[New Loan Officer Series] Get a Handle on Your Company’s Basics

Welcome to the mortgage industry. As a loan originator, your success truly depends on two independent and distinct entities: you and the company you work for.

The first is obvious – you’re in control of your success through your actions and initiative.

But perhaps you didn’t realize your company can either be an enhancement or a detriment to your success. That’s because every company is different in their efficiency of process, target market, risk appetite, and product offerings. All have an effect, positive or negative, on your success.

Additionally, the brand and reputation of the company will quickly and automatically be attributed to you, and customers will ask you about the company. There are certain facts, figures, and elements about your company you should know before you talk to your first potential customer.

Are You a Broker or Lender?

Is your company a broker or a lender? Each one has positives and negatives. You should not only know them, but you should know how to communicate those positives and negatives to customers.

Broker Definition

A broker is an entity that originates a loan and places that loan into a lender’s program. Let’s break down characteristics of a mortgage broker and how customers may perceive pros and cons of a broker.

Lender Definition

As you may have realized, a lender actually lends the money. This may be a retail or direct lender including large and small banks, online lenders, or credit unions.

Here’s how customers may think about working with a lender:

From a loan originator’s perspective, it seems favorable to deal directly with the decision maker, but this presents one obvious problem: if the borrower does not fit within the profile (underwriting guidelines) that the lender is seeking, there is little if any ability to get the loan approved as you are not able to place the loan outside the company.

In a nutshell, the more difficult the loan, the broker has the greater probability of success because they have access to a greater number of loan products to meet the loan parameters. For borrowers that fit squarely within the lender’s guidelines, the lender typically can offer lower rates and/or fees.

Whether you work for a broker or a lender, you should be able to discuss the pros and cons for each and be ready to answer any concerns or objections.

Does Your Company Service the Loans?

In the previous section, we mentioned servicing or mortgage servicing. Loan originators often use the term “servicing” with their customers and potential customers but talking about servicing can fall flat as many borrowers don’t know what servicing is.

Definition: The mortgage servicer is the company to which the borrower pays the mortgage loan. The servicer typically will accept and record the payment, calculate interest on ARMs (adjustable rate mortgage), handle paying taxes and insurance from the escrow account, and work with the borrower in the event that the borrower is having trouble meeting their monthly mortgage obligation.

In some cases, the servicer is the same company that originated the loan and sometimes it’s not. You as a loan officer may be asked if you service the loan, and you should be prepared to answer whether your company services its loans and what that means to the borrower.

The positive side of servicing the loan from the loan originator and consumer perspective is the borrower knows who will be servicing the loan and who to contact in the event that there is a question, concern or issue meeting the borrower’s monthly mortgage requirement.

However, if the loan servicing is sold to another company (the originating company is not servicing the mortgage), the borrower will be notified of the new servicing company.

Some consumers care that they know who the servicer is and that it’s local and others do not. Based on the provided information, you should now be comfortable having the servicing conversation with your borrower.

The positive side of servicing the loan from the loan originator and consumer perspective is that the borrower knows who will be servicing the loan and who to contact in the event that there is a question, concern or issue meeting the borrower’s monthly mortgage requirement. Certain borrowers also want to be able to go to a local branch office to make a payment or speak with someone so “retaining the servicing” can make a difference to a potential borrower.

However, if the loan servicing is sold to another company (the originating company is not servicing the mortgage), the borrower will be notified of the new servicing company.

Based upon the provided information, you should now be comfortable having the servicing conversation with your borrower.

Types of Loan Products

There are several types of residential mortgages that can be originated. These residential mortgages (mortgage-backed securities) may be bought and sold on the secondary market after origination and closing. The buyers of these securities are called aggregators.

Types of Aggregators:

• Conventional loan aggregators: Fannie Mae (FNMA) and Freddie Mac (FHLMC) – together called the Government Sponsored Enterprises or GSEs
• Government loan aggregators: Federal Housing Authority (FHA), Veterans Administration (VA), and United States Department of Agriculture (USDA)
• Private loan aggregators: can purchase conventional, government and/or nonconventional or portfolio loans on the secondary market

In addition to conventional, government and/or nonconventional or portfolio loans, you should be aware if your organization does commercial loans. Sometimes a customer may have a business and in addition to seeking a residential mortgage, they may be seeking a commercial loan. Knowing where to place this loan, internally or externally, may provide you an additional source of income.

Things to Know: Other Company Basics

Beyond knowing the basics about your company, you should also know your company’s goals, assets, and senior leadership team.

Companies, lenders, and brokers have goals. Individuals have goals, too. If your goals are inconsistent with your corporation’s goals, conflict can arise, and your personal success can be jeopardized. If your company is not interested in working with builders, they may not have construction to permanent mortgage solutions. If your personal goals and strategies involve working with lenders, the conflict between corporate and personal goals is obvious.

Lastly, you need to know your senior leadership team whether your organization is large or small. The reason to know these names is customers love to name drop when applying for a mortgage. Imagine a customer telling you that he went to college with Jill Smith, who happens to be your organization’s Chief Risk Officer, and you don’t know who Jill Smith is. Awkward….and a potential ending to the transaction.

Your Company’s Origination Process

Once you understand who is who, the next step is to understand the process. Every company has a process unique to them. You should have a firm understanding of how leads enter your company’s system, how a loan is originated, the application process, and who touches the file from the beginning of the transaction through closing.

As part of knowing the origination process, you should know things like where do you order the credit reports from, who orders the appraisal, and who is responsible for chasing post-close conditions? You’ll also want to have a good handle on your company’s underwriting operations like if your company does delegated or non-delegated underwriting, or if you leverage contract underwriting for any of your work streams.

Now that you have all this knowledge, learn how to put it into action to form an awesome elevator pitch!

Next Lesson: Nail Your Elevator Pitch