Washington State Loan Originator Licensing Update

[photopress:LOLicensing_1_2_3_4_5.jpg,thumb,alignright]As of November 14th we had roughly 15,000 loan originators who had received an interim license during the year 2007. These licenses expire on Dec 31, 2007 and license renewal is conditioned upon them passing their competency exam and completing two continuing education courses, one of which must be an ethics course. At the November 14th Mortgage Broker Commission meeting, we were told that out of 15,000 LOs, there were only about 5,000 who had taken their competency exam.

The new loan originator exam was introduced in June andthe exam candidates were given a 600-question study guide along with the answers to the test questions. The LO exam is 100 questions long and candidates must pass with a 70%. One to two percent of the students that attended my exam prep course had actually read the entire 600 question study guide. Less than half of one percent of the exam candidates that came through my classroom had read the state law to which they’re subject to, the Mortgage Broker Practices Act. The pass rate for the LO exam currently sits at 89%. This means the exam is too easy. For those that did not pass the first time, the second try pass rate for them was 71%.

As of December 19th, WA State Department of Financial Institutions (DFI) reported that only 1,900 loan originators had renewed their license. At this point, we can try to project attrition numbers before the actual figures are released from the state which will likely be at the next Mortgage Broker Commission meeting, date TBD.

If there were 10,000 LOs who had not tested between mid November and now, and if we know that 1833 LOs are not physically located in WA state and could likely find a Promissor testing center near their city, then we’re left with 8,167 LOs that needed to take their exam before Dec 31st. I suppose if every testing center across the state was filled with exam candidates between Nov 14th and today, they all could have made it. I think not.

LOs were reporting up until mid December that many of the testing sites were not completely booked when they took their exam. I had been predicting LO attrition to be about 2,000 since the meltdown began. Now I believe we could see further LO attrition, up to 4,000. This will consist of LOs who haven’t closed a loan in many months and who have found other employment, LOs who were only originating subprime, LOs who have chosen to work for a retail bank or consumer loan lender not subject to licensing, LOs who were not able to pass the background, fingerprinting, and felony checks, and LOs who have just simply de-prioritized the licensing renewal requirements.

LOs who do not pass their exam, complete their two required courses, and renew their license online must stop originating (scroll down to numbers 18-22) at midnight on Dec 31, 2007 and transfer all files in process to their broker or another licensed loan originator. LOs will have 45 days to pass the exam and complete the required CE classes while originating NO loans. After Feb 14, 2008, if a LO has not passed the exam and completed his or her required CE, the interim license will expire and the LO will need to start the application process all over again from the beginning and must wait until their new license arrives from DFI before being able to do the job of, and earning fees from loan origination. There are no exceptions; not even one loan. New LOs entering the industry on Jan 1, 2008 may not originate until they pass their exam and receive their license from DFI.

I receive an interesting phone call from a student late Sunday afternoon. She was once again canceling her attendance at the Dec 31st ethics class, and for the third time, was asking me to move her into another class. I made sure she realized that if she didn’t finish up by midnight on Dec 31st that she would have to stop originating. Here’s what she said; “Oh, yeah, I know. I haven’t taken my test yet either. Can you put me into a Jan class please, and sorry to have to reschedule on you again.

About Jillayne Schlicke

Educator in the field of mortgage lending and real estate. Follow me on Google+

Comments

  1. Those are some pretty amazing numbers, Jilayne! I personally know two loan officers that left their brokers and went to work for an in house bank. I was told that they did not have to take a test while originating loans in house. I wonder how many instances there are of that happening.
    The total lack of urgency is what really floors me.
    Thanks for the interesting post.

  2. Hi Courtney,

    Yes, I’m surprised, too. However, we can’t discount the 1900 who got in gear before Dec 19th and I’m sure well see several thousand on top of that who made it by Dec 31st.

  3. Nice post, Jillayne. It will be interesting to see the lender landscape in 2008. I’m wondering if one reason a lender we were dealing with on a transaction in December seemed to disappear for a few weeks was perhaps him being sent off to classes for this reason? I’ll have to ask since we’re doing a follow up with him after the closing because of his lack of communication throughout the transaction. He ended up almost costing his client the deal and she’s not a high-risk borrower either.

  4. National City just exited wholesale business.

    So far three big source for local brokers have exited wholesale:

    WAMU
    National City
    ABC

    End of brokers as we know it? For once in a very long time, retail LOs are actually in better position…

    I have been out of the game for a year now, so can someone fill me in on what major players still left remaining in the wholesale business?

  5. Very interesting article on the birth of subprime:
    http://www.ocregister.com/business/how-subprime-lending-1950724-all-started

  6. I agree that the test is too easy. I did not take your study class, as I had previously passed the test as soon as it was available. I found both of your other classes stimulating and informative.

    I think there may be a culture of disregard for the law in this industry, as the policing was quite lax in recent years. There’s a new sheriff in town now at DFI, with additional funding and that may help.

    Regarding lenders leaving wholesale, I do not believe that WAMU has left wholesale. They, and several other banks have left subprime wholesale. The other large institution that left wholesale entirely is Bank of America.

    Losing ABC and National City is tough. They were good lenders. On the plus side, there are still hundreds to work with, with guidelines changing every day.

    I think it is a great time to be an independent loan originator. If a guideline change kills my loan at one lender, I’m free to find another, and well versed on what’s available, unlike my retail counterparts.

    In addition, I am free to make the right decision every time, unfettered by my boss’s bottom line.

  7. Word on the street is that WAMU is closing Bellevue wholesale.

    Problem with having hundreds of selection is no one uses hundreds of selection, and any good LO would prefer to work with lenders they know and trust to close their loans. So how many of those are still left, please shed some light to me.

  8. Well, WAMU is certainly going thru layoffs, and possibly could close branch offices or reduce staffing. I have had strong personal assurances that they are not leaving wholesale, but that does not make it so.

    Implode-o-meter is pretty good about sniffing out early warning signs of lenders closing.

    It would be reckless of me to say which lenders are staying in the business, and which are in trouble.

    My recommendation is to always keep several good vendors and lenders in your rolodex in each category.

    Who do I like? Well, I liked ABC and National City, for all the good it did them! I even liked BOA a little bit.

    I like WAMU, Wells, TBW, Plaza, Provident, and HSBC, and many others, each depending on the circumstances. I hope that is not the kiss of death for these fine companies!

    I agree that no one uses hundreds, but I think that we should be open to the possibilities of using new ones, and developing those relationships and understand our lending partners ways. It is unwise to depend only on a few in these uncertain times.

  9. I am out of the business so my resources are limited. But a friend of mine also said the same thing about BoA that his contact high up in BoA assured him that they would stick around wholesale. ml-implode is a reference site just like all these similar websites, so I take them for what they’re worth.

    I had very strong relationship and knowledge of the background working of local wholesale lenders, but of course it’s outdated. As far as your remaining vendors’ list goes, WAMU is very shaky, TBW seems shaky, Plaza is VERY shaky considering what they offer. I never liked HSBC’s rate or their staff…So I don’t find that list very strong…nor believe in any broker with strong list right now.

  10. So Ubersalad,

    That doesn’t leave very many. BOA, Wells, and the big banks. However, if you take a look at the Scotsman Guide, there are still some choices left.

    http://scotsmanguide.com/

    The new growth areas are FHA and hard money lending.

