During the course of my day I have occasion to talk to
mortgage loan officers. As I talk to potential new hire
LO's, quite often I find myself talking to unhappy
individuals; people who are frustrated because they just
don't understand that the mortgage industry has changed.
The last 6 months to a year, the mortgage industry is
different than it has ever been before. In fact, it is so
different; many people don't understand their job anymore.
I believe that as an LO, you have to have an understanding
of what your actual job is and at least some basic training
requirements necessary to succeed in the industry before
you can set yourself up to actually be a loan officer.
Before you can hang up a sign that says, "I'm a mortgage
broker or I'm a loan officer", ...thinking that because
it's easy to get a license and to become a loan officer,
you need to realize that in the mortgage industry it's not
always easy to know what is required of you, unless you
have the proper training.
It used to be straightforward to be a "loan officer" and
the industry formerly would support people who didn't have
a concept of what they were doing. This was because the
mortgage industry simply could not hire enough people to
take all of the mortgage applications. There were millions
and millions of loans being written and virtually any "warm
body" could write them.
The AE's helped the new LO's, their lenders helped them;
they had support systems, albeit loose support systems,
that they could call to get help.
What you have now are 236 less lenders than you had a year
or so ago and you have companies that don't even have AE's
or Reps any more because they simply can't afford to pay
them.
These companies have a fraction of the mortgage activity
that they use to have. Consequently, they have
underwriters who are completely overwhelmed by the influx
of government loans because this seems to be the product
more of our lenders are encouraging.
The real problem comes when you couple the emphasis on FHA
and VA government loans in the industry with LO's who are
trying to submit government loan applications and think
they can submit them like they did during the sub-prime
era. This is absolutely not possible.
So what you have are people who have no experience
submitting government loans that are presenting documents
to more than one lender because they may have been denied
previously. Quite often the LO needs to restructure and
re-submit the loan, basically because the loan officer
doesn't really understand how to properly submit the 1003.
They don't understand because they were never forced to
learn during the crazy days of the sub-prime marketplace.
History has thrust us into a position where our loan
officers now need to know how to originate loans. LO's all
over the country are sitting by themselves with a very
limited support system, which is made up of fewer "support"
people than it ever has had in the past.
You have mortgage company's like ours who are adding
additional support personnel for our LO's because we have
recognized the drop in the vendor support. But
unfortunately, our company is in the minority of mortgage
companies that are actually expanding and growing during
this downturn of business and can afford to provide
sufficient support personnel to assist our LO's.
For many LO's, it appears that they need some of the most
basic training, like for instance, how to simply complete
an application and the 1003. I know that it sounds silly
that it would take any training to fill out forms or to ask
questions, but in my opinion, it is even more necessary
today than in the past.
We see thousands and thousands of loans. Of those coming
from the general population of the new LO's that we hire
off the street, I would not be surprised to learn that 90%
of them send in applications to processing incomplete.
With the new, stringent requirements imposed by most
mortgage companies today, the loan officer needs to
understand that they now have to complete all fields on the
1003 and also with correct dates that comply with
regulations.
Let me provide you several examples of what we are not
seeing completed on the 1003 today;
*Years of schooling isn't completed,
*Borrowers birthdays aren't given
*Documentation necessary if there were less than 2 years of
employment is not provided
*History of ownership
*Rent history
*How many children in the family *Correct mailing address
*Correct dates that are in compliance with regulations
*The list goes on and on...
These may have been completed in the past by the lender's
Rep or AE, and they may seem like little things reflecting
back on the past days of the "Wild West sub-prime years",
but today, your declaration has to be perfect if you want
the application to get past underwriting.
In today's demanding marketplace, the HMDA section has to
be perfect and the REO has to be done, and has to be done
correctly. These are items that often may have been left
blank a year ago, and "slipped by" because someone would
have completed it for the LO.
When we were in the subprime heyday, 1003 applications
quite often were written haphazardly and unfortunately
nobody really cared because the LO had an AE doing follow
up for them.
Occasionally, a lender would force the LO to complete the
information and would end up telling the LO exactly what to
put on the 1003. The lender would end up contacting the
client for information, and in turn, create a photocopy of
the application in which they had written exactly what the
LO was to put in the blanks. They would then send it back
to LO and have the LO write in the correct data. They would
then have the borrower sign it and send it back to them.
Obviously, while we all know of companies that used to do
this, it was never an acceptable practice. I'm not implying
that it was fraudulent from the standpoint that they were
falsifying information, but they did tell the LO exactly
what they needed to put into the 1003 and we all know that
is in violation of our industry's most basic compliance
regulations.
While our company never allowed this practice, and I do not
have a lot of interaction outside of our company, I doubt
that there are any reps left who are going to provide this
"service" for the LO...that century doesn't exist any more.
Those lenders who had that level of "service", or at least,
what loan officers perceived as service, were basically
good lenders that regarded their "services" to the loan
officers as a necessary evil to get their loans closed;
that is just what it took to get the job done and mortgages
processed.
Well, let me tell you; that environment no longer exists.
What you have now are conventional lenders like Flagstar,
Chase, Citi Banks; huge conventional lenders who have never
provided these "services" because they assume that the LO
knew what their job is.
My position is that at this historical point in the
mortgage industry, we need all mortgage companies to focus
on providing their loan officers' more basic training. We
need to recognize and correct this egregious training
shortcoming BEFORE new regulations and compliance issues
are "slapped" on LO's by an industry that is already
regulated to the hilt.
If we as an industry start providing the proper support and
training, and insist on higher standards of training and
compliance, we will see more professional LO's providing
proper paperwork and as a result closing more mortgage
loans in a fraction of the time it is currently taking due
to incomplete 1003's and unfinished documentation.
After all, isn't this why we are in the mortgage business?
----------------------------------------------------
Phillip P Gilliam has been helping professionals in
software, marketing, finance and business management for
over 37 years. Phil has a wife and three daughters and
resides in Florida. He attended WSU in Dayton, Ohio and
obtained a CmfgE in Robotics. He presently is the CEO and
President of Discover Software Inc.
http://www.home-mortgage-refinancing-mortgage-company.com/
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