Why Haven’t Loan Officers Been Told These Facts?
Ready for a challenge? Sample the Mortgage Originator Proficiency Exam (MOPE)
1. A loan officer obtains sufficient information from a prospect to determine they will not qualify for financing and communicates this to them. So what is the next best thing to do according to the Equal Credit Opportunity Act (ECOA) and implementing Regulation B?
a) The loan officer should avoid taking notes, keeping any document, or otherwise creating a written record of the inquiry.
b) Due to the casual and informal approach of the consumer, the loan officer has no further obligations.
c) Because the MLO has communicated an adverse action to the prospect regarding their credit inquiry, he treated the prequalification request as an application. Therefore, he must first make a written record of the application, then comply with the notice requirements.
d) No further action is required as long as the loan officer declines the application within three days of application. The ECOA notice requirements do not apply.
2. A prospect calls and needs a “preapproval letter” to present a purchase offer. The MLO obtains enough information to prequalify the request and issues a preapproval letter but carefully avoids recognizing any property address. The letter stipulates that the approval is subject to standard documentary requirements, an acceptable appraisal, and title report. Does the MLO have an application according to the ECOA?
a) YES. The MLO reviews the request and issues a written commitment to extend terms subject to specific conditions.
b) NO. The MLO did not take a written application.
c) NO. The MLO avoided capturing the property address; therefore, there is no application under either TILA or RESPA.
d) YES. On loans secured by a dwelling, there is an application anytime an MLO provides underwriting guidance to any credit inquirer.
Are you throwing away living advertisements for your business? Adverse action – The goldmine under your nose. The Journal unpacks simple techniques to turn adverse actions into prospect goldmines. Stay tuned.
He who is forgiven little loves little – but the one who is forgiven much greatly loves the one who forgave him.
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. Real estate agents, builders, financial planners, insurance agents, and other professionals who are essential to your business. But of course, your numero uno referral asset could be your borrowing customers.
Do your customers refer you to their family, neighbor, attorney, accountant, or financial planner? Why or why 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 of the loan manufacture and start with the basics.
As with farming, timing is key to a bountiful harvest. Planting the referral seed starts early with prospects and applicants – during the prospecting and loan manufacture. And the time to reap is early and often. So sow early, reap early and reap frequently. So sow, re-reap – repeat.
Some MLO’s are natural promoters. The thousand-watt smile people make it look easy! This article and the recommended referral approach are unnecessary for some Originators. They are just shameless—no judgment against that. People are just different. The Journal is suggesting a better way for those suffering from referral reluctance.
So why does asking for referrals feel like asking someone to buy your kid’s fundraising peanut brittle? For some folks, part of the apprehension may stem from fear of rejection. Understandable. Even prudent. Fear can be a good thing. After all, there is one thing worse than fear – pain!
But must you present the referral request in such a way that it comes across like something Dickensian? Is it in the asking that the train leaves the tracks? You – “I’m Oliver Twist from Mudfog Mortgage. Please, Sir, I want some more referrals?” Applicant Bumble -“Oliver Twist has asked for more! That boy will be hung!” Scary. Why not ask Bumble to prequalify his leads before you bother?
So why must it be hard to ask for referrals? The good news, you are just a step away from becoming a referral machine and learning to make money while you sleep. But why must you ask for referrals? Alternatively, you might try – “give me the damn loan!” But while such requests might briefly satisfy some special unction, this approach may be unwise.
Referral grubbing sounds pretty mercenary. Keep in mind. We serve people, not referrals.
When young Oliver Twist went up to Mr. Bumble, bowl in hand, to ask for seconds, “Please Sir, I want some more.” Mr. Bumble certainly got the message. This impertinent gutter-child stirred up trouble and threatened the status quo at the venerable workhouse, Mudfog. So embarrassing.
No wonder seeking referrals might feel unnatural or inappropriate. Can you rewire your mind to escape the mental workhouse? Yes. Stop working so hard. Go for easy. You are asking for the wrong things. Do referrals need financing?
No more walking around with your hat in your hands! Reorient yourself.
Remember, plant early and often. If you wait until the prospect experiences a felt need for a mortgage, you are already late to land the business. People are better off knowing the professionals they need before they need them. People could benefit by knowing a mortgage professional before they need financing.
The holiday spirit of giving has caught on at the Journal. So next week, the Journal provides a few gifts for immediate implementation. As a result, you will sow, reap and harvest sooner, more fully, more frequently, and ultimately with tremendous success.
Next week the Journal unwraps a few simple referral techniques.
Tip of the Week
Project Management Skills for Loan Origination – Communication
Last week the Journal’s editor confessed his ineptitude in communicating with Amiableaholics. That’s nothing, though, compared to the Directator’s inherent conflict with this week’s personality type.
If you remember, from last week, my boss had publicly confronted me about my apparent dislike for her. It felt like a satanic ritual from a Dr. Who episode. So, there I was, sitting in the middle of these managers. My boss says she doesn’t think I like her. So, I cleared my head and asked her, “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? The second question, do you still feel that way?” She was super gracious and said, of course not, we were a great team, and all was well.
What could I have said that might have been better – “I AM SORRY, PLEASE FORGIVE ME!” – That phrase has become my abracadabra in life. It may be the most powerful combination of words in the English language.
It takes a big person to admit to a wrong. And one must be a scoundrel to kick someone when they are down. Don’t struggle with what should be, accept things for what they are, and work it.
The Journal has described two of the four personality types that may help you improve your social capital with various stakeholders. Last week the Journal described the Amiableaholics. They are hard to miss. You feel good after being around them. They make you feel liked and respected. Their feelings are bruised if you fail to ensure they know you care for them as a person. The week before last was the Directator. With proclivities and tendencies to be more direct and fact-oriented, the Directator wants it their way. Feelings should not get in the way of a job well done. Let’s get down to business types.
This week the Journal dissects the Performist. Similar to the Amiableaholic but decidedly different. The Performist is also people-centric. Relationships are preeminent. One of the key differences between the Amiableaholic and the Performist, the Performist loves to be the center of attention. Oh, they have magnificent ideas! Like a Shakespearian actor, they live for the stage. You’ll recognize them right away. They talk about their ideas a lot. They are emotional. Facts get in the way of good ideas. They say things like, “We can make a load of return on this idea! The numbers don’t add up? Negativity is cheap; positivity takes effort! A million dollars or a thousand dollars what’s the difference?” – Yes, Virginia, there is a Santa Claus – favorite motivational book.
The Performist, unlike the Amiableaholic, embraces more direct communication. They like a heart-to-heart talk and look damn fine while having it. Like the Amiableaholic, conflict is a total turnoff. The Performist will make everything okay, whether it needs fixing or not. They are movers and shakers, quick to embrace change. These are the folks that must have every new software release and recycle their iPhone every year. They tend to get jobs started but are often poor finishers, leaving the “details” for smaller minds.
Watch for the Performists. They are hard to miss. You know a lot about them, even when you’d rather not. They need approval. Their feelings may be bruised if you fail to recognize their efforts. Give them room to vent, to take the conversation off-topic. You must demonstrate admiration and appreciation for their effort and their person. Next week the Journal will unpack the fourth 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!