Monday, November 2, 2009

Deciding About an In-House Training Program

Is it the end of contract private training companies in the mortgage industry?


The advent of the Nationwide Mortgage Licensing System (NMLS), and the incumbent centralized education approval that it includes, presents a tremendous opportunity for companies with multiple employees to develop their own internal training programs for certification purposes.  The legacy 50 state licensing ad-hoc system with its patchwork quilt of requirements made the education certification process difficult even for full time compliance companies.  The new protocol makes it easier for smaller companies to have a state or even national certification education program.  

While the state licensing systems previously in place now have a uniform “overlay”, the states are still in charge of licensing.  But the new system forces states to “get out of the education approval business.”  The SAFE Act requires that the NMLS approve course material and certify that federally mandated minimums are included.  Some states, such as Utah and Texas, have robust and heavy education requirements and are very invested in the review process.  These states may maintain their own separate additional requirements.  Most states, however, see that having a separate state education approval function is a duplication of effort.  These states are more than happy to turn over the education certification function. 

This means that in the future it will be much simpler to get an instructor, a course or course material approved.  In addition, unlike virtually every other piece of legislation spawned by the housing finance crisis, the cost is substantially reduced.  Under the old systems, multi-state course licensing meant a training company would have to spend over $28,000 just to get a course approved nationally.  In the new system the cost is $600. 

Generating Your Own Program – Is it Worth it? 


The question of internal training program feasibility is a calculation that will vary as the market determines the per person cost of the comprehensive curriculum.  With as few as 3 employees, it makes sense to have an internal training program.




Unfortunately, it is never that simple.  This model does not take into account the cost of developing a course, the application and approval process, and having an instructor to run the course.   

Of these impediments, course development is the most troubling.  A course book can be 400 pages long and, particularly these days, the content is a constantly moving target and a challenge to update.  Otherwise, filling out the application form is easy to do internally.  As to the instructor, most companies have a manager or senior person who enjoys teaching, so that’s not a problem either.  

This means that, if you purchase or lease a course, you can arrange a training program for your employees at a substantial cost savings while getting all of the other benefits of an in-house training program at the same time.  Does it still make sense? 

What is clear from this calculation is that, if you have at least 11 originators, it makes sense to at least consider an in-house course. 




What are the benefits of an in-house training program?


Control the Message - One of the most frequent complaints regarding outside trainers is that they do not understand how your company runs.  Combining an in-house program with other vocational training can reinforce your company’s standard procedures, values and methods.  In addition, regular meetings can be used as time to deliver required training topics that would be covered as a matter of the course of business.   

Manage the Time – The most expensive part about training origination personnel isn't the cost of the training, it’s the time spent away from phones or sales related activity.  In an in-house program, compliance training can be combined with vocational skills training.  This means your origination staff spends less time in training and more time doing what you pay them to – bring in business. 

When and Where you Want It – Instead of having to coordinate a far clung event at an outside party’s convenience, you can provide training at a moment’s notice, at whatever location is convenient.  Having a company meeting?  Schedule some training as part of the event. 

Thursday, October 29, 2009

RESPA 2010 Update - Understanding “Changed Circumstances”

The intent of the new GFE regulation is to require a FIRM cost estimate.  Once issued a GFE cannot change unless there are “changed circumstances.”  This eliminates the “bait and switch”.

The original information cannot be a basis for the change, unless it is later found inaccurate.  If there is a changed circumstance, then it can only change that aspect of the costs that it affects; i.e.: title problem > title insurance or credit score > interest rate.  Any changes have to be issued within 3 days of discovery – by whoever discovers the change.  The lender or broker can revise the GFE, so communication is crucial.  Retain documents that relate to the change for 3 years.

Not Changed Circumstances
Maybe, depending
Yes
·         * Any accurate information provided prior to GFE borrower
·         * Broker issued GFE inconsistent with wholesaler’s
·         * No property address at application
·         * Broker changes from one investor to another
·         * Market changes
·         * Borrower delays closing
·         * Original vendor goes out of business
·         * Acts of God, war, disaster, emergency
·         * Borrower changed: credit quality, loan amount, property value
·         * New information
·         * MIP/PMI factors changed
·         * Credit policy/Regulatory change
·         * Incorrect legal address initially supplied
·         * Undisclosed title or property issues
·         * Borrower changes occupancy status
·         * Borrower selects POA closing
·         * AVM – “No hit”
·         * Credit score change