REQUIRED READING: What’s New And Exciting In Loan Officer Education?

Under pressure from regulators and politicians, and facing lower profits from sales of loans, mortgage lenders are tightening lending standards and reducing the wide range of products that were available just last year. That is not good news for the millions of Americans looking to refinance their mortgage loans, especially those with adjustable rates.

Some allege that lending companies engaged in practices such as deliberately making loans to borrowers who could never meet the terms of their loans, thus leading to default and foreclosures. Borrowers, meanwhile, have been criticized for rushing into loan agreements they did not understand and could not uphold.

In an effort to improve its reputation while making sure consumers fully comprehend what they're getting involved with, the mortgage industry has renewed its focus on training and particularly for loan officers.

As proof of its commitment to training, the Mortgage Bankers Association (MBA) will celebrate attaining 1,000 Certified Mortgage Banker (CMB) designees at its National Convention in October. Since its inception in 1973, the CMB has been the highest professional designation for the real estate finance industry.
According to John Golden, vice president of education with MBA, the CMB community is made up of outstanding industry professionals and leaders.

‘Someone who has made it through this program is really qualified to run a mortgage bank, and therefore, we recognize these individuals as the 'best of the best,'’ he says. ‘To reach 1,000 Certified Mortgage Bankers is a big milestone for us.’

Next year, says Golden, is another landmark. ‘We'll reach the 60th anniversary of the School of Mortgage Banking,’ he reports. ‘At MBA, we've felt for a long time that education is paramount to success of the industry – and especially now, all parties see the need for highly trained professionals.’

Given the current state of the industry, loan officer education could not be timelier. Golden asserts that MBA will focus even more attention on loan officer training in the future.

‘At our annual conference, we'll introduce a Certified Residential Originator (CRO) specialist designation, which signifies an individual's superior knowledge, experience and industry participation in pursuit of excellence in residential originations,’ adds Golden. ‘This designation will join others such as Certified Mortgage Servicer, Certified Mortgage Technologist and Certified Residential Underwriter.’

The objective for the CRO program, he says, is to provide the specialized, high-level knowledge that will prepare loan officers to step forward in their careers. The program is a three-level process, consisting of 153 hours of training that culminates in a three-hour comprehensive exam.

‘The first year curriculum deals with ethics and focuses on topics such as fair lending and fraud detection,’ he states. ‘We look at underwriting essentials in the second year. In the final year, students are introduced to secondary marketing, real estate law and receive advanced training on anti-predatory lending.’

While Golden notes that separate offerings are made available to loan officers, MBA wanted to put together an official certification program. ‘We're comfortable granting a designation given the overall framework,’ he says. ‘In the end, consumers should understand that a CRO is a highly trained professional with a designation to prove it.’

MBA continues to offer standalone courses specifically for loan officers, Golden says. A new course, ‘The 7 Habits of Highly Effective Loan Officers,’ is in collaboration with FranklinCovey, the management development specialist. ‘This workshop,’ he says, ‘will teach loan officers how to generate referrals, manage time, and build leadership skills.’

By the end of this workshop, loan officers should be able to:

  • Identify the seven habits necessary to improve networks and productivity as a mortgage banking professional;
  • Synthesize the steps required to proactively advance communication and influence within the workplace and business networks;
  • Create a personal mission statement and set professional goals after careful reflection and realignment of values and goals;
  • Discover new strategies in the areas of time management and effective time and resource planning; and
  • Differentiate between the dos and don'ts of emphatic listening and enhance listening skills, keeping in mind common barriers to communication.

Bay State teaching

Amy Tierce sees loan officer training as a vital part of the industry's commitment to the public. Tierce, a regional manager of Fairway New England Mortgage and chairwoman of the Massachusetts Mortgage Bankers Association's (MMBA) Education Committee, says, ‘The association has been very aggressive about keeping members informed of current trends and changes to the regulatory landscape. We need an educated membership, because at the end of the day, we're all serving our local communities. And this is even more important now that the industry is so beaten up. In order to protect the public, we need to make the loan officers understand what they need to be doing.’

MMBA, for example, revamped its mission statement and bylaws with an emphasis on business ethics and standards of practice. It is expanding educational offerings, and it recently launched a learning center. The association is currently in the midst of designing a certification program for lenders, to include an emphasis on business ethics and behavior.

Much of the loan officer training in the past, Tierce fears, has been carried out by wholesale representatives. ‘We've heard stories, for example, about Alt-A lending in small shops where the salespeople will come in and tell the staff how that particular wholesaler expects a loan to be originated,’ she says. ‘This process creates a lot of misinformation about what's appropriate for standard business practices. The training should be performed by a disinterested party and not someone who has a financial interest in the transaction.’

The association is establishing a loan officer ‘boot camp,’ which will integrate a number of individual classes into a standard course. ‘We hope to grow this,’ she says, ‘especially now that loan officer integrity is such a big issue. While we understand that our members can go anywhere for training, we hope they'll choose our program.’

