|
Last
time, first in our series Industry
Checks & Balances, we addressed
the initial basic step that people
involved with the origination pipeline
need to have a clue about ‘What’s a
Good Loan!’ Having that knowledge,
keeps the junk loans out of portfolios,
and helps to keep the industry safe so
you can have a long and successful
career in it.
Today, let’s look at another Industry
Check & Balance that’s vital.
As an owner of a mortgage company –
Big or Small and whether you’re a
Mortgage Banker or Broker, if you have
Loan Officers working for you, than you’re
probably a bigger Gambler than you may
realize! You may know the FBI’s
reported several times that up to 60% of
all industry fraud happens at
origination, but there’s more …
As we move deeper into this current
industry cycle, and further away from
the ‘Gold-Rush’ days of the last one
– you’re beginning to see a new
paradigm emerging as things change.
Generally things are moving in a better
direction, and you need to be a part of
a smarter way to operate your own
company.
Odds are you yourself were raised during
the last cycle, that began in August
1998. And, therefore received very
little industry education and training,
since most employers during that period
typically focused on production and
sales, and not your long term career.
Unfortunately you got short-changed, and
now as an owner yourself, you’re
beginning to see your limited exposure
to only sales is hurting you. Sadly
anything beyond that which you have
learned, has probably been through hit
& miss, with a lot of bumps and
bruises along the way as many of the
non-industry laws and regulations that
owners must know have eluded you, in
addition to the dozens of lending/real
estate ones you do hear about a lot.
If you’re like most we encounter at
Secret! University and inside many
industry discussion boards, then you
most likely know every little about the
several mortgage laws which effect
advertising issues (commercial messages
that promote credit transactions
requiring disclosures are considered
advertisements under Regulation Z.
Messages inviting, offering or otherwise
announcing generally to prospective
customers the availability of credit
transactions, whether in visual, oral or
print media, are covered by the
regulation). Other specific rules for
advertising, as established by HUD, are
set forth in the Fair Housing Act.
Additional advertising rules are
contained within Regulation Z (as
mentioned above) and ECOA (Regulation
B). There are also specific HUD
requirements for lenders involved in the
origination of FHA-insured loans –
plus several non-mortgage laws that also
cover advertising issues. For example
the FTC regulates a wide range of
advertising issues, as does the Business
& Professions Code in your State’s
“good faith and fair dealing”
doctrine. Plus, of course, subjects that
relate to the Federal Wage & Hour
Act alone with the Federal Fair Labor
Standards Act along with your own
individual State labor laws Employees
vs. Independent Contractors, where you
most likely violate the above indicated
Federal Statutes and your own individual
State laws too, by having your LO’s
operate unlawfully as Independent
Contractors.
So, where the big Gamble you say then?
Odds are both you and your LO’s
incorrectly believe it’s their
principal job duty is to ‘bring in
customers,’ when it’s really a
customer service/help desk type of a
position. So, here’s the hazard
you’re exposed to. Neither of you know
all that much about advertising laws and
potential violations, since you almost
certainly have them focus on
production/sales just like you where
treated! So, permitting them to ‘bring
in customers’ using their own
advertising savvy, exposes your company
to future liabilities. Remember, if
times get tough, or slow, they can
resign – whereas you’re stuck there!
I want you to think this through
thoroughly (and do the math) without a
knee-jerk reaction to the following
advise.
Put LO’s on “salary” (with a small
bonus here and there if you like), and
save the tens or hundreds of thousands
of dollars annually you won’t be
paying them ‘commissions’ and
instead spend it on advertising to build
up YOUR Company, it’s credibility, and
cover your own butt against advertising
violations. If you like, we can show you
how to recruit and hire them, done it
this way hundreds of times! You’ll get
far more bang for your buck this way,
and better control over the type and
quality of applicants that come to your
company… Do The Math.
While we on this subject, it long
overdue for you to convert your LO’s
to “employees” with proper
Employment Contracts (where you’ll be
complying with appropriate labor laws)
and you’ll also have the protections
afforded to Employers – like when they
conspired to steal and download trade
secrets, to commit fraud in connection
with computers; leave and steal your
company’s property. As ‘Employees’
if they take customer lists, logs, loan
files, other information that are trade
secrets to the company, they can be
prosecuted federally. The Computer Fraud
and Abuse Act (CFAA) (18 U.S.C. §1030)
sets forth criminal and civil penalties
for the misuse of employer computer
data. It can be used to sue departing
employees AND their new employer who may
ultimately benefit, and IS liable as
well!
We want to tweak the odds in your
favor, so you can build a solid and
enduring business moving forward. One
which you can be proud of.
In summary, the move to pay big choking
commissions leads directly to the fact
that the FBI has repeatedly reported
over the last couple of years, 60% of
mortgage fraud is done at origination! Greed
is a powerful thing and it can Kill Your
Company! Register
then tell us what you think on our
Discussion Board
Fannie Now Going 120% LTV -
Whoppie!
OK kiddies, let's all remember Fannie
(and conforming) is GOOD and subprime is
BAD. Fannie conservative, Subprime crazy
... right? Just so we're on the same
page.
Well, guess what, after the BIG
fraud/accounting scandal at Fannie, and
with the entire industry is in turmoil,
your pals over at Fannie have decided to
be even more reckless .... Even though
they have lost over $6 Billion in the
past six months, and pretty well hidden
inside this Press Release (peek at page
2) they now have an all new 'Key to
Recovery' initiative going on.
Having "the full faith and credit
of the United States Government"
backing your play, it's no wonder they
can do stuff like this and get away with
it ... but they're white-hat good guys
and subprimers are questionable ...
remember? You can read all about it HERE
... oh yea, BTW, did you ever wonder
S&P's measure of how Fannie would
manage without any support from the
federal government? It's part of the
board post, when you click
"HERE" above. Register
on our Discussion Board and Tell u sWhat
You Think About This
|
|
By
now, reading my thoughts here and also
in my own personal