  11. We never know, do we?

    However, as a practical matter, the lenders only have to stay alive long enough to fund the loan, and generally when they truly exit a business channel, they do so with ample notice, and with adequate time to close existing deals.

    Each lender has their strengths, and weaknesses, and knowing what those are is a large part of the value I bring into the process. That knowledge is constantly changing, which makes life interesting, to say the least.

    I am led to the quote, “…grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”

  12. I think with the current climate, many of the LOs will just go back to doing what ever they did before they were in mortgage. I will bet that a majority of those who are not sticking around entered into the business around 2005.

    It will also be tougher for LOs who work for companies that do not offer FHA/VA mortgages. And, I don’t recommend that LOs assume they can just land at bank-mortgage company either. They’re laying off and checking out why LOs decided not to follow through with their exam and/or if DFI rejected them.

    I’ve heard some LOs not believe DFI’s “drop dead date” since they did an extension before with the licensing.

    I’ve renewed through Dec. 2008 and I’m really looking forward to what this year will bring our industry.

    Happy New Year!

  13. Jillayne: Very interesting post. How is Washington dealing with this new trend of mortgage brokers or lenders sending notary signing agents out to either complete mortgage applications or obtain signatures on a loan application and disclosure packet aka RESPA signings?

    The documents do not require any notarization. The NSAs see themselves as some sort of glorified courier service yet they enter the consumer’s home and – in my opinion – engage in the business of mortgage origination. Any thoughts?

  14. Hi Diane,

    I have not heard of this trend.

    The questions I hear are usually surrounding other clerical staff that might come close to doing to job of a loan originator. For example, a loan processor, an LO assistant, or a telemarketer.

    Each time, a mortgage broker in this state simply goes to the state law and reads the definition of a loan originator.

    If that clerical person meets that definition, that person must have a loan originator license.

    If a loan app is taken from a distance, the customary practice here is that the documents are emailed to the client and mailed back. Nothing is notarized at this point at application time.

    Where we DO run into problems is when a third party, independent contractor is paid by the title/escrow company to bring the final loan documents to the homebuyer for signatures. Homebuyers often have many questions during signing and most (not all) independent notaries either do not know the answers or refuse to answer their questions.

  15. I am of the opinion that 2008 is going to be a very exciting year for our industry regardless of the perceived state of the market. LOs, Realtors, Appraisers, even Escrow agents are leaving the industry in droves and leaving it to the true professionals. As far as the LO exam, maybe it wasn’t challenging enough but I think DFI is cracking down so hard that many of the remaining “shady” brokers will filter out by the end of year through DFI’s auditing process. Our company already had our DFI audit and it was extremely grueling. We are a very ethical company and did just fine, but NOTHING was taken lightly by DFI and we did have to correct a few minor oversights. I have a distinct feeling that many other companies won’t be so lucky. As far as large companies leaving the wholesale arena, we had far too many options anyway. Many of the 200+ lenders who “imploded” were not even lenders that most of us had heard of and their demise didn’t hurt our business. National City was down to strictly conforming and government loans anyway, there is no shortage of options in that arena.
    Loan orignators who went retail can only help the independant broker, in my opinion. I have worked in both situations and I can tell you that a mortgage lender in most in-house positions is not out there talking to people and learning new things about the industry day in and day out. In addition, there is no training, competency, or licensing requirements for a mortgage lender working at a bank. Not to say that most are not great professionals, but they are not held to the same standards as a broker…not now, not previously. The loan originator who is a true professional has a distinct advantage over a retail mortgage banker in almost every situation because his/her survival depends on keeping an ear to the street every minute of every day and a banker is only required to be aware of their own products.

  16. Ubersalad says:

    Very optimistic dreamer you are. The transition from last 4-5 years to today’s market and tightening guideline, it is an entirely different animal. A completely different operating and marketing approach need to apply effectively and immediately to survive.

    I wish I can keep track of your business in some sort of WA only broker implode meter.

  17. Ubersalad says:

    By the way, can you guys offer a stronger list of available lenders that you work with, other than just saying there are many? I quit paying my subscription to Lion, Inc, and I never took Scotsman guide seriously on their less than reputable lenders.

    I ran the search in Scotsman:
    Prime (single family, purchase, primary)
    CitiMortgage
    MortgageClose?
    Hollander?
    ICON?
    Chevy Chase (do they have local rep, I never used them before and never felt the need to)
    First Mutual
    BF Saul?
    Merit?
    Vertice (AmNet/Wachovia).

    Out of this list…how many would you consider strong.

    Alt-A:
    IndyMac
    Royal Crown?

    List speaks for itself.

    Honestly, most of everyone I speak to have this confident that there are still a lot of lenders left…Where? How do you have confidence that lenders can survive this storm without having their own bank behind it? I don’t see many evidences of how wholesale can weather this storm.

  18. I am constantly reminded that there are many different backgrounds and perspectives in this business I am in. Those backgrounds, as well as mine, contribute to a predisposition for each of us to see developments in a particular light.

    This makes this blogging arena fascinating!

    Ultimately, the question posed by Ubersalad seems to boil down to “Are there adequate wholesale lenders currently available that will close loans, and will there be in the future?”.

    Until I hear otherwise, I will assume wholesale lenders are open for business, and I will continue to search the marketplace for the best combination of program, rate and price, and delivery, for any borrowers that entrust me with the responsibility.

    Whether one or more lenders will go out of business in the future is not of great concern to me, so long as there are remaining competitors to select from, with an adequate selection of programs. There are still many, and while I expect there to be a few less lenders at the end of 2008, I firmly believe there will be many conforming lenders in wholeseale business at this time next year.

    Conforming wholesale lending thrives because, on the whole, it is a cheaper delivery method than retail delivery, and tends to be more nimble, as their fixed expenses are considerably lower. Retail has it’s advantages too: better marketing, better lobbying, more business channels. Both will survive, but the balance may tip in favor of retail for while, as wholesale has largely been tagged as the bad guys in the Big Story (I guess banks have better PR departments, too!).

    Scotsman’s Guide is one of many resources (just like Lion Inc.) that we use to find lenders, rate sheets and guidelines. I would generally only use Scotsman’s guide to find a lender to do a difficult deal in subprime, or a strange stand-alone 2nd. Today, almost all subprime feels difficult, and there are practically no lenders doing riskier SA 2nds.

    I use Lion Inc. to see if any new lenders are surging to the front of the pack in price, in mostly conforming loans, as I find it does a poorer job of seeking out Alt A with any accuracy, and completely ignores subprime scenarios.

    Implode-o-meter has it’s own agenda, but has been fairly accurate in it’s reports, providing that you read the source material provided, and not just the headlines. Bad news sells much better then good news, and the volume of imploded lenders represented in that site is more reflective of the vast number of small and regional duplicate subprime lenders that flooded the market in the past few years, than of an overall conventional mortgage collapse.

    The decisions of a few banks pulling out of the wholesale market may not be an indication of future profitability of that channel, but an indication that the leaders of that company needed to take a calculated public action to support their falling stock prices. An analogous comparison can be made when you saw companies make announcements of layoffs to bolster stock prices temporarily, though the market seems to have wised up to that trick. Also, some businesses decide to focus on core competencies in more difficult times, and shed other business opportunites, even if they are profitable.

