Why Haven’t Loan Officers Been Told These Facts?

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1. According to RESPA, the definition of a business day is a day on which the offices of the business entity are open to the public for carrying on substantially all of the entity’s business functions. Generally, this definition equates to the following days:

A) Monday through Saturday except for federal holidays

B) Monday through Sunday except for legal public holidays

C) Monday through Friday except for legal public holidays

D) Monday through Friday except for federal holidays

C) Best Answer

A creditor can operate on Saturday or Sunday. However, it’s unlikely that the creditor could carry on “substantially all of the business functions” on Saturday, Sunday, or legal public holidays. On Saturday, Sunday, and federal or state public holidays, the unavailability of central electronic banking platforms and critical personnel may limit creditors’ business functions.

REGULATION Z 1026.2(A)(6)-1. Business function test. Activities that indicate that the creditor is open for substantially all of its business functions include the availability of personnel to make loan disbursements, to open new accounts, and to handle credit transaction inquiries. Conversely, activities that indicate that the creditor is not open for substantially all of its business functions include a retailer’s merely accepting credit cards for purchases or a bank’s having its customer-service windows open only for limited purposes such as deposits and withdrawals, bill paying, and related services.

Of note, RESPA timing requirements for many loan servicing requirements, including 1024.34(b)(1) Refund of escrow balance specify Monday through Friday, excepting public holidays as required timing “days” other than “calendar days” or “business days.”


2. In meeting the disclosure timing requirements, which of the following disclosures are not dependent on the RESPA definition of a business day?

A) The Loan Estimate

B) The Closing Disclosure

C) The Servicing Disclosure

D) Your Home Loan Toolkit, A step-by-step guide

Answer: B

REGULATION Z § 1026.19(f)(1)(ii)(A) . . . the creditor shall ensure that the consumer receives the CLOSING DISCLOSURE no later than three business days before consummation.
The term “business day” means all calendar days except Sundays and legal public holidays for the Closing Disclosure.

The lender shall provide the SPECIAL INFORMATION BOOKLET (including as applicable the Home Loan Toolkit, the CHARM Booklet, and the “What you should know about HELOC” booklets) by delivering it or placing it in the mail to the applicant no later than three business days (as that term is defined in Regulation X §1024.2) after the application is received or prepared.

THE LOAN ESTIMATE contains the Servicing Disclosure. Regulation Z (1026.19(e)(1)(iii)-1) Timing and use of estimates. The Loan Estimate must be delivered no later than three business days after the creditor receives the consumer’s application. The term “business day” means a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions.

SERVICING DISCLOSURE Creditor’s intent. REGULATION Z 1026.37(m)(6) requires the creditor to disclose whether it intends to service the loan directly or transfer servicing to another servicer after consummation. Thus, a creditor complies with § 1026.37(m)(6) if the disclosure reflects the creditor’s intent at the time the Loan Estimate is issued.

The Servicing Disclosure is a statement about the creditor’s intentions regarding servicing. The disclosure is based on the intent at the time the Loan Estimate is issued. Intent to transfer servicing of the loan includes:

  • The intent to transfer servicing immediately after consummation
  • The intent to transfer servicing anytime throughout the life of the loan
  • The intent to transfer servicing to a subsidiary or affiliate

REGULATION Z 1026.37(m)(6) Servicing. A statement of whether the creditor intends to service the loan or transfer the loan to another servicer, labeled “Servicing.”


Behind the Scenes

The Taper Tantrum Watch Those Refinances, No On and Off Switch for Rate Changes

Leveraging a Blue Ocean Strategy to Grow Your Business

To Explore Strange New Worlds, to Seek Out New Life and New Civilizations, to Boldly go Where no Person has Gone Before :).

Last week, the Journal emphasized the importance of solidifying your value proposition with current referral sources. Of course, this includes your number one asset (or it could be), your borrowing customers.

Do your customers refer you to their neighbor, attorney, accountant, or financial planner? Why do some customers refer and others do not? Do you ask your customers if they know any first responders or educators? What do you have to lose? Let’s go to the beginning and start with the basics.

