I apologize in advance for the War and Peace length of this post. And also to those who, even though my intent is good, will become offended at the thoughts offered. My intention here is to offer real clarification to real estate investors as to what is really required in order to give them advice.
For those who may think I feel threatened by this newly acquired knowledge being acquired by mortgage brokers, think again. Michael Cook is just 26 years old. Most mortgage brokers with this 18 hour designation could study real estate investing for another year and wouldn’t know what Michael has already forgotten. Real estate investment brokers/advisors will more likely be cleaning up the messes made by those who think they’re qualified to give advice in that arena. The other day Brian Brady wrote a thoughtful post on Certified Mortgage Planning Specialist — CMPS. Before I continue what is sure to be a full scale Dennis Miller rant, I want to make two things very clear.
Brian Brady does know about the subjects taught in the 18 hours marathon of education they offer. He spent six years on Wall Street before entering the lending industry. You can’t fake it through six years — at least not on that street. 🙂 In fact, it’s my contention Brian could teach most if not all the 18 hours offered in return for this new designation.
Though I don’t take the designation seriously, I certainly don’t extend that opinion to the folks who earn it. They mean well. Brian had it right when he said there are many pros for whom he holds respect and admiration who either already have a CMPS or are headed that way.
Speaking only for myself, it boggles the mind how these folks think they can hand out real estate investment advice with 18 hours of education. That couldn’t possibly make them qualified to even be my assistant.
Is that too harsh? Too bad.
Here are just three of the subjects on which they will be advising their borrowers:
- Real Estate Equity Management
- Real Estate Investment Planning
- Real Estate Taxation Concepts
There are more. And the others have to do with analysis, which by definition can get pretty hairy. I know because I do it on a daily basis.
And these three relatively complex subjects are going to be covered along with many more subjects, and all in 18 whole hours? Why didn’t they make it 24 hours and learn to give advice on global warming too?
This whole designation is about marketing, and originating more loans. Period. There’s nothing wrong with that — until you call it something besides marketing.
One of the perks offered is a year’s access to Certified Scripts For Success ™ which shows them how to evaluate ARM loans and sell more of them. In other words — marketing. I’m sure the tools provided by this site are excellent. I’ll even go as far as they can be of great help to mortgage brokers, and therefore their clients.
The real purpose of a full year’s access to that site and its information? Here’s text from the site.
………jam-packed with easy to understand and simple to implement tools and systems guaranteed to help you become an expert in selling ARMs.
Now let’s talk about giving out real estate investment advice.
In the mid-1970’s when I made the switch from selling houses to the investment side, I knew I needed massive amounts of intense education just to be able to ask the pertinent questions much less give advice. For the next several years I attended seminars taught by the most experienced and respected investment brokers in the country. Most of them are dead now, as they were pretty long in the tooth back then. But the education was priceless.
I learned about 1031 exchanges (tax deferred), installment sales, partial exchanges, portfolio analysis, and much, much more. And I learned it not from folks who hadn’t or couldn’t do it very successfully in real life, but from those who had made their mark doing it for decades.
And yet even after a few years of learning from giants, I knew I still needed more. This is when I discovered the CCIM program. Talk about a designation that tells the public nothing. It means Certified Commercial Investment Member. (Member of what?) Now that was real education. 18 hours? Give me a break.
In order to actually get the CCIM designation you had to run what amounted to an obstacle course. The failure rate for the first class alone runs around 50% more or less, depending on the individuals in each class.
This course is 200 hours of the most rigorous training you can imagine. 100% is devoted to real estate investment analysis of some sort. Trust me, it ain’t for sissies.
Before I continue, a note of personal disclosure.
In 1979 I realized I had to drop everything and go through the CCIM course as quickly as possible. I’d put away enough money to do so, and it was a very down time in real estate. So in 1980 I successfully completed all 200 hours of the course. It took me almost nine months, and just over $5,000! That was in 1980 dollars guys. (They allow five years.) After that they require the following:
- Several case studies of actual transactions documented from the first client meeting to escrow closing statement — signed by the escrow officer, and your broker themselves.