    There are still plenty of options for good loans, and the remaining lenders appear to be competing hard for the best wholesale business. Several wholesale lenders have actually increased their presence in wholesale, in expectation of gaining market share during this downturn, and presumably growing profits.

    Alt-A has gone into hiding since July, but there are pockets left, and occassionally new programs will resurface from lenders who previously backed out. There is considerable risk for an lender to have a Alt-A loan package that it cannot resell to investors. It’s not worth researching Alt-A loans until you have a committed borrower, and they must be made aware that the real world has changed a lot in that time.

    I haven’t done much subprime loans for the past 2 years (less than 10%), and I certainly could not have made a living from them. However, if a subprime borrower needed my help, and honored their commitments to me, like I would honor my commitments to them, I would beat my brains out to find them the best loan. Even if that included telling them that their current loan WAS their best loan.

    As for providing a list, I already have, and each of those lenders have closed loans for me since July, and are currently open for business. As to how strong they are (whether they stay in the wholesale channel), how are we to know in advance what decisions are made in the boardrooms of these banks? What does it matter, so long as they can close the loan? In most instances, the lender gives plenty of notice of their intent to exit wholesale, and adequate time to close the loans in their pipeline. If they cannot, there are many remaining who will close the loan.

    If it is a bad loan, maybe no one will close it, but I have never depended on bad loans to survive in this business.

    It has been a year of many changes for me, and it has been challenging to keep my footing on the tightrope, balancing the extremes of reckless optimism and paralyzing despair, but that is the art of living. Part of that art is to continue to gather information, assess risks and opportunities carefully, and have faith in the goodness of people (including ourselves), and our collective wisdom, and an enduring faith that it will work out in the end.

    Here’s to believing that 2008 provides greater reason for hope than the last half of 2007!

  19. Well, Ubersalad…if all you are is negative, then negative is all that will come your way. The statistics are still tipped in our favor really. There is less competition and business, although down significantly, is not suffering as badly so opportunity is actually UP. If there are going to be less than 5,000 eligible LOs by mid february, that is roughly a 66% decline and business is not down anything close to that. Our company is having the best year it has ever had. The NATIONAL application index was up over 20% from last year as of the beginning of December and, yes, I realize that many of those were simply people attempting to get out of bad loans but it is an increase nonetheless. Those who thrive and survive through these volitile times will be rewarded generously when everything settles down a bit. As for being a dreamer, I don’t think that is completely accurate because I practice what I preach. If I maintained that “sky is falling” sort of outlook then I would fail and failure is not an option. As Mr. Inagalls says, it is a challenging time and a difficult task balancing the reality of the market with staying on track for growth in the future. Eating, breathing, and sleeping the “doom & gloom” reported by our beloved media and various bloggers is not condusive to my business plan, so I choose to focus on the positives. I will concede that maybe it is a bit less dramatic here in Seattle, but I know of loan officers in Florida (one of the six truly troubled markets) who are absolutely crushing their best previous years right now so it does track directly back to how you approach your business. As far as producing a list, I just take it day by day…Suntrust, Wells, American Sterling, Sierra Pacific, Flagstar, First Horizon, and many others are still around and seem strong.

  20. Ubersalad says:

    That’s a long response…thank you, but without many facts. Bottom line is, those so-called lenders that are left, many of those are without a bank behind it, which means they do not and cannot offer any portfolio loans, and they are at the mercy of banks that provide their line. With the recent move of major banks cutting off wholesale and moving to retail, anyone left in wholesale is in limbo.

    My other point is how many successful brokers like to put their loans through lenders they never worked with before. I personally would not even bother with new lenders on purchases due to the obvious. So if your business is relying on these long list of “unknown” or less than reputable lenders in the market, your business may be in trouble. Even if there are 1000 lenders that offer loans, how many would you actually use? I am not a consumer that will be bedazzled by the list of lenders you have “access” to, because we all know most LOs do not use more than a handful of banks.

    Wholesale is less expensive than retail? I disagree and cannot find facts to support that claim. Clients are also more incline to walk into a retail bank and trust the people they work with than a flashy brokerage with long list of lenders. Banks are also more regulated and compensate less to their reps. I still do not see how wholesale is better than retail.

  21. Ubersalad says:

    Matt Clark, I understand that your position requires you to be optimistic of the market else you shouldn’t be in it. I have been in that end of the boat, but looking at things from another end have helped me evaluated my position better.

    Having less competition is great if the market remains strong. Pending sales from NWMLS are down approximately 25% and the trend is that it will continue to do so. 66% down in LO numbers is significant, but how many of those were actually real full-time competitors? 25% decrease in sales is a real number, and a significant indeed. That in combination of less available lenders and stronger retail support from major banks…it doesn’t look too good for brokers.

    Last but not least, “As far as producing a list, I just take it day by day…Suntrust, Wells, American Sterling, Sierra Pacific, Flagstar, First Horizon, and many others are still around and seem strong.” Why would I trust a broker that is taking things day-by-day and cannot be certain if my purchase deal will go through when it’s time to close the loan?

    Btw, I never worked with Suntrust, American Sterling, Sierra Pacific and rarely First Horizon, and I didn’t because they weren’t strong in rate or program. So this list still doesn’t tell me much…

  22. Communicating solely with the written word has always been complicated. I enjoy it, because it allows me a little more time to think about my ideas (and the ideas of others), and try to craft my ideas with clarity, with varying success. I prefer talking, perhaps because I’m not such a good typist, and perhaps because I like to hear myself talk.

    I had not read post #19, when I responded to post #20.

    When I finally read post #19, I initially construed it as a challenge to my opinion, and a wish for my business to implode (or the business of the other writer, Matt).

    After emptying the dishwasher, and loading it up again, I thought differently. Maybe, Ubersalad was wishing for an Implodometer for all mortgage broker businesses in the state of Washington. Certainly that would be a nobler and grander vision than wishing for the demise of only two originators/brokers.

    Being the thoughtful optimist (but apparently, instinctual pessimist), I chose to go with the 2nd interpretation.

    That set me to dreaming once again. Dreams are a way of exploring possibilities, but generally only come true when someone has enough motivation to act, as did the founder of Implodometer. That was one angry elf, but he definitely found an audience! I even sent him a little money, in appreciation of what he did.

    Still, the national version of the Implodometer proved to have relevance and public utility, providing many worthy employees of advance notice of their pending termination, hopefully allowing them a little more time to make a good decision. It also provided others in the business of early warnings that the lender that was going to close their loan, maybe wasn’t, and allowed us to hedge our bets with other options.

    I encourage anyone who feels the motivation to start a WA Implodometer to do so, but personally I question the public benefits. Most broker shops are very small, and wink out like a spark, and have little effect on the outside world. Being small, the LO’s probably just have to ask the boss, or look at their own pipeline to determine it’s viability. Anecdotally, I have heard of many small shops closing, and a handful of larger shops closing, or changing their business model. As a remote competitor to these other businesses, it does not affect me much if they survive or not, unless they are publicly harming the industry (see Linden).

    To gather the data, I suppose one could just go to the DFI and compare bokers of 2005 or 2006 to currently operating brokers. Alternatively, you could just open up a web site or blog, and let LO’s contribute, but I’m not sure there would be enough input to be valuable.

