Helping Washington State homeowners learn more about their mortgage options.
The voting is for Round 2…the competition is tensely high. Please visit Real Estate Undressed and cast your vote.
I’m very fortunate to be in the running…please check them all out and cast your vote and help Larry out.
Don’t let the pressure of me wanting a Magnificent 7 t-shirt sway you. 🙂
I received a fairly lengthy comment from someone (aka Cogger) who did not leave their real name or company…he/she appears to be from a bank but I can only assume. Here are some points from the comment that I would like to address:
"That’s great you passed your mandatory test."
Yes, it is a mandatory test. I’m glad we have it in place so that it will raise the current bar of entry to be a loan originator for a Mortgage Broker in Washington. This is a welcomed improvement to our industry. Is there a mandatory test to prove competence to be a mortgage banker in Washington?
"What continuing mortgage education did you take prior to this requirement."
I earned my CMPS designation last year. Prior to that, I began working on earning my CFP (that’s on the back burner). I belong to Mortgage Market Guide, Loan Tool Box, Strategic Equity and WAMB. I am a self motivated student of mortgage. I continue to attend as many seminars and to self study as much as possible in addition to training that I have received at my company where I have been employed for over seven years. Prior to being in mortgage, I was in the title and escrow industry for 14 years where I managed a escrow branch…I learned plenty about the mortgage industy sitting across from signing tables from consumers.
"If you have ever had the luxury of working for a bank you would know that compliance, ethics, security, etc… modules are required annually by the bank employees. We don’t wear these requirements as badges, rather we separate ourselves from the rest by demonstrating our knowledge. In addition, most of these employees continue to expand their knowledge with such certifications as CMPS. This is done for the sake of education rather than requirement. Of course, there are always employees that engage in education more so than others, but to try to distinguish yourself from the rest of the pack without truly knowing the facts tells me what you really know about the banking industry. I get your point….but really, can you actually believe that there are not well qualified employees with these institutions?"
I have only worked for one mortgage company which is a correspondent lender. We are a HUD approved lender. We can provide FHA and VA mortgage loans in addition to all the other programs of lenders we have a correspondent relationship with. Do we have compliance regulations? You better believe it.
I have never worked for a bank. This is why I’ve asked in this post and others for mortgage bankers to respond with what their specific requirements are so I can compare them to those of a mortgage broker LO. I have yet to have someone reply with detailed information. I am proud and will wear being licensed as a badge. Many LOs will not pass the exam, I studied and apply myself to my industry. I’m committed to my clients. There’s nothing wrong with taking pride in what I do for a living. You are correct, I don’t know a lot about the banking industry and I (again) welcome a response on what mortgage bankers have to do to comply with state and federal regulations to be loan originators. There is nothing stopping a LO who works for a bank mortgage company from taking the same exam and the same continuing education courses that a LO who works for a mortgage broker is required to.
There are "bad actors" at the mortgage banks too. You can’t really believe that just because someone works for a bank that they are above bad mortgage practices? Just last week I received an email from a borrower who just closed a loan from a major bank-mortgage lender. They had escrow change the final HUD-1 after closing increasing the closing costs by $2600 without telling the client. They only found out when their proceeds was shorted. I may be telling their story in a future post…I’m waiting for the clients permission.
"You have not addressed the Banker/Broker scenario. So what’s your take on a Banker/Broker? You must realize that working with just a broker has far more limitations for the client vs. working for a Banker/Broker."
I’m assuming this is referring to a Correspondent Lender? I’m really not sure. Cogger, if you’re reading this post, please let me know and I’ll respond. I am a Correspondent Lender which, in my book, is the best of both worlds. We work from our own credit line and broker loans. It is similar to being a banker and a broker. What if you work for a bank who’s products are pulling away and you cannot broker to another lender? A broker or correspondent lender has the ability to quickly move to another lender if needed.
"We all know that there are bad LO’s just as there are bad attorneys, cops, doctors, CPA’s, etc…Reading through your website I see a lot of attacks towards the bad one’s in the industry….However, in my opinion to continue to harp on the bad to prove a point that you work differently is a balancing act that is razor sharp. To continue to point out the flaws in the industry you feed into the stereotype of mortgage brokers. Try illustrating your skills without the examples of what others have done wrong. People can figure that out for themselves that you are good at what you do without perpetuating our industries stereotypes."
