Historic Summary of the Life Mortgage & Real Estate Officers Council

The roots of the LMREOC date back to 1948 when a few larger life insurance company mortgage officers began meeting for breakfast at the annual Mortgage Bankers Convention. Over the next 28 years eventually three different groups were having annual breakfast meetings. Each group had approximately eight to ten members and were grouped by portfolio size. The breakfast meetings were very informal and unstructured and were more social networks than business networks. In the 70's the Mortgage Bankers Association was holding Spring Conference in April, which were fairly well attended. In 1976 Mike Faulkner of Gulf Life and Tom Wratten of Lafayette Life began planning for a joint afternoon meeting of the breakfast groups at the next MBA Spring Conference. A fixed agenda for a large roundtable was the format of the four-hour meeting. The first of these meeting were held at the 1977 Spring MBA Conference in Orlando Florida and was well attended. At the next MBA Convention in the fall the enlarged group met for the first time for breakfast. Mike and Tom agreed to alternate organizing the spring meetings that were held in New Orleans in 1978, Los Angeles in 1979 and Houston in 1980. Representatives from National Life and Pacific Mutual coordinated the breakfast meetings at the MBA Convention in the fall of those years.

In 1981 the MBA, adjusting for a down economy, cancelled the Spring Conference which Gulf Life was to host. Faced with a growing demand from the life mortgage officers for this "Dutch Treat Reunion" at the now cancelled MBA conference, Lafayette Life planned an independent meeting in Indianapolis. As interest grew within the industry it was decided to do an advance survey of discussion topics and forecasts. Attendees alternated between discussion roundtables of not more than 15 each. As a follow up to the interest in holding the first independent meeting a poll was done to determine the support for creating an independent organization of life mortgage and real estate officers for the future. The poll results were positive so the topic was placed on the agenda for discussion and vote. The vote was positive and in the ensuing months the Life Mortgage and Real Estate Officers Council was organized. Expenses were to be covered on a pro-rata basis hence the name "Dutch Treat" was coined. The "show of hands" polls were done for the first time that year and considerable work was accomplished by the legal counsels of Lafayette Life and Life of Virginia on the legal structure and restraint of trade guidelines still in use today.

The first meeting of the independent Life Mortgage and Real Estate Officers Council was held on the April 22, 1981 at the Hyatt Regency Hotel in Indianapolis, Indiana. A steering committee was appointed to guide the development of the new organization. Representatives from 39 companies attended the meeting. Approximately 75 companies attended meeting during the first five years of the LMREOC.

At the 1981 fall Dutch Treat Breakfast held in conjunction with the MBA Convention in NYC, the Life Mortgage and Real Estate Officers Council (LMREOC) was adopted and the organizational structure, meeting times, and format were approved. At the 1982 Dutch Treat Reunion held in Chicago the Founding Board and Officers were elected. The year 2011 was the 30th anniversary of the founding of the LMREOC.

Over thirty years ago, in 1981, this group met in Indianapolis for the first time. There were 49 companies represented and the Life Mortgage and Real Estate Officers Council was formed. There were several reasons for the formation of this group but a general theme was developing: projecting and promoting professionalism in the career field of commercial real estate investment. The group established a "wish list" for the betterment of our profession as follows:

1. Create a capital market for the liquidity of commercial mortgages. A ten company LIC task force met with Investment Bankers in the Board Room of MONY and began the work on what is now the CMBS market. The CMBS capital market is now a permanent financial force worldwide. In the early nineties a "Portfolio Seller – Servicer Program" was launched for portfolio investors after six Life Company to Life Company trades were accomplished to identify the many obstacles to portfolio liquidity.
2. Create a forum for the sharing of "best practices" within the industry. The Life Mortgage and Real Estate Officers Council is in its fourth decade. There have been 60+ meetings of the LMREOC and to my knowledge no active LIC member of this group has ever failed because of its mortgage practices.
3. Create an internal risk rating system for the grading of commercial mortgages. S&P and Duff and Phelps Rating agencies were recruited. S&P created the Actuarial and Property Specific rating systems and coupled it to the "traunch" methodology now used in CMBS issues.
4. Create an efficient annual meeting for the gathering of all practitioners in the CRE mortgage field.
5. Create an ability to lobby on critical issues such as bankruptcy, reserves etc. Joining with the MBA lobby staff in 1992, Ray Smith of Aetna launched our first lobby at the Dutch Treat Meeting in Cincinnati to stop bankruptcy abuses. It took nearly 12 years but it was finally accomplished. Another critical issue was handled by Charlie Knudsen of Lutheran Mutual as he headed up the successful MBA effort to establish loss reserves and capital requirements for life companies with the IRS and the NAIC.
6. Pursue "standard "documents that were saleable. This goal was accomplished by the Capital Market Consortium (A group formed by the MBA and LMREOC) but was not universally adopted based primarily on objections of the development community. A compromise was the "Core" document now used in the CMBS market.
7. Conduct an industry salary survey to determine equitable compensation. A task force was formed with six leading LICs, headed up by Denny Francis of Principal. At that time LIC mortgage officers were usually paid in accordance with local guidelines most likely based upon local commercial banks. After completion some companies raised their mortgage staff compensation as much as 30% across the board.
8. Create a standard "training" program and a professional designation for real estate professionals that would be recognized by the investment community similar to the way the CFA program is recognized for bond and stock professionals.

The first seven wishes were realized over the next 15 years. The last wish list item, development of a professional designation program, began in earnest in 1999.  At that time, a task force was launched and the Commercial Real Estate Education Foundation was formed to support The Chartered Realty Investors Society which was to develop The Chartered Realty Investor Designations. Funds were raised and a professional testing company was employed to supervise the test development task force according to the strict government and NOCA standards for accredited professional designations. The designation was sponsored by The LMREOC, MBA, CREF Council, The Appraisal Institute and the academic community through the ARES (American Real Estate Society).

This final goal is not yet completed.  We ask all members to encourage their junior investment management staff to pursue the CRI designation as a means of furthering minimum standards of competency and professionalism within the industry.

For more information about the CRI Program, please visit www.crisociety.org.