- A massive amount of actual volume over the past several years — documented eight ways from Sunday.
- Pass a comprehensive written test covering all 200 classroom hours.
- Pass an oral examination in from of a small committee.
Folks, these guys take their designation seriously. Sadly, since the real estate market had totally tanked, my wife was pregnant with our first child, and food had to be put on the table, I could only put together my case studies, then stop in frustration. By the time the market had resumed relative normalcy in 1984, I’d decided I didn’t need the designation as I’d already made very good use of the 200 hours of education. So I never got the formal designation. My son won’t have that problem. He starts the course later this year. (He’ll have a distinct advantage, as I’ve been teaching him these subjects for over two years now.)
It was the best education I’d ever received. It changed everything I did, and altered forever my approach with clients. Going through the entire 200 hour CCIM course is literally the best professional decision I ever made.
18 hours? And they’re going to give advice to serious real estate investors? The students finishing the CCIM course had 18 hours by the morning coffee break on Wednesday of week one for heaven’s sake. The first 40 hours alone are everything about numbers and in-depth analysis you never wanted to know. That class is critical to just understanding their real estate tax class — which takes up another 40 hours on its own. Can you imagine what a week of nothing but real estate related taxation was like? Try running naked through a cactus patch.
Each class goes for five days, Mon-Fri, all day. You then have homework in your hotel room until the 11 o’clock news. It’s grueling. What makes it worse is how they teach. They use the tag-team approach with two or three instructors for each class. This results in having a rested and fresh instructor ever couple hours or so. By the morning coffee break on Wednesday most students look like death on a cracker. 🙂
Saturday morning is the test. I don’t want to say the material covered for the week is extraordinarily difficult to digest, but their first week’s fail rate, as mentioned earlier, is about half. Oh, did I mention the test is open book? And still about half fail. They don’t give any quarter to wannabes.
You must be a serious camper if half don’t even get past the first week’s course work. CCIM isn’t the normal Realtor education. You don’t show up, get some coffee and an apple fritter, and get a certificate. You generally have to travel a long way to get there, pay for a week’s hotel stay, buy yourself meals every day – oh, and pay the thousand bucks they’re now charging for each 40 hours.
Today getting your designation will cost somewhere around $10-12,000 easily.
Successfully complete 200 hours of that, and you’ll feel like you were a character in a Stephen King novel. 🙂 I know I did.
18 hours? It would be funny if it wasn’t so sad — and truly dangerous.
What we have in the making with this new designation is a whole new crop of Schmoes.
John Michailidis says:
I’ve taken all courses for the CCIM designation and passed all of the tests the first time around. I completed all of the coursework in a year, but haven’t as of yet bothered to take the time to put the portfolio together for the actual designation. I thought the coursework was very good, but I hardly think it takes the superhuman effort that you seemed to want to portray — anyone with a good mind and a willingness to do the homework can pass the courses — it’s not rocket science. That said, the idea of an 18-hour program designation as proof of expertise is absolutely ludicrous. BTW, the courses run about $900 for each of five and if you live in a major city the odds are that you can take the courses locally without having to incur travel and lodging expenses.
April 15, 2007 — 10:23 pm
Brian Brady says:
I’m going to start the discussion with this comment, Jeff.
You’re right AND you’re wrong.
You’re right. The CMPS doesn’t hold a candle to the rigorous education a CCIM candidate endures. In fact, no real estate designation (except perhaps the GRI) comes close to the CCIM distinction.
Here’s where I believe you’re missing the boat. We have…nothing… in the mortgage industry… NOTHING
The Certified Mortgage Banker designation, sponsored by the Mortgage Bankers Association of America, is designed to produce knowledge in underwriting and secondary marketing skills. It really doesn’t deal with suitability and financial planning techniques.
