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You're Not a Kid Anymore

National Mortgage Professional
Jan 15, 2003

The Burgeoning BrokerJohanna Maherevolving mortgage broker, credit counselors, financial analysts, There was a time when mortgage brokers were the people whom consumers turned to solely for the purpose of buying a home. Today, they wear many hats, having evolved into financial professionals who provide credit and debt counseling; they have evolved into legislative experts who have the nuances of an ever-changing regulatory market at their fingertips; they have evolved into astute marketers who must know how to reach out to and serve an increasingly diverse population. Today's mortgage brokers do this in a sophisticated marketplace where ethical practices, fair lending laws and the fine points of truth-in-advertising are important components of their business. And they still serve that fundamental role: helping people fulfill the American dream of homeownership. In short, mortgage brokers are becoming the full-service industry professionals who consumers rely upon. Mortgage brokerages typically lack internal departments to provide updates on legislation, develop expanding market sectors or create continuing education programs. Thus, seminars, online classes, newsletters and other forms of professional development assistance can be invaluable to brokers who seek professional development. This critical continuing education is available from a wide range of sources. Some lenders have already created ways to help mortgage brokers improve their ability to build their businesses. Argent Mortgage Company, for example, has developed tools to help mortgage brokers stay on top of industry developments through newsletters and seminars, among other things. Organizations such as the National Association of Mortgage Brokers also are working to take professionalism to the next level. NAMB encourages states to adopt continuing education requirements. The organization also has developed a set of Best Practices for brokers. NAMB believes that an increased emphasis on continuing education and Best Practices will help protect consumers and ensure originator competency to everyone's benefit. Mortgage brokers who want to embrace these efforts can benefit from developing their own Best Practices, using samples set forth by professional organizations or actual Best Practices from the industrys top lenders. Best Practices help brokers adhere to fair lending laws and set forth clear guidelines that will help them comply with future legislation. Best Practices may also help them differentiate themselves in the marketplace and illustrate their commitment to fair and equitable mortgage loans. All of this has come about due to a rapidly changing market that puts pressure on brokers to understand and respond to emerging trends. The hot real estate market of recent years brought many new people into the business who learned on the run from others in their office or from friends in the industry. As a result, they may have missed out on the nuances of new legislation or learning about the growth potential of various market sectors. A decade ago, brokers facilitated mostly mainstream, conforming loans. Consumers either qualified or they didn't, and on-the-job training was generally sufficient. Today, however, brokers increasingly look to the more complex issues of non-prime lending, which requires them to know how to evaluate loan applications, conform to fair lending practices and work with lenders who can provide efficient and complete loan services in a short amount of time in order to satisfy today's demanding customer. It also means that brokers must understand the potential of growing market segments important to the development of future non-prime business. Through non-prime loans, brokers provide a service for diverse consumer groups, as well as for entrepreneurs and others who cannot get a conforming loan from large lending institutions. But non-prime loans also provide a lifeline to homeowners who find themselves facing financial challenges that require tapping into their home equity for cash, often on more than one occasion. This is a new market for many brokers, and there's the rub. To fully understand how they can help a homeowner find the best way to tap home equity, brokers must learn the ropes of non-prime lending through continuing educationsomething that many brokers missed out on during the refi boom. State and national organizations have started to address the issue. An expanding selection of NAMB classes reaches out to brokers exploring the non-prime market. New offerings include how to work with diverse populations and sub-prime lending. Online classes are also available to learn about credit scoring, ethics and fair lending. Such classes underscore the need for brokers to be knowledgeable in broader financial areas. This is a step in the right direction, but not all brokers belong to industry associations. Membership is not required in most states, so non-member brokers must look to other sources for professional developmentsuch as lender-sponsored seminarsparticularly in the rapidly changing world of non-prime lending. Mortgage brokers might also want to work closely with lenders who are willing to help brokers deliver the customer service that consumers seek. Argent Mortgage has found that brokers welcome assistance in the form of quick turnarounds for loan requests and online loan tracking that helps them keep consumers informed. Don Exley, president of the Mortgage Training Institute, said the basic challenge faced by brokers remains fairly constant: to assess the needs of the borrower and place that borrower with the best-suited mortgage product. It's finding the right product that's the challenge today, he said. "With the sea of available products and their particular nuances, finding the right program can be a challenge," said Exley. "As the market continues to change, loan officers will need to focus their time and attention to developing a marketing strategy more consistent to a narrowed market and an absence of refinancing." According to NAMB, mortgage brokers originate two-thirds of the country's residential loans. The organization says that consumers who choose to work with independent brokers typically believe the brokers offer a competitive advantage, offer loans from multiple lenders and deliver on their promises in the interest of future business. Providing services and tools to mortgage brokers is a win-win situation for everyone. And with lenders, associations and the mortgage broker community working to take professionalism to the next level, a stronger partnership for the future can be forged to the benefit of everyone involved. Johanna Maher is vice president of channel services for Irvine, Calif.-based Argent Mortgage Company. She may be reached by e-mail at jmaher@argentmortgage.com.
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