By Bunderson, Gaye

Consider the present upheaval in the mortgage industry as a "sifting the chaff from the wheat" kind of process. With the impurities weeded out of the industry, the businesses and individuals still standing are stronger and more refined.

The Idaho Association of Mortgage Brokers may be a smaller organization than it used to be, but Steve Cox, current president of the association, calls the remaining members "highly conscientious."

During the peak years of 2006 to 2007, membership stood at 510. Now, there are only 140 members left in the organization.

"The association covers all mortgage professionals - loan originators and brokers, as well as lender-partners," said Cox, who explained many lenders left the area and are no longer in business, casualties of the housing bubble, subprime lending mess and the resulting economic crisis.

Scott Stingley, past president of the association, said that of the number of wholesale lenders who used to operate in the area, more than 300 of them are out of business. "Within Idaho, they have consolidated by 50 percent; of all loan originators in the state, roughly half from 18 months ago are gone," Stingley said.

Both Cox and Stingley said hanging out a shingle as a mortgage lender used to be much easier. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 stiffened regulations - something the Idaho Association of Mortgage Brokers has always favored.

"We've always pushed for tighter licensing laws, to raise professionalism in the industry," said Stingley. "It used to be more difficult to get a license to cut hair than to get a license to provide mortgages."

A bad haircut can be fixed in a few weeks. "You can damage someone for their entire life with a bad mortgage," he said.

Some of the dubious loans that were being offered, such as interest-only loans, stated income loans, subprime loans and alternate documentation loans, are now out of the picture in favor of government-backed loans through Freddie Mac and Fannie Mae.

"It definitely needed to be reigned in. Lenders weren't practicing responsible lending," said Stingley, who said "lending with integrity" has returned.

Stingley, Cox and president-elect Nichole Browning, who will lead the association in 2010, all agreed that though lending practices are currently "dramatically tighter than they have ever been," things will ease up again at some point. Stingley called it "the pendulum effect," and said the process has gone from too loose to too tight but the future should see a return to moderation.

Regarding steps taken by the government to stabilize the economy, Stingley said government intervention was more necessary than it was good but stated if things had continued unabated, many more mortgage firms might have gone under. Cox owns Stonebrook Mortgage; Stingley is Stonebrook's president; and Browning works at MoneyWise Home Loans.

"Government programs are now spurring business," said Stingley. There has even been an uptick in home sales in 2009 compared to 2007 and 2008, which Stingley called "a difficult time frame."

"People say you can't get a mortgage today. You can; it's just changed," said Cox. "Houses are affordable, there is an $8,000 tax credit (for first-time homebuyers), low interest and low down payments."

Less competition in the marketplace is also benefitting the remaining firms.

Does the mortgage industry suffer from an image problem? "There's a negative connotation," Cox conceded. "Some people think, 'You caused the problem.'"

Others express sympathy that things must be awful in the mortgage business, Browning said. "They ask you, 'How are things?'", with a note of concern in their voices, she said.

The primary focus of the Idaho Association of Mortgage Brokers was formerly as an education and networking organization. Cox explained those are still important emphases, but said, "Our mission is a resource for mortgage professionals to help them navigate the current economy."

"The association provides us an opportunity to sit down with other people in the mortgage industry and share ideas about how we're surviving in the marketplace," Stingley said.

"We truly want to see our profession survive and thrive, and you kind of have to ban together," Cox said.

The association has been around for 18 years, according to Browning, and is a member of the National Association of Mortgage Brokers. The national organization is at the center of mortgage reform and gives the state chapter representation in Washington, D.C.

Locally, members of the Idaho group have met with U.S. Rep. Walt Minnick, D-Idaho, voicing their real world perspective on mortgage issues. "We're daily working with borrowers and lenders and can share ideas on how mortgage reform affects us as mortgage entities and individuals," said Cox.

Now that Wall Street, with its "insatiable appetite," as Cox expressed it, has been taken out of the equation, the mortgage industry can return to an even keel. He stressed how important the industry is. "We are providing a vital role to the economy," he said.

Credit: Gaye Bunderson

(Copyright 2009 Dolan Media Newswires)

(c) 2009 Idaho Business Review, The. Provided by ProQuest LLC. All rights Reserved.

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