go have some fun, but be careful. Do not overdue it and get yourself in trouble. I want to make sure that you are around to get my MMM next week. Be safe!!!
Just a reminder if you are renewing your membership, don’t forget to go and renew your NAMB Lending Integrity Seal of Approval. Please CLICK HERE for more information.
It has to be renewed every year when you renew your membership. Here is hoping that you all have a great week this week in business. And just a THANK YOU to all of our members. You really are the lifeblood of the mortgage industry and we appreciate your membership.
Despite the economic and financial challenges young adults have braved since the recession, the millennial generation represented the largest share of recent buyers, according to the 2015 National Association of Realtors Home Buyer and Seller Generational Trends study, which evaluates the generational differences of recent homebuyers and sellers. The survey additionally found that an overwhelming majority of buyers search for homes online and then purchase their home through a real estate agent, with millennials using agents the most.
For the second consecutive year, NAR’s study found that the largest group of recent buyers was the millennial generation, those 34 and younger, who composed 32 percent of all buyers (31 percent in 2013). Generation X, ages 35-49, was closely behind with a 27 percent share. Millennial buyers represented more than double the amount of younger boomer (ages 50-59) and older boomer (60-68) buyers (at 31 percent). The Silent Generation (ages 69-89) made up 10 percent of buyers in the past year.
“Over 80 percent of millennial and Gen X buyers consider their home purchase a good financial investment, and the desire to own a home of their own was the top reason given by millennials for their purchase,” Lawrence Yun, NAR chief economist said. “Fixed monthly payments and the long-term financial stability homeownership can provide are attractive to young adults despite them witnessing the housing downturn and subsequent slow recovery in the early years of their adulthood.”
With millennials entering the peak buying period and expected to soon surpass boomers in total population, Yun believes the share of millennial purchases would be higher if not for the numerous obstacles that have slowed their journey to homeownership.
“Many millennials have endured underemployment and subpar wage growth, and rising rents and repaying student debt have made it very difficult to save for a downpayment,” said Yun. “For some, even forming households of their own has been a challenge.”
According to the survey, 13 percent of all home purchases were by a multi-generational household, consisting of adult siblings, adult children, parents and/or grandparents.
The biggest reasons for a multi-generational purchase were cost savings (24 percent) and adult children moving back into the house (23 percent). Younger boomers represented the largest share of multi-generational buyers at 21 percent, with 37 percent of those saying the primary reason for their purchase was due to adult children moving back into their house.
“Even though the share of first-time buyers has fallen to its lowest level since 19871, young adults in general are more mobile than older households,” said Yun. “The return of first-time buyers to normal levels will eventually take place in upcoming years as those living with their parents are likely to form households of their own first as renters and then eventually as homeowners.”
The median age of millennial homebuyers was 29, their median income was $76,900 ($73,600 in 2013) and they typically bought a 1,720-square foot home costing $189,900 ($180,000 a year ago). The typical Gen X buyer was 41-years-old, had a median income of $104,600 ($98,200 a year ago) and purchased a 1,890-square foot home costing $250,000 (same as last year). Seventy-nine percent of all buyers considered their home purchase a good financial investment, with millennials (84 percent) and Gen X (82 percent) having the highest share, followed by younger and older boomers (both 77 percent), and the Silent Generation (72 percent).
Generation X buyers (68 percent) were the most likely to be married, younger boomers had the highest share of single female buyers (23 percent), and millennial buyers were more likely (compared to other generations) to be an unmarried couple (14 percent).
When asked about the primary reason for purchasing a home, a desire to own a home of their own was highest among millennials at 39 percent. Younger boomers were the most likely to buy because of a job-related relocation or move, and a change in a family situation—likely the birth of a child—was the highest (13 percent) among Gen X buyers. Older boomers (at 15 percent) were the most likely to buy because of retirement.
Regardless of their age, buyers used a wide variety of resources in searching for a home, with the Internet (88 percent) and real estate agents (87 percent) leading the way. Millennials were the most likely to use a real estate agent, mobile or tablet applications, and mobile or tablet search engines during their search; Gen X buyers were the most likely to use an open house.
Although the Internet was the top source of where millennials found the home they purchased (51 percent), they also used an agent to purchase their home at a higher share (90 percent) than all other generations.
NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., says the survey results highlight the fact that while the Internet is widely used during the home search process, the local market knowledge and expertise a Realtor provides is both valued and highly sought by buyers of all ages.
“Nothing can replace the real insights and guidance Realtors® deliver to help consumers navigate the complex buying and selling process,” said Polychron.
Although most purchases by all generations were in a suburban area, the share of millennials buying in an urban or central city area increased to 21 percent in the past year (19 percent a year ago), compared with only 12 percent of older boomers (unchanged from a year ago). Older boomers and the Silent Generation were more likely to buy in a rural area (18 percent each). Buyers’ median distance from their previous residence was 12 miles, with older boomers moving the furthest at a median distance of 30 miles.
The majority of all buyers (79 percent) purchased a detached single-family home. Gen X buyers represented the largest share of single-family homebuyers (85 percent), and the Silent Generation was the most likely to purchase a townhouse or row house (10 percent). A combined 7 percent of millennial buyers bought an apartment, condo or duplex in a building with two or more units.