    As for changes in marketing tactics and operations, I guess that would depend on what model you were initially using, or working under. I have already made several large changes, and expect to make many more in the future. Most of the changes were improvements in one way or another, not always financial.

    Of course, your comments can be interpreted either way, and I am sure that it’s likely that my comments can contain ambiguous meanings as well. I do as well as I know how.

    Hopefully, as I continue to express myself in this forum, the picture and subtext of my comments will become clearer, both to readers, (and to myself), as I find that the act of writing disciplines me to think more clearly than speaking, or merely dreaming.

  23. Easy with the insults Ubersalad. Are you a part of the media? You seem to be very skilled and turning words into whatever fits your argument. As far as the lenders mentioned earlier, they are all in the top 25 lenders on the Broker Secondary Guide so I guess things have changed. In addition, pricing is so similar for most lenders that it comes down to who is the easiest to work with and who fits each unique situation. As far as you trusting me, any reasoable mortgage lender would know that, even if a company goes under, they honor their existing locks and pipeline so your purchase would close on time and just fine. I have never missed a closing date in my career and have never had a unsatisfied client. Why is it that no matter what anyone writes, you find a way to turn it around in a negative manner to fit your argument? Obviously things have changed quite a bit, those of us still involved know our market, and here you are asking us to produce a list to help you out because you don’t know the answers. The problem is, as soon as anyone responds you tear apart their answer and insult them. Is your motivation to actually obtain information or simply to fulfill some personal vendetta against mortgage brokers? I think it’s safe to say that nobody in this blog is one of the “bad guys”, so why the cutting remarks?

  24. Ubersalad says:

    Roger,

    I guess you’re right in both. I don’t have any self serving interest to see brokerage fall, but at the same time it is interesting to see certain ones fall. An implode meter for Washington will be interesting because it’s close to home, but I don’t see any usefulness of it either.

    Good luck to your business, and you should be cautious in expansion.

  25. Ubersalad says:

    Matt Clark,

    I thought I was being as neutral as possible in my response, but I guess not. You are more than defensive in your subsequent response, and I guess I must have said something right.

    I don’t know anything about the Broker’s Guide, but is being top 25 the same as being the remaining 25? That’s how I see it since many of them have gone under.

    “I have never missed a closing date in my career and have never had a unsatisfied client.” Even the best have missed closing date to factors that are beyond anyone’s control. No one in the industry can claim what you just claimed…

  26. Ok, saying that I have never had an unsatisfied client may be a little nieve because it’s nearly impossible to know, but I am in regular contact with my entire database and have heard nothing but positive remarks. As far as missing a closing, I truly don’t recall a single missed closing and I’ll keep my fingers crossed that the streak continues. My response was defensive and I apologize for the tone. To some extent, I suppose the idea of this Blog is to stir up some emotional response, but my initial intent in participating was simply a healthy discussion not a war of words. Again, my apologies. No, the broker’s guide is not the remaining 25, but I doubt there are many more than 100 lenders left. I guess that plays into your point that there are many unknown and unused wholesale lenders out there since I only listed a handful.

  27. I have been in this business for almost 4 years; before that, 15 years in telecommunications, and who cares before then.

    Started with a direct lender, went to W-2 at a broker, and I am now 1099 ILO. Learned something different at every juncture.

    One of the differences I noticed right away in the two cultures was the lack of collegiality and cooperation in the mortgage business. It’s natural, I suppose, since the telecom business is largely staffed by customer service and technical types, whereas the mortgage business is largely staffed by competitve types.

    I miss the true teamwork of telecom (as opposed to phony rah-rah sales meetings disguised as teamwork), and have tried with some success to create a culture around me that recreates that kind of atmosphere that I once knew, at every new place I landed.

    Am I a dreamer? Obviously! Am I driven? Surely, but perhaps by a different combination of forces than is common in this industry. Have I had my heinie handed to me on a platter by a more aggressive Type-A competitor? You bet!

    Do I want to win every contest? No, only the ones that truly matter, and even then, I found I can absorb a few important losses.

    Am I still in business? Yes. Will I remain? My gut tells me yes.

    I don’t want to be anyone’s boss, nor anyone’s servant, except by choice.

    What I think I have found here at Rain City, is an opportunity to be a part of something more collegial, but that atmosphere only works if I remember that there is a mutual benefit to turning off my instinctive reptilian brain, and to take a breath before writing.

    Were we in a room together, that instinct would be stronger, as we intuitively know that stongs words and opinions can quickly turn into adverse physical reactions.

    Years of evolution, undone by the internet!

    I have met a few bad actors at direct lenders/banks, and I have met a few at brokers. In general, I think my experiences have kept me away from the worst lending environments, but I cannot in fairness say the bad actors did not exist, nor could I estimate their numbers or percentages. In my direct experience, it was very small.

    As to the classic debate of “bankers vs brokers”, personally I chose independent loan originator, thru a broker, because it affords me the greatest freedom to make the best moral and financial choices.

    There is not a lot of independent study of which is better in the whole, (which does not tell you much, since at my level, decision’s are largely individual) and I would always be happy to read anyone’s research on the subject.

    I can cite an older study of subprime lending from Georgetown University that shows that “on the whole”, brokers delivered better (less expensive) loans than did direct retail lenders.

    http://www.paylessmortgage.com/files/6/1/61b852da9a4f8d2dc53520b369026335/80551-chicagotribune.pdf

    (sorry for the long url, I’m sure there is a better way)

    I know, the environment has changed, but one thing has not changed for the better:

    ” the bigger the organization, the bigger the paycheck is at the top!” Just ask Angelo!

    On a practical note, I just spoke with a former client and suggested that she “go retail”, as I was sure that it would be a better choice for her particular situation.

    So I sing the refrain to the the tune of Let it Snow:

    “…as long as it’s only dough, Let it Go, Let it Go, Let it GO!!!!!”

    See, it’s easy! And fun!

  28. I can think of a couple LO’s that have never missed a closing date promised to their clients in the four years our escrow office has been open. I can also name a few that are chronically late for one reason or another, sometimes their doing, sometimes out of their control.

    The challenge is how do consumers know who manages transactions in a professional manner? Perhaps your title or escrow office would be an excellent resource–being that they are closing numerous transactions. Same goes for finding agents.

  29. Ubersalad says:

    Not missing a deadline in a time like this is more than miraculous. For me personally if I had a questionable loan, I would submit to two or more lenders at the same time for approval and close with the best with least conditions. I personally still do not think it’s possible to never miss a closing date, consider how many parts of a closing transaction involves. But of course if all you do is vanilla loans, that may be a different story.

  30. Submitting to multiple lenders and then failing to deliver will result in a degradation of your pricing tier with many lenders, so it’s really not an option in most cases. Not to say I haven’t had to do it, but I steer far away from it for the most part. Now more than ever, unfortunately, it is becoming a reality on some more challenging loans. Notice I said that I have YET to miss a closing and I hope to keep the streak alive. If you know your borrower and you are good at what you do, you shouldn’t have any problems. I will say, however, that a purchase loan I closed last week came dangerously close due to some issues with the way title was passed in a past transaction…not at all my fault, but is one of those random, squirly occurances that you spoke of earlier Ubersalad.

