Fred Kreger, president-elect, NAMB, The Association of Mortgage Professionals
By Rob Crow, editor, Scotsman Guide Residential Edition | bio
Regulations Still Hover Over Mortgage Industry
Regulatory issues continue to dominate the mortgage landscape. Last year saw the implementation of TRID, the new Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure rules. Also in 2015, the Consumer Financial Protection Bureau (CFPB) began cracking down on marketing-services agreements (MSAs) between mortgage originators and third parties, such as title insurers, changing the way many originators do business. NAMB, The Association of Mortgage Professionals, acts as a voice for originators in these regulatory matters, as well as providing educational and networking opportunities. Founded in 1973, it is a major national trade organization for mortgage originators.
Fred Kreger, a longtime originator based in California, is the vice chair of NAMB’s Government Affairs Committee and is the association’s president-elect. He spoke with Scotsman Guide about several regulatory issues facing the mortgage industry and ways for originators to boost their business.
What do you think is the biggest issue facing the mortgage industry this year?
We’re still going to experience the aftermath of TRID. … There’s still a lot of ambiguity regarding the CFPB and how they are looking at these loans. Really, at the end of the day, everyone’s doing their due diligence. I really do believe the industry is doing their darndest, and they’re spending a lot of money on compliance, trying to abide by the TRID [consumer-disclosure] rules. There’s still a lot of confusion as to what the industry standards are, and should be.
The stress levels inside your mortgage-originator shops have tripled. They’re so concerned about timing — making sure that they meet the expectations of Realtors, making sure they meet the expectations of their clients. I’m an originator myself, and I feel the stress. … What happens is, we’re working overtime, we’re working more than we ever have, we’re spending more on resources to make sure that we get it right, to make sure that we can close on time. That’s really what it comes down to. From the outside, a lot of people don’t see what goes on, the inner workings of how to put a loan together, but there’s a lot of confusion.
Do you expect to see MSAs drastically change, or disappear?
Let’s take a look at some of your big depository institutions and some major investors that have exited those marketing-services agreements. They have exited the joint-venture agreements, because how the CFPB will look at an MSA is, are you paying for a [customer] lead? If the answer is yes, that’s a CFPB violation. That’s really how they look at it.
There are some great MSAs out there that definitely work well. You split marketing costs, because you’re jointly marketing to a consumer. There are some really, really good, above-board MSAs that are in place, that I truly do believe are legitimate. But it’s hard for someone to defend themselves, because at the end of the day, they’re going to have to defend themselves in front of a court of law, the Department of Justice or the CFPB. … Instead, you can just jettison the whole MSA agreement, because it’s not worth me spending millions of dollars to try to defend myself. You’re going to have some major lenders really balance that out, in terms of a business decision, and that will really shape the landscape.
What advice do you have for originators looking to increase their business?
As originators, you can’t just keep calling the same referral sources, saying, “Hey, I have the best price, the best customer service, the best turnaround time.” Another originator, or 99 other originators, are going to call the same referral source and say the exact same thing to them. So what I would have originators do is, be involved. Be involved in the communities that you serve, whether it’s sitting on boards for Realtors, or sitting on the boards or volunteering committee for the local chamber, the local industry associations. Ask yourself: What is the business you are doing, what community are you dealing with, and are you actually giving back to the community, so therefore you can brand yourself as someone who is respected and knowledgeable.
Myself, I teach a lot. I volunteer on a number of boards in the realm that I do business in, because I want to be that respected person. That’s one of the best pieces of advice that I can give originators. No longer can you just sit in that seat and hope your phone will ring. Hope is not a strategy.
Fred Kreger is the president-elect and vice chair for government affairs at NAMB, The Association of Mortgage Professionals. He also is a past state president for the California Association of Mortgage Professionals and branch manager for American Family Funding. Kreger is an advocate for the mortgage industry, speaking regularly at the federal and state levels on the current state of mortgage lending, as well as to other mortgage professionals and credit unions. With more than 30 years of experience in operations and customer service, Kreger trains loan officers and credit unions in customer service and sales skills.