The era of loan officers serving as little more than “application takers” has reached its end. The dynamic pace of regulatory change, underwriting guidelines and shifting credit standards is challenging every housing industry professional and consumer. Realtors understand the level of unprecedented chaos in today’s market, and – to a certain point – have become more forgiving. This is only true; however, if the realtor is convinced loan officers have done everything within their control to properly manage the loan process. The best way a mortgage originator can demonstrate professional excellence is to take a complete loan application. In a recent survey by XINNIX, more than 90 percent of loan officers graded themselves excellent when it came to taking a complete and thorough loan application. Yet, when asked to measure themselves against the six vital steps to take a complete loan application (detailed in the XINNIX class of the same name) the group re-evaluated their performance and the grade dropped to less than 50 percent. While these steps seem easy, completing EACH in detail is absolutely essential in today’s environment. As you work with a borrower, keep these steps in mind:
- Prepare the customers properly
- Outline what you will need, why you will need it and most important, why it is not optional!
- Complete all the blanks
- Residency Term – many loan officers today do not cover the required two years (a guideline standard for more than 30 years)
- Employment Term– again many loan officers today do not cover the required two years (a guideline standard for more than 30 years)
- Calculating Income Properly – a large majority of loan officers tested failed basic income calculations when asked to determine monthly base income for salaried individuals.
- Confirming Adequate Assets – one of the biggest issues lenders face with agency buybacks is the confirmation of adequate cash to close. While lenders have adopted stricter underwriting, this continues to be problematic on the front end.
- Liabilities – loan officers must interview borrowers carefully to uncover all liabilities that will affect the loan decision.
- Reconcile customer’s documentation – many loan officers are either not aware of or do not conduct a thorough review of the documentation provided by their borrowers
- Five items on pay stubs must be reviewed
- Four items on W-2s must be reviewed
- Eight items on bank statements and investment portfolio statements must be reviewed
- Obtain necessary signatures
- Meet the customer in person when possible to ensure #5 is properly completed
- Communicating next steps to the borrower
- What can the borrower expect throughout the rest of the loan process? – a crucial step in the loan application process as it sets proper expectations. A realtor has greater confidence in a loan officer who has properly prepared and informed the borrower for what to expect and manages the borrower experience effectively.
- Organize and prepare the file for submission
- Introduce yourself to the realtor
- Follow company submission standards
- Provide a communications log to processor/underwriter
There is no such thing as too much dialogue between a loan officer, borrower and realtor. More than ever, realtors seek intelligent loan officers who serve as educators, help mitigate the risks to borrowers and deliver creative solutions to complex scenarios. Realtors are looking for leadership. Lending professionals must take a proactive role in all aspects of the lending process from setting proper borrower expectations, collecting all required documentation, taking complete and accurate loan applications to fully explaining potential risks to all parties.
Consider the below situations and the best method for communicating information:
SITUATION: April 18, 2011, FHA
mortgage insurance premiums will rise .25 percent.
COMMUNICATION: Email this deadline and supporting FHA information to realtors today and provide examples to show the impact on borrower.
SITUATION: A lending guideline has changed, which may impact the qualification of a loan. COMMUNICATION: Call the realtor to update them on the change and what recommendations you will present to the borrower. Follow-up via e-mail the guideline change to realtors with the potential impact to all borrowers
SITUATION: The appraisal identifies a valuation or repair issue.
COMMUNICATION: Contact the realtor immediately, whether by text, call and/or e-mail, and give a brief description of the condition or issue and discuss solutions and/or other options. Loan officers must deliver good news fast and bad news even faster. Realtors will embrace almost any difficulty that arises from the industry turmoil, but they will not tolerate loan officers or lending institutions who add unnecessary delays, deliver cavalier customer service, or simply fail to take responsibility for operational issues within their control.
It can never be repeated too often, but realtors seek to do business with loan officers they know
and who deliver results
. Today’s industry is complex, stressful and provides all parties with the potential for ample heartache. Realtors want honesty, straight talk and professionalism. They cherish the core values of respect, candor and honesty regarding the lending process. When loan originators practice and perform with high integrity, they stand out to realtors and establish the basis for a long-term, profitable relationship.
All Signs Point to Professional Reputation
We have entered a new era of lending. It is one that is constantly evolving. Instead of being a burden to loan originators, the changing lending landscape can serve as a foundation to build a strong and positive professional reputation. Realtors are relying more and more on each other for recommendations, which includes the best mortgage originator to work with, and partners they can trust. Realtors today are more understanding of the intricacies and difficulties of the loan process, but they will not forgive hiccups or refer business to an originator they cannot trust. By following the steps outlined in this article and working to build professional competence, proactive communications and high integrity, mortgage originators cement profitable realtor relationships.
Casey Cunningham is president of XINNIX, the leading provider of mortgage sales and leadership development programs. She can be reached at casey@XINNIX.com or 678-325-3501.
The interdependent relationship of realtors and mortgage originators has dramatically changed since late 2008. Moving forward, proposed regulatory changes look to further impact the lending process and the people operating within it. Mutual success, perhaps even professional survival, has rarely demanded realtors and mortgage originators develop such close, professional partnerships the way it does today. The real estate industry is being challenged to trust in the core competencies, knowledge, skills and professionalism of loan officers and the lending institutions that employ them. Trust, as we all know, is not easily given. It must be earned. This article explores both the broader professional skills originators must demonstrate and the specific actions realtors demand to cement a mutually beneficial relationship.