Though these changes will affect pricing policies for many mortgage companies and MLOs alike,  they are not the end of our industry, but rather a signal for the need to alter operations.  The mortgage industry over the past several decades had become bloated with under-trained individuals earning incomes that rivaled physicians and attorneys.  Unharnessed revenue structures allowed unskilled MLOs, untrained processors and managers to maintain high incomes without sufficient industry knowledge, all at the consumer’s expense.  Mortgage lenders could afford to maintain an unskilled workforce as per loan profit margins negated a need for sufficiently trained employees.  Mortgage lenders of all sizes will now need to evaluate the cost of loan originations.  A need to streamline origination and processing functions will become critical.  Each dollar saved in the process becomes an additional dollar of profit and a potential compensation dollar.  The need for a MLO to understand everything about the origination/processing procedures and to efficiently compile a closable loan file from the point of origination will be essential, if the MLO wishes to maintain a reasonable earnings per hour spent compensation.  Effective training programs for all MLOs and processors will become an equally essential part of every successful mortgage lender’s operations.  The once neglected training area will be at the forefront of every profitable mortgage lender’s staffing protocol.  The days of unskilled, under-educated production and ops staff are gone.  The ability for mortgage companies to retain employees who are sufficiently trained, will become increasing more difficult.  As per-loan revenues fall, additional profits will only be achieved through greater efficiency and higher skill set of their workforce. 

Though the Dodd-Frank Bill set out to achieve consumer protection through the establishment of compensation limits, the new law will also reach well into the operations of every mortgage lender.  Along the way the law might possibly not only change the operations of the lender, but may also ignite changes that will improve our industry forever.

If licensees are not COMPLETELY approved by their state’s licensing deadline, they will not be able to act as a mortgage loan originator until the approval is completed.

Below are current stats, from the State of Colorado, regarding the license application process.  Your state may have very similar statistics.

CO states, as of the week of May 31, 2010:

1. 2.500 individuals have registered & received their NMLS ID number
2. 2,000 have completed Federal fingerprinting
3. 1,950 have taken NMLS testing
4. 900 have passed the testing
5. Only 140 have been completely approved by the State of Colorado

* Statistics provided by the Colorado Department of Regulatory Agencies and NMLS

MTI is an NMLS-approved education provider and currently offering the required 20 hours of pre-licensing education, many state specific regulatory courses and test preparation packages. 

Visit us today for courses and schedules:  www.MortgageKnowledge.com

Click the link below to sign up for MTI’s industry newsletter and stay current with all general industry and national licensing updates.

http://www.mortgageknowledge.com/subtype_classes_FP.asp?st=60324

This is a brand new Internet communication technology that is unlike anything I’ve ever used before.  It is communicating Live over the Internet in full video, audio, PowerPoint slides and offers real-time interaction with all participants. You can also archive your presentations for future playback.  I’ve used Webex and GotoMeeting, but this is more powerful to see and incredibly easy to use.   And… oh yes, you can use it FREE.

If you want to WOW your participants with your next online presentation, this is a product you need to try out. To see it for yourself, go to www.livepresenter.com

The American Recovery and Reinvestment Act of 2009 created an incredible opportunity for a group of home-buyers, one that could allow them to purchase a home with ultimately no money invested in the transaction.  No down payment or closing costs, as long as the real estate agent and mortgage lender understand the new rules.

Under ARRA, first-time home-buyers are given a tax credit of up to 10% of the purchase price not to exceed $8,000, or $4,000 for married filing separately.  This tax credit, unlike the tax credit provided in 2008, does not require the home-buyer to repay the credit, as long as they remain in the home as their primary residence for at least 36 months post closing.  Additionally, as of February 25th, the IRS will allow this credit to be taken in either the 2008 or 2009 tax year.  The only requirements to receiving the tax credit are, they must purchase the home prior to December 1, 2009 and their adjusted gross income does not exceed $75,000 for single or $150,000 for joint filers. 

So what about the No Down Payment and closing costs I spoke about?  If you’re working with someone who qualifies as a first-time home-buyer, someone who hasn’t owned a home in the previous 3 years, and you can place them in an FHA mortgage, here’s how it could go together.   FHA requires a minimum down payment of 3.5% of the purchase price (must be paid by the buyer), plus they need money for closing costs, unless the seller agrees to pay those costs.  If you negotiate the right transaction, your buyer will have no money invested in the transaction, compliments of the government.

Here’s a scenario:  You have a buyer purchasing a home for $140,000,  they will need $4,900 in down payment and an estimated $2,900 in closing costs (may vary slightly in different areas), for a total of $7,800 invested.  If they purchase the home , having the money necessary to close the transaction, they would after closing, immediately file tax return form number 5405 with the IRS (either with their original tax filing or in an amended return, depending when they purchase).  The will receive the $8,000 tax credit funds, making their investment in the property zero.

Now you have ability to help many people buy their own home, using this government assistance program, in a time when home buying opportunities are at their highest level.  This becomes a win-win-win situation for everyone, go help you community!

Too often the mortgage industry is seen as open during “general business hours”, or a typical 9 to 5, Monday through Friday.  But is that how you see your business?  Is that how you want your customers to see your business?

Wouldn’t you like to have your business open 24 hours a day, 7 days a week, 365 days a year?  Wouldn’t you like it if customers could see you, do business with you, any time of the day or night?  Do you think your business would increase?  Do you think your customers would find value in that convenience?

I know what you must be thinking.  How can I be available 24 hours a day 7 days a week?  It would cost a fortune to have staff members available all hours of the day.  And really, how much mortgage business will there be at 2 or 3 am?  Good considerations.  But in today’s business world you have the ability to offer your services on a 24/7 basis, and not have to stay up all night. 