The CMPS Institute, with all of its faults, is opening America’s eyes to the danger of sinking all of your money into the homestead. It’s highlighting a fact that is currently unpopular again; ARMs outperform fixed rate loans over a five year period. This is not our grandfather’s economy. There are no pensions, social security is a pipedream for those under 45, and mobility in the workforce is the rule rather than the exception.
Is the CMPS designation comprehensive enough to claim expertise in real estate investing? No. Is it anywhere close to the rigor of a Certified Financial Planner? Not close. However, the Financial Planning Association recognizes the designation; that’s headway.
It IS a start. Education. A Code of Ethics. An industry attempt to create professionals where there are few. A proactive effort to self-regulate before someone like the Mortgage Professor seriously advocates government regulated flat mortgage brokerage fees.
I’ll use an analogy we’ll both appreciate. The CCIM is the Yankees and the CMPS may very well be an expansion team in brown uniforms. Remember, those expansion teams can go on to win pennants.
Someone’s gotta take the bull by the horns. Why not me? and Dan Green? and Rhonda Porter? and Robert Ashby? and Morgan Brown? We can’t let ourself be overrun with schmoes.
April 16, 2007 — 1:09 am
Rhonda Porter says:
To add to Brian’s comments, the CMPS exam is (or was) also “open book”. I was impressed by the calibur of professionalism at the exam…this was not your typical mortgage crowd you might find at typical mortgage-education event. 25% of the participants at the exam I was at in Phoenix last year failed. The designation must be renewed annually. CMPS is also very young and I anticipate it will continue to develop and improve over time.
April 16, 2007 — 7:31 am
Jeff Brown says:
John – >I thought the coursework was very good, but I hardly think it takes the superhuman effort that you seemed to want to portray — anyone with a good mind and a willingness to do the homework can pass the courses — it’s not rocket science.
I think the combination of a horrible market, pregnant wife, the pressure to successfully make the transition from homes to investment may have magnified the ‘ordeal’ for me. 🙂 That said, it wasn’t just the content, which was always solid, but constant five day classroom/homework/study grind. The information obviously wasn’t rocket science for me, as my average test score was over 90% with one exception. (Got a 78% on the whole linear regression demographic class in CI 102.)
Since all I’d done in real estate was sell homes, which back then required an IQ of just over 90, this was rigorous. Rocket science? Not hardly, I’m with you there. But what does it say about the average house agent in that first week who failed? I’d guess the mortgage business pulls from the same pool.
Of course, the difference in our outlooks could just be because you’re a lot smarter than I am. 🙂
Thanks for showing up. Please come back.
April 16, 2007 — 8:56 am
Jeff Brown says:
Brian – >It’s highlighting a fact that is currently unpopular again; ARMs outperform fixed rate loans over a five year period.
Dude, you are so going to get flack for saying that out loud. 🙂
>However, the Financial Planning Association recognizes the designation; that’s headway.
That’s a factor in this discussion on which I can speak with first hand experience.
OF COURSE the FPA recognizes the designation. Loan officers are one of the top 2-3 sources of client referrals these days to the planners themselves. Loan officers are falling all over themselves to align with as many financial planners they can find. FPA endorsing that designation reminds me of an old girlfriend of mine. “You’re so strong, and you’re so smart….” I can show you a planner today who literally has over half a dozen loan guys eating out of is hand.
There’s absolutely nothing wrong with this. But it’s called marketing – cross pollination. I do it myself. But when I do, I ensure my planner does the planning and I do the real estate.
In the end, planners/lenders are a natural match. The lenders make a point or two, and the planners get a supply of cash for their clients to buy their products.
It’s my theory the FPA lent a hand in setting the curriculum for the CMPS course. From what I can see it sure looks like it.
April 16, 2007 — 9:09 am
Jeff Brown says:
Rhonda – I think the issue most objectionable to me is the duel purposed agenda. First, they want the public to think they’re now in fact investment advisors. Second, it’s really a marriage between the financial planners and lenders to increase business for both.
