Tuesday, August 9, 2016

A Novel Solution to Loan Officer Certification

Solving the Need for Loan Officer Product Knowledge Training

In teaching our Loan Officer Boot Camp, I have always thought (if we had unlimited time) that we should start with the Foreclosure Process; If we, as loan officers, do a bad job, that's where the borrower ends up, after all. But we don't have unlimited resources. Training new loan officer's is hard and expensive.

When you say "FREE" online, you get banned!

Most e-mail spam filters are set up to recognize "FREE" as a scam. But in the mortgage industry, when it comes to training, that's what we want; something FREE.

If I told you I had just discovered a free answer to one of the most pernicious problems in the mortgage industry you would want to know about it, wouldn't you?

Training and developing new mortgage loan originators remains one of the most challenging aspect of the industry. We don't have time to develop a comprehensive curriculum. If you find an individual with good character and willingness, you still have somebody who is completely new without any exposure to the mortgage language and process; not just with loan products but also the entire spectrum consumer financial analysis. Add to that the fact that it takes 6 - 12 months until the loan officer is comfortable enough with the process to be effective in dealing with customers and referral sources, usually too long to make enough money to succeed.

This is because there are three areas in which our industry is completely ill-equipped to train and support new entrants:

Content - We don't have the curriculum mapped out, so when we train someone it is ad-hoc
Revenue - Knowing that only 10-20% of new originators succeed, we don't want to risk the expense of training. In addition, we can't afford to pay someone's salary while they learn
Time - The constant time demands of the new originator mean we have to put aside tasks in order to focus on their needs.

Isn't there a related industry which specializes in developing these individuals? There is: housing counselors.  The best part is IT'S ENTIRELY FREE.

Step 1: Complete the HUD Housing Counseling Curriculum

Available on the Housing Counseling Website, this free program provides in-depth preparation on all the general financial skills and sensitivities that an originator must possess.

Step 2: Participate in Housing Counseling for a Non-Profit or Debt Management Counseling Agency

What a great opportunity to start developing some customer relationships. These firms are government sponsored lead mills. Think about it. Every single housing related website points to housing counseling. Pre-purchase counseling is a great tool to start working with some agents.  After the counselor has spent 6 - 12 months working with customers, that individual has more customer focused experience than many seasoned originators. Most housing counseling agencies provide a salary during this learning period. Introductory positions yield a salary of $30,000 to $45,000 a year.

Step 3: Identify Individuals who want a career with higher earnings potential

We know that many individuals don't have the drive or personalities to source their own business. This process weeds those individuals out. Someone who is satisfied with a $45,000 salary won't make a top producing loan originator.

Step 4: Use FREE industry programs to fill in the niches

Even experienced housing counselors, there is in invariable need for additional skills type training. But the industry provides this for free as well! Just look at the list:

Associations: Providing sponsor underwritten training
Wholesalers: Providing product specific training
Private Mortgage Insurers: Among the deepest curricula of the industry providers, with everything from processing issues to sales and marketing.

When we formed lendertraining.com, in the mid-1990's, there was very little industry training. We filled the gap between compliance/licensing training (NMLS) and niche training with a resource which includes the foundational loan originator skills of mortgage math, product comparison and complete application methodology that doesn't exist anywhere else. In addition, we provide loan officer marketing methodology. Our programs cost between $55 and $159.

The Housing Counselor Training solution doesn't replace us, it just puts us in the correct context of the training universe.

Tuesday, August 2, 2016

Reverse Mortgages and UDAAP - Can a disclosure fix it?

How do we solve customer notification issues?

In the wake of TRID and its hegemony over the compliance discussion, several high profile compliance issues get overlooked. One of these came up in a recent examination of a Massachusetts client challenged to provide its Reverse Mortgage procedures specifically with respect to ensuring the customer received sufficient information to make an informed decision. We categorize this type of risk in the category of Unfair, Deceptive and Abusive Acts and Practices. (UDAAP)

Traditionally, we ensure we don't run into trouble with predatory-type practices through the use of informational disclosures. We used this approach to design the solution for our client. The regulator wanted to know how we made sure the customer received specific information. Our only choices was to provide an informational document. It surprised me that there was no standardized disclosure, but we simply took the regulator's requirements and extracted them into a single page disclosure.

The regulator's site describes requirements. In the audit, the regulator simply asked "How do you inform customer of who to call with complaints?"

We designed a disclosure which described the requirements for reverse mortgages in the states the client conducted business. 

Is a disclosure enough?

Ironically, GFE reform, and now TRID, took disclosure as a cure for deceptive acts off the table. Now, rules extend to the content of the disclosure and the measurement of the final terms as a cure. Will this regulatory cure extend to programs like the Reverse Mortgage, where so much elder abuse takes place? Ultimately, the regulation of the loan type, the customer's proof of understanding, such as the completion of a course in the product, now fills that need. Perhaps the customer also needs to be quizzed on the terms of the product for our own assurance of understanding.