  31. Ubersalad says:

    I guess we’re on the same page then. For the record, I don’t recalling missing a date for vanilla loans either. But for certain tough Alt-A and subprime, closing date is really something of a reference date, and I made clear of that in the very beginning.

  32. I would love to put together an implode-meter for Washington State mortgage companies. However, the legal liability and time constraints of undertaking such a venture may outweigh the benefits. I will carefully think about this.

  33. What would be the point in another implode website? It really doesn’t serve any purpose other than to spread more doom & gloom throughout the industry and to consumers. I would just have to ask, why fuel the fire? Just think it would be wasted effort and I don’t understand what good could possibly come from further negativity…the media forces plenty of that down our throats as is. Maybe you can shed some light on what your goals would be with something like that? I’m curious to hear how many LOs are out of the business I suppose, but what else would you be tracking?

  34. Ubersalad says:

    If the focus is to clean out the industry and advocate for better brokerages, then it could work and have a purpose. You can’t deny the fact that the industry stinks with part-timers and those without knowledge.

  35. People like information. I go to ml-implode.com multiple times/day not only to see if a company has gone under but to read the other news stories that the web author compiles for us daily. Funny, I never thought of ml-implode as a gloom and doom site but instead I see it as a reference site. ML-implode also provides a list of lenders that are NOT imploding.

    The media fueled the real estate bubble on the way up and it will surely fuel the decline as well.

    So Matt, your curiosity means there may be an appetite for this information. Why are you curious as to how many LOs are out of the buz?

  36. Here is the tag line on their website:
    “Tracking the housing finance breakdown: a saga of corruption, hypocrisy, and government complicity.”
    Sounds a bit negative to me. I suppose that I do look at that website from time to time and have found one or two good pieces of information. I just try very hard to ignore that type of news because it can really start to affect a person’s attitude if all they do is surround themselves with that kind of information. Why am I curious about how many LOs are out of the biz? Honestly, I am tired of competing with dishonest, shady brokers and I hope this all but wipes them out…plus, less LOs means potentially more opportunity for those of us who take pride in doing it right. The industry, real estate included, needs a good cleansing every so often.

  37. Ubersalad says:

    Matt, I finally clicked on your profile and went to your website. Cedar River, that’s the one on 140th across from the huge apartments with a wood sign that seems out of place. Oh, right down the street is the new Reliance Mortgage office.

    I must say, you have only been in this business since 2003, which means you have NOT experience the norm of this business. I started in 02, just before the refi boom and business was SLOW. Since then, I reference slow as in closing 10 loans a month. So buckle up, and perhaps some negativity is just what you need to survive this storm.

  38. Jillayne:

    You go girl! Implode Away!

    The money I sent him was for his legal defenses, so think hard. I’d probably send you money too, for your legal defenses.

    His non-imploded list seems pretty small. Revenue source perhaps?

    I was glad that it existed in a time when it was hard to get the lowdown in real time and I’ll be glad to see the day when his site is irrelevant. He seems like a pretty smart chap, and he should be able to adapt to a new niche when things change, now that he is famous.

    Are there records for number of post?

    Archives, if I need to eat my words?

  39. Actually, I have been in the business overall since 2001, first working for a real estate appraiser, but thank you for doing some research in an attempt to discredit me. I don’t think that one year’s difference makes you any better than me and I doubt that anyone reading this blog would think very highly of someone who is simply out to hurt other peoples reputations. I know that I am very good at what I do and I know that I will survive this market as many others have not. Best of luck to you in your business, whatever it is, and happy new year.

    P.S. If you are going to make cutting remarks and insult people, you shouldn’t hide behind a screen name.

  40. Hi Matt,

    Many bloggers use an anonymous name when they leave comments or post a blog article for various reasons. I have been monitoring the exchange between the two of you all morning. People like to get closer to the truth. So it is not uncommon at all for a blogger to look at our public profiles and match what we’re saying with who we say we are to the general public.

    So, Matt, why are you curious as to how many LOs are out of the business?

  41. Ubersalad says:

    How am I attempting to discredit you? You are very defensive and seems to have some emotional issues as well.

    All I am saying is that base on your OWN profile, you have been in the retail business since 2003, and I know how business have been from 2003 to today. So what I was trying to say is, perhaps being only part of a boom, you may not know what and how it feels like to be in the slow end, hence you have such confidence. But when closing 3-5 loans or even less a month become the norm of business once again, you won’t want to stick around.

    As far as being in the business since 2001, yes I saw that part where you were an appraiser. Appraiser is not the same as being a LO, especially not as a trainee.

  42. Jillayne,
    I am curious how much competition is left and how well the licensing/testing filtered out some of the bad apples.

  43. Ubersalad says:

    I am actually being quite nice as oppose to my usual self…

  44. Ubersalad says:

    I am also curious that you keep on referring to these bad apples, how are we to know that you are not one of them?

  45. Hi Roger,

    The biggest downside to running an information-rumor type website is the legal liability. My attorney has advised against it, and ethically, it doesn’t make sense to trade short term gains for long term sustainable profit. But brainstorming ideas is what will keep us all moving forward as we face the year ahead!

    Roger asks, “Are there records for number of post?” Do you mean number of comments? I am fairly sure that the most comments on this blog have come from a blog article called “The Top Ten Things to Know Before Moving to Seattle.” The top blog articles of mine are:

    Short Sales
    FHA Secure: A political power move disguised as a helping hand
    Seattle Real Estate Market Conditions
    Countrywide; Superbad
    MILA Shut Down
    Professional Status; Perceptions and Reality

    I define “top” as having over 100 comments. To read any of them, click on my picture and scroll down or do a keyword search.

    Blog authors have access to their own archives and those with higher authoring power have the ability to edit or delete any comments. So, for example, if ubersalad and matt can keep the conversation focused on the topic at hand, great. However, if they start in with personal attacks, I can edit or delete their comments if needed.

    We have two basic rules on raincityguide. One of them is to avoid the ad hominem fallacy.

    “ad hominem: An arguer who uses ad hominems attacks the person instead of the argument. Whenever an arguer cannot defend his position with evidence, facts or reason, he or she may resort to attacking an opponent either through: labeling, straw man arguments, name calling, offensive remarks and anger.”

  46. You know, Ubersalad raises an interesting point. How is any consumer to know who is a “bad apple” and who isn’t?

    How would we define “bad apple?”

    Would it be a person who could not pass the fingerprints and background check? Would it be a person who has prior felony convictions but answered “no” to that question when asked about prior felonies by the state regulator?

    Those apples are easy to spot. All anyone can do is to just go to that page on the DFI website. Here is the link:

    http://www.dfi.wa.gov/cs/adminactions_2007.htm

    But maybe “bad apples” could be defined in many different ways:

    “How many LOs did not pass the test?”

    “How many LOs didn’t complete the licensing renewal process and are still originating loans?”

    I think it may end up being easier to answer the opposite questions rather than these two questions.

    Bad apples never just go away. That’s why it is up to the industry to self-regulate. Government was never designed to catch ALL the bad apples, only the superbad ones.

    Without an industry coming out and saying “these are our good apples” then that means everyone in that industry can say “we are good” (no matter what they really do) and they’d be right.

    We are still in that phase where subjectivism is the norm.

