If you are a Loan Officer right now, you are hearing a lot of doom and gloom about the imminent implementation of the Dodd-Frank legislation aimed specifically at our commission structure. I could put up lengthy posts about this issue, but anyone that isn't in my seat isn't going to understand most of it, or for that matter, care very much. But, I have been thinking about the positives that are going to come out of this, and there are many. Not just for the Consumer, but for the Loan Officer and even our Realtor partners.
I previously posted a very concise article regarding the future of the Loan Officer and our industry in general. I do not think that the Loan Officer is dead, but I do agree that the days of just writing loans, without any expertise, is over.
There aren't many indsutries like Mortgage and Real Estate where you don't have to be a full time employee to participate in the process. If you spend the time and money to get licensed as a Loan Officer or Realtor, I guarantee you that someone will give you a phone and a desk to sell mortgages or real estate. Think about that. Beyond the basic licensing requirements, you don't need any other background or knowledge to come in and do what we do. Scarier still is that they do get deals. I call these the 'Brother In Law' deals. When you ask who they are using to buy a house and they say, 'Well, my Brother In Law is a first grade teacher, but he sells mortgages on the side'. Really? So, you are going to trust the single largest purchase of your life to a guy that writes maybe five or six loans a year? Yes. It happens all the time.
Our industry has changed so much in the past 18 months, that even the most seasoned in our industry can struggle to keep up. We have added disclosures and compliance at an astronomical rate. The smallest mortgage shops are doomed at this point. There isn't any way that they will be able to keep up with the compliance part of the puzzle and the margins have become so slim, there just isn't any room for profit anymore. The bulk of these firms are home to the lowest volume sales people, and they will not be picked up by the lenders left in the wake. It's just to expensive now to justify bringing on sales people that aren't working full time.
This is a plus for the consumer. We are already a pretty lean industry of sales people when compared to our numbers in the mid 2000's when we topped out. Our ranks should be left with the most experienced sales people, the ones that have been out selling themselves as Mortgage Advisor's, rather than the sales people only concerned with the transaction at hand.
It's never been more important to vet your Loan Officer. It's well within bounds to ask how long they have been in the industry. You should ask what their specialty is and what their volume is like. An experienced loan officer is probably already sharing this with their potential clients and will likely have references ready to go to back them up.
Now, the downside for the consumer will be reduced competition. But, it's Friday and I think I'll leave you with the positives. Check back next week for how this legislation will hurt the consumer.
Joe Burke
Your Chicago Mortgage Guy
773-742-6707
joe@yourchicagomortgageguy.com