I believe this is referring to my posts on the subprime lender. This was not about saying "I’m better than him". This LO contacted me looking for help on how to become a better LO and how to develop a relationship based business. I’m flattered he would contact me and I was sickened by his story. Not by him. Someone younger (I don’t know his age) and impressionable could easily fall into his trap with his employer and "drink the kool aid". The purpose of those post were two fold:
Posting his story had nothing to do about elevating my status as a mortgage professional.
It’s just recently that I’ve covered "the bad ones" in this industry. The other post I did about LOs who irk me is about two of my past clients who have been damaged by other LOs. I will not apologize for exposing what others have done and I only hope it will help other consumers. I have been receiving a deluge of emails from consumers who are in trouble from the loans they received from their mortgage broker OR their mortgage banker. I have not posted all of them. They have stories they want to tell.
"A more cohesive industry is a healthier one for all of us."
Amen. How about we all abide by the same laws and guidelines? It would not only benefit the mortgage industry as a whole (bankers and brokers) but most importantly, it would benefit consumers as well. Isn’t that what it’s all about? Where do consumers go if they have a legitimate complaint about their LO? They have to determine if they’re a mortgage broker, banker and then who regulates them…it’s a mess.
I agree with you. A cohesive mortgage industry would benefit all. We don’t have that right now.
Early this morning I went to Promissor to take my Loan Originator test. Passing the LO exam is required by all loan originators who are employed by Mortgage Brokers prior to January 1, 2008. I’ve passed my background check from the DFI and FBI and I’ve attended my two clock hour courses (ethics–which is required for the first year of licensing and reverse mortgages)…the test was the last step in retaining my license to be a Loan Originator. I passed!
If Loan Originators (we go by many names: mortgage consultant, mortgage planner, loan officer, mortgage specialist…etc) who work for a Mortgage Broker have not passed the 100 question exam by the January deadline, they will not be allowed to practice as a LO for a Mortgage Broker. I’m betting we’ll see the LOs who do not want to take the exam or who did not pass the exam become employees at mortgage companies who are exempt from having licensed loan originators (mortgage company banks like WaMu, Chase, Wells Fargo, Countrywide; credit unions; consumer loan companies).
As a Licensed Loan Originator, I am required to continue taking two classes per year approved by DFI in order to maintain my license.
I would love to hear from a local bank Loan Originator/Loan Officer to hear in detail what they are required to do in order to maintain employment at Wells Fargo, Countrywide, Chase or Washington Mutual…I’m all ears!
I’m currently working with two of my returning clients who opted to use another LO for their last refinance. I know that in spite of my marketing and efforts to keep in touch with the families I provide mortgage advice to, not all will stick with me. I can live with that. What gets me pissed (sorry…no other word for it) is when I hear that they were taken advantage of. ‘
Client A recently divorced and needed to refinance in order to remove his ex from the mortgage. He met a LO who suggested he do an option ARM and make just the minimum payments while investing the difference into an insurance annuity. She was kind enough to provide this advice along with a copy of Doug Andrews book, Missed Fortune. While this strategy may work for some people, it’s certainly not a one size fits all. Client A has perfect credit yet this LO managed to tack on a 3 year prepayment penalty which Client A only learned of when he was signing his loan papers at the escrow company. Watching his equity evaporate by the negative amortization made Client A very nervous. Many don’t have have the risk tolerance to use their home as an investment vehicle–I wouldn’t do this loan for me. Nor do I recommend it for my clients. Client A is now refinancing back into a long term fixed rate. I estimate the other LO cost Client A more than $20,000 in lost equity, prepayment penalties and refi closing costs…all in less than a year.
