College programs do more
than educate future mortgage pros
Despite predictions of a possible recession in the next few years, the mortgage industry continues to hire more
people. According to the Nationwide Mortgage Licensing System (NMLS), the number of mortgage originators
grew by 8. 9 percent last year, to more than 158,000.
Many of these originators work exclusively with residential mortgages, but the 2017 growth figure also likely
indicates that there is an expanding number of originators involved in the commercial mortgage industry as well.
And demand for skilled professionals means colleges and universities need to find ways to create and educate the
commercial mortgage brokers of tomorrow.
Nancy E. Wallace, co-chair of the Fisher Center for Real Estate and Urban Economics at the University of California,
Berkeley, spoke with Scotsman Guide about the role a major university can play in preparing the next generation
of real estate professionals, and she also discusses the research pursued by a university that can inform the
mortgage industry as a whole.
What are the educational needs for the commercial real estate industry? Are there enough young people
looking to enter the field?
That’s a very good question. The universities across the U.S. have different kinds of models in terms of real estate
education. Many of them, especially the big state universities, have large intro classes on real estate.
I’m finding that [real estate finance] firms are really keen on hiring undergraduate analysts that have this really
deep understanding of the capital markets. Because just knowing mortgage math and knowing the difference
between an adjustable- and a fixed-rate mortgage, and maybe knowing something about the CMBS (commercial
mortgage-backed securities) market, really isn’t enough for some of these institutions.
I partner with firms all around the country that will bring in their deals, and then we very carefully dissect these
deals so that my students really understand contracting and reading contracts.
Are continuing-education opportunities for mortgage professionals less prevalent on the commercial side
than on the residential side of the business?
Yeah, I agree with that. I think that is exactly true. It’s not that I wouldn’t be interested in doing that. … I could
envision, in the future, doing something that would be intended for [commercial] brokers. I mean, we certainly
have brokerage firms on our policy-advisory board.
We have two public conferences a year, for which real estate professionals can get continuing-education credit,
and we’ve done that for a very long time. What we don’t do is specialized appraisal courses, specialized brokerage
courses or specialized mortgage-banking courses.
You’ve done a lot of work with financial data. How is that evolving and influencing commercial real estate
[At Berkeley], we are developing an incredibly large data repository for commercial real estate and residential real
estate, including all the mortgages in the United States and all the bonds that are tied to them. We have 72 terabytes
of data and we are really going to push hard on having data to inform this industry about what’s really going on.
Once we have this done … I would be more able to have informational meetings for the brokerage industry in
terms of what we’re finding — where the risk is geographically, what the differences are in underwriting practices,
what the effects of some of these policy decisions have been on the markets.
You also do research on the CMBS market. How is it evolving?
I think that people are appropriately cautious. I mean, this market basically collapsed [years ago] and there are
new rules that are poorly understood. We’re at a different part of the cycle now, where pricing, [capitalization]
rates and occupancy rates are of concern.
Anyone that is in these markets where there has been a booming multifamily [sector] heavily financed by either
Fannie Mae or by CMBS knows there is room for concern here. And, unfortunately, there are big lags (in reporting
data), so what we’re seeing right now is the default rates are plummeting in CMBS. … But [I don’t know] whether
or not you should take heart from that, given that right before everything just completely blew out in the CMBS
market [last time], default rates had never been lower. n
Nancy E. Wallace is co-chair of the
Fisher Center for Real Estate and
Urban Economics at the University of
California, Berkeley. She is a professor
of real estate at the Haas School of
Business and is the Lisle and Roslyn
Paine Chair in Real Estate Capital
Markets. Wallace previously served
on the Federal Reserve System’s
model validation council and on the
U.S. Department of the Treasury’s
financial research advisory committee.
Reach Wallace at (510) 642-4732 or
Neil Pierson is editor of Scotsman Guide Commercial Edition.
Reach him at (800) 297-6061 or firstname.lastname@example.org.
Nancy E. Wallace
Co-chair, Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley
By Neil Pierson