The proliferation of the Internet and the acceptance of the general public to use the Internet as an acceptable way to do business, can extend your business hours to 24 hours  a day.  Having your own website, not just a company site, will allow you to actively interact with your customers, 24/7.  But to do this properly, your web site must be more than an advertisement or static website with nice pictures but very little value to the visitor.

Your customers must know that your personal website is just like your personal office assistant, it connects them with you and your business directly.  The site should illustrate how you conduct your business, how they as a customer will be treated.   So how you build a website is crucial.  Your site must include certain elements:

a. Interactive.  The site has to allow your customers to interact with you in describing and fulfilling their needs.  From content to activities like taking an application, the site has to allow your customers the ability fulfill their needs.

b. Relevant Content.  Your customers must be able to find content that is important to them.  This could include interest rates, loan status, educational content and current mortgage market information.  The content should be easily found and delivered in a format best suited to your customer.

c. Communication.  Customers need to know you are serious about staying connected to them.  They should feel that you treat their loan with absolute priority and that you use the website to help you accomplish this.

d. Security.  For your customers to rely on your site as an extension to your office.  They must feel their information and communications are private and secure.  Each customer should have unique access to obtain and provide information.

Your business day doesn’t have to end when the office doors are shut and locked.  Your business can continue to grow as you sleep, relax or take a vacation.  Proper use of the Internet will truly allow you to conduct business 24 hours a day, and with those hours where will your business be 1-year or 5 years from today?

I’m reminded of a fable I heard a very long time ago.

Mr. Battaglia had a flourishing hot dog stand on Rt. 38 on the edge of a very busy shopping center near Lombard.  He had signs extending every few miles from Chicago to Geneva.  They read:   Stop at Battaglia’s!  We Serve the Best and Largest Hot Dogs in the Midwest, Tasty Char-Grilled Franks with a Sauce from a Cherished Family Recipe.  He ran ads in the newspapers and handed out circulars in the cities around him.  His hot dogs and service were good and his business was BOOMING.  Things could not have been better. 

He decided to expand.  He met with a financial consultant who had an MBA from one of the larger business schools.  The consultant, after hearing Mr. Battaglia’s expansion plans, said “All of the financial writers and even Washington say that the business outlook isn’t bright.  We’re on the brink of a serious recession, there is double digit inflation, money is tight and expensive, there is an energy crisis and people won’t drive to your hot dog stands.  It would probably be wiser to think in terms of a holding action and even a cut back in expenses.”

Mr. Battaglia, who didn’t have a great deal of formal education, respected the learned counsel of his advisor.  He went back to his hot dog stand and tried to think of ways to cut costs to prepare for the oncoming recession.  What to cut?  Not the hot dog and bun orders –  he needed those for his present business.  He decided one of the expenses he could cut immediately would be the newspaper advertising and the circulars.  He stopped these services immediately.  He realized that the consultant’s advice was sound because within four weeks his sales began to drop.  He thought to himself, “The consultant and financial forecasters are really smart.  The recession is beginning.”

To cut expenses even more, he decided to take down half the signs which would cut his sign maintenance costs.  At the end of two months his business was down 40%.  “This recession is really serious,”  he told his family, “but I’m going to give it one last try.”  He took his diminishing capital and put the road signs back up, began advertising in the newspaper and passing out circulars again.  At the end of three months his business was once more booming.  He was thankful that the recession was so short-lived and that he survived it.

What part of your financial difficulties could be answered in a simple fable?

Here’s what I’m talking about, let’s say Joe has $10,000 in his stock fund, and he wants to buy a car that requires a $10,000 loan.  If he were to get that loan from his bank, it would be at 7.5% interest over 4 years, and he would have payments of $241.79 per month.

If Joe took the $10,000 from his stock fund and bought the car; then executed a loan to himself from the “Bank of Joe,” for $10,000 at 7.5% for 4 years, at the end of the 4 years Joe would have paid himself $11,605.92.  This would mean his $10,000 returned him 16.05% over 4 years TAX FREE, potentially much better than the stock market would have done over the same period of time.

With a falling stock market and uncertain financial times ahead, your customers need to change how they view money and how they utilize debt to their advantage.

Defining your business using this definition can cause conflict.  Your business is no longer a job, but rather a lifestyle.  How you conduct yourself in life should be reflective of how you define your business.  If you aren’t already doing this, doing so will add a new dimension to your business.  Once you realize everyone of an adult age is a prospect for your business your daily actions will change.  From that point forward when  you do shopping at a store, you will never leave without giving the sales clerk your business card.  You will always include you business card with the tip at your local restaurant or bar.  You will make your career known to all in your church, PTA or civic club.  Payments to your local stores and utilities will include your business card along with the payment.

The simplest things you do and how you involve yourself  with all around you will change and along with that your business will also change.

Think back as a young adult, around 16 to 18 years of age.  You just got word that “Bon Jovi” was gearing up for a new tour, you can’t wait!  But wait, their not coming to your town, bummer.  Your friends, after serious peer pressure, bait you into that long road trip, just to make sure you see them… one more time!

Those days are all but gone!

Now you just sit back, relax and log on.

The Internet has brought all of us closer, basically within a mouse click of each other.  The Internet not only serves our social lives, but also our professional/instructional development – e-learning.  Rapidly growing and adopted, e-learning is now advancing through just about all areas of instruction.  From Pre-K to corporate America, Internet-based training applications are surfacing everywhere.

Many major corporations save millions of dollars each year using e-learning to train employees more effectively and more efficiently than with conventional “in-class” methods.  Research on e-learning applications for Pre-K through grade 12, as well as in adult learning and training settings, strongly suggests that it is an effective means for delivering instruction.

Time will tell just how advanced e-learning applications may become and how much more effective they may become from your conventional face-to-face education, but one thing is for sure… it will be one very exciting time!