Client B is a similar story. I helped her with her financing for the purchase of her home. She’s a single Mom who’s ARM would be adjusting next summer. She began dating a LO who wanted to help her out with lower mortgage payments and convinced her to refinance with an Option ARM promoting the low payments. He failed to explain what would happen to her equity if she opted for the low payments. With the deferred interest (negative amortization) and a second mortgage, she has little to no equity to refinance at this time. Oh yeah, this LO was kind enough to give her a parting gift of a prepayment penalty as well.
Note: a 3 year prepayment penalty equals approx. a point in your LO’s pocket if you have an option ARM. Plus, with an option ARM, the higher the margin is, the more money the LO is raking in. This compensation is in addition to any points or fees that are being charged.
I am thankful for new business and my clients…it does sicken me to see how damaging a bad LO can be to a person’s finances. Every once in a while at RCG, Jillayne Schlicke and I will go around and around about how bad LOs are (she calls us Mortgage Retail Sales People and I prefer, Mortgage Professional)…I feel like I’m constantly fighting to bring up the caliber of my industry. Yes, there’s some bad actors out there. I’m ever hopeful that with our current market and licensing, many are flushed out for good.
This is a respectable business. I’m proud to be a Mortgage Professional and I don’t relate or associate myself with MRSP’s. I know plenty of other Mortgage Professionals in my industry…and I just wish that my clients, if they’re not working with me, would have wound up with a professional instead of a predator.
One of the Realtors I work with sent a Seller to me since they were having second thoughts about the lender they were working with for the property they were buying in Arizona. I reviewed their estimate and discovered their proposed loan had a prepayment penalty that they were not aware of. Long story short, they decided not to buy (not just because of the lender…I believe their house did not sell in time and they were "bumped"). I’ve told their story in a previous post.
They recently contacted me wanting to know if they should refinance. They have 5 years left on their 7 year ARM which is currently at 5.5%. Since their mortgage is not set to adjust until the summer of 2012 and they still hope to move from their current residence, I recommended that they do not refinance at this time. Even though I’m not her original loan originator, she asked me if I would mind watching her rate and keeping tabs on her ARM. Managing mortgages is part of my standard business practice for my clients. I added her information to my database and told her I will gladly add her to the mortgages that I care for…even though I did not originate her current mortgage.
It got me thinking… if you or someone you know have an adjustable rate (or actually mortgage) and you don’t have a Mortgage Professional who is helping you manage that debt (watching current mortgage interest rates and trends, keeping tabs on when your mortgage payment may adjust), and you’re in the beautiful Washington state, I’m glad to include include your existing mortgage to my database. No refinance required. If you’re satisfied with your Loan Originator, then ask them to manage your mortgage for you. I’m sure they’ll be happy to do so (again, no refinance is required).
Now if I could only figure out a way to be paid for all the times I’ve talked people OUT of refinancing! Seriously, if you have an adjustable rate mortgage, please contact a Mortgage Professional to review the terms.
Last night reunited at the SeaTac Marriott. My career began on May 1, 1986 as a doc puller at Safeco. Andrea Budnick was my first “professional” boss in the PIC department and once again when I became a title rep in the SMART (Standard Mortgagees Assurance of Record Title) home equity loan department.
I was barely 19 years old when I first worked for Andrea. I thought I knew everything (what teen doesn’t). I was a doc puller for a whole month and I tried to quit 3 times. Each time I’d meet with Andrea to let her know that I did not want to be a doc puller and that was quitting, she would send me back to my desk and tell me that I could not quit that day! Thanks to her, I wound up having a rewarding title career for 14 years. 
Mary (Sweeney) Forrey and Adoline Brown were a few of my old friends from 
Safeco. When I was in Property Information -Customer Service, I always looked up to Mary who was a Safeco Title Sales Rep. I thought she was sooo cool…I wanted to be just like her and eventually, I did become a rep at Chicago Title (CTI bought Safeco). It’s such a small world–now our kids go to high school together!
Adoline Brown, aka Addy or Ma Brown…I think the world of as well. I was a Title Technician (prepared recordings, typed supps, wrote title policies…etc.) in Unit 5 for Adoline who was the Title Officer of our group. She was so patient and taught me everything I needed to know about title insurance. Safeco was known in the industry as “Safeco U” because we were paid very little (compared to other title companies) and we had excellent training. People would go to Safeco U to learn and then be hired away by a competitor.