Like farming, there is an ideal time to sow and reap. Planting the referral seed is best accomplished early and often, starting with the loan manufacture. Sow early and reap a more bountiful harvest.

I have enjoyed a show on Amazon Prime called “Clarkson’s Farm.” It is, at times, both entertaining and somewhat instructive. Jeremy Clarkson, our protagonist, is best known for the Grand Tour and Top Gear TV shows. In the show, Jeremy’s long-time farm manager has retired, and Jeremy, for the time being, has retired to his country farm to try his hand at farming. Aside from the hilarious and unavoidable “City Slicker” type stuff, Jeremy must learn the ropes of farming, and so he retains a farming consultant.

The farming consultant observes that early planting is the key to more bountiful harvests. The later the seed is sown, the lesser the harvest. When Jeremy discovers the sowing and reaping timing requirement, he’s hard-pressed to make his planting schedule work. This predicament serves as a timing foil for the show. Jeremy contends with weather and equipment failures that conspire to thwart his efforts. As a result, one thing after another goes wrong, and Jeremy can see his profits dwindling by the day.

If only the connection between our daily “farming” activities and our harvest were as evident as Jeremy’s. MLOs are not too weather-dependent like farmers. However, we have our challenges much as farmers have the weather. The minor or significant things that sidetrack us from more profitable activities siphon away time like a hole in the bottom of the canteen. Are these distracting events controlling your success, or are the events a matter of misplaced focus and priority?

Life will return to normal for most of your borrowing customers once they get settled with the new financing or the new home. Of course, many of these folks will be receptive to your downstream referral activities. But the whole mortgage thing will soon be insignificant to most of your borrower customers. And you may become irrelevant and forgotten over time.

However, your applicants become mortgage-centric amid the mortgage process for a brief time. Like when you’re hungry, think of how your sense of smell grows so strong when it is time to eat. Another illustration, think of significant purchases you’ve made. Cars are a good example. If you are thinking about buying a particular car, you suddenly begin seeing that car wherever you go. You overhear people talking about buying cars. You see ads for cars you would never have noticed. You seek affirmation and validation for the car you want. When the cars you are considering begin following your online browsing – that is a sign you are so attuned to buying a car, even the internet notices. The same focus occurs with the mortgage manufacture. Many of these borrowers become mortgage bird dogs extraordinaire.

As Jeremy discovered a little too late in Season 1, the earlier the sowing, the more bountiful the harvest, though better late than never. As a young MLO, I felt it improper to ask for referrals until I had proven myself to the customer. However, once I closed the deal and the customer could see what a great job I had done, I earned the right to ask for referrals. The proof is in the pudding, I would say.

How can you direct the applicant’s interest in providing referrals? For many originators, this isn’t easy. First, it could appear insensitive, suggesting to a customer you just met that they refer loans to you. After all, you are their loan officer, and you should focus on meeting their loan needs, their mortgage – not looking for new business on their nickel.

Part of the issue is asking for the wrong things – loan referrals.

Next week the Journal helps with asking.


Tip of the Week

Project Management Skills for Loan Origination – Communication

Last week the Journal described one of the primary personality types with proclivities and tendencies to more direct, fact-oriented, and objective communications. We’ve labeled this communication style the Directator or, more descriptively, Dewrecktator. The Directator wants the communication and things done their way. So let’s get down to business types. Feelings should not get in the way of a job well done.

This week, the Journal hopes to define the polar opposite of the Directator.

Keep in mind that you won’t reinvent your communication skills overnight. Start with a few key stakeholders. Building better communication skills will be gradual, with incremental improvements. Start with the key stakeholders you know best. For example, pick a coworker or customer you know well. Identify their communication style and how to communicate with them using their language.

Part of the benefit of attempting to identify the communication style of key stakeholders is the deliberate focus necessary when contemplating effective communications. Some form of deliberation and analysis regarding something so significant as communication is better than nothing – which is the default for many.

