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Special Reports
Construction Lending
Dinham: Past Year Good For NAMB
By Alton Gary Simpson
Despite a steady drumbeat of troubling news about the subprime implosion and a
stagnating housing market, as far as Harry Dinham is concerned, the past 12 months have been good for the National
Association of Mortgage Brokers. The association has forged relationships with the legislators, the other industry
trade groups and has seen the idea of a national registry of loan originators begin to gain traction. As he prepares
to hand over the reins of the NAMB, the outgoing president noted that despite a down market, the members of the
association were prepared for what's ahead. "It's feast or famine in this business," he said. "There's
always going to be down cycles." Off the top of his head, Mr. Dinham, president of The Dinham Cos., Plano,
Texas, and who has been in the mortgage industry for more than 40 years, cited at least five down markets between
1974 and 1994. "People need to learn that they need to be more like squirrels," he said. "They need
to put those acorns away for when you're going to have a down market because no matter how good things are today,
it's going to again be down - just like it is right now."
Mr. Dinham acknowledged that mortgage brokers have been taking a lot of heat for the troubles on the subprime side.
"We are continually treated as the problem of all this right now," he said. "We're only one piece
of the pie. The broker can't do anything without an underwriter and a lender. They (lenders) are just as culpable
- without them, and eventually without Wall Street, you can't have the problems you have today."
Mr. Dinham explained that as an extended sales force for lenders, mortgage brokers sold the products that the lenders
put out and approved. After approving them, the lenders funded and then sold these products on Wall Street. "Now,
you can't say that we're in here by ourselves, but you can say that we do have some responsibility because we did
sell these products," Mr. Dinham noted. "We need to be sure the consumer understands better what their
options are." He added that NAMB is in continuing talks with the Mortgage Bankers Association about coming
up with "a standard of good faith and good dealing."
He advocated for a national registry that includes all loan originators with an emphasis on all loan originators,
singling out the regulatory scheme from the Conference of State Bank Supervisors for particular scorn because it
mainly targets mortgage brokers. "If you weren't in that registry, you couldn't be in the business anymore,"
said Mr. Dinham. "We really feel that it's important that everybody be in that registry, and if you commit
a bad act, then you're gone."
Currently, lenders maintain blacklists of brokers who commit fraud, but don't share these blacklists with their
competitors, allowing an individual who is committing mortgage fraud to move from lender to lender he noted. "Until
these lenders decide that it's important enough to them to stop fraud we're going to continue to have this problem.
We need to find a way to get the bad actors out." He said the prospects were good that federal loan originator
registry and predatory practices legislation would advance this year.
According to Mr. Dinham, among the issues facing the association in the coming year are trigger lists, credit score
inflation and simplified disclosure requirements. He said the trigger list issue opens consumers up to identity
theft - someone could apply for a mortgage loan and then be besieged the next day by offers because the credit
bureaus sold the lead that was triggered by the mortgage application. "It bothers me that 10 or 15 people
are calling you the next day," he said, adding that it would be fairly easy for someone to misrepresent themselves
as being from the mortgage company that took the first mortgage application, in order to obtain enough information
to steal a consumer's identity.
As for credit score inflation through the addition of a credit-impaired person's name to the authorized user list
of someone with good credit or "rent a credit," Mr. Dinham said, "if I have bad credit and I use
somebody else's credit to get a loan, that's nothing more than fraud. There's no other way that you can say it.
To me, that is illegal from the get go." He said that the association regards this as an unethical practice.
Mr. Dinham added that FICO is going to change its procedures in either August or September so that being added
as an authorized user will not increase a person's credit score.
Mr. Dinham also restated NAMB's position that simplified disclosure requirements should not confuse consumers about
fees. "In particular, the good-faith estimate doesn't have to have any correlation to the HUD-1 and we think
that's wrong," he said. There should be tolerances on the good-faith estimate that require re-disclosure for
fee and interest rate increases of more than a set percentage.
Noting that the association has come a long way since it was founded in 1973, Mr. Dinham had some sage advice for
incoming president, George Hanzimanolis. "My main recommendation is to continue to be proactive," he
said. "We don't want to wait for things to happen to us. A moving target is harder to hit than a stationary
one."
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