The broker boom

The number of mortgage brokers and solicitors in Hawaii have skyrocketed along with real estate prices

ZOBEL DELA CRUZ, who got her start in Hawaii's residential real estate market in 1997 as a real estate agent, decided to hedge her bets two years ago and become a loan officer as well.

YOU DECIDE How to choose a good mortgage broker: 1. Get referrals and don't hesitate to ask for references 2. Look for someone who has education and/or experience and belongs to professional trade organizations 3. Check with state regulators about complaints 4. Find out if they are up to date with the advantages and disadvantages of the most current lending programs Source: Rusty Rasmussen, Vice president of Castle & Cooke Mortgage

"This way I can work both sides of the market -- it gives me more control over my income opportunities," said Dela Cruz, who works at Pacific Realty Ventures, one of the fastest-growing brokerage firms in Hawaii.

The boom-town atmosphere of Hawaii's robust housing market has led to a proliferation of new mortgage brokers and solicitors who are hoping to capitalize on the lift in real estate values and low interest-rate climate that has brought them new business, said Steve Higa, president-elect of the Hawaii Association of Mortgage Brokers, which is at an all-time high of 420 members.

"You have a lot of young people switching careers right now," Higa said. "If our industry isn't at its peak, we're pretty close to it."

Mortgage solicitors and brokers act as an agent of sorts, bridging the gap between the borrower and lending institutions. In Hawaii, solicitors must work under a broker for two years before they are eligible to hold a broker's license, which gives them the option to work independently or open up their own firm.

Although consumers may talk to lenders and banks on their own, mortgage brokers and solicitors serve as the borrower's advocate, counseling them on which loan programs best meet their needs and which are fast enough to meet their deadlines.

At last count, the number of lending professionals who had been granted either a brokers or solicitors license in Hawaii had shot up to 4,575 from 3,503, a 30 percent gain from the year prior. Membership in the Hawaii Association of Mortgage Brokers also has grown about 10 percent in the last year, Higa said.

At the height of the Japanese investment bubble in 1995, there were about 3,000 loan officers, Higa said. Then the market tanked and many fair-weather lenders left to pursue more steady careers. But they came back in 2003 after interest rates hit a five-year low, he said.

The lending industry boom is evident at real estate schools as well, said Betty Dower of Dower Realty Inc.

"We have to turn students away because our classes are so full," said Dower, who remembers the lean years of the latter 1990s when that wasn't the case.

This time around, the potential to make big money off benchmark loan amounts, and a high volume of home refinance deals and equity loans, has attracted the latest generation of lending professionals. It's also created opportunities for some lenders to work part time in independent one- and two-man brokerages or as real estate agents' lenders.

"It's gotten incredibly competitive," said Rusty Rasmussen, vice president of Castle & Cooke Mortgage.

Today, Higa said, some Hawaii brokers work out of their homes and conduct business at clients' homes, businesses and coffee shops.

"If they do two or three loans a month out of their garages, they could survive," Higa said, adding that most loan officers make about 2 percent on every deal.

The high median home price in Hawaii, which is more than $600,000 on Oahu and higher still on Kauai and Maui, has made it possible for even the small guys and part-timers to earn a good living as lenders, said Dela Cruz, who at Pacific Realty Ventures has experienced first hand the ebb and flow of Hawaii's real estate cycles.

"It's not uncommon for first-year solicitors to make more than $60,000 a year and really skilled loan officers and brokers, like real estate agents, can make millions," said Dela Cruz, who chose the phone number 1-808-Success and plans to apply for her broker's license next month.

The greater interest in the mortgage brokerage side of Hawaii's booming real estate market has given consumers more loan options and bargaining power over junk fees and closing costs, but it also has upped the potential for them to fall victim to unscrupulous behavior.

"Sometimes you have to wonder if they had enough knowledge or if they were just unwilling to turn down a loan because the motivation was to just get paid," Higa said.

The mortgage lending profession offers the promise of big money with no mandatory training, said Stephany Sofos, a local real estate analyst.

It takes little more than paying an $85 to $320 professional licensing fee to the state Department of Commerce and Consumer Affairs each year to be in charge of deciding what loans get approved for what financial experts call the biggest single purchase a person can make.

And the market is filled with e-mail solicitations from brokers seeking new clients and promising low interest rates.

"In Hawaii, it's easier to become a broker than a real estate agent," Sofos said.

On the mainland, beginning solicitor Oliver Johnson said he had to take an exam to become a mortgage lender.

"Here, all you have to do is fill out an application and pay the licensing fee and that's why it's buyer beware," said Johnson, who made the decision to go into lending because the stock market had tanked right before he got his finance degree from Appalachian State University in North Carolina.

"Sure there are 2,865 solicitors on Oahu, but how many know what they are doing?" he said.

There soon may be discussion at the state legislative level to regulate the mortgage lending industry, which has come under fire in recent years, Higa said.

"There is nothing on the agenda this year, but we are working for some type of continuing education and minimum standards," Higa said. "As a loan officer, we are asking you for your history. Maybe you should ask for your loan officer's history, too."

In Hawaii, there is a certification process with online courses for mortgage professionals, but there are no requirements to complete it, he said.

"The onus right now is on the principal broker to make sure that their new people are well versed," said Higa, adding that his firm requires new solicitors to join the Hawaii Association of Mortgage Brokers so that they can get continuing education.

Education is important for lending professionals because it teaches prudence, Higa said.

"With so many new loan programs out there, we can get almost anyone a loan." Higa said. "But is it right for them?"

TRACKING LOAN OFFICERS' EARNINGS According to a salary survey conducted by Robert Half International, a staffing services firm specializing in accounting and finance: » Mortgage loan officers earned between $36,000 and $45,750 in 2002; » Consumer loan officers with one to three years of experience earned between $42,250 and $56,750; » Commercial loan officers with one to three years of experience made between $48,000 and $64,500. With more than three years of experience, commercial loan officers made between $66,000 and $92,000, and consumer loan officers earned between $55,500 and $75,750. Earnings of loan officers with graduate degrees or professional certifications were approximately 10 to 15 percent higher than these figures. Loan officers who are paid on a commission basis usually earn more than those on salary only, and those who work for smaller banks generally earn less than those employed by larger institutions. Source: U.S. Department of Labor