  47. Sorry I’m late to this party! I’m just returning from a family vacation at Ocean Shores…and I’ll probably not be able to “hang out” and comment as I’m catching up for taking a couple of days off. Matt, if you go to DFI’s site (which I’m sure Jillayne has linked in this article), you can find which LOs have been rejected from being a WA State LO working for a mortgage broker.

  48. Yes, I did mean comments.

    So generally, provided the blog author has not removed your comment, the comment should be still attached to the original blog, and can be word searched.

    And, if a make a friendly wager (like a prediction, e.g.) with you in in a comment, I’d better keep proof if I wanna collect, cuz the winners always get to write the history books! :)

    The ad hominem rule makes sense, even if my inner Dino wants to ignore it.

    What’s the other basic rule?

  49. The other basic rule is “no blatant self-promotion.”

  50. Jillayne, do you feel that some self regulating is all ready taking place with LOs who are not dedicated enough to through the (not too painful) process of becoming licensed calling it quits?

  51. Hi Rhonda,

    Welcome back from your vacation. My entire immediate family went to Cannon Beach, Oregon last year for Christmas and it was very windy, rainy and altogether way too stormy for me, but it was quiet and FUN.

    Did you mean self-selecting, as in LOs who are personally making the decision to pursue other employment?

    Yes, there will be a number of LOs who fit one or more of these criteria:

    1) only got into the business because they thought they could make “six figures their first year with no experience” (I wonder how they got that idea? /sarcasm off);

    2) who were living off of subprime refi-churning and now need something else to live off of;

    3) who survived only on web-based or other media-based leads handed to them by their broker and do not really know how, or care to build long-term business relationships that are based on mutual trust and respect;

    4) LOs who got into the business late in the game in 2007 and are struggling to survive financially and may have had to already take another full time job to make ends meet and are simply just doing this part time now.

    5) English as a second language (ESL) Loan Originators who have been struggling to learn not only english but also mortgage lending practices at the same time. I can’t imagine how difficult it must be to move to a new country and have to learn a new language and also a new profession at the same time. I have met MANY high quality LOs who fit this description who HAVE passed the test, so I’m not stereotyping here, just wanted to make sure that we don’t forget how hard it might be for these folks to pass the test the first time. Some may have to self-select themselves out of originating for awhile longer while their english skills improve. The reason this makes my list is because I honestly believe everyone would be shocked at how many of these students have come through my classrooom in 2007. I’ve had all different kinds of languages represented. Spanish, Mandarin, Korean, Russian, and so forth.

    I will delete any derogatory comments in regards to immigrants so don’t even bother going there, readers, unless you have something constructive to add to the dialogue.

    Did I miss a catagory? Do you have a number 6 or 7 to add?

    Thanks!

  52. Well, there’s the deceased….

    Seriously, though, I think rational people make rational choices. If it turns out you can make more money by going back to riveting (or gluing) airplanes together, and the money is roughly equivalent, and the security, at least for now, is better, a rational person would make that change. Employment in Washington is high (thank you, Boeing, MS, et al), so I think that has to be a factor.

    Personally, I can’t think of a business that’s more interesting than this one at the moment, and of course it still has to to pay the bills, but the promise of a six figure income would not be sufficient reason to stay, especially if it were available in other endeavors with lower risk.

    The occupation makes for much more interesting cocktail party chatter than what we had to say 3 years ago.

    “Hey, what’s your rate? Any idea what your house might be worth? Call me!”

    Now, we get to do our best Nixon imitation, and say “I am not a crook, and I have the license to prove it!”

  53. Ubersalad says:

    “Employment in Washington is high (thank you, Boeing, MS, et al), so I think that has to be a factor.”

    That has been debunked several times…it is a myth. Employment in comparison to other metropolitan areas, Seattle is not special.

  54. Jillayne, I would say LOs who got into the biz from 2005 on re. #4.

    Here’s a few:

    6). LOs who entered the biz part time thinking it would be an easy $econd job.

    7). LOs who put most of their clients into option ARMs after going to one too many seminars and are now not able to show their faces.

    8). LOs who do not provide the level of service that would generate repeat or referral business from past clients and other professionals.

    9). LOs who are not compassionate enough about their business to commit to taking the exam, two approved courses per year and plunking down some bucks.

    It is a challenging business…no doubt. The LO license will serve as one filter to reduce LOs and this market will be the next.

  55. “You may be right, I may be crazy…”, but strong employment is what is repeated over and over in the media about the Seattle market, so if even the perception that employment is good motivates people to explore other opportunities, that may account for the evident thinning of the ILO herd.

    I have another theory, that of self-fulfilling prophecy. Some folks call it the law of attraction. Either way, we all make decisions based on perceived risks (whether real, or not), and if anyone with an agenda can get you to focus on a minor perceived risk, at the expense of your focus on a real risk, they can control the game.

    It is difficult to separate the two, but real risks are usually immediate, and threaten our near term security. Most of the things we worry about don’t happen, and even if they did, without knowing the exact circumstances of the danger (exact time, date, location, and severity), would we have been able to avoid them? If not, take reasonable precautions, and stop worrying.

    In other words, all of the bad news has lowered most ILO’s perception of short term future earnings (including mine, truthfully), and perhaps inflated a few other ILO’s perception of improved earnings.

    And what you believe, definitely influences (but does not determine) what you get in life. I choose not to focus solely on the financial aspect, but on the other, more satisfying aspects of this strange business, and find on the whole that I am adequately rewarded for that attention, both personally and financially.

    And, last of all (really, this blogging stuff is kind of addictive), Seattle IS special. It’s had it’s share of hard times, and I’m sure there’s both good and bad times ahead for the good residents of the Emerald City, and the Land of Oz beyond, but I could not think of another area in the world I would rather be, tomorrow, or for the rest of my life.

    I am pretty sure my hardest days are behind me, and certainly holding that perception to be true makes for a happier day.

    I came across a bumper sticker recently that stuck with me, and do my best to make it one of my guideposts to living.

    “Less Barking, More Wagging”.

    I figure I’ll make about the same amount of money, and have about the same amount of influence and attention whichever approach I take (and I must admit I enjoy barking, too), but I’ll be happier in the process if I’m wagging.

    At least that’s what my dog tells me, and he’s never lied to me yet.

    Good luck, and best wishes for 2008, Ubersalad!

  56. Roger, you’re ever the optimist :) Seattle is a fun place to live, but in my opinion Seattle is no more special than any other city experiencing a downturn. We’re just lagging behind other cities as far as the time it will take to reach us, and we have a shorter distance to fall (when it comes to property values) because our run-up was not as steep as in other bubble markets.

    See Ardell’s most recent blog article for some current MLS stats:
    http://www.raincityguide.com/2008/01/01/seattle-real-estate/

    When I talk to Realtors and LOs in the classroom, they are telling me that they want and need to know the truth about what’s going on in the market instead of more tail-wagging from the industry. Sometimes barking is better than wagging if that’s what your client is asking for. I’m not a dog owner, but I do get that sometimes when dogs bark at me, it’s a happy, friendly bark, like the dog is trying to greet me and tell me something. Maybe barking isn’t 100% bad.

  57. I saw a bumpersticker too. It said: “News is to television as bumpersickers are to philosophy.”

  58. I saw one, too. It said: “Money is the root of all evil. For more information, send $10 to me.”

  59. Those are good! Shooting four sacred cows with one bullet is especially admirable, unless one of them is your cow, I suppose.