The MMBA, says Tierce, has established a three-day program, consisting of about 30 hours of classroom training. ‘We're going over many of the fundamental issues, such as analyzing tax returns, reviewing appraisals, compliance and secondary marketing,’ she continues. ‘In addition, we're teaching them about some specialized products, such as FHA loans and reverse mortgages.’

Rocky Mountain high

To Charlotte O'Donnell, community resource director with the Colorado Mortgage Lenders Association (CMLA), it's all about how to do business better. She observes, ‘In this changing market, loan officers have to do their jobs differently. As an example, underwriting guidelines and investor requirements are constantly being updated. In addition, loan officers must learn how to use new products.’

O'Donnell recently received the ‘Education Advocate of the Year’ Award from the MBA. The award, part of CampusMBA's annual Corporate Training and Education Awards, recognizes an industry professional who facilitates, advocates and promotes education within his or her company, the industry, and the community.
O'Donnell says the CMLA's training program is geared to help loan officers communicate better with consumers, which she says is a special challenge with so much of the mortgage industry in transition.

‘Documentation requirements,’ she reiterates, ‘are constantly changing, and we show loan officers what to look for and explain the best way to review the paperwork with consumers.’

The idea for a loan officer training program, according to O'Donnell, came about as an offshoot from a consumer help-line, which was established about 10 years ago.

‘Over the course of the past three or four years,’ she says, ‘it's been used more and more for lender training. We found a number of lenders calling in and expressing concerns about some ongoing practices in the industry. Large corporate training programs must be very detailed and regimented. Our intent is to be a little more broad-based, since we're providing this to industry professionals with varying degrees of experience.’

O'Donnell adds that topics deal with contemporary issues, such as legislative agendas, predatory lending and fraud detection. CMLA works with lenders who have committed violations, helping them understand the steps that must be taken to get back in good standing.

‘We routinely let our members know about consumer complaints,’ O'Donnell says, ‘so that lenders may avoid making these mistakes in the future.’

Going forward, O'Donnell says the association will continue offering programs revolving around boosting loan officer effectiveness. She says, ‘We'll look at the strategies that make sense in the current marketplace. On the agenda for later this year is a course dealing with how changes to credit scoring models will impact consumers.’

The GMAC way

Terri Lewis, vice president with Horsham, Pa.-based GMAC Mortgage, says her company introduced a new Web-based ‘Learning Management System’ in September 2006 partly in an effort to rein in costs. She says, ‘We're a nationwide lender and traveling across the country to conduct face-to-face training became too expensive.’

‘Altogether,’ she says, ‘the system is comprised of nine interactive modules encompassing all the steps in the origination process, including the application, verifying income, appraisal review and so forth. At the end of the course, the employees complete a 'wrap-up' where their understanding of the system is tested. If there are questions, they can go back to certain sections and re-test themselves or view a simulation that walks them through.’

There was some ‘push-back’ as the program was rolled out, and she says this was not totally unexpected, since people are naturally resistant to change. As employees began to see the benefits, acceptance grew rapidly, and she reports that most were on board within 60 days. Managers like the new training program because it gives them more control.

‘With a computer-based system, we're able to track everything,’ she says. ‘We can tell who's completed what sections and how they've scored. This allows the manager to be more proactive, since they can gauge everyone's progress. And since employees know they're being watched, they're much more likely to complete the training on time. For the most recent period for which we have records (Q1 2007), 98 percent of the training was completed. This compares with only 56 percent for the same time period in 2006. We surveyed our employees recently and found an 87 percent satisfaction rate. Employees seem to like it because they know exactly what's expected of them.’

For loan officers, she says it works because they're able learn the system at a time and place that's convenient for them. ‘Loan officers tend to be entrepreneurial,’ Lewis says, ‘which means they prefer to do things, and training is one example, on their own schedule. In addition, we've created a follow-up questionnaire that new loan officers fill out after working here for 30 days. There is space on the survey to provide comments which they usually do. Our goal is to take the feedback and fix any problems in 'real time' before things get out of hand.’

The questionnaire consists of the following:

  • Did you receive all your new hire paperwork on a timely basis from your manager?
  • Was the Launch! Web site your opening browser on your laptop?
  • Did you receive all necessary system IDs and passwords to access applications needed to perform your job function?
  • Did you receive e-mail notifications for required new-hire training?
  • Do you believe you have the tools and resources available to make you successful at GMAC Mortgage?
  • Do you feel you had the right resources made available to you during your on-boarding process?

‘Our loan officers are hungry for this type of information,’ she says, ‘since it makes their job so much easier. It's gotten so popular that we're adding new modules all the time, one of which is for interest-only loans, because they're such an issue now.’

GMAC Mortgage spent heavily to develop this training program, Lewis says, and she adds it was a difficult decision given current market economics. ‘The key was executive buy-in. Our senior management team believes the investment in training will pay for itself in the long run, with better equipped employees.’

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