How AIME is taking advocacy to a new level

Publicly, the work of the Association of Independent Mortgage Experts (AIME) has made the group an industry powerhouse, particularly given its clarion call asserting “brokers are better” – saving consumers money, providing lender choice, working on loans from start to finish, giving tailored attention to would-be homebuyers resulting from less volume than that of direct lenders or banks, and other reasons.

Yet AIME’s work behind the scenes – away from the public spotlight – also is substantive – resulting in measurable change. Among its advocacy efforts, the association dutifully works on behalf of military veterans and minorities to ensure each segment receives benefits and loan advantages its rank and file deserve.

The advocacy work covers many fronts.

In Michigan, AIME is drumming up support for HB 6434 – the state’s disabled veterans property tax exemption bill. On Oct. 11, the AIME-championed Disabled Veteran Tax Exemption measure was introduced in Michigan as HB 6434 by Rep. John N. Damoose. AIME previously secured House Bill 809 in Maryland, which enables 100% permanent and total disability veterans to apply for real estate tax exemption before taking ownership of a home. The bill was signed into law, and AIME is using that measure as something of a template to help fix the issue in Michigan.

The mission is to replicate the issue across all 50 states, Brendan McKay (pictured), president of Broker Advocacy for AIME, told Mortgage Professional America. He explained how disabled vets in each state classified as being 100% disabled are eligible for total or partial exemption from real estate taxes. Yet currently, they can only apply for this exemption after taking ownership of the home, McKay noted. That catch lengthens the homebuying process in requiring mortgage underwriters to count the real estate taxes against veterans’ debt-to-income ratios.

“This is my favorite topic,” McKay said in starting off the conversation with MPA. “When I came on board the leadership at AIME, I was president of Broker Advocacy but the position was more all-encompassing than it is now. We’ve since brought on four additional member leaders, and now I’m truly focused on advocacy, and 90% of my time is lasered in on that,” McKay, who runs Maryland-based McKay Mortgage Company LLC, said.

Advocacy at AIME is actually something of an offshoot of the group’s own efforts to be heard on a larger stage, he noted. “It started with the basic premise of the fact that mortgage brokers have really never been properly represented in Washington, DC – nothing remotely approaching the level of banks and direct lenders who have lobbyists in DC – and we wanted to change that,” McKay said. “Mortgage brokers currently make up somewhere around 23% of the market. We are in the communities, we are hyperlocal. Our interests align with the American consumer on a very high level, so that’s where it started,” he said.

“And we have been largely successful,” he added, pointing to the launch of the Broker Action Coalition Political Action Committee (BACPAC) this past summer. “The PAC launched in July and raised over $300,000 in 24 hours. We’ve already put that to use and had some really important conversations.”

That effort ushered in advocacy initiatives at AIME, he said. “Veteran advocacy is something that we dove into deeply,” McKay said. “As an organization, we believe nobody deserves advocacy in DC more so than the American military veteran. Our membership has a high percentage of military members,” he noted. “Our members work with a lot of veterans.”

He broke down the victory in Maryland. “Our first success in that arena was HB 809, which passed in Maryland in August,” he said, adding that the effort was in partnership with the Maryland Mortgage Bankers and Brokers Association of which he is a board member. “In Maryland, if you are a disabled veteran with a 100% rating – so you separate from the military and inevitably you get a rating from 10% to 100% -- you are exempt from real estate taxes. That is true to some degree or another in 40 other states and 28 are clean copies,” he said, meaning similar laws are identical as the one in Maryland with only the name of the state and other vagaries adjusted accordingly.

Here's the rub: “The problem with the law as it existed was that the veteran could not apply for that exemption until after they took ownership of the home. While that makes sense on the surface, what happens is because they are not exempt while they’re going through the underwriting process, you have to count the real estate taxes against them when they’re qualifying for the mortgage. You also have to collect money on a tax escrow account on a bill that’s never going to get paid. So the veteran is floating the government a couple thousand dollars until they can get it processed and refunded – not a convenient time to lend a significant amount of money.”

That’s why seeing passage of the law fixing the issue was so gratifying, McKay suggested: “HB 809 is beautiful,” he said. “All it does is move the timing from after closing to when they go under contract. So they go under contract, they can apply for the exemption, get a letter and say they’re exempt the minute they own the home. That’s all the underwriter needs to not count the taxes against the veteran or collect the tax escrows. In Maryland, this created an additional $48,000 in buying power for disabled veterans. It’s a big deal.”

Ahead for AIME on this effort is getting similar laws passed on Mississippi, Utah, California, Illinois and other states. “We are trying to roll it out nationwide,” he said.

As an added plus – almost as if the mortgage gods had smiled upon the effort – the issue of fixing the loan process guidelines for military veterans is politically desirable, McKay noted. “It helps disabled veterans become homeowners – that is as bipartisan an issue that you’ll ever get. It’s very politically popular.”

Just how popular? He used Maryland as barometer: “In Maryland, it had 17 co-sponsors,” McKay said. “It went unanimously through the House and Senate. And one of the best parts is it doesn’t cost the state any money – the exemption already exists; we’re just changing the timing of when it’s applied to give veterans the benefit when they need it most. Nobody could be against this. It went from a conversation last summer to signed law in less than a year – which is warp speed for legislation.”

In terms of advocating for minorities, AIME’s efforts center on the SPARK Grant Program – from which the group has raised more than $2 million. The money takes the form of grants to help female, military and minority brokerages get off the ground. “The entirety of the money has been raised privately without any government subsidies,” McKay added with palpable pride. “AIME believes that one of the best ways to increase homeownership in underserved communities is to create more mortgage brokers from those communities.”

Viewed not only as a sustainable solution, McKay said the tactic also helps ensure more money stays in the communities that are predominantly populated by minorities. “When someone from an underserved community receives financing from a large bank or national lender, the profits from that transaction leave the community,” McKay explained. “When they work with a local, boots-on-the-ground mortgage broker, the dollars stay local and continue to be invested in the community. SPARK has been incredibly successful and will soon be available to establish brokerages who fit the specific criteria to help them grow and further thrive.”

It may not have gone unnoticed that AIME has a penchant for fiery metaphors – take SPARK for example, or the name of its annual convention Fuse, or its slate of mortgage career training programs dubbed Ignite. True to form, through its advocacy efforts, the association is fanning the embers of the past to reignite the broker channel. For his part, McKay is proud to carry the torch.