Why Haven’t Loan Officers Been Told These Facts?
More than 80 years ago, C.S. Lewis, the noted British scholar, writer, and Christian apologist, penned the famed satire, “The Screwtape Letters.” In the spirit of late medieval Christian spiritual notions, Lewis sought to expose and mock the wicked shenanigans of two fictional evil spirits who do everything in their power to make an ape of man (their “patient”). The book introduces the reader to two spirits: Screwtape, the more accomplished and seasoned spirit; and his protégé, Wormwood.
In the spirit of the season- Halloween, Reformation Day, and the 88th anniversary of Orson Welles’s radio rendition of H.G. Wells War of the Worlds- the LOSJ borrows from Lewis’s satire, with hopes of encouraging and amusing the many honest, hardworking mortgage loan originators who commit themselves to serving their customers with honor, integrity, competence, and love.
The best way to drive out the devil, if he will not yield to texts of Scripture, is to jeer and flout him, for he cannot bear scorn.” — Martin Luther
The LOSJ has been privy to a trove of communications from a certain mortgage executive, Mr. Mendax, to his young loan officer mentee, Eva. The emails reveal shenanigans of the worst kind, as evidenced by a chilling sample of messages from Mendax to his protégé, a young woman named Eva.
The reader is cautioned that Mr. Mendax, in his counsel to Eva, and in violation of his authority and responsibilities, has engaged in a pattern of compliance recklessness that directly violates numerous consumer protection laws and even criminal statutes. To less compliance-aware practitioners, the LOSJ warns that while one might see glimmers of truth or wisdom in Mendax’s guidance to Eva, make no mistake: any thread of truth is so tangled with lies, double-dealing, and self-serving worst practices that nothing coming from him has any value other than to serve as a cautionary tale to those who yearn for honesty, truth, and equity in the mortgage origination industry and beyond.
Though Mr. Mendax was one of his era’s most prolific originators, the LOSJ sincerely hopes mortgage loan originators will find his practices and guidance to young Eva abhorrent.
Mendax and His Message
Eva had proven herself an apt pupil of the mortgage industry. After nearly a year with the company, she was already in the top quarter of producers, and management had identified her as having significant potential. The company owner had recognized that the company must do what it could to keep her happy and bring her along in the business. To that end, Mr. Mendax, a Regional Vice President, was tasked with mentoring young Eva in the ways of the top producer. Mendax had a unique role at the company; in addition to managing a geographic area, he also received production overrides on loan officers who completed his top-producer bootcamp.
Though Mendax was rumored to foster questionable origination tactics, no one could argue with his success and over-the-top productivity. However, questions persisted about his past and frequent job changes, but the owner wanted the best for the best.
Meet Mr. Mendax
December, 2025, Mendax’s first email to Eva:
Eva,
You’ve been with the company for almost a year now, and I can see that you’re excited to move up! With your hard work and a bit of guidance from me, I’m confident that you’ll be able to triple your income in 2026 compared to 2025. How does that sound?
You have made impressive strides, significantly exceeding the typical production level for a rookie. However, I believe you still have untapped potential. Both the owner and I see great possibilities for your growth, and I encourage you to embrace this opportunity for further development. I am here to support you on that journey, as our partnership focuses on helping you reach your highest potential.
In my last email, I asked you to share the three main reasons why you feel you haven’t reached top producer status in the company yet. I appreciate your honesty, but I noticed some common misconceptions in your responses. Let’s start there and work together to clarify things!
1) You stated that building a business takes time and that you’ve been in the industry for less than 12 months. This misconception will hold you back. Success in the mortgage industry is not about time; it demands DRIVE and CLARITY. Embrace that mindset to accelerate your progress.
2) I understand that you feel the market is slow right now, and that can indeed make it challenging to build momentum and volume. It’s natural to feel discouraged under these circumstances, but it’s important to remember that success doesn’t solely rely on market conditions. It truly depends on your DRIVE and CLARITY. Success is a relative concept, and it’s important to recognize that your competitors are navigating the same market challenges that you are. To reach the bonuses we discussed, including a place in the 5% Club, your main focus should be on outperforming your peers. Think of this as the first stepping stone on your journey in the year ahead! You’ve got this!
3) You expressed that you have much to learn and that competing loan officers have expertise and a reputation that you’re still working toward. It’s important to remember that while experience is valuable, true success is driven by your motivation and clarity of purpose. With your resourcefulness and determination, you have the potential not only to surpass others with more experience and knowledge, but to render their experience and reputation utterly irrelevant. Focus on harnessing your drive, and you’ll build your reputation and expertise in no time.
I would be delighted to help you clarify your vision of success and identify anything you may be missing. Are you prepared to embrace the journey towards success and the necessary efforts that come with it? The only aspect that I cannot influence is your personal motivation—you either possess that drive or you do not. Please know that I will not be disappointed if my offer doesn’t resonate with you. Achieving your goals in 2025 will require dedication and sacrifice. This opportunity may not be suited for everyone; it is designed for those who are truly committed to success, and I believe you are one of those individuals, Eva. Wishing you a wonderful Christmas, and I look forward to embarking on this path together after the New Year.
Week One, January, 2026
I wanted to take a moment to express my genuine appreciation for your response. I have every confidence in your ability to achieve every quarterly bonus and the year-end award. Looking ahead to next year, I am hopeful that we will be celebrating together at the President’s Inner Circle (The 5% Club).
Congratulations on your engagement! That’s such exciting news! I do want to mention, though, that having a wedding in June might be a bit tricky since it coincides with your responsibilities at the HomeShow that month. It’s such an important event for your success, and I’ve invested a lot of time and resources into it.
