Houtan Hormozian is vice president of Crestico Inc. He is
an accomplished mortgage veteran in both wholesale and
retail operations and currently serves as the president of the
North Los Angeles Chapter of the California Association of
Mortgage Professionals. Hormozian distinguishes himself as
both coach and mentor, coaching his team in the short term
to complete tasks while mentoring in the long term in the
interest of personal and professional development. Reach
him at email@example.com.
Answering the Tough Questions
Originators must be prepared to handle challenging queries from borrowers
By Houtan Hormozian
Mortgage loan originators, or MLOs, often get asked about the state of the market. Borrowers want to know if it is a good time to buy a home or where
the market is going. The toughest questions to answer
are those that hit closest to home. These are the questions that force MLOs to defend their abilities or the
strength of their companies.
A prospective borrower may ask: “How is your company different from other mortgage companies?”
Answering this question can be tricky, because often
what the borrower really wants to know is, “Are you
the right choice to handle my loan?” The goal here is
to reassure borrowers that they are making the right
choice. Originators must show prospects that they are
capable of understanding, appreciating and working
through any situation, regardless of its complexity.
Responding to this question requires knowledge,
experience and creativity. While every borrower’s
situation is unique, the solutions to their issues exist
within a limited universe of possibilities. After listening
to the borrower’s story, any decent MLO should be
able to come up with creative solutions designed to
solve that borrower’s issues.
This involves communicating with, instead of just
responding to, the borrower. Customer service is of
key importance to borrowers and should always be a
top priority for successful MLOs.
The most common question MLOs face is: “What
interest rate can I get on my loan?” This is a landmine
because any MLO who quotes a rate without having
any information on the borrower will most likely say
anything to get a borrower in the door.
Professional MLOs will explain to prospective borrowers that it is virtually impossible to quote a rate
without information about the borrowers’ income,
debt load and credit rating. Without enough information to determine the borrowers’ financial status,
the MLO cannot quote a rate because rates are dependent on loan programs and the lender’s underlying
Instead of answering this question, use it as a springboard to ask the borrowers about their loan needs
and credit history. Explain to borrowers that without
knowing what specific loan will best meet their need
and whether or not they meet the criteria for those
products, there is no way to determine if they will
qualify for a specific rate.
Buy or refi questions
After the rate question, the two most common ques-
tions that borrowers ask are: “How much can I afford to
spend on a home?” and “When does it make sense to
refinance my mortgage?”
The answer to the affordability question is quite
different for each person. In general, homebuyers can
determine the amount of money they can afford to
spend on a home by looking at their debt-to-income
ratio. One common rule of thumb is that an individ-
ual’s monthly housing payment should not be more
than 31 percent of that individual’s gross monthly
income. So, borrowers who earn $5,000 per month —
an annual salary of $60,000 — should not spend more
than $1,550 on their mortgage payment.
To answer the refinance question, tell borrowers
that as with all big decisions, the decision to refinance
has to make sense and, in this case, should make more
than cents. In short, this should be a decision that
results in a financial gain for the homeowner, whether
that means lower payments from a lower interest rate,
or a shorter loan term to save the borrower money on
interest paid, or the chance to change from a rising
adjustable rate to a low fixed rate.
When faced with either of these questions, make sure
to tell prospective borrowers that to determine what
out scenarios, determine estimated costs and provide
them with enough information to make the best deci-
sion for themselves. In short, turn the question into an
opportunity to get them in the door.
One final question that MLOs still face is: “How can I
trust mortgage professionals after what happened
during the housing crisis?” Answering this question
requires factual knowledge and education. Veterans
in the industry and those just starting out all must
educate themselves on the causes of the crisis. Study
articles, books and other media to become an expert
about the crisis. This knowledge can instill a sense of
confidence in borrowers that the originator they have
chosen is an expert on the topic.
The best way to answer this question is to acknowledge that the subprime mortgage crisis was truly a
dark time for the country when people lost faith in the
government, in the banks and in one another. Follow
this answer with a statement that brings hope and a
sense of calm to these borrowers.
Discuss the lessons learned and the safeguards now
in place to prevent future crises and to protect borrowers.
Assure them that most mortgage professionals play by
the rules and are happy the rules are there to weed out
the bad apples.
Borrowers are motivated to work with MLOs who
respond with sincerity and an obvious knowledge of
the issues because those originators have represented
themselves as human beings who not only lived
through the crisis, but emerged as experts who can
guide borrowers fairly through the loan process.
n n n
These are just a few of the possible questions an
MLO might face over the course of a typical day. As
with any business situation, MLOs should focus on
respect, common courtesy and confidence when
communicating with prospective borrowers. This will
provide the best interactions and, hopefully, mutually
beneficial results. n
For more articles on
communicating with borrowers
View these articles and more at
“Make 2017 the Year of Customer Service,”
Gene F. Thompson III,
“Mortgage Marketing Takes Time,”
“Why Borrowers Shop,”