How the Golden State is Setting the Tone

California MBA CEO Susan Milazzo talks about the association's efforts — and legislation to watch for in her state that could have an impact beyond.

California represents around 20 to 25 percent of the national housing market and a fair amount of the national commercial real estate market, notes Mortgage Media’s SA Ibrahim — so it behooves professionals throughout the industry to keep a close eye on what’s going on in the Golden State.

They’ve got a strong ally in that regard in the California Mortgage Bankers Association, a highly active state MBA that sounds the alert on legislative actions that affect the industry — both in California and potentially elsewhere — as well as educates policymakers as to the industry’s needs and concerns, and providing a plethora of resources to industry professionals.

Ibrahim — himself once a member of the California MBA’s board of directors, recently spoke with the association’s CEO Susan Milazzo about the California MBA’s role and activities, and what policy issues it’s grappling with; issues that are likely to have an impact outside the state’s borders.

The association’s values are threefold, Milazzo said: “We strive to provide advocacy, education and connection” — through its various conferences, its podcasts, webinars, and educational information about what’s happening with state legislators and regulators. She noted proudly that some 80 industry representatives recently joined them in Sacramento to participate in a legislative-focused day when they met with lawmakers’ staff.

“I feel very passionate about the fact that anybody in the industry should be active in their own advocacy efforts in their states in which they’re licensed,” she said, “and also at the national level, at our national advocacy conference the MBA has.”

Advocacy becomes even more important when a single party has a lock on political power. California, for instance, has had Democratic legislative majorities for years, but after the 2018 election, it’s an overwhelming majority, Milazzo noted: 28 state Senate seats out of 40; 61 Dem Assembly seats as opposed to 19 Republicans. “I only point that out to say that when one party has this much control, your advocacy efforts become that much more intensified, especially if one party is not necessarily known for supporting what the mortgage industry and the real estate finance industry has always needed in the legislature. So, we’re spending a lot of time educating policymakers on how some of the legislation that has been introduced will affect our industry.”

A couple of the issues of note in California include the following, according to Milazzo:

  • Enactment of remote online notarization. Milazzo said the legislation last year had support by many on both sides of the aisle but got tied up in an appropriations issue with the secretary of state assigning a $25 million implementation fee. A bill already has been introduced for this year; Milazzo is hopeful they can work out the financial issues with the secretary of state’s office and get it passed this year.
  • The California Consumer Privacy Act passed last year, with very specific consumer protections on requesting information on businesses that use their personal information — in which the consumer has the right to ask everything to be deleted.
  • A proposed 8 percent tax on services in the industry — a bill whose unintended consequences could strike a serious blow toward affordability just when affordable housing is a major need (especially in California). Lawmakers talk a good game about affordability, she noted, but this bill carries serious costs: Consider all the services needed to originate a single loan — appraisals, LOS (loan origination software), and insurance. “The cost to build a home would be tens of thousands of dollars additional, tacked on to the construction of homes,” she said.

This legislation has been introduced and defeated in the past in California, but Milazzo noted the state’s new governor has supported such a tax in comments on addressing the volatility of state revenues. To bolster its advocacy efforts in this regard, the California MBA has joined a research project involving a coalition of many businesses led by the California Chamber of Commerce, to research how each industry would be affected by a tax on services.

Should that tax go through, it could very conceivably be duplicated and replicated in other states, so the California statehouse bears close watching on a national level, Milazzo noted. And membership in the California MBA is not restricted solely to California-based mortgage players.

“… We are keenly aware that measures that are introduced and passed in California are often duplicated in other states, so it has a ripple effect to other states’ legislatures that may or may not have a full-time lobbying effort as we do, because we have a very full-time legislature. We have to be there all the time,” she said. “If a company has a decent amount of origination volume in California, I encourage them to look at membership and contact us about all of the activities that we have to support the industry.”

In addition to advocacy efforts, California MBA has a number of activities and efforts Milazzo is excited about.

There’s a future leaders program, that was ramped up a few years back with a partnership with Pepperdine University, in which the future leaders take part in intense leadership development activities — including teaming with colleagues to create a fake business in the real estate finance industry, which they present at the end of the year to the board of directors in a kind of “shark tank” format.

There’s the Western Secondary Market Conference in July in San Francisco, the Mortgage Innovators Conference in August in San Diego, and the Western State CREF (commercial real estate finance) conference in September in Las Vegas. At the San Diego event, Milazzo says there will be some 30 demonstrations from a variety of technology vendors that have a solution for the life cycle of a loan, with the opportunity for lenders to have “innovation lab” space with the tech vendors, personalized demos about how a particular project can be tailored to a lender’s needs. The plan is to price the conference reasonably, so every size mortgage banker can send a participant there who can walk away with something they can implement in their own companies.

There’s the podcast the California MBA is launching this year; a partnership with a social media marketing company to help design new conference websites for each major event; a weekly video update on California MBA events and legislative happenings; and a new event app at all the conferences to give attendees and sponsors a more efficient way to connect with one another.

And there’s the real estate services trust developed last year, in which member companies can access discounted employee medical benefits — addressing a timely need, as 2018 was challenging financially for many members.

“We are very proud to be able to make available to them this way to provide great benefits to their star employees so that they can keep their A-team involved with their companies. … If you’re a small or medium sized mortgage banker, it’s very difficult to have access to large pool rates, so we’re happy to provide that to our members as well.”