Loan Officer Licensing and the Banks...

Published by: Rich on 10th Feb 2010 | View all blogs by Rich

Thanks to Jen commenting on my last blog post, I now have my next blog post. Continuing my compliance theme, today I'm talking about licensing and how it came about in MA. Starting in the early 2000's, our state association was pushing for Loan Officer Lincensing. One year it came real close to moving on, as the bill was filed and it went to comittee. There was a lobby to oppose it, and that lobby was lead by the banks. Why would the banks not want non-bank Loan Officers to get licened? Take your guess in the comments. I'll check back in between shoveling snow to see if anyone has the correct answer.

Comments

10 Comments

  • Joe Cafiero
    by Joe Cafiero 5 months ago
    After what I paid to take classes and tests at the end of last year, my guess would be to drive up the costs enough that doing business in Mass does not make any sense..

    Or....They needed another reason to hang out in Boston and take unknowing visitors to Cheers.
  • Rich
    by Rich 5 months ago
    Nice answer but no. :D
  • JP
    by JP 5 months ago
    They didn't want to compete with the appearance of credibility that having a license would provide? It can't be because of a slippery slope precedent because they are insulated from state law. Or, it could be because they're managed by a bunch of pedantic nincompoops who facilitated the credit market collapse of 2008. Just a guess.
  • Rich
    by Rich 5 months ago
    JP hits it on the first guess.
  • Rich
    by Rich 5 months ago
    So the story is that the banks came in hard against this idea as they thought their own LO's might not seem so legitiamate compared against a Broker/Lender LO who has gone through education and testing.
  • JP
    by JP 5 months ago
    I can totally see that. I generally try to avoid the banker versus broker debate, though, around Chicago, saying your a mortgage banker is supposed to be a huge deal. But what's becoming more and more apparent is the growing dissatisfaction consumers are getting in dealing with their banks. Whether it's the increased fees or the lack of competency of their staff. Order-taking or tellers are fine when dealing with everyday checking account stuff. But when approaching something as monumental as a mortgage transaction, whereby hundreds of thousands of dollars change hands, consumers demand knowledge and credibility; or at least, they should!
  • Rich
    by Rich 5 months ago
    In my earlier career in the mortgage business, I was a LO at a Lender (funded their own loans). Thought Brokers were the scuzziest people on the planet. Once I bacame a Broker, I was converted. Everyone has their pluses and minuses, hopefully we have more of the pluses.
  • Paul
    by Paul 5 months ago
    "Thought Brokers were the scuzziest people on the planet"

    That term is now reserved for the Loan Mod and Debt Settlement reps of the world...and some deserve it.
    Great Blog Rich!!
  • NJShoreMortgage
    by NJShoreMortgage 5 months ago
    Years ago Provident Bank began having branch managers take loan applications. Theory was: why pay the LO a commission when a borrower simply was walking into a branch? Let the mgr take the loan...they're sitting there anyway and the customer doesn't need to be "sold". The mgr was really just an order-taker.
    The first time this happened, I was on my honeymoon in Mexico. When I got back, I received a phone call from a Realtor upset that her buyer had been declined for a loan. Obviously I hadn't taken the application, but being the local rep, I got the nasty call. Turns out, the borrower worked at a restaurant, and told the mgr she made $40,000 a year...which the mgr wrote on the app. She said she had $25,000 saved...which the mgr put on the app.
    When the processors asked for pay stubs, w-2's and bank statements...what do you think they saw?
    Being in a business where cash was a part of her income, nothing matched the figures on the loan application. She was denied because she couldn't prove income or assets.
    Branch managers aren't thinking like loan officers who are trained and/or have the experience in underwriting guidelines.
    But branch managers also don't get paid the same commissions as LO's (or if they are the commissions are small "bonuses"...$50) so it costs less for the bank to book that loan.
    Eventually, Provident saw that branch managers weren't the best people to deal with the complexities of the mortgage process, and I'm sure some mgr's complained about the phone calls they'd get from Realtors asking for follow up.
    Now, when customers walk into a branch asking for mortgage info, the call comes to us. I'm assuming though that many banks still want to save a few bucks by having a data centers where legions of college kids take loans over the phone. (Doesn't BoA do that?...)
  • Rich
    by Rich 5 months ago
    What I've heard about BofA is that there is a total wall between the branch and the mortgage dept. They can help you in the branch, take your information, plug it into a computer, but where it goes after that is anyone in the branch's guess.
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