Mortgage Professor: Choosing a Loan Officer is Harder than it Looks

The merits of an individual loan officer far outweigh the identity of his or her firm when it comes to choosing a new LO with whom to work, writes the Mortgage Professor Jack Guttentag in a recent column

That’s because a loan officer will be responsible for his or her own price integrity and quality decision support, which don’t necessarily come by choosing a firm. 

“The problem is that the typical borrower has no reliable way of determining which LOs do well in providing these services, and which don’t,” Guttentag writes. 

Advertisement

Guttentag says he is working on developing a certification process for LOs, but in the meantime, details the considerations that will come into play for that process. 

For example, when it comes to posted prices, the borrower needs access to the same posted prices the originator sees, he says. 

“Mortgage prices have integrity only if they are the lender’s “posted prices” — those  at which the lender is actually prepared to lend at the indicated point in time. Lenders distribute their posted prices every day to all LO employees through a variety of electronic systems. Borrowers seldom have access to these systems.”

The LO’s integrity also extends to decision support, or making a decision that is in the best interest of the borrower’s needs. 

“Decision support means that the LO offers expert counsel to the borrower on the type of mortgage, and the combination of interest rate and upfront fees on that mortgage type, that best meets the borrower’s needs,” Guttentag writes. “These decisions, which can have very important consequences for the borrower in future years, are often made in haste, subject to bias or questionable rules of thumb, with little or no consideration of alternatives.”

The Mortgage Professor further details these different decision-making factors in his column. Read it here.

Written by Elizabeth Ecker

Join the Conversation (5)

see all

This is a professional community. Please use discretion when posting a comment.

  • If the Professor is saying that the LO should give the company’s pricing sheet to the borrower, is there any reason, legal or otherwise that this can’t be done?

    This would obviously show the borrower the lowest rate available from each lender they might be considering, and would give them an idea of the total compensation paid for originating the loan, but wouldn’t show how much the LO is making. What can of worms would this open for the lenders and the LOs? Would all the lenders have to offer the same products with the same pricing?

  • The more I study the Mortgage Professor’s new attempt at Loan Officer “Certification” the more I groan.
    Good luck quantifying and codifying this type of subjective behavior. I have known many “bad actors” who belonged to the Better Business Bureau and who signed Codes of Conduct. The Mortgage Professor is certainly correct that not all loan officers are equal but making pricing understandable and “visible” to the consumer isn’t going to be easy in the absence of actual discount points for certain interest rates especially when the rates, costs and available loan proceeds are constantly changing. By the time a borrower has comparison shopped 4-5 lenders most of the early quotes are no longer valid. Furthermore, what good is the “best price” if the loan officer is unskilled in moving the file through to a successful closing or if the loan officer didn’t ask the right questions to determine eligibility or the customers objectives?
    Please don’t create another pretend certification that wastes more of my time

  • So far this thread of comments is focused far, far more on the quantitative rather qualitative. That in itself says far too much about our initial reaction.

    My concern is just the opposite. In our industry far too many times we read and hear deficient explanations of the products and misapplication of the situation of the senior to the acquiring of a HECM. There is little doubt that a significant portion of the seniors who are now facing foreclosure due to property charge defaults would ever have been in that situation had the originator spent time analyzing the financial situation of the senior after the closing of the HECM. How can anyone argue that such conduct met the NMLS standard of putting the interests of the consumer before our own? In fact almost all overcoming objections have little or no real consideration for the needs of the senior.

    Yet what the Mortgage Professor is proposing is ridiculous. What is his enforcement mechanism? What he is proposing is more cosmetic than a rigorous or vigorous means of producing origination integrity. It might be better suited to an organization like the CFPB.

  • Why this industry puts so much credence in what Jack says is beyond me. I’ll grant you he may be a very educated and extremely well informed of the mortgage industry. But lets not forget that he has a “dog in the game”. Do you really think he put that website together and hands out leads for nothing!!! Is he really this supportive of the industry or is it just another way to make money? Now he wants LO’s to be “Jack” certified….sounds like another money making proposition to me……If there wasn’t a money making scheme behind what Jack says his words would have more meaning…..well at least to me. LO’s be very careful in using anything “Jack”….once your client goes on his website you may never see them again.

  • Dear Cynic, QUANTITATIVE happens to be the correct word to describe this ill advised procedure of certification. Furthermore, your suggestion that some higher standard be imposed by CFPB is even more foolish than the Mortgage Professor’s bright idea.
    Heaping on of “credentials” seldom serves to raise ethical behavior and in this particular area the very subjective nature of the process defies the establishment of measurable or enforceable standards. We have many recent examples of ill conceived and ill advised attempts at standardizing ethical behavior and the dreadful words used are “Suitability” and Fairness as two perfect examples.

string(111) "https://reversemortgagedaily.com/2013/12/01/mortgage-professor-choosing-a-loan-officer-is-harder-than-it-looks/"

Share your opinion