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This
is what seems to be going on right now,
more than I’ve ever seen. As close to
this as I can recall, was back about two
decades ago, when the Chairman of
Salomon Brothers (a 100+ year old Wall
Street firm) invented the Mortgage Back
Security (MBS) and the subsequent
trading of the MBS. Prior to that
significant paradigm shift, portfolio
lending and modest volumes of whole loan
sales were predominant in our industry.
This gave way to easy access to
virtually unlimited funds available for
mortgage lending.
Abandoning their more traditional role
as ‘deal-makers’ and businesses
involved with securities underwriting;
sales and trading; investment and
merchant banking; financial advisory
services; investment research; venture
capital; correspondent brokerage
services; and asset management - more
than a decade ago we saw the beginning
of the Wall Street invasion into our
industry when DLJ bought First Franklin,
and from that several Wall Street firms
became more and more involved as owners
of mortgage companies, warehouse
providers and etc. Due to their relative
short time-line horizon thinking, today
as a major part of industry turmoil
we’re seeing those more recent roles
of theirs disappearing.
Another noteworthy transformation that
came about a little more than a decade
ago, as I recall, was the notion that
retail originators - mortgage brokers,
loan officers, loan agents, loan
associates (or whatever label you chose
to select) should be ‘commissioned
sales/closer’ types. This shift
created a new culture and attitude
revolution, apart from the
long-established character of the
position as customer service, trusted
advisor, underwriter/processor thinking
individuals. This newly created
commissioned concept, has given rise to
a need for nationwide fiduciary duty
legislation being considered, and the
absolute return to good faith and fair
dealing standards necessary to help
protect the public.
Contrary to all the “Me Too”
articles I see by most supposed industry
Guru’s these days, it’s not all
about ‘selling,’ it’s more like
solve a problem or help the customer
make a decision! Originators should not
be taught to be a ‘closer’ – don't
kid yourselves, customers trust their
interests are being considered first,
not being handled by a commissioned
sales/closer like the guy that sold them
their last used car!
So last week-end I go to the local
Garden Center and up comes a fresh faced
twenty-something year old young man who
asks “How may I help you Sir” – I
go on to explain I’m think of tackling
several projects in my yard and need to
a buy a shovel! With a big grin he
begins to ask me several probing
questions, like what do I want to
accomplish? I explain one thing I need
to do is to dig a small 6” deep trench
for a sprinkler system I want to put in.
His product knowledge kicks in, and he
explains I need a flat nosed narrow
shovel for that sort of a task, and
shows me one. Also I tell him I’m
going to plant a few fruit trees, he
shows me a medium sized pointed nose
shovel or easy hole digging. Then I
mention, I’m going to pour some
concrete for a small side patio and I
pick up a wide flat nosed shovel for
that! Three different shovels for three
different situations. In fact, he's
the perfect candidate to hire as an LO!
I just explained precisely what a retail
originator does with a potential
mortgage loan customer; needs good
product knowledge and common sense
coupled with a friendly customer service
oriented helpful attitude. Customer
interests are ahead of originators
commission check and no selling
necessary.
The big ‘commissioned sales/closer’
types have, these past several years,
had the gall of posing as professionals
when they mainly have been neither
knowledgeable, nor willing to expend any
effort to learn … their main focus has
been like a laser light aimed at their
own commission checks instead of
centering on helping borrowers solve
their problems with loans they can
afford and whether the customer receives
a reasonable, tangible net benefit from
doing business with them.
I have absolutely ZERO influence on how
Wall Street will ‘make-over’ how
they interact with our business next,
but I do know all of you can surely
influence our front line customer
contact personnel. Everybody needs to
see, breed, educate and train these
valuable front line people, who are the
face of our industry to most of the
public. STOP thinking and saying they
are salesmen, they’re not – they
need to be better than that again. Click
Here and tell us what you think on our
Discussion Board
Weiss Blames Feds, Lenders for
Mortgage Crisis
Federal regulators and mortgage lenders
were "largely responsible" for
the housing and mortgage crisis, which
should be remedied by better enforcement
of predatory-lending statutes and the
adoption of "suitability"
requirements and federal licensing
standards for lenders, according to a
white paper by Weiss Research Inc. The
white paper, submitted to the Federal
Reserve Board July 19, argues that the
crisis is likely to worsen and that the
Fed played a role in "further
inflating the housing bubble that's at
the root of the current crisis."
Mike Larson, Weiss's interest rate and
real estate analyst and the author of
the report, also points the finger at
lenders who "debased their
standards" rather than accept a
decline in lending volume, and at Wall
Street, whose "large-scale
transformation of mortgages into
securities significantly boosted
risk-taking." Among other things,
the report calls for assignee liability
for the secondary market and closer
monitoring and prompter action by the
Fed to "help avert runaway asset
price inflation." Weiss, based in
Jupiter, Fla. CLICK
HERE if you want to give us your opinion
on our Discussion Board
NAMB: Brokers Closing Fewer
B&C Loans
The National Association of Mortgage
Brokers has released new trend data
showing that mortgage brokers continue
to close fewer nontraditional or
subprime loans than in 2006. The survey
of more than 200 brokers found that
prime loans fell from a 61% share of the
market in March to roughly 56% in April,
but that they were still by far the most
widely used type of mortgage. In April,
only 11% of all loans were subprime,
compared with 13% in all of 2006, the
NAMB reported. "The shift in the
market toward more traditional loan
products is yet another reason we have
cautioned Congress not to overreact to
existing concerns and allow the market
to adjust," said NAMB president
George Hanzimanolis. The association
said researchers expect monthly data to
fluctuate throughout the year.
"There will be some volatility, but
as the year progresses, the trend will
be toward lower-risk loans," said
David Olson of Wholesale Access Mortgage
Research and Consulting Inc., which
conducts the continuing survey for the
NAMB. "New legislation will make it
more difficult to offer higher-risk
loans." CLICK
HERE if you want to give us your opinion
on our Discussion Board
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