In today’s world, the job of a mortgage professional isn’t comparable to those of days gone by. The expectations of a mortgage professional are different; more structured by rules and regulations that are ever-changing, along with an unpredictable financial environment.
The days of easy lending are over. A borrower can no longer just walk into the lender’s office and get a mortgage because they have strong equity, assets and credit. The days of one pay stub, one bank statement and the first two pages of the 1040’s are over. Today, when a borrower makes application, they must provide full documentation supporting income, expense and asset accounts. They must have a minimum credit score, and in most cases, be “Approve” or “Eligible” through an automated underwriting engine.
The words “automated” and “mortgages” didn’t go hand in hand until the late 1990s when Fannie Mae and Freddie Mac introduced brand new automated underwriting engines. These automated underwriting engines incorporated credit reports and newly designed credit scores into the loan approval process. The automated findings streamlined the documentation and approval process, and loan officers and processors would typically “Document to the Findings” and obtain less and less documentation from the borrower. Additionally, by using credit scores, the loan officer and processor didn’t get as in-depth with the borrower’s credit profile as they once did. Finally, by “Documenting to the Findings” the loan officer and processor could easily dispute what they considered to be an underwriter’s unreasonable conditions.
The automated framework helped to standardize loan approval, but might have made credit quality more dangerous. When specific new loan programs were introduced, the automated underwriting engines were adjusted to comply with the new program requirements. Want to reduce the programs minimum credit score. Adjust the engine. Want to increase the programs debt ratio. Adjust the engine. As long as the loan got the “Approve” or “Eligible” findings, it was a loan that could close. Loan approvals as a percentage of loan applications taken were on the rise, but credit quality began to decline.
The year 2008 was a breaking point for the mortgage business as more and more loans became delinquent. The massive delinquency caused the federal government to get involved. Federal involvement always takes the form of regulation, and the industry absorbed new regulations regarding appraisal independence, licensing, loan officer compensation, RESPA, TILA, (to name but a few). Fannie Mae and Freddie Mac went from private enterprises to government agencies, and although now on the back burner, are on the chopping block to be further restricted and/or eliminated. A new agency, the Consumer Financial Protection Bureau (CFPB) was created to guaranty fairness and transparency to the consumer. New regulations known as Qualified Mortgages (QMs) have been created and go into effect Jan. 1, 2014. QM may cause lenders to offer fewer loan types. Interest rates have increased from their historic low levels, and the Federal Housing Finance Agency (FHFA), the conservator of both Fannie Mae and Freddie Mac, is considering reducing loan limits in order to reduce the government’s liability on mortgage defaults. Large money center and mortgage banks are jettisoning mortgage loan employees by the thousands to prepare for the new reality of lower loan production.
Where do we go from here?
Mortgage banking is such a bipolar business where the peaks are high and the valleys dip ever so low. What type of consistency do we have while tackling the ever-changing interest rates, rules and regulations. The one thing that remains the same, and has remained the same since the mortgage industry began is the public’s desire for homeownership and their need to finance homes. The mass market advertising created by the Internet and other forms of social media is the talk of the town, every type of business uses social media to advertise their products and reach a broader spectrum of clientele. Use it!
I’ve been in this business since I was a little girl, as my father is a mortgage professional and has been for more than 40 years. I’ve seen the good, the amazing, the bad, and the horrible, and then back to the good again. The business I learned was a mesh and a cross between the old and new. I had no other choice nor any desire to learn how to do anything mortgage related without the use of a computer. Social media, such as Facebook and Twitter started out being a college thing, used more for meeting new people in a new place rather than by connecting with others who could become a huge part of your referral business. Connecting with people is our job, and social media allows us to connect to a plethora of contemporaries who may be looking for our services.
Technology isn’t something to shy away from. Video blogging, and blogging in general, will send a message to your clientele in a very personal way. I have learned that my clients want to know me, and when they do, they are more likely to trust my opinions regarding mortgage finance. I build that trust through communication, phone calls, e-mails, face to face meetings, Facebook posts, Twitter posts and entries on my personal blog. I want my clients to know me personally because when they do, they will feel more comfortable. When they grow to know me better, my referral base will grow.
As a mortgage broker in today’s economy, I want my referral base to always be thinking of me. I want them to discuss my work, and I want them to tell their friends to look me up on the Internet, to read my blog, connect with me and then give me the opportunity to work for them. There is a high demand for homeownership, and it’s our job to be ready to help give our clients the best, state-of-the-art, high-tech service they are going to be shopping for.
Amy Goldstein is a long-time mortgage broker whose reputation for excellence supersedes itself. Having worked at BMIC Mortgage Inc. since 2001, Amy quickly grew her client base helping BMIC become one of the best known mortgage companies in the D.C. Metro area. Amy has been recognized in National Mortgage Professional Magazine as one of the “Top 40 Under 40 Most Influential Mortgage Professionals” as well as one of the “Top 25 Most Connected Mortgage Professionals.” She may be reached by phone at (301) 231-5770 or e-mail [email protected]