How about considering a postponement to January for the wedding? It could turn out to be a wonderful honeymoon opportunity at the 2027 Presidents Club! It would be such a memorable experience, and I bet you’d love to show your new husband what a fantastic time you can have there.
Plus, it’s a great chance to see how aligned you both are when it comes to your vision for success. Just think of the fun moments you’ll share at Presidents Circle next year! Whatever you decide, I’m here to support you!
Week Two, January, 2026
Eva,
I’ve reviewed a sampling of your closed loans. A few comments.
Could we discuss the reasons behind customers choosing to lock their rates at application? When they opt for this approach, it can complicate competition regarding rate, payment, and cash to close, making it more challenging for us to meet our target profits. It’s important to keep in mind that our bonuses are tied to achieving these target margins. It may be beneficial to reconsider our involvement in down payment assistance deals, as they can sometimes divert our focus from our core business objectives. This kind of business has unsustainably low margins. Our goal is to maintain a sustainable and profitable business model. Thank you for considering the business perspective.
No worries, here is how to price: When quoting rates or preparing the Loan Estimate, whatever the days pricing, reduce the interest rate by a quarter and the points by half.
To price the quote effectively, instruct the borrower to float the interest rate until the last possible moment. Clearly advise them to lock in the rate no earlier than two weeks before the closing date. Most borrowers won’t challenge this guidance. By taking this approach, you will effectively minimize competition.
Sometimes, it helps to share with the borrower a little explanation about why delaying the rate lock can be beneficial for them. Most of the time, they’ll be happy to follow your advice, especially if you offer them the Visa debit card. Just remember to send them the electronic access key for the Visa card before you quote the rate. The key is to follow this friendly approach: Give first, then get and get! When you give, you’ll find that they feel guilty if they don’t give back, and that’s a wonderful thing. Don’t forget the power of reciprocity—it can really work in your favor!
If you find yourself dealing with a borrower who seems knowledgeable and questions the rate float, approach the situation with understanding. You might say, “I completely understand your concerns! Many borrowers worry about rates, but locking in a rate at the beginning of the loan process can sometimes lead to higher costs. In fact, most experts suggest that waiting until you get closer to closing is generally a better strategy, as pricing tends to improve then. Lenders are really motivated to keep borrowers happy as they near closing, which is why it’s often better to wait. If a lender suggests locking in your rate on the same day you apply, it’s perfectly reasonable to take a step back from that lender. Generally, they might have their own reasons for suggesting that practice.”
This approach to the Loan Estimate or Fee Sheet is usually reliable. On many occasions, interest rates may decrease, allowing you to wrap things up smoothly. In instances where rates rise, the situation can still be managed effectively. Engaging in a bit of technical discussion can help mitigate any concerns, uncertainties, or regrets; you might mention the Federal Reserve, the volatility of the 10-year Treasury, or other relevant factors affecting rates. Next week, I look forward to sharing some valuable tips to further enhance your Loan Estimate presentation.
Cheers,
Mendax
BEHIND THE SCENES: VANTAGE SCORE 4.0 GOOD TO GO!
Excerpted From FNMA Lender Letter (LL-2026-06)
With the guidance of U.S. Federal Housing (FHFA), and in coordination with Freddie Mac, we are expanding the availability of VantageScore 4.0 to all Fannie Mae-approved lenders, without prior written approval. All lenders may use VantageScore 4.0 when originating and selling eligible loans to Fannie Mae. This expansion follows the initial implementation of VantageScore 4.0 through a limited lender rollout and reflects our continued, measured approach to supporting a modernized, competitive credit score framework while maintaining appropriate risk management and operational controls.
Note: FICO Score 10T is not currently eligible for delivery. We will provide additional guidance when FICO Score 10T is available.
A lender may select either Classic FICO or VantageScore 4.0 for an eligible loan; however, the same credit score model must be used for all borrowers on a single loan. The credit report must be maintained in the loan file in accordance with our Selling Guide.
Our LLPA Matrix has been updated to include guidance outlining applicable pricing for loans delivered using the VantageScore 4.0 credit score model. We have removed the separate grids applicable to loans delivered using a VantageScore 4.0 score.
FNMA LL-2026-06
LOSJ V6 I26 Classic FICO or VantageScore 4.0
LOSJ V6 I17 Using Nontraditional Credit With the New Score Models
Tip of the Week: Sign up for 2026 CE
The LOSJ is celebrating five years of exceptional service to the mortgage industry, offering insights you won’t find anywhere else. To celebrate, enjoy our gift to you! Use the promo code “newsletter” when placing your class order.
Expanding your product offerings is an effective way to enhance your business’s vitality. This year, the Loan Officer School is surveying non-Qualified Mortgage (non-QM) financing options. We will review the various types of underwriting required for non-QM financing, including higher-priced mortgage loans (HPML), balloon-payment features, and interest-only options.
Presenting non-QM solutions to consumers improperly can lead to serious consequences. Understand the essentials of compliant and ethical subprime mortgage origination. Attend the Loan Officer School 2026 continuing education classes.
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Have a Question About Operations, Sales, Marketing, or Compliance? Email Your Questions to the Loan Officer School Journal.
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Necessary Mailbag Disclosure: The LOSJ is a periodic publication from LoanOfficerSchool.com designed to educate and inform our readers. Please note that we do not provide legal advice, and nothing in the LOSJ should be construed as a legal opinion on specific facts or circumstances. The content serves strictly for informational purposes. We strongly advise readers to consult legal counsel regarding any legal matters or specific questions.