THE PROFESSION’S PLIGHT
How did we get here? Since the financial meltdown in 2007, the
mortgage industry has seen layer upon layer of both people
and technology deployed to enforce new regulations and create
efficiencies to offset the cost of the new regulatory environment.
After their initial focus on compliance, tech companies saw an
opening for “aiding” the origination process. Companies were
forced to hire more people to assist the mortgage professional in
navigating the new regulatory environment.
This added tremendous expense to an already hefty compliance
burden. Companies had to protect their already tight margins by
creating disclosure desks to watch the bottom line and to make
sure fees were accurate and disclosed to borrowers in accordance
with the regulation.
The cost per closed loan skyrocketed, commensurate with the
cost of compliance and the newly added head count. Companies
struggled to interpret the Dodd-Frank Act and frantically sought
direction and advice from expensive attorneys to make sure they
were in compliance so as not to attract the attention of the newly
founded Consumer Financial Protection Bureau.
Moving forward a few years, the industry stabilized. Bad actors
were forced out of the business, exotic loans were no longer the
bright and shiny object, and the industry focused on government
loans and conventional business, the true foundation of mortgage lending.
Mortgage professionals became dependent on disclosure desks
and loan-officer assistants. An unintended consequence of this
comfort was the loss of a few basic skills that all mortgage professionals used to possess, such as how to disclose a loan as well as
communicating with borrowers after a loan submission.
Online applications were becoming popular and mortgage
professionals no longer had to interview their borrowers to fill
out a 1003 loan application. The borrowers could complete their
application in the comfort of their own homes and when it was
convenient for them.
This innovation led to 1003s that were not always accurate and
mortgage professionals that were not familiar with the story of
the borrower’s past. They had no connection to the borrower.
As technology advanced, the mortgage professional’s interaction
with borrowers declined further. This is where the death of the
mortgage professional began to look more like a real possibility.
A TECHNOLOGICAL BARRIER
Just a couple of decades ago, a mortgage professional had to be
well-versed in all aspects of lending. The good-faith estimate was
filled out by hand, the truth-in-lending tests were manually calculated, and the 1003 form was completed on carbon paper four
The level of knowledge that the mortgage professional was
required to have rivaled that of an underwriter, because there
wasn’t Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan
Prospector to make the decision for them. The mortgage professional was required to have solid interview skills so they could
proactively address any issue that may arise throughout the
process, which took over 45 days.
The mortgage professional was the single point of contact
for that borrower and built an enduring relationship that lasted
the mortgage professional’s entire career. Certainly, 1003 loan-applications were filled out over the phone, and there were cases
where the mortgage professional never met the borrower face to
face, but they still communicated with one another.
This communication is the key to the success of a true mortgage
professional. Technology has advanced to the point where the
borrower can go through the entire process without speaking
to a human being. This may work for some loan types, borrowers and companies, but it does not bode well for the mortgage
Technology is sold to mortgage professionals as a way to close
more loans with less effort. Technology, however, is too often
pushed down from the very top by executives who may not necessarily be in touch with the sales team. The tech companies that
create these interfaces do not market to the mortgage professional. They sell to the chief financial officers, chief information
officers and chief operating officers, knowing that these leaders
are always looking for ways to create efficiencies and lower costs.
Continued on Page 72 >>
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Rob Clennan is president of Mortgage Solutions Financial. He joined
Mortgage Solutions Financial in November 1996, starting in inside sales.
He later advanced to loan officer, branch manager and vice president
of sales. During this period, he helped lead the successful transition of
the company’s brand from Freedom Financial Services to Mortgage Solutions Financial.
As chief production officer, Clennan helped identify and grow a number of new and
emerging markets, leading the company to all-time production records. Reach Clennan