Are Lenders Paying a Premium for Multi-State Licensed Originators?

Does more licensing necessarily mean more value to lenders? The short answer: Sometimes.

For lenders operating on a call center model, where a single originator will need licensing in several states, the answer is often yes, there is a premium for loan officers who apply for the job with several licenses in hand.

For smaller, “boots on the ground” operations, it is another issue. While licensing itself is an important consideration, the quantity is less so, lenders say. And even for those operations where an originator may hold several licenses, there is no guarantee that he or she will hold on to them.

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For newly-launched Greenlight Financial, which operates a call center in Irvine, Calif., and is licensed in 16 states with plans to expand, there is a high premium placed on loan officers with multiple licenses.

“Without a doubt, it’s a big to-do for any company that is not exempt,” says Dave Bancroft, reverse division manager for Greenlight. “For Greenlight, we offer a $3,000 bonus if you’re licensed in four states.”

For Greenlight, Bancroft says, the goal is for loan officers to become licensed in five states. But, he says, the process is not easy.

“It’s time consuming. Studying takes a while and so many loan officer have issues passing,” he says.

Similarly, for Orange, Calif.-based American Advisors Group, which operates under the call center model, there is a premium placed on the number of licenses a loan officer has—to a point.

“It’s a two part issue,” says Paul Fiore, head of sales for AAG. “Licensing is a continually evolving process. Now, when you bring someone on, even if they have licenses today, it doesn’t mean they’ll have licenses tomorrow.”

Fiore says the process is becoming more difficult and more strict, meaning that licenses as well as renewals are harder to obtain now than they were just several months ago. However, at AAG, where many originators hold several state licenses, the additional licensing is seen as having value.

“If I bring someone in with three to five licenses and good credit, we’d consider doing a premium for that person,” Fiore says.

For those who have some licensing and are looking to change companies, it’s one thing. But for the many who are coming out from under the bank charter umbrella following the exits of Bank of America and Wells Fargo from the business, it is seemingly another.

In the case of those originators who go to different lenders but do not come equipped with licenses, Bancroft notes a challenge.

“For a company to get these loan officers, it absolutely can be daunting,” he says, “depending on what your floor looks like. If we took a bunch on without licensing for several states, it would be almost a separate action [for us].”

For others, paying the upfront costs as well as putting in time and effort toward the necessary training is seen as a sound investment.

“While other companies may place a premium on new hires that are already licensed, that’s not the case at NewDay,” said Bruce Giacoma of NewDay Financial, in an email to RMD. At NewDay, licensing fees are paid by the company, as is additional training. Extensive training is required even for those who are already licensed, as NewDay sees that training as “imperative.”

“When we find a candidate who is a good fit, paying licensing-related costs, if necessary, is a sound investment,” he says.

Reverse Mortgage Solutions, which operates a call center in Spring, Texas, says the time saved by a new hire who has licenses is beneficial, but it’s not everything.

“We place a premium on it because it allows them to get into the call center work much sooner, and the time before earning commission dollars shortens dramatically,” says Mike Kent, RMS senior vice president. “But more important to us is finding the right fit and right personality.”

Most agree that having several licenses isn’t a bad thing, but it can have some indication as to the type of originator, says Alex Farber, senior vice president of White Plains, N.Y.-based Residential Home Funding Corp.

“Yes, if you are coming to us with multiple licenses you do have value. However, at that same time, multiple licenses also means you are probably not a self-source lead generating person, or “hunter,” meaning you are looking to just get leads from your company (“gather”), which works for a call center model, but not a “feet” on the ground approach model. It really all depends on the company’s business plan.”

“We feel that if you are truly committed to the industry, you will make that investment in yourself…It serves as a barometer or gauge on the level of commitment,” he says.

Written by Elizabeth Ecker

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