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New Trade Group Seeks to Level Playing Field

Community Mortgage Lenders of America launch

Oct. 2, 2009


A new mortgage association hopes to level the playing field between national mortgage banking firms and behemoth financial institutions.

The Community Mortgage Lenders of America was launched during the past week, the group's chairman, Scot Stern, told in an interview.

Stern is also the chief executive officer of St. Louis-based Lenders One Mortgage Cooperative.

Prospective members of the new association, which operates from both St. Louis and Washington, D.C., are "non mega-banks" that operate nationally but have no deposits, Stern said.

Stern said 120 members of Lenders One have already committed to joining the new trade association, while Quicken Loans Inc., "the largest independent mortgage banker in the United States," has also committed to join. In addition, he said inquiries have been coming in from prospective members across the country.

The cost to join the group is $8,000, though Lenders One members will receive a $2,000 discount. The cost includes all lobbying and advocacy efforts, regulatory counsel and limited legal advisory services. It also includes conference calls with Fannie Mae, Freddie Mac and FHA.

He hopes the new organization will help ensure a level playing field for mortgage industry participants so that member companies survive.

"What seems to have occurred is that the mega-banks are getting a bit of a free pass in a lot of the regulations for the mortgage industry of the future," Sterns said. "Mortgage bankers are considered the pariah of the industry."

Without the new organization, Stern said all mortgages would eventually run through just three or four mega-banks.

He pointed to the disparity created by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. He noted banks are exempt from the act, while mortgage banks that operate in multiple states must comply with a hodgepodge of state education requirements.

"The S.A.F.E. Act is by far and away the most egregious application of winners versus losers that I have ever seen," he stated. "The S.A.F.E. act is a tax on mortgage bankers."

In addition to the monetary expense, independent mortgage bankers are also subjected to separate exams and licensing in each of the states they operate -- while banks are exempt from the act.

The disparity between financial institutions and non-bank lenders also places banks in a far more competitive position in recruiting loan officers. While originators might need to complete hundreds of hours of continuing education if they work at mortgage banking firms -- there are no such requirements for bank originators.

"We're trying to create differentiation where regulators, lawmakers and media distinguish between mortgage banks and mega-banks," he explained. "A loan officer who meets with a consumer should follow the same rules whether they work for ABC Mortgage or Bank of America."

Sterns concluded, "The survival of our industry depends on the work that we're doing."

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of in 2000.

[email protected]

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