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SECRETS
EXPOSED!
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Insights,
Opinions & Commentary
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| The
Solution As I See It |
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As
I'm sure you do as well - I see so many
regulation enforcement issues, arrests, fraud
blogs, convictions, license revocations, law
suits, and jail sentences in various publication
lately, I am astonished at the lawless natural
of our industry now days. Astonished is really
an understatement, I'm even more shocked then
that!
However, I want to offer up a solution, which I
know in the long run will solve this epidemic
of greed that seems to be growing. Just like
in college, where people have a Major and a
Minor when they graduate and are degreed - we
need a national mandatory licensing program at
the industry entry level position of Loan
Officer - a serious one. One part of getting
licensed is they need to be educated and
certified by an a authorization certification
board and have a Major in Underwriting
and a Minor in Processing. Any sales
background should a No-No PERIOD.
Those two 'training required' skill sets are
truly what separates one good LO from another. The
LO position needs to be no longer be thought of
as a sales position. It's that DNA, when
coupled with 'commissions' which has evolved us
into the mess we see in our industry today.
Reducing commissions to small incentive bonuses
(when certain goals are met), on top of W-2
salaries for LO's and staying away from the
sales-type DNA, but instead hire for good
customer service skills, and train to that end
while introducing the underwriting and
processing theory to the new LO, is exactly what
I mean. Sound revolutionary? Nope, what I
describe is how the subprime industry worked
when I got hired in my early 20's, and how it
was for the first 90 years of its existence.
It's a tried and true operational standard. Big
commissions breed fraud.
To start this evolution into your industry
sector, I call upon shop owners all across the
Country, to begin today hiring and training in
this new direction; I'm certain you'll see the
benefits very shortly in your own company. I've
done it, seen it done by others, trained it
myself, and watched it work for me personally
and others for many decades.
CLICK
HERE to tell us your views on our Discussion
Board
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| Stranger
to 1003 ... 1003 to Funded - Part Duex |
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To
continue this series on real compliance issues
faced by both Loan Officers and their Owners;
there's still plenty of things to consider
besides what's become commonplace of late, with
the LO generally being clueless about the range
of laws that regulates what it is they do –
many of them merely: 1). attract an applicant,
2). post a Loan Scenario someplace on the
Internet to interest a wholesale AE, 3). get a
preapproval from that AE, then toss the 1003 to
someone else in the company to turn it into a
big fat commission check – and the LO moves on
to the next one. The compliance issues which
they face are monumental, and all should be met
– yet sadly too many are clueless. Their
attitudes all to frequently are "I'm here
to make a living, I gotta keep selling and
selling, I don't have time for all this
regulation noise."
At this point, these "ignorance is bless
1-2-3" LO's who operate this way will tell
all of us, moving from ‘Stranger to 1003' is a
breeze, on the other hand however, it surely
qualifies them worthy of huge payroll sums (in
their minds). Without doubt they typify the old
adage ‘ignorance is bless' method, yet
recklessly leave themselves and their bosses
open to a great deal of liability.
From our last piece on this topic, we can only
hope these LO's did no advertising, therefore we
can rest assured they did not utilize any
'triggering terms' and thus ending up violating
Truth In Lending and possibly RESPA advertising
issues (we cross our fingers). We further trust,
their applicants did not come their way from
‘referrals' or we may have to bring to their
attention the RESPA Section 8 unlawful kickback
violation boundaries they may cross, which we
discussed last time ... since the ‘ignorance
is bless 1-2-3' method easily can stumble
themselves right into that fertile ground with
little or no trouble. Regulation X of the Real
Estate Settlement Procedures Act, as detailed in
Section Nos. 3500.14-15 and 19, provides for
fines of as much as $10,000 and one year
imprisonment for failure to comply with the
prohibition against unearned fees and kickbacks
(the notorious Section 8 we all know and love).
Hopefully they did all their work with the
customer, at their company office, and no
consumer information was jeopardized by their
working with it in a home-office, and their
subsequent likely GLB Act privacy violation
negligence either.
When the "ignorance is bliss 1-2-3 crowd
says "I didn't know" … violations of
Regulation B of the Equal Credit Opportunity
Act, as detailed in Section No. 202.14, requires
the U.S. Department of Treasury's Office of
Thrift Supervision to report discrimination
practices to the U.S. Department of Justice for
prosecution. As an owner, are you real sure your
LO's follow this one to the letter? Violations
can result in civil liabilities for actual and
punitive damages, class-action judgments, fines
from $10,000 to $500,000, costs and attorney
fees. We've still got Regulation E of the
Electronic Fund Transfer Act, as detailed in
Section No. 915, imposes criminal liability and
penalties including fines of $5,000 and one year
imprisonment for willful violations; for fraud,
the penalties can be as much as $10,000 and 10
years in prison, when the LO was only concerned
about selling and "didn't know." There
is now new and growing concern over the new Fair
and Accurate Credit Transactions Act of 2003
(FACT Act) with LO's and/or their employer and
how they destroy their customer's consumer
information before they discarded it! And of
course, we trust the employer is properly paying
the LO via W-2 (paying all appropriate payroll
taxes and a minimum wage as well), and doesn't
continue to violate both State and Federal Wage
& Hour Laws by paying them via 1099; another
mine-field facing both.
When we have LO's closing a dozen or more loans
monthly, therefore earning well into mid-6
figures annually … as with any other
occupation at this income level, they should be
very well versed in their careers and the laws
that govern what they do. Yet we see, day after
day, time after time, this ‘ignorance is bless
1-2-3' crowd operating in a lawlessness way.
We are probably the most highly regulated
industries in America. The maze of laws,
regulations, etc. are mainly aimed directly at
the industry entry level position of Loan
Officer, that's where the 'action' is and where
MOST lawlessness occurs. Why? Greed and
stupid bosses who don't train. In our next
edition, we'll discuss the relative ease of
Stranger to 1003 vs. 1003 to Funded.
CLICK
HERE to tell us your views on our Discussion
Board
HIGHLIGHT: What you get from our Mentor
Program
Precisely and exactly this. Our faculty will
show you where not to step in your business;
think that has value to you? Or you can continue
to learn through trial & error - which do
you think will feel better?
CLICK
HERE to learn more
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