Nothing in mortgage banking is arbitrary. It is all for a purpose. There are countless details, duties, events and circumstances that comprise each loan. Knowing that is the case, each loan originator must soon realize that their job is also not completed by accident. There is a reason to deal with each borrower, loan and problem according to good business integrity and standard industry guidelines. There is an underlying purpose for the originator, the staff and the mortgage company.
I recently attended an industry event where the guest speaker was a felon convicted of mortgage fraud. She fully admits to the guilt of creating leases to help qualify the borrower, misstating income, etc. Many of her reasons for committing fraud did not resonate well with me. Reasons like “An underwriter told me they needed more income” and “the loan company rep suggested it” made me realize her total lack of understanding of the true purpose of mortgage banking. There are many things that can happen in the creation of a loan file. We are dealing with people as our main ingredient to the recipe of a sound loan. During the process there are surprises and things change. One day borrowers have a job and the next day they don’t. One month they can write a check for the mortgage payment and the next month they cannot. Knowing that there is a possibility for change makes each job in mortgaging even more important to the over all purpose of the mortgage industry. The originator’s role is key in starting the loan out right and heading it in the direction for its purposeful place in mortgage banking.
In their book, Built To Last, authors James Collins and Jerry Porras, make clear the concept of purpose in business:
Purpose: The organization’s fundamental reasons for existence beyond just making money – a perpetual guiding star on the horizon; not to be confused with specific goals or business strategies.
Examples of Corporation Purpose
Wal-Mart To give ordinary folk the chance to buy the same things as rich people
Walt Disney To make people happy
Mary Kay To give unlimited opportunity to women
What is the ‘purpose’ of mortgage banking as it relates to the everyday work of those working in mortgage lending? To originate loans ‘on purpose’ means following these “guiding stars”:
- * To write loans that are good for the borrower. If you need to add something to the file to make them qualify it means there is every possibility that down the road they will not be able to make their loan payment and loose their house to foreclosure. Not to mention, you might get caught and go to jail.
- * To originate in a fair, accurate and honest way. If you have to lie to a borrower or Realtor to get their business you are also lying to yourself. You may not be as good as you think you are if your loans are made from lies rather than the hard work of truth and honesty. Such as being honest when you have to say ‘You don’t qualify for this size of a house with this loan type.’ Starting over to help that borrower get into a house and a loan that works for them is good, old fashioned, honest, hard work.
- * To close loans in a manner that is good for the industry. If the loan documentation from the application through the good-bye letter is accurate and actually in the file (!) the originating lender, the correspondent lender, warehouse lenders, investors, (as well as the borrower) are protected in the event of a serious change that may create foreclosure action later down the road.
- * To apply industry and regulatory guidelines at the highest level of execution. This purpose does not change even though guidelines and regs change frequently.
Originating loans ‘on purpose’ is different than following a mission statement. Mission statements generally apply to the particular individual company, setting certain ideas and goals for the shareholders and employees to measure up to and follow. Originating loans ‘with purpose’ gives every mortgage worker, every company board member or executive a sense of the larger picture of which they are a part and how each loan makes a difference to others outside the mission statement.
“Purposeful” origination is also different from the core values of a company. The purpose goes beyond the originating company. No matter what the company’s core values are, when just one loan is closed by using fraudulent techniques, many people outside the mortgage origination company may be hurt.
Nor is origination ‘to purpose’ the same as following a plan or a set of goals. For example, an underwriter or underwriting engine has many goals in a day, week and month. However, underwriting for the bigger “purpose” of the industry is to decision each file at the highest level of ability to fit the borrower’s job, income and assets, the collateral, the loan program, and the payment stream into a package that has the least chance of default, protecting the borrower’s future and that of the industry players. The trick is to do it consistently every time and keep the other goals of production, company risk tolerance and basic humanness in line at the same time.
The ‘purpose’ doesn’t stop with the originator or the underwriter. Once the loan is approved, the document drawing engine is under the gun to get the docs out fast. That is usually goal number one to please the borrower, the broker and the company’s lock position. Fast is a goal but ‘on purpose’ documents are accurate to the letter. Each page, word, margin, cap, percentage, legal description, and character are accurate keeping the industry players protected and the purpose of mortgaging in tact.
The funder / closer has the huge responsibility to review the file ‘on purpose’ and ensure that the program, rate, insurance, documents and all closing requests are perfected before wiring funds. It is usually the funders in a mortgage company that can tell the horror stories of catching a mistake that caused the loan to either stop all together or be seriously delayed. Their job is huge and when performed ‘to the greater purpose’ makes a sound loan decision even more valuable.
Many a borrower, with or without a smart attorney, has gotten out of a defaulted loan repayment due to a mistake in the documentation. This information is not always relayed to the originating staff, which in this author’s opinion is a mistake. Every individual in mortgage banking should know the consequences of their poor judgment, lack of care or sloppy mistakes.
For the most part, mortgage executives, human resources personnel and industry specific staffing companies, do the very best job they can to screen, test and identify the skilled mortgage worker. Without a sense of direction (a plan), goals (expectations) and the meaning of their jobs to the big picture (purpose) the chances of even a skilled worker missing the point of the job is extremely high. In a recent interview with a rookie loan officer she revealed, “I haven’t really had any training. I was given a list of prospects to call and some paperwork for each caller. I just read the script and filled in the blanks.” When questioned further it was clear she had no idea of her purpose in the big picture of mortgage banking and that was one of the reasons she was interviewing for a new position. She had the personal passion for mortgage banking but felt that her work was a wasted effort. The company that directs this person, or anyone like her, to work their job ‘on purpose’ will create an industry leader with passion.
Originating ‘on purpose’ makes sense. It follows the path of doing what matters most in the big picture of mortgage banking. From my viewpoint of twenty years as a mortgage lender and then twenty years supporting the lending community at SRS, the purpose of mortgage banking hasn’t changed any, if at all. The purpose is to originate solid, honest loans creating a vehicle for people to own and keep their homes. While doing this we keep the integrity of our industry in tact making our impact on the economic evolution of America a positive one. Mortgage Banking creates jobs both in its industry and the many that support the housing and building industries. It is important that we keep our purpose in mind as we train those who join our companies, as we talk about our industry and whenever the issue of integrity is raised.
People want to know why they are in the picture. Why am I doing this job this particular way? Satisfying that question by imparting the real ‘purpose’ of mortgage lending will keep mortgage quality in tact and fewer mortgage felons on the lecture circuit.
Integrity Today 