Last night we sat with Doug Pittman, Dan Duffus, Stephanie, Mike and Sam. It almost felt like a high school reunion! We did have some people missing. I would have loved to have seen Bill Massey, Linda Yoo and Phil Jenkins (and others). It was very nice for the group at Stewart Title to organize this event. Many thanks to Teresa Dopps, Mark Perez and the rest…and to Sherry Gill (of Pacific NW Title) who told me about the event! I had a great time.
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!
Once again, I was glued to the TV watching Ben Bernanke along with Treasury Secretary Henry Paulson and HUD Secretry Alphonso Jackson testify before the House Committee on Financial Services about the mortgage mess. There were a few of Paulson’s points that I that really stuck out to me beyond the talk of temporarily raising the conforming loan limits.
"many borrowers mistakenly believe that their lender wants to repossess their house in foreclosure…. The vast majority of lenders would rather find a way to help the homeowner stay in their home than foreclose. Yet according to most of the servicers and counselors we have spoken to, 50 percent of those who lose their home to foreclosure never contacted their mortgage servicer or a mortgage counselor for help. Often times borrowers are fearful of foreclosure and not aware that their lender may be able to work out a solution…"
Please don’t wait to contact a Mortgage Professional. Do so well before your ARM adjust or before you cannot meet your financial obligations.
"The borrowers who are facing the greatest stress today are those who have less-than-perfect credit, and also those who have little equity in their homes, due to a decline in house price appreciation or a depreciation in home values. These difficulties are not limited solely to subprime mortgages, but are also surfacing among some prime jumbo mortgage holders."
And who wouldn’t welcome this (regarding the stack of paper work you are the recipient of when you’re obtaining a mortgage):
"The key is not more disclosure, the key is better disclosure and this might be a case where less is more. Taking it as a given that many people will not read all (or even most) of the disclosure documents, we should try to evaluate what type of information is most critical for a lending decision to be consummated. Some of the proposals to create a one-page mortgage disclosure have been designed with this goal in mind."
I’ve got a bone to pick with Paulsen over this statement:
"Mortgage brokers have often been singled out as the main problem, and it appears that many of the mortgages that are currently under stress were arranged by mortgage brokers. But that is not the complete story as in many cases mortgage brokers were arranging loans based on lax underwriting standards developed by mortgage originators who could then fund these loans through securitization transactions arranged by investment banks."
Mortgage Brokers outnumber Mortgage Bankers, so therefore it’s simple math that more stressed mortgages were originated from a mortgage broker. However, everyone seems to forget that mortgage brokers are not the ones who have created the programs that are under scrutiny…they come from BANKS and follow the bank guidelines. Mortgage brokers are simply the source for consumers to obtain their financing from.
"Additional efforts to encourage the development of a more consistent licensing, education, and monitoring system for mortgage originators are worth considering and such a system could help to weed out some of the bad actors."
Presently only mortgage brokers are licensed in the state of Washington…loan originators who do not work for a mortgage broker are not required to be licensed (i.e. LOs who work for bank-mortgage companies like Washington Mutual, Wells Fargo, Countrywide, Chase, Bank of America…etc.). I do hope that the State of Washington will step up to Paulsen’s call and have everyone who originates a mortgage be accountable to the same high standards as that of a Loan Originator who works for a Mortgage Broker.
"I have no doubt that some mortgage brokers and originators engaged in deceptive and predatory practices in marketing loans to people that they did not understand or have the ability to repay. Just as important, and not said as often, I have no doubt that there was an abundance of borrower-level fraud as well. Some people chose to inflate their income or mislead a lender into thinking the property was to be owner occupied as opposed to being an investment property. Both of these practices have a profoundly negative effect on the mortgage market."
Are you still reading this??? To read the entire testimony…click here.
Rhonda Porter is a Licensed Mortgage Originator MLO121324 living in the greater Seattle area. Rhonda began her career in 1986 in the title and escrow industry and began her mortgage career in 2000. She enjoys helping people understand the mortgage process and started writing The Mortgage Porter in late 2006. Read More…
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