What you say is necessary, but how you communicate the message is also of great importance. Our focus in this subsection of communication is establishing immediate social capital with the message recipient. Interpersonal and leadership skills are also necessary for effective communication. Yet, influence may be the most significant element in your effective communications. Influence puts your persuasiveness and interpersonal skills on steroids.

This week’s influence style is the Amiableaholic. Unlike the scorched earth practices of the Directator, the Amiableaholic avoids more direct communication or conflict. Directator behaviors freak these folks out.

Recently, your Journal editor was in a meeting with a few stakeholders. There were five people, myself included, with four influence styles. I went off on what struck me (that’s the problem ;)), as a measured and necessary tirade about what I wanted and what I was getting. After expressing my frustration, one look at the Amiableaholic across the room told me I’d stepped in it again.

Hands folded in his lap, head bowed, and eyes on the floor, he was probably asking God to deliver him from this meeting and the boor across the room. Early in life, Directators, with their scorched earth take no prisoner approach, learn to do lots of apologizing. My friend, the Amiableaholic does not like rocking the boat. He needs to get along with people at almost any cost. He will go turtle before going toe to toe. If he does not feel that I like and respect him, he cannot listen to one word I say. Like a turtle taking refuge in its shell, it’s hell to get the Amiableaholic back out. Reestablish trust, be warm, get a drink or a small gift to thaw the ice.

I had an Amiableaholic boss years ago. She and I were at a production event. We had learned to work together well. I genuinely liked and respected her, and I believed the feeling to be mutual. Matter of factly, she said to me in front of a small group of people that when we started working together (this was about three years earlier), she thought I did not like her. She thought maybe I was sexist and did not like having a female supervisor. She said she also wondered if I thought I knew the job better than her (Directators come across as arrogant, she was right on that count!). She thought maybe it was personal and I did not like working with her (this was completely untrue!).

My jaw dropped. I was stunned. I had nothing but the highest regard for this person from day one. She treated me like gold, and I couldn’t ask for a better boss. So, I cleared my head and asked her, in front of these people, “Two questions. Number one, can I ask you why you felt (use the feeling words) I did not like you, or you were feeling I disliked working with you? Number two, do you still feel that way (with a big smile)?”

Quickly, she cleared up the second question. “No, we are a great team, and I know you like and respect me,” she said. I must have been holding my breath, I could feel my heart beating, and I must have been three shades of red. Then, mercifully, she said, ” What stands out more than anything, whenever you came into my office, it was as if you couldn’t leave fast enough. Like you had little interest in me. You were always (Amiableaholics use absolutes frequently, “always” and “never”) right to business, all business and just business.” It was quite a moment. Yet the Journal’s editor survived another near miss.

My former boss labeled me the “comeback kid.” I had a never-ending appetite for eating crow and humble pie.

Next week, I will share what I learned not to say, what I said, what I should have said, and how to have a little fun doing the right thing.

Watch for the Amiableaholics; they are hard to miss. You feel good after being around them; they make you feel liked and respected. However, their feelings may be easily bruised if you fail to ensure they know you care for them as a person. Next week the Journal will unpack the third of the four communication and influence styles.


2021 CE – Sneak Preview

Is now a good time to go long or short on the stock market? Is the residential real estate market overbought? Time to sell? Are you confused about where to invest your hard-earned money? Stop messing around and make the best investment you will ever make – invest in yourself. Yes, that means professional development. Be the best version of yourself that you can be. Expand your horizons. Why not get on one or more of the developing market waves?

Are you interested in Low-Moderate-Household-Income lending? Do you wonder about getting started with loan manufacture requiring alternative credit (nontraditional credit)? Have you heard all the horror stories about collaborations with Housing Finance agencies? Grab the bull by the horns and take some chances. Join us for a primer on getting started with these types of loan programs.

CE should be an opportunity for professional development. That you might expect – but we promise that you will have fun at the same time. So how can you enjoy hours and hours of law, ethics, and regulation? Well, swing on by the LoanOfficerSchool.com 2021 continuing education classes and find out!