    I must drive aimlessly around more often in the daytime, to gain even more superficial wisdom! (is a sign for lite sarcasm needed here?).

    Barking is not even half bad, I was just expressing a personal shift in emphasis. I LOVE to bark.

    Thanks for the light riposte.

    Cheers!

  60. Looks like the final number of licensed originators at the beginning of 2008 is …5,720!

    Seattle Times Business section today has some pretty good coverage.

    Total denials were 170 (criminal history etc.).

    Let the comments commence!

  61. Cathy R., Sequim, WA says:

    Now will DFI actually go after those LO’s who were too stupid, lazy or arrogant to meet the licensing requirements and are still originating loans? Do they have the staff to enforce the law?

  62. They do not, but don’t be too harsh on DFI.

    First, no one wants too pay for that much staff. The costs would be passed onto us, which would be passed on to our borrowers, which would make us less marketable.

    Second, I don’t think we can make the the world a better place simply by adding more policemen. It requires a change in mortgage broker culture too, and that has been steadily happening.

    Third, do what you can (and what you believe in) to contribute to the improvement of the culture.

    I think the DFI did a remarkably good job, considering the challenges it faced.

    As an example, it managed to process and approve something like 3,820 lincensees in the last 2 or 3 weeks of 2007, if the available stats are to be trusted.

  63. Here’s the link.

    They also warn everyone to check if their LO is licensed, and give them the tools to look it up themselves.

    Today, there’s not much more they could do.

    http://seattletimes.nwsource.com/html/businesstechnology/2004104916_originator03.html

    If you really want to surprise DFI, take the time to tell them you appreciate their hard work this year. It’s not fun being the cop, but I’m sure they feel a sense of satisfaction in performing their duties well.

  64. Cathy R., Sequim, WA says:

    I agree that DFI has done a remarkable job this past year administering this law and that the licensing law is the best thing to happen to our industry in a long time in terms of restoring consumer confidence and establishing a level of professionalism. It just would nice to see that there really are penalties for the violators… I was just amazed by some of Jillayne’s observations about the attitude of some LOs.

  65. I don’t know this to be fact, but rumor has it that DFI has a list of the people who failed to renew by December 31st 2007. They are supposedly planning to call down that list posing as a borrower and, if the LO discusses loan products with them, they go on the naughty list making them ineligible for any future licensing as an LO. Again, just a rumor I heard, but more power to them if it’s true!

  66. Cathy R., Sequim, WA says:

    That’s a whole lot of people to be calling!

  67. Yes Cathy, but they would only be focusing on the people who had taken the test, completed required clock hours, but had yet to renew their license so that would narrow it down a bit. Again, just a rumor I heard.

  68. Ubersalad says:

    Roger,

    By the way this caught my eyes about TBW:

    http://raleigh.craigslist.org/sls/525833444.html

    They’re following the footsteps of big banks, too. Another sign that the mortgage market is changing.

  69. Do they want any volunteers?

    I’d be willing to put in a few hours of mystery calling to help the cause. Get a few hundred ILO’s calling and the list will be done in a day or two. :)

    Good rumor, may have the desired effect, whether true or not.

    I’m not wishing folks out of making a living, just those who continue to flaunt their unwillingness to comply with the basics.

  70. Thanks Uber! The posting has been deleted, so I’m not sure what info it has to give. I’ll keep my radar up about them.

    They are an excellent lender to work with, incidentally, with one of the lending’s best designed web sites for brokers. That’s IMHOP, of course.

  71. Ubersalad says:

    the listing was a wanted ad for retail LO and that they’re expanding retail operation. It might be a fake since they deleted it so fast.

  72. I had never thought of TBW as a retail lender, but I had heard of a colleague that was exploring that idea with TBW a few months ago. Might be related.

    I would not consider a lender’s expansion into retail a warning sign. Craig’s list ads come and go pretty fast, too. I don’t think it’s a fake.

    It’s funny, I typed in to Google (the biggest gossip the world has known!) “taylor bean whitaker rumor”, and got a surprising number of hits. I plowed thru a few, mostly blogs, mostly around Aug 07, that had relevance.

    What power rumor has attained!

    I am reminded that it is all the more reason to treat information responsibly. I would prefer it not be my huffing and puffing that knocked down a house of value.

  73. Ubersalad says:

    “I would not consider a lender’s expansion into retail a warning sign. Craig’s list ads come and go pretty fast, too. I don’t think it’s a fake.”

    I would actually consider that to be very strong sign, consider that’s how all these other major banks are proceeding.

  74. Regarding comment 72, Roger I’m sure that you wouldn’t be accepted as a volunteer since you have something personal to gain by knocking down the number of LOs. :)

    LOs paid licensing fees to DFI. Let’s see how DFI does with the money they’ve been given.

    I did see this press release from DFI and there’s nothing in there to substantiate Matt’s rumor from comments 68 and 70.

    To me it would see like a more logical phone call to this very small number of LOs (419) would be more of a courtesy to remind them to renew or inquire as to what’s up. Wouldn’t DFI WANT these people to renew and send in their money? YES!

    419 LOs x 125 fee = $52,375. But wait, it gets better. The licensing fee is 1 1/2 times the regular amount for late renewals, so the numbers really look like this:

    419 x 187.50 = $78,562.50

    Matt, I think they’re going to call them so that they can start getting some of that revenue.

    5720 have renewed
    6139 have passed the exam.

    http://www.dfi.wa.gov/consumers/news/2008/fewer_mortgage_brokers.htm

    Now what about the other 7,583 LOs?

    There’s no way DFI has the money or resources to sit down and call seven thousand LOs.

    So now we wait and see what our regulator is going to do. Perhaps they will need more money than what they have now. This will come from higher licensing fees.

    If we don’t want to pay higher licensing fees, then the industry has to look at the Roger method, in which we all sit down and volunteer to call all 7,000 ourselves. We will pay with our time or we will pay money for the government to do it for us.

    Here is another idea. Why doesn’t DFI just simply call, email, or write 1900 BROKERS and inquire as to the status of their LOs? 1900 phone calls seems like alot less work than 7,000 phone calls.

    I just sent out an email to 5,000 loan originators and brokers to try to get the word out. Perhaps that will help.

  75. Well what do I know!

    Here is Aubrey Cohen’s article in tonight’s Seattle PI that shows us that indeed DFI IS planning on getting in touch with those 7,000 unlicensed LOs, though the penalty doesn’t sound as severe as what was rumoured. Good call, Matt!

    “Deb Bortner, director of consumer services for the Department of Financial Institutions, said state officials will start checking in about a month to see if those with expired licenses are still working. Those violating the license requirement would have to refund any fees collected and pay a fine that could be double or triple those fees.”

    http://seattlepi.nwsource.com/local/346005_mortgage04.html

  76. OUCH! I guess it wouldn’t be all that harmful to a 1-2 unit per month, but imagine the fines a major offender would pay! Then again, I think most of the high producers got there by being on top of things and probably did what they were supposed to do with regards to licensing. I wonder if the actual Designated Broker will be penalized as well for allowing unlicensed LOs to originate?

  77. Now, THAT’s what I like about RCG!

    Timely and relevant, brainy and engaging!

    A few thoughts.

