A short history on the market and the evolution of mortgage brokers.
The Florida Association of Mortgage Brokers was officially incorporated July 7, 1960. Let’s review the evolution of mortgage brokering in Florida and the United States.
Several private mortgage companies were established in Florida during the 1940s. At that time banks and savings and loan associations dominated the first mortgage market. Small loan companies were one source for persons with did not qualify for a bank loan, but their loan limits were extremely low. Private lenders made first and second mortgages for persons who did not meet bank criteria. This business thrived. As the market evolved, so did the need for legislation. The Southern Mortgage Association was started by a few Miami-Fort Lauderdale companies and another mortgage group was organized in the Jacksonville area. Both organizations merged and worked with the legislature to create the first mortgage brokering act written in the United States. The act was created during the 1959-1960 legislative sessions and the Florida Mortgage Brokerage Act went into effect October 1, 1960. The next state to organize was Arizona in 1972.
Florida’s mortgage brokering act originally was based on the private lending market. The current law refers to private investors as non-institutional investors. Although they play a smaller part in today’s overall loan production, the non-institutional investor fills the void when the sub-prime market will not fund mortgages to persons who have credit problems.
The late ‘60s and early ‘70s evidenced an age of national reform. The Equal Credit Opportunity Act, the Truth in Lending Act and the Real Estate Settlement Procedures Act all came to fruition. Government sponsored enterprises, created by Congress in the early 70s, were authorized to invest in mortgages and funds were raised through the sale of mortgage backed securities. Prior to that time the Government National Mortgage Association, who administered the FHA programs were one of the major sources of mortgage funding.
Second mortgages became more prominent in the early ‘70s. During this time Florida’s Legislature changed finance company regulation. This allowed Florida’s Finance Companies to make mortgages up to $2,500. Around this same time banks created the first “home equity loans” commonly called HELOC’s. Prior to that time second mortgages were rarely investment in which banks and S & L's participated. It was during this period that we saw the largest expansion in the mortgage market. The Federal Home Loan Board (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) became important players in the market during the early ‘80s by opening up the availability of funds through the conforming loan underwriting. The Mortgage Insurance companies also evolved and played an important role in insuring the mortgages that were delivered to the secondary market. Mortgage Brokers became the conduit for delivery of conforming loans to mortgage bankers, who then delivered the loans to the GSEs. Banks no longer needed a retail presence in every city. Today, Mortgage Brokers deliver over 60% of the mortgage loans created in the United States.
The sub-prime market became prevalent in the 1990s by serving the niche between conforming and the non-institutional investor loan. This market has played in important role in creating homeownership for people who did not meet the conforming loan criteria.
History of the Mortgage Association
The Florida Association of Mortgage Brokers is the oldest mortgage brokerage association in the United States. Incorporating on July 7, 1960, FAMB held its first convention in Winter Park, Florida. Winter Haven, Mayor L. W. Dunson, welcomed the brokers and the first day was devoted to organizational activities and discussions focused on the role of education in the mortgage business. Day two, the business meeting was conducted for the purposes of electing officers. Mr. J. W. Housefield was elected as FAMB’s first President serving his term during 1960/1961. The Association has remained viable and has played an important part in the legislative process both statewide and nationally.
The Florida Association of Mortgage Brokers founded the National Association of Mortgage Brokers in 1973. NAMB staged it first national convention in Atlanta in 1975. The majority of the attendees were Floridians. Walter Smith, one of FAMB’s past presidents, became the first president of the National Association. In 1983 John Yessayan (1983 president) , Don Roberts (1984) and Herman (HY) Weisser (1983) took the national association to Washington, DC. FAMB provided the seed money to help establish the presence needed in DC.
FAMB now has over 4,000 members and the National Association of Mortgage Brokers has over 20,000 members with membership throughout the US.
Left to right – Walter Falk, Leo Nagle, Lt. Governor Ray Osborne and Gerald Simon – Convention at St. Petersburg – 1969.
In 1990 members of FAMB were appointed by Comptroller Gerald Lewis to serve on the Sunset Task Force covering the re-write of FS494. Between 1988 and 1989 members of the Executive Committee, the MBA of Florida and the Department also worked with a facilitator discussing the manner in which the statute could be re-written. The 1990 version of the Florida Mortgage Brokerage and Lending Act has since become a model for many states.
After the passage of FS494 members of the FAMB were appointed by then Comptroller Robert Milligan to serve on the 1995 task force review of the statute. FAMB has played an important role in educating the brokers. Members were appointed to serve on the state review committee for restructuring the pre-licensure exam. In 2001 FAMB was instrumental in requesting the legislature to institute continuing education for brokers and originators. Our state was one of the first to require CE credits for license renewal and since then over 50% of the states require education. We formed the FAMB Education Foundation, which now provides free chapter classroom education throughout Florida. The Foundation also oversees the faculty and education programs of the association.
Members of the Government Affairs Committee and Executive Committee have testified before Congress during the national reform of RESPA and TILA in 1992-1994. Our members have consistently monitored mortgage laws. Had it not been for their involvement, far-reaching laws could have stifled the mortgage business in Florida. FAMB served on a coalition to write the Florida Fair Lending Act. Unlike many other states that passed very onerous predatory laws, the Florida law was structured utilizing the same triggers as Federal Law, thus lenders remained viable in our state.
During 2007 several changes occurred in Florida’s Crimes and Fraudulent Practices Statute as well as FS494. Working with the legislature, we were able to provide additional consumer disclosure protection in FS494. The changes will enable consumers to better understand the mortgage process. We supported the changes to the Fraudulent Practices Statute. These changes make it a felony for schemers to fraudulently mortgage and sell real properties.
Our work is never ending. Your association is constantly looking for ways to protect brokers legislatively and to enhance the benefits we provide as an association.