The origination side of the industry needs to get back to the basics, like what is a good loan? Not simply who can be found that is aggressive/foolish enough to fund this puppy. This sort of enlightened thinking will help keep the industry strong and moving forward.

There was once a time when most LO's and Brokers were former portfolio lender employees, so that kind of an attitude was common in that, they wouldn't put a 'loan on the books' simply because they could. They would think about the consequences of approving and getting a loan funded(not only to their pocketbook and the customer but to the funding source).

Sound credit decisions are based upon the 3 Legged Stool custom. Character, Capacity & Collateral - it is just that simple, yet that complex. As in a three legged stool, the stronger each leg is, the more solid and reliable it will be.

In a nutshell ...

Acceptable 'Character' is basically a detailed analysis of the credit report of an applicant, along with their stability of residence and employment/income. On balance, there is a scale here - from top-notch gold plated all the way down to lousy. The further away from lousy, the stronger that leg of the stool is. This is considered the most important leg by many long experienced credit grantors. This is but a quick definition.

An applicant 'Capacity' to good lending decisions is critical, as it is essential that any customer has the ability to repay their debts. The Character leg's strength tells us their willingness to take care of their obligations in an acceptable manner. This Capacity leg however, measures their capacity - their ability - can they afford it? This leg of the stool needs the support of a likely reliable and steady available future income stream so the customer has the funds to make timely payment.

The 'Collateral' which secures the transaction is the third leg of this three legged stool. Obviously, the more security which collateralizes the loan the better, and the stronger the stool will be. This is thought of by many however, as the least important leg of the stool, as it can lose value and is not always of satisfactory quality, or sometimes even accessible upon default.

With two sturdy legs for our stool, with only one weaker, even though not ideal, is still an adequate formula. Two of the legs weakened is generally a recipe for disaster. Having all three of the legs fragile at origination, barring a miracle, is most certainly a future loss.

An ingredient missing from the training regimen of most employers in our industry these days, is teaching this concept to all personnel. Sure, processors may get a small bit of it via osmosis; naturally underwriters and institutional investors should all be intimately familiar with this sort of thinking; yet it is our observation even many of them are not. Unfortunately mainstream Loan Officers don't have the first clue what it's all about, all too regularly. They see themselves as sales experts, closers, and regrettably not loan/borrower analysts. Yet, in most cases, those very LOs are the face of our industry to nearly everybody outside the business! Shouldn't they know what a good loan looked like? CLICK HERE to tell us your views on our Discussion Board


Privacy Laws and Security Breaches
and oh BTW:Twenty-five states have escalated concern for the privacy of personal information and have passed legislation that goes beyond Federal law. Eleven states have legislation pending in their current sessions.? CLICK HERE to tell us what you think about this on our Discussion Board





What the Government is Saying
Speaking at a Federal Reserve Bank of Chicago annual meeting, Fed Chairman Ben Bernanke said it "seems pretty clear" that housing markets are cooling. But, as reported by The Wall Street Journal, Mr. Bernanke responded to a question saying that the housing slowdown is "orderly and moderate" at the time being. In his prepared speech, Mr. Bernanke also addressed new mortgage products, saying that innovation in housing finance has led to "more sophisticated and flexible instruments, more liquid markets, and better risk-sharing." While the net benefits have been positive, Mr. Bernanke said "rapid financial innovation carries some risks," and he urged regulators to be ready to mitigate those risks.

The housing boom is over but the exit from it will be a matter of regional price declines rather than the bursting of a national bubble, former Federal Reserve Board chairman Alan Greenspan said at a dinner celebrating the 30th anniversary of the Bond Market Association, according to Yahoo! News reports. The association at the dinner also established an Alan Greenspan award that association president Micah Green said, "will embody the foresight, dedication and leadership that were the hallmarks of chairman Greenspan's tenure at the Fed." CLICK HERE and give us your two cents on our Discussion Board




Come Watch us Grow!
We're pleased to announce another fine addition to our growing Mentor faculty, check out David J Patti. We're happy to have him on our team! To read all about his fine background, CLICK HERE

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Our next class is Sunday July 16th; make it a two day session with us, come to our 'chat' (day before) plus this class. Even if you have a website now, we'll show you how to enable the website you get with this class, to make your job more productive. Click Here and register for our live Website & Internet Originations class now.

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Back when I wanted to go out on my own as a broker and open up my own shop, there were many hurtles I needed to jump over and several significant barriers to entry which would tend to keep a lot of riff-raft out of this industry. Virtually every young broker like me that I met, had previous portfolio institutional lender training - not like today where most have no previous lender etc.experience/ training. Therefore they lack the values and mind-set a portfolio trained person has. Back then, unlike today they knew the long term value of only putting together good quality transactions, instead of that's the wholesalers problem!

First off you needed to spend anywhere between $20k to $40,000; sign a multi-year term commercial occupancy space lease, buy and/or lease office furniture fixtures and equipment. Lobby furniture, plants, clocks, pictures, desks, chairs, tables, bookcases, faxes, copiers, computers, typewriters, staplers, chair mats, pens, pencils and many other supplies to get started once you were licensed. That's called owning a 'real' business and having career goals.

Next the credit bureaus had their field people inspect my location, it needed to meet certain confidential standards, because not just any Tom, Dick, or Harry couldn't pull credit reports, so the location needed to be acceptable and I needed to qualify and get approved by them. Many were rejected.

After that I needed to get approved to do business with the various wholesale funding sources I liked, just because I had a transaction for them, meant ZIP - they were picky about who they would accept loans from, so the quality would hold up! Little or no experience? Then you had no business dealing with credit applications and packages, can got rejected - thus no access to credit reports and no access to the money the wholesalers coveted.

The model has changed a lot since then, now days no license, and working out of a furnished apartment, no experience, no training or industry education, and handling the most important financial and emotional transaction in the lives of most American families is left up to just about anybody with no investment and virtually nothing to lose. These three barriers alone are pretty much gone now - the industry has done to itself; that's resulted in many problems.

Many of these individuals poking around in the unsupervised darkness, have caused the industry to have the black eye it has today - a roll back to the basics in many areas is long overdue for things to significantly improve. We don't need more laws and regulations, more enforcement surely is long overdue - plus extensive training and industry education is a good place to start from right now to get things headed back the other direction. CLICK IT to discuss this item on our Board





In Case you were wondering how long ...
In a recent interview, Countrywide CEO Angelo Mozilo predicted that the industry's correction will last at least another two years. He believes that significant consolidation is now underway. CLICK IT and tell us what this means to you


HIGHLIGHT: Mentor Program
Nearly one-third of all those that visit our website, go to our one-on-one Mentor Program section to learn all about it - seems like those that will be the survivors during this down-turn period are savvy enough to reach out to our faculty for a helping hand.

It appears that our Guarantee is a common theme which they particularly enjoy. 'We promise you'll either earn more money and/or save more money than you pay us in tuition from what our Mentors teach you, or the tuition will be refunded to you!' CLICK HERE to read all about this program right now.