    1. There are 1,900 brokers and only 5,720 LO’s. That’s an average of 3 LO’s per broker. Boy, I’d love to see more data around those numbers! Any idea how many brokers exited the business? Is there a database of MBs and number of licensed LO’s for each, easily accesible?

    2. Jillayne, I love the way you think, even when you are wrong! It is hard to meld the experience and perspective of an LO to that of a government regulator, and come up with a reasonable prediction, but you did!

    Organizations typically act in their best self-interests, and it is in the best self interest of DFI to have as many paying LO’s as possible, as long as that objective serves the primary reason for DFI’s existence, that of eliminating LOs, or converting rule breakers to compliant LO’s. The latter is preferrable to DFI’s interests, so that is the predictable course, most of the time.

    Keeping it cerebral, (and funny, too), adds so much more value to this site!

  78. On post 80, please note that I meant to say DFI’s primary objective was to eliminate “non-compliant” LO’s, not all LO’s.

    Also, their reason for existence is much more comprehensive than regulating mortgage brokers.

    It is tedious to be precise. I’ll have to start reading my comments 3 times, now, before posting.

  79. Hey Ubersalad!

    The national UE stats came out today, with UE rising to 5%.

    That got me to thinking about whether our area employment was any better or worse than comparable metro areas, and tried to do my own research, to some small effect. I like mythbusting too, and I’d certainly want to know the truth.

    The King Pierce and Snohomish county stats for Nov 07 are here (Dec not yet available on a local level)

    http://data.bls.gov/map/servlet/map.servlet.MapToolServlet?state=53&datatype=unemployment&year=2007&period=M10&survey=la&map=county&seasonal=u

    It seriously beats the state level, which also beats the national level, but’s that’s not your contention. You say that our high employment is comparable to other metro areas

    I looked at a few comparable Metro Areas: San Fran, Minn., and Boston.

    Minneapolis is about par w/ Seattle, SF and Boston appeared worse. All were well above the national rate, and it is probably safe to generalize that metro areas have better employment stats than rural areas, at least that’s what I saw.

    Highly unscientific, I know, but it’s free labor.

    Do you have a source for the busted myth? Maybe we can bust the mythbusters!

    Try saying that fast 5 times….!

  80. When you’re talking real estate and employment levels, it’s really number of jobs that’s important, unemployment percentages–not so much.

    Stated differently, it doesn’t matter so much that our unemployment level was between 3 and 4 percent at any given point. What’s more important is how many local jobs companies like Microsoft and Amazon add (or subtract). People moving into the area is what raises the demand for rentals, condos and houses.

    As a matter of fact, you could have situations where rising unemployment was actually good for demand–at least demand for rentals. Where news of a strong job market brings unemployed people here hoping to get a new job, that can raise demand. Even while unemployed, they need a place to live.

  81. Ubersalad says:

    If you want breakdown of local numbers, seattlebubble.com is a great place…that’s if you can look beyond all the gibberish being said.

    These local employers are merely maintaining, neither local population or local employment is increasing above other metropolitan cities. It’s great to toss these “assumptions” by calling out big local players to friends and local clients who are not in tune with the specifics, but it’s getting old for blogs like this.

  82. Interesting. Kary points out that is not just jobs that matter, but people wanting a place to live (and willing to pay for the privilege), that drives demand for housing. That’s logical enough.

    Coincidentally, today, United Van Lines realeased their annual study in households moving statistics. Not the whole picture, but interesting, and probably a statistically valid sample (note, I’m not a statistician).

    http://www.unitedvanlines.com/mover/united-newsroom/press-releases/2008/2007-united-van-lines-migration-study.htm

    It shows that WA state is holding about even, some states are bleeding population (Michigan, Ohio), and others are increasing rapidly, mostly in the South (N & S Carolina, Tenn.). The most curious migration is from N. Dakota to S. Dakota! What’s that all about?

    The Seattle Bubble stats are interesting, (October 07)but they do seem to verify that employment is better here than in most other metro markets. Nice data, good graphs.

    Let’s hope it stays good.

    So the employment here is better than average, but people are clearly not coming here in droves, driving up (or even maintaining) home prices, and only slightly increasing rental rates and occupancy.

    Could it be that retirees do not find it so attactive to live here? Maybe it’s traffic? Maybe it’s the winters?

    That may account for the trend southward. Maybe those North Dakotans are just on the leading edge of a national trend, heading south for warmer weather!

    PS, it would be nice to see an overlay of housing price change with the United moving data (beyond my capabilities). Certainly there would be a correlation in Michigan and Ohio, but how do you explain Nevada, with high in migration, and above average falling house prices?

  83. Ubersalad, my information is a bit dated, but a couple of years ago when I was dealing with rentals I was really surprised how many people were moving here from out of state with jobs from those big companies you discount. At that time rental rates were going up nicely (if you were a landlord), in part from that and in part from condo conversions.

    But in any case, my main point remains. Unemployment figures are just about irrelevant when you’re dealing with demand for real estate. If the unemployment number goes up it doesn’t mean less demand and might mean more demand. If the number goes down it doesn’t mean things will be good. You really need to look at the number of jobs and how that’s changing.

  84. I wonder if those Seattle area unemployment figures are taking into account the 7,000 unlicensed LOs.

  85. Ubersalad says:

    Kary,

    Actually your information was never correct. I don’t have time to verify this following post’s information, but it should be correct: http://seattlebubble.com/forum/viewtopic.php?t=960. You’re using perception as statistics, similar to most people who read the newspaper and suck in the information. The latter part of your entry is simply speculation, and I am sure there is correlation between unemployement with demand for real estate. Some of the biggest real estate bust in American history were followed by huge layoffs. I am not trying to break your comments down, but it doesn’t really float especially for a blog like this.

  86. Ubersalad says:

    I am reading your post again and it’s actually pretty bad…

    “Unemployment figures are just about irrelevant when you’re dealing with demand for real estate.”
    Who would actually agree to that statement?

    “If the unemployment number goes up it doesn’t mean less demand and might mean more demand. If the number goes down it doesn’t mean things will be good.”
    It’s like saying if it’s warm, it doesn’t mean it is sunny. If it is sunny, doesn’t mean it is warm.

    “You really need to look at the number of jobs and how that’s changing. ”
    What? What? What?

    I don’t think it’s a good idea that you’re posting here…especially if your clients might read your comments.

  87. Thayne Westerman says:

    Yes, the numbers are both amazing and scary at the same time.

  88. Who would actually agree to that statement?

Trackbacks

  1. [...] Original post by Jillayne Schlicke and software by Elliott Back [...]

  2. [...] January 4, 2008 The new year brings in a new licensing requirement for loan officers in Washington State.  It has been the talk of the media and blogs over the past week. Elizabeth Rhodes reported on the changes in the industry and the requirements in a recent article in The Seattle Times.  Larry Cragun also commented on the changes over at the Seattle Real Estate Professionals blog.  Jillayne Schlicke wrote a detailed post about the changes over on Rain City Guide. [...]

  3. [...] Rates are continuing to rise at this time.  Please don’t dilly dally with your mortgage interest rates.  There are fewer Mortgage Professionals to assist you in our current market and many of us experienced (and I’m still seeing it today) banks being “clogged” with people trying to lock…websites “down for maintainance”…etc.  By the time a Mortgage Professional can get through to lock in a loan, the rate is gone.  Bam. [...]

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