Sep 05 2007
Knowledge - A Value Again!
The motivation of this post was a question asked to me by a borrower and their Realtor on Friday. Why didn’t the loan guy I was dealing with know about the option you offered me?
There appears to me to be a silver lining in all the turmoil we are seeing in the mortgage business. The reappearance of knowledge as a value. Knowledge has not really been needed in the mortgage world for several years now. If you could fog a mirror we could get you a loan, well maybe not me, but someone would do “whatever” it took to get you a loan. I do want you to know I will do “whatever” it takes to get you a loan too, except commit fraud. Unfortunately that little caveat did cost me business.
The mortgage industry not only lowered the bar for the borrower but we also lowered the bar for the loan officer. Anyone who wanted to be a loan officer or even own their own mortgage company could do so in a day, especially in Colorado where there was no real regulation until a couple months ago. These loan officers, mortgage brokers, etc. did not need any knowledge to be in the industry, if they had potential borrowers and wholesale representatives or experienced processors, they were in business.
If a borrower asked if he could get a loan the answer was an immediate “yes”. Yes before they even asked any qualifying questions. How could they do this? By renting knowledge. They would get “all” your information and then shop it to several wholesale lender reps. or their managers who would either say yes or no or worse would tell them how to structure the deal to change a no to a yes. Remember how I said they took “all” your information - now the deal structuring began. Any information that could cause the “no” was removed from the file or disguised and submitted to another lender or underwriter. Voila, an approval!
Now we could feel bad for that lender or investor that was duped, but the truth is I think they were aware that they had created loop holes to their own programs so they could do more loans. That is a whole other subject that I may tackle in the future. Back to the point, if all the deal structuring did not work, the answer was no, too bad for you. If you were disappointed - tough. There was so much refinance business that these loan people didn’t need you or your referral, the phone was ringing off the hook.
So what does all this mean? It means that for five years our industry hired many, many people; some great mortgage professionals, some great “sales” people, but unfortunately a whole lot of empty suits. So, fast forward to September 2007. At the time of this post 142 mortgage companies are gone according to Mortgage-im-plode. All those reps and managers that were the knowledge source for the masses no longer have jobs, all those “fog a mirror” programs are gone. The mortgage people that did not learn anything for the last five years sees today’s world as very daunting. They are leaving the industry in mass.
Who does that leave? The mortgage professional. The person who knows how to qualify a borrower, how to ethically find a program that works, who knows how to read and understand loan guidelines and maybe most importantly, knows from experience when the underwriter needs to reevaluate a loan.
How do you find these mortgage professionals? Your Realtor could be a source of that information. If your reading this blog you have already found me but the consumate professional is my wife and partner Debra. Knowledge, experience and a killer work ethic. That was a bit of a commercial, but seriously, it will become easier as more people leave the business and others excel. You can also look to future guest speakers that will contribute knowledge to 5280mortgageguide.com.