The first is, as John observed, ludicrous. There’s nothing wrong with the second. It’s legitimate marketing. Just don’t dress it up as something else.
Rhonda, it’s amazing how many financial planners have called me out of the blue, to talk about their clients’ need for capital growth as part of their plan. For the first time ever, they’re beginning to admit their single digit yield growth products don’t begin to measure up with investment real estate. And their clients are eating it up.
Their new relationship with lenders is a natural progression. 20/20 hindsight shows they should have been on the bus together years ago. However it’s unseemly to go to the lengths they have to make it appear lenders possess the level of investment expertise they’re claiming.
It’s marketing.
Speaking of marketing, I have something for you.
April 16, 2007 — 9:23 am
Chris says:
I view the study of real estate as a life time thing. I find in amusing that after an 18 hour course someone can be an expert in anything, let alone the subject of real estate. Real estate is such a complicated subject matter that you would need at least 18 hours to teach an introductory course on the most basic aspects.
After I finish college, I will pursue a CCIM designation before I get my MBA. (I may or maynot go for my MBA)
I have been studying all aspects of real estate since I was 17; now I’m 21 and I still consider myself a novice.
April 16, 2007 — 1:30 pm
Rhonda Porter says:
Jeff…what do you have for me? 😉 Was that a pun?
April 16, 2007 — 2:54 pm
Jeff Brown says:
Chris – I love guys like you. You’re smart, your eyes are open, and you have more cajones than is safe. 🙂
The best to you. What a future you have.
April 16, 2007 — 5:25 pm
Brian Brady says:
“You’re so strong, and you’re so smart….”
Oh…I remember her.
Seriously, I’ll make no bones about my agenda. The mortgage industry needs to stratify expertise. The current market is weeding out the dregs pretty well. Greg makes a good case in his recent Zillow post for letting the market do that. However, we need to highlight our talent on a national scale.
Is it marketing? Are we hoping to say “We’re so strong and we’re so smart?” You betcha, Jeff. I’m sick of being blamed for the schmoes’ mistakes and want to celebrate the victories of the good guys and gals in my industry. Today, the CMPS represents the best chance to do that. Tomorrow, who knows?
and Chris? I’ll reiterate Jeff’s conclusion; what a future you have. We need more like you!
April 16, 2007 — 7:29 pm
Jeff Brown says:
Brian – I think what mortgage brokers are doing with financial planners is a natural, and I not only support it, I promote it.
The problem with your industry mirrors mine. The Schmoes screw up, but with relatively ignorant clients who don’t know better until it’s too late. It’s pretty hard to ‘unring’ the bell when some so called ‘mortgage planner’ has advised a borrower right into the poor house.
Now if they were all like you, Dan, Morgan, and Rhonda…….you know – so smart, so strong. 🙂
April 16, 2007 — 7:41 pm
NYCJoe says:
Jeff,
a) you’re making it really friggin’ hard for me to catch up on my reading with posts of this length, and
b) please write more posts like this (and of this length).
And I totally agree with Brian – the mortgage industry has to start somewhere. CMPS is at least a start.
April 17, 2007 — 12:18 am
Chris says:
Thanks guys.
In defence of this program I think they are halfway to a good idea. Why not bill it as continuing education?
April 17, 2007 — 7:21 pm
Rhonda Porter says:
Chris, I believe in many states it does qualify as continuing education. Last year, when I took the exam, WA State was not licensed…so I’ll looking for my credits this year! In fact…thanks for the reminder…I’m going to shoot CMPS an email right now. 🙂
April 18, 2007 — 6:15 am
Jeff Brown says:
Chris – Too late, as they’re already basking in the glory of being certified, and planning specialists.
But continuing education would have been much better.
April 18, 2007 — 8:24 am
Jeff Brown says:
Thanks Daniel – I rest my case. 🙂
April 23, 2007 — 10:43 am