More confessions from the Subprime Lender

I sent an email to the Loan Officer who contacted me last week wanting advice on how to create a referral business with a link to the post about him.   His reply is worthy of a new post…   

"Well I can’t say that I disagree with the message being sent by the post and I agree that people need to be made aware of the dangers that exist out there for potential borrowers. I appreciate you not using my name; I truly am an ethical mortgage originator. I always work in my client’s best interest and I will never give anyone a bad loan again. I was a novice then with regard to the lending industry. Now I constantly study and keep myself updated on market trends; I know exactly what is going on in the mortgage industry and I make a point of educating my borrowers properly so that they are never taken advantage of. I work from 9am to 7pm everyday then I go home and study mortgage publications (Scottsmans Guide/Orginator Times/The Mortgage Daily ..etc.).

I am well versed now when it comes to ethical lending practices, providing the utmost quality of service, and mortgage loan products. I am no longer “brainwashed” by my former employer, but everyone should know that there are still lenders out there preying on innocent people on both sides. When I began in this industry at the aforementioned company I was so excited to be a part of something so “great”. Something that people need to be aware of is that there is so much involved in our business. When I began my senses were overloaded every day of training; they piled so much information on me about how superior “we” were, how much faster we are than everybody else, how great our rates are, and how low our fees were. When people told me another company was offering them a better deal I did not believe that it was possible. I told them things like “we do over $100,000,000.00 per month in volume which affords us volume wholesale discount pricing” which was true. What I didn’t know was that the rates that I was selling based on macro enriched excel spreadsheets were not real. I didn’t know that once it hit processing everything would change; by then I was already on the next file (aside from “chasing stips”). Another thing that the company did was keep people burned out so that they couldn’t decipher what the hell was going on. They insisted that the magic number of OFA’s (internal reference meaning “out for appraisal”) was 10 per month in order to get 4 closings. That means that in a good month their entire staff of LO’s are chasing stips down for 10 files (at a minimum) while only closing 4 loans; That’s a lot of “busy” work.

Now in the last week I have really reached out to people in my community and across the nation for marketing advice and for advice on building strong referral partnerships. I do not need advice on how to operate ethically because as I said I operate with the highest level of integrity and I always have … That is why I lost sleep when I found out the truth about what was going on with my former employer and that is also why I left the company. Now I am well educated and I am truly “in the business that I am in”. I wanted to write you this update to clarify where I stand in this business. Now I will never be taken advantage of again and I work hard to educate my clients so that they will never be taken advantage of."

I’m sure this person has learned a lot from their past.  Kind of reminds me of when an ex-burglar becomes a security expert.  I do believe that this LO fell into the wrong company and is not a bad person. 

This is the difference between working with someone who is transactional vs relationship based.   If a LO is just looking at the client as a transaction, trying to make 10 files a month to satisfy production goals, they’re not focusing on long term relationships with a borrower.   Odds are, they do not provide the level of service that would encourage anyone ever returning to them. 

When someone is providing mortgage advice with the expectations of maintaining a relationship with the borrower beyond closing, it’s a much higher level of service.  If I bump into one of my clients at the grocery store, I want them to be happy to see me–not aiming a tomato at my head!   Mortgage Professionals who have a business practice based on retaining relationships will provide "long term" advice and will provide a level of service that they hope will not only encourage the borrower to return, but also to recommend their friends and family to them. 

This LO seems to have made a mental shift in his business practice after realizing that the company he was previously employed at was potentially harming borrowers.   I welcome more "good guys" to our industry anytime!


  1. I have been in the industry for 7 years. I have always worked for solid companies that had the borrowers interest placed first, my paycheck 2nd.

    Your post above details so many individuals that I have heard in the originating business that say, “I didn’t know better.”

    Most know that what they were doing was wrong or at least feel it was shady but that is how business was done.

    Hopefully the industry has turned the corner.

  2. Mike, like you I have been in the industry since April of 2000. I’ve only worked for one company which is family owned and has been in this biz for 30 years.

    I am really hoping that with what is currently going on in the market, that the “bad actors” bail out or with all the press some mortgages (such as subprime) are receiving, LOs such as the one who wrote me will see the light and “find God”.

  3. I meet so many LOs who resemble this story that I could never go back and count them all. I could only estimate that it’s been in the hundreds now.

    Environmental conditions are extremely influential in how an individual or group of individuals will behave. Aristotle figured this out for us in about 600 B.C.

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