Is the California Association of Mortgage Brokers insolvent?

A couple of years ago (June 2006) CAMB had over 1.5 million dollars in cash and reserves, which has been virtually wiped out -- it's gone. Where it went is a BIG question, with bickering Board members looking for answers, and an audit. We don't think there is even enough funds left for an audit. A report sent to us titled "CAMB weekly cash management system" shows current available cash is just over $3,000.00 (The budget spreadsheet shows $3,074.00 as of August 22, 2008). Most companies run a Profit and Loss Statement at the end of each month -- CAMB runs their figures weekly. Check it out here.

As a non-profit corporation (501-c6) there is no requirement for public disclosure, and we're pretty sure there is no way to ever find out where the money went. In California, Non-Profits are governed by the AG's office, but with the current budget cuts, there is not enough manpower to even 'think' about looking into what might be the obvious.

Although CAMB's many Board members carry (non-profit remember) Credit Cards, it appears the Membership at large is not allowed to see the individual expenditures and rationale for the dollars. Granted the Board gets no pay (all volunteer), it's the Credit Cards that could tell the real story. After all... the money is gone -- somewhere.

We spoke with CAMB President Fred Arnold, and he acknowledged money was tight, but felt there were sufficient funds to make it through until at least January or February. Mr. Arnold suggested operating dollars would come from incoming dues, but we found out 90% of the current members run on an April-to-April payment basis, and they are paid up! So it looks like very few (some of the 140 as they come due) left will be footing the bills.

The day-to-day administration of CAMB's activities are handled by the "Association Resource Center" in Folsom, CA. We believe their contract for services was just renewed this month. We have not seen the actual 'signed' Management Agreement, but the one presented for signatures says $17,682.00 per month. Here's a copy.

Fred Arnold, current President of CAMB said in a conference call that "anyone that talks to the Implode-O-Meter will be fired on the spot." Not surprising considering someone inadvertently released the weekly budget. Should we have kept it private? We think the internal expenditures and financial brinkmanship should at the very least be exposed to the membership. And yes... Fred has used the word "insolvent" in front of numerous people.

Let's step up to the National level for a moment. The National Association of Mortgage Brokers (NAMB) is organized as an "affiliate of States." Each state signs an agreement with NAMB. In turn each state is set up to operate as it sees best. Some states have Chapters, some do not. You can see the various states on the NAMB web site. About $190 (at least that's the California figures) out of each member's dues is sent to NAMB.

Each State or 'Chapter' entity signs an agreement with NAMB which not only commits a certain amount of funds (from dues) to flow through to this national association, but also has specific conditions regarding their ability to stay in business and be part of the 'club' at the National level. In the example for CAMB, here's the critical clause that can trigger, or should trigger an immediate response:

"Termination of Charter. Either party may terminate this agreement immediately by written notice upon the occurrence of any of the following events:

e) Effective immediately and without notice if the other becomes insolvent or seeks protection under any bankruptcy, receivership, trust deed, creditors arrangement, composition or comparable proceeding, of [or?] if such proceeding is instituted against the other (and not dismissed within ninety (90) days);"

Click here if you would like to see the entire agreement.

We called Marc Savitt, President of NAMB for this article but he would not return our calls. He was made aware we were writing about the financial problems. We believe there may be a fear factor involved. The entire world is aware of the Mortgage meltdown and the subsequent implosion of Mortgage companies (now numbering 286 on the Mortgage Lender Implode-O-Meter). With tens of thousands of industry people out of work nationwide, the entire NAMB system of 'state affiliate structures' may be at risk.

It's time to let the hens come home to roost... the cards lay where they fall, and reality to have a seat at the table. Somebody break out a bottle of transparency and we'll all enjoy a glass of honesty. NAMB has to be willing for ALL the 'state affiliates' to come clean, and those organizations that are failing or insolvent should be replaced or consolidated with lean successful new organizations that can honestly serve and benefit their members.

Visit our Discussion Forums to read additional commentary or email us with your feedback on this development.

- Randall Marquis
Senior Editor

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