Caught in the thick of thin of things?Joe Cornoprioritizing, originating loans
Almost every aspect of loan origination and processing can be
controlled. However, are you constantly playing catch up -
crunching past deadlines and promised delivery dates? If so, you
are caught up in what I call the "thick of thin" of things.
The majority of brokers and lenders have the priority of
business backward. Overcoming obstacles, getting things
accomplished fast and staying ahead of target dates are a
never-ending battle. The majority of the industry focuses on
getting loans funded first. These files take top priority because
people are waiting with moving vans and the seller's house to fund
so that they can close on their newly acquired property. Agents,
home inspectors, appraisers title companies and everyone else want
to be paid.
The deal is on fire, heating up all around, and long-term
relationships are on the line. The originator is no longer a loan
officer, but a firefighter, running around and stomping on the hot
spots that flare up. Next are the loans that are receiving their
documents to be signed before making it to the funding stage. Due
to playing the role of a firefighter, the originator may neglect
the documentation request, losing precious time. However, more time
is lost on the loans being submitted to underwriting and processed
from the login stage, due to everyone focusing on the wrong end of
the loan process. Of course, this means that loans being originated
are given the least amount of attention.
Now, we have developed a thick of thin of things scenario, and
we have no control over the latter stages of the loan journey. The
reason is that we did not place priority at the correct end of the
loan process.
The inverse of the above scenario is the solution to the
problematic concept of backward prioritizing. If it were truly this
simple, everyone would be doing it. There is a light at the end of
the tunnel, and it is in the originator's control to get out of the
thick of thin of things.
Most of the time, a terrible experience is due to an originator
wanting to do only the minimum. Originators want to sell, sell and
sell some more. They love the pitch, the adrenaline surge and
making attempts to avoid what they deem office work. They say to
the staff, "Call the borrowers and get their ages and years in
school. I want to go get more loans, so stop bothering me about ZIP
codes, interest rates, types of loan and listed assets on the
applications." Management and staff are afraid to anger a
volume-producing loan originator, so they accept partially
completed loan applications, and the vicious cycle of lost time at
the application submission stage continues.
When I was a chief operating officer, one great experience was
firing the top-producing originator. This originator was indeed the
top loan-volume producer, but chaos was present with every loan
file, which always thickened up thin things.
Once, I came into the office after hours, and a processor was
there, crying at his desk. When I asked him what the matter was,
the processor told me that the originator had come in, yelled at
the staff on items missing from the loan files and then left. The
dedicated processor was working late to complete the loan files.
While the originator was out having dinner, the processor made
calls to locate addresses, ages of borrowers, account data, etc.,
which should have been part of the loan applications at the
submitting stage. I instructed the processor to go home, and I
reviewed a very revealing problem - all of the originators loan
files were incomplete, inaccurate and illegible, with handwritten
loan applications.
The entire processing system within the office changed the very
next day. I created a new processing scrub sheet to align with each
section of the loan application. The top of the form indicated that
the process could not be initiated due to four main reasons. The
first reason - application.
I developed an "open trough" type of processing. No active loan
file would be placed in a closed-file drawer. All files would
routinely be run through the open trough system, even if the
originator did not place them all there. No loan was going to slip
through the cracks. The system made the originator responsible for
making sure that the file was ready to go into processing. Once the
originator screamed some more at our support staff for missing
application data, he had sealed his fate.
I performed the termination at a recognition sales luncheon the
next day. Everyone's jaw dropped when I handed the top producer the
volume bonus in a pink envelope. I invited the originator to leave
the meeting, the office and a nice, sweet position. I announced the
new system along with the new processing scrub sheet, trained the
sales staff and expressed that there was now room available to be a
top producer. The benefit of such a move was astronomical. The
sales staff out-produced any prior month, and the loan files were
processed in half of the time experienced previously. Everyone was
happier to be doing his job correctly.
The emphasis should be on placing priority on the application
stage, which is the true remedy for getting caught up in the thick
of thin of things. By taking complete, accurate and legible
applications, the entire team works better and faster.
I have found that the majority of originators, new and
experienced, do not comprehend what a complete application is.
Training is needed to understand and complete the Uniform
Residential Loan Application (1003), and we have a new, revised one
to learn about. If the originators are not trained to take
complete, accurate and legible applications, you are going to
always be caught in the thick of thin of things. Professional
training is a must for the originator more so than any marketing
training, because all you get is more thicker thin things as a
result of better marketing.
The way to eliminate the waiting moving vans, hotel stays for
borrowers and angry real estate agents is by taking complete,
accurate and legible applications. It will expedite the entire loan
process and greatly thin out delays.
Joe Corno is president of Utah-based We Be Consulting and
Seminars. He may be reached at (801) 836-2077 or e-mail
[email protected].
