Page...2 Citibank has every right to be a large corporation, so that cannot be the issue. The issue is the violation of RESPA and the political machinations that took place in New York and other states to grandfather the real estate brokers into Registered Mortgage Broker status. None of us can argue with Citibank's right to run a profitable business. We can only question how it is done. When the abrogation of a federal regulation takes place that is another question. All of those who are so willing to see RESPA abnegated, should read mortgage history. They should go back to the sixties when homebuyers were being raped by realtors and dishonest FHA employees. They should ask themselves if they are prepared to vote for a repitition of the same thing. The American home buyer is being mugged in a jungle of incompetence and greed. This takes place because they are psychologically potent when they go out to buy a house. The first charlatan that gets their hands on them becomes one whose words must be chiseled in stone and recorded right long with the deed. The consumer should be grateful for the honest ealtors who know that they represent the seller and are in conflict when they betray that trust and also represent the buyer. Mortgage banking and mortgage brokerage can be rewarding professions. When it is all over, they will still be there. Citibank will still be there too and I am sure that there are those within the corporation who do not agree with its mortgage policies. "We will never price below the median. Our rates may sometimes be the highest but we will never be the lowest." That says a lot for those who have to sell. The real estate broker has the buyer in a trap and HUD or Congress has to be made to understand that. If it chooses to cave in to pressure, the home buyer will suffer and many small businesses will disappear. Mortgage bankers and brokers can perform a real service for realtors, unfortunately many them do not see that. We can only hope for the support of the professionals among them. ISSUES There are a number of issues that have surfaced during the RESPA debate. Most notably, they are: 1. Technology 2. Work Performed 3. Conflict of Interest/Dual Agency 4. Controlled Businesses Arrangements Those issues are described in more detail in this section. Technology Some opponents of MBA's RESPA position argue that referral fee programs are simply an inherent part of modern-day mortgage delivery technology. By involving real estate brokers/agents in the mortgage application process and compensating them accordingly, it is possible, some argue, to streamline processing and shorten the time it takes to make loan commitments and close loans. Some even maintain that opponents of referral fees are anti-technology and are simply worried about being left behind. We disagree. Computer technology is an integral part of all modern mortgage lenders' business. Many of the larger firms have sophisticated computerized origination systems that provide current, complete and accurate information on types of loans available and their interest rates so that consumers can select from a list of options the type and price of loan most suitable to their needs. Most of these systems have nothing to do with the payment of referral fees. (A chart showing how one of these systems works- without the payment of fees- is attached.) These systems can also provide quick processing of loans with some of the data verified electronically and loans underwritten largely by the computer. These services are generally provided to the consumer without the necessity of fees paid to real estate brokers/agents by either the borrower or lender. In fact, it is clearly unwarranted to pay a real estate broker/agent for faster processing of the loan when it is the lender that provides this service. Computerized loan origination systems approved by HUD private opinion letters do indeed provide consumers with information on loans in the real estate broker's office. But the choices are limited (usually no more than eight lenders are represented) and the pricing available on the system is not always the most current information. Further, the fees paid by lenders to real estate brokers/agents under these arrangements bear no relation to the amount of work the broker/agent may perform (usually simply inputting a minimal amount of data into the system) or their costs for computer time and equipment. Fees are based solely on the number of loans referred to the lenders on the system. There is no incentive for the real estate broker/agent to help the buyer find a lower priced or a more appropriate mortgage or lender; rather the incentive is to encourage the buyer to use a lender on the system who will pay a fee for the referral. Computerized loan origination systems that are open to all lenders who want to participate and do not include fees to real estate brokers/agents should be allowed. AMERICAN BANKER TECHNOLO EW July 9, 1990 New Uses for Laptops Proliferate Tiny Machines Speed Mortgages, Pep Up Meetings By KAREN GULLO NEW YORK When bankers leave the office to call on customers, more and more are taking portable personal computers with them to stay productive on the road and put some dazzle into their sales presentations. Most banks are equipping salespeople, consultants, and auditors in their corporate banking groups with small, lightweight computers, which are usually battery powered. But some banks are also find ing uses for portables outside the corporate banking area. A handful of institutions are using portables in real estate lending units to speed mortgage qualification and application processing. The banks are storing mortgage product and pricing infor mation on the portables and incorporating them with communications capabilities so they can dial up credit bureau data bases and access credit re ports for near-instant approvals. Banks Slow to Catch On Many nonbank mortgage companies began using portables a few years ago, but banks are just starting to. "It's an emerging area for banks," said Doug Gallagher, president of Gallagher Financial Systems Inc., Coral Gables, Fla. Earlier this year, BancBoston Mortgage Corp., Jacksonville, Fla., a subsidiary of First National Bank of Boston, began requiring its 125 loan officers to use Toshiba laptop computers. Improved productivity and better customer service are the biggest advantages, say company executives. "We find that it reduces the traditional ratio of processor to orginators, allowing the originator to do more up-front processing in the field," said Stephen B. Matheson, vice chairman and "They allow us to respond Banking Goes On Location BancBoston officers typically take the computers with them to client meetings at real estate brokers' and builders' offices, where they type customer information into the computer. A small printer attached to the machine can produce application forms and letters. The system is also equipped with a modem, which transmits information from the portable to computers in the home office. Continental, which has been using portables in some capacity for three years, purchased more from Compaq Computer Corp. in January for its treasury automation and cash management consultants and salespeople. The computers have "changed Resler said. the way we do consulting," Mr. Not only do the portables alposals in their hotel rooms at low consultants to work on pronight and exchange electronic the office, but they add finesse to mail messages with colleagues in sales presentations. The portables can run spreadsheet and lowing consultants to revise and word processing programs, alrecalculate figures in a sales proposal on the spot. "It makes for a much more "When you have a single product environment, it be- professional discussion and re comes hard to justify brick-and- Gallagher Financial Systems Mr. Gallagher says about 150 mortgage companies use the system but only a handful of banks have acquired it. That may be because of the expense. Hardware and software can cost $6,000 to $7,500 a unit, at least as much as for a desktop com- "They aren't cheap, but the lieves anxiety on the local unit level," said Mr. Resler. handy for demonstrations for The portables also come in bank products that run on personal computers. Salespeople in the trust and commercial bank ing units at the Northern Trust Co., Chicago, take portables along on sales calls to demonstrate how to dial into the bank's Mastertrust Client Services and use the bank's PC-based cash management products. Advantages Outweigh Problems easy to use, getting the system's While portables are relatively sometimes be a problem. Usualcommunications to work can into most machines, but "somely a phone can be plugged right times it's not that simple," said Robert F. Schnitzer, vice president, corporate finance department, at Bankers Trust, New York. touch tone, or a hotel doesn't "Sometimes phones are not have phones you can readily plug into," he said. : |