by Mike Sharkey
The numbers are amazing, but considering the skyrocketing real estate industry in Northeast Florida, shouldn’t it stand to reason that there are a few more mortgage brokers in the area now than four years ago? Sure.
But more than twice as many?
Yes, according to statistics kept by the State of Florida’s Office of Financial Regulation there were 28,140 active mortgage broker licenses in the state in the fiscal year 2000. Today there are 59,896. Four years ago there were 3,717 mortgage broker businesses in the state. Today there are 6,789.
Brad King, a mortgage banking lender for Wachovia, agreed that the numbers are staggering but not surprising.
“It’s not unusual, especially in conjunction with the real estate market in general,” said King. “If you check the real estate agent numbers and how they compare with the mortgage broker numbers, you will probably find very similar numbers.”
He’s right. According to Melanie Green, communications director for the Northeast Florida Association of Realtors, there are about 6,000 real estate agents registered with NEFAR. Four years ago, there were 2,500.
“We have more than doubled, too,” said Green. “There has been a real dramatic increase the past few years.”
Both King and Ernie Saltmarsh, vice president and senior lender for AmSouth, agreed that the increase in numbers of mortgage brokers is directly attributable to the ease of entry into the industry.
“There is a very low barrier of entry to get your license,” said King. “The State’s regulations are not overly burdensome. The question is: how many of those licenses are actively involved in the industry? How many are making a living? There’s no way to know. I tell people as long as you’ve $250 and no felony convictions you can get your mortgage broker license. Your credit is not a criteria. They do a criminal background check, fingerprint you and give you a test.”
The State requirements to become a mortgage broker are fairly minimal compared to the income potential. The applicant must pay a $200 fee, fill out form OFR-MB-101, pay a $23 fingerprint card processing fee, take 24 hours worth of class time within a week and pass a test. It’s that easy.
“It’s hard to say if it’s good or bad, but that’s the case,” said Saltmarsh of the nearly 60,000 brokers in the state. “The ease of entry has something to do with it. Also, because we are in a cycle where the interest rates are historically low, people have been lured into it. People have made a part-time living on just refinancing opportunities.”
King said many of the people getting their mortgage broker licenses these days are taking advantage of an industry that is booming statewide. They see the mortgage business as an easy way to make a fast buck and are intent or riding the trend until the housing bubble bursts.
“Most are doing it of their own volition because they see it as a way to earn an easy living,” said King, adding that many newly-licenses brokers lack the experience necessary to do a thorough job. “Like any profession, there are people in it that shouldn’t be.”
Saltmarsh echoed those sentiments and said there are things consumers can do to protect themselves from telemarketing mortgage brokers and Internet offers.
“There is so much telemortgaging going on. I get multiple phone calls at all different hours of the day and on Saturday and Sunday. They are coming from brokers working in these back room sweatshops. They have very little experience. They are given a phone and a pitch to make,” said Saltmarsh. “My best advice is to be cautious and careful. You should check everything thoroughly because there is so much bait-and-switch going on. Get a written estimate and check the numbers thoroughly and ask a lot of questions because there will be surprises. Generally there are high ‘other’ fees and most consumers don’t ask about those fees and charges.
“Customers come back to me and say they were misled. When we look at the numbers, it’s amazing.”
Saltmarsh said the Internet has been both good and bad for his industry. He doesn’t think that it has been as negatively affected as many predicted a few years ago when Internet mortgage companies first showed up. He says many of his customers still appreciate personal interaction.
“A couple of years ago people said the Internet was going to change the whole look of the industry and I’m not sure it did. People putting money into their largest financial investment still like to visit and talk,” said Saltmarsh. “The Internet has been great for research. People are more knowledgeable than ever.”
In the end, Saltmarsh believes most people prefer a reputable mortgage company and one with which they have an established relationship.
“It takes five to seven years to get established in this business,” he said. “The Brad Kings and others, we have have staying power. We know the business and we know the products. There is an art to it. We are not just selling the product of the week.”