Among the biggest factors influencing neighborhood choice, millennials were most influenced by the quality of the neighborhood (75 percent) and convenience to jobs (74 percent). Convenience to schools was most desired by Gen X buyers and proximity to health facilities by the Silent Generation.
Millennials plan to stay in their home for 10 years, while the baby boom generation as a whole plans to stay for a median of 18 years.
NAR’s study found that 88 percent of all buyers in the past year financed their purchase. Millennials (97 percent) and Gen X (96 percent) were more likely to finance than older boomers (72 percent) and the Silent Generation (61 percent). The median downpayment ranged from 7 percent for millennial buyers to 20 percent for older boomers.
Younger buyers who financed their home purchase most often relied on savings for their downpayment, whereas older buyers were more likely to use proceeds from the sale of a primary residence. Younger buyers also were more likely to receive a gift from a relative or friend, typically their parents, cited by 25 percent of millennials and 15 percent of Gen X.
Twelve percent of all recent buyers had delayed their home purchase due to outstanding debt. Among the 22 percent of millennials who took longer to save for a downpayment, 54 percent cited student loan debt as the biggest obstacle – down slightly from 56 percent a year ago.
Younger buyers were more likely to finance their purchase with a low downpayment Federal Housing Administration (FHA)-backed mortgage, whereas older buyers were more likely to obtain a mortgage through the Veterans Affairs loan program.
Gen X homeowners represented the largest share of sellers in the past year (27 percent), followed by older boomers (23 percent) and younger boomers (20 percent). The older the seller, the longer he or she was in the home. Millennials had been in their previous home for a median of five years, while older boomers and the Silent Generation stayed for 13 years.
Younger sellers were more likely to need a larger home or move for job relocation. In comparison, older buyers wanted to be closer to family or friends, said their home was too large, or were moving due to retirement.
The survey additionally found that Gen X sellers were the most likely to have wanted to sell earlier but were stalled because their home had been worth less than their mortgage (23 percent compared to 16 percent for all sellers).
Sellers moved a median distance of 20 miles, with boomers and the Silent Generation moving further distances and downsizing to a smaller-sized home.
A combined 60 percent of responding sellers found a real estate agent through a referral by a friend, relative or neighbor, or used their agent from a previous transaction. Eighty-three percent are likely to use the agent again or recommend to others.
While all sellers wanted help in marketing their home to potential buyers, younger sellers were more likely to want their agent to help with pricing the home competitively or selling within a specific timeframe.
NAR mailed a 127-question survey in July 2014 using a random sample weighted to be representative of sales on a geographic basis. A total of 6,572 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 9.4 percent. The recent homebuyers had to have purchased a home between July of 2013 and June of 2014. Because of rounding and omissions for space, percentage distributions for some findings may not add up to 100 percent.
Number three bodes ill for TILA-RESPA problems
The Consumer Financial Protection Bureau pulled back the curtain on what investigations go on inside the regulator and what mortgage violations the industry is likely to make.
The bureau’s seventh edition of supervisory highlights covers activities between July 2014 and December 2014, resulting in remediation of $19.4 million to more than 92,000 consumers.
“We are sharing our latest supervisory highlights report with the public so that industry can see trends, examine their own practices, and be proactive to make needed changes before consumers are hurt,” said CFPB Director Richard Cordray.
“The CFPB will continue to monitor both bank and nonbank markets to ensure deception is rooted out, deficiencies are corrected, remediation is given to consumers, and violations are stopped in their tracks.”
Although the bureau is willing to share findings from these examinations, it maintains the confidentiality of supervised entities.
In all cases where CFPB examiners find violations of law, they alert the institutions to their concerns and outline necessary remedial measures. The CFPB often finds problems during supervisory examinations that are resolved without an enforcement action.
Here are the six mortgage violations that the CFPB said it saw on one or more examinations:
- Loan originations cannot receive compensation based on a term of a transaction. Regulation Z prohibits a loan originator from receiving compensation based, directly or indirectly, on the terms of a consumer credit transaction secured by a dwelling.
- Improper use of lender credit absent changed circumstances. Regulation X requires that a loan originator be bound, within the applicable tolerances, to the settlement charges and terms listed on the Good Faith Estimate provided to the borrower, unless a revised GFE is provided prior to settlement.
- Failing to provide the Good Faith Estimate in a timely manner. Regulation X requires that a lender provide a GFE not later than three business days after it receives an application, or information sufficient to complete an application. Regulation Z also requires creditors, in certain mortgage transactions secured by a consumer’s dwelling, to provide a good faith estimate of the Truth in Lending disclosure not later than the third business day after the creditor receives the consumer’s written application.
- Improperly using advertisements with triggering terms without the required additional disclosures. Regulation Z requires advertisements to include disclosures when certain triggering terms are advertised.
- Adverse action notice deficiencies and failure to provide the notice in a timely manner. Regulation B requires a lender to notify an applicant of action taken within 30 days after receiving a completed application regarding the creditor’s adverse action on the application.
- Deficiencies in compliance management systems. A sound and robust compliance management system is essential to ensuring compliance with federal consumer financial law and preventing associated risks of harm to consumers.
Click here for the full report, which also delves into areas of payday lending, overdraft practices and student debt violations.