Loan officers have long enjoyed the potential to make a substantial income in the mortgage industry. The job usually does not require a college degree, just a burning desire to succeed. We loan officers have been long criticized for the way we are paid and we are accused of abusing customers by selling loans for the benefit of compensation rather than what’s in the best interest of the borrower.
Apparently, the recent attempts to force transparency by using the revised good faith estimate have not been good enough. Encouraging borrowers to shop around and compare rates and fees right on the new GFE, has not been good enough, either. Even the industry’s diplomatic response of using premiums to pay borrower costs, has not made a difference. The new Reg Z wipes it all out, not underlining and enforcing the SAFE ACT or the new disclosure policies but rather making them obsolete and a waste of time. Loan originators, whether working for a depository or not, will be compensated on some other model that has nothing to do with loan terms, in the future.
The problem I have with this is that a loan officer by definition is someone who negotiates the terms of a residential loan with a borrower. This will no longer be a function of the loan officer so I do not believe I can be called a loan officer, when these new laws are implemented. What that means is that I am no longer required to have a license because I am no longer negotiating terms, I am just taking orders.
I agree that this method of compensation based on loan terms has been abused and even have fallen victim to it myself many years ago. I learned my lesson and that’s what life is about. Lawmakers think differently. They revised Reg Z and implemented new laws to take affect April 1, 2011 that limit the way a loan officer can be compensated and stops loan originators from being involved in the process of ordering third party services like credit and title reports.
There are still plenty of other sales careers that do not disclose commissions, premiums, trails and other forms of compensation. It is the customer’s responsibility to shop and compare. It is counter-productive to require a business to disclose secondary market terms. The economy will take a another hit from this when, loan officers become order takers, loans become difficult to close from other regulations already in affect and order takers have no incentive to get difficult loans closed. The sum equals less and less loans closed and less and less home sales. We are already seeing the results of laws like these and no matter how much they kick and scream about wanting these laws, no one wants the net results of less home sales, lower home values, shrinking economic conditions and less jobs.
Michael Manfredi is Reverse Mortgage Originator
Reverse Mortgage Concepts
Phoenix, AZ 85020
(602) 456-0009
(888) 697-5556
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