recapturing the industry soul

INDUSTRY

RECAPTURING THE

SOUL

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Doc Searls was nice enough to point outthat Blown Mortgage took hiscommentary on Starbucks personallyand outlined the ways in which themortgage industry can start to recaptureits soul. Then my follow up rant on hisdiscussion board got me thinking to howfar the industry has really sunk.



THE PROBLEMThe problem with poor customersatisfaction in the mortgage industry(and hence the soulessness of it) is thatthe problems not apparent until the veryEND of a long, drawn out process. Whenyou get bad service at a restaurant youknow it. The server is non-existent, thefood is cold, the order comes out wrong. Instantly you know the service is bad. Itonly takes maybe 15 minutes to figureout how satisfied you are going to bewith a restaurant.



But imagine if the waiter kept telling youhow great the food was going to be; howit was unlike anything ever eaten before;how you were getting an incredible mealat a steal of a price. You are then madeto wait in-line for a month at the doorand by the time you got in and seatedyou had invested so much time ingetting to the meal that when they bringout a McDonald’s hamburger for $100you have no choice but to eat and pay. Such is the lot of many mortgage-seekers.



Instead of food though, its a home. Hundreds of thousands of dollars. Nowits late bills piling up, a mortgagepayment that you’re struggling to make,money needed for food, a child’s tuition,repairs to a leaking roof, income toreplace that lost by the disabledbreadwinner. Now do you walk awayafter a month invested and needing themoney? No way. And that is where thiswhole concept of blown mortgagescomes from.



Brokers know you can’t walkaway after that much timeinvested. They know theyhave you if you are behind inbills, late on mortgagepayments, in a bind. And theydisgustingly use it to yourdisadvantage.



What exacerbates this wholeproblem though is the enormity ofthe transaction. If you have a badmeal, you’re out $50 bucks andwhen you go out to eat you’ll nevergo to that restaurant again. Andwhen you go out you won’t have tolisten to 40 restauranteurs yellingyour ear that they have the bestfood at the best price. You makeyour decision and eat.



When you have a bad refinance you then arestuck. You’ve spent a lot of capital, emotional,credit and cash. You can’t just go out and refiagain. Then when you finally can you’re back inthe mortgage bazaar with vendors yelling andscreaming at you with all sorts of half-truthsand flat-out lies. But guess what? Hope tugs atyou. The same hope that makes you think thatthis is your week to win the lottery. And you getan offer from a good, upstanding company andit looks TERRIBLE compared to the shadycompany’s offer. The fees look outrageous, therate looks worse and the APR is sky-high. Theshady company’s offer looks more in-line withwhat you are looking for, and that rate and nofees – amazing! You’re trapped again.



Ensure Your ServiceSo how can you find thehonest companies, the rebelsthat are fighting the evilempire of the mortgageindustry? Here are 5 tips toensure you get greatcustomer service and a not-blown mortgage:



1. Ask for proof in writing(know which writing is reallyproof). Get the broker to sendyou the Loan Approval fromthe investor. Not the GFE, TILor other documents that areeasily manipulated. Get theapproval from the bank. Ifthey won’t give it to you gosomewhere else.



2. Ask for the rate sheet that yourloan is quoted from. A rate sheet isa matrix of interest rates based oncredit score, the size of your loancompared to the value of yourhome (loan to value, LTV), and yourmortgage payment history. Theyaren’t supposed to share this withyou. Find one that will and workwith them. You’ll be able to see theactual rate you should be gettingfor your situation.



3. Ask for your credit scoresfrom your credit report. Brokers can’t send you thewhole report (just like at thecar dealership) but they cansend you the credit scoredisclosure pages. Keep these. You won’t believe how manyloan officers quote worsecredit scores to make moremoney on a loan.



4. Ask for the name of theprocessor on your loan file and gettheir number. The loan officer doessales, the processor makes yourloan go through. They are usuallysalaried employees who don’t havea huge upside to push your loanthrough – it makes them moreobjective and honest than the loanofficer whose whole paycheckrides on your loan.



5. Check the Better BusinessBureau for the complaint history ofthe company. Then look them upwith your state’s mortgagelicensing bureau. A quick Googlesearch will help you find thelicensing entity in your state.



Those five should help yousteer towards a goodcompany and away from ashady one and decrease thelikelihood of being on thewrong end of a blownmortgage.



Industry – Start Here

You can read in my firstpost some of thesimple things that youcan do to restore somefaith in our industry. Here are a few morethoughts:



1. Do every loan like you aredoing a loan for your: mother,brother, wife, sister, husband,best-friend, cousin,grandmother. You’ll be morepleasant, patient, and fairthinking like this.



2. Educate, educate, educate.If you hear of a rate that is toogood to be true, take the timeout to educate your customer. If they are concerned aboutfees work with them to explainthe third parties involved andwhere you can work withthem and where you havelittle leeway.



3. Explain what can cause changesin a loan up front. Let them knowthat an appraisal that comes inlower will change the rate, that aprepayment penalty will affect theamount of cash-out they aresupposed to get, if their W2’s endup less than they remember, thesewill all change the loan. Tell themthat on DAY ONE and remind themthroughout the process.



4. Call your customers. Even ifyou have little news. Touchbase at least 3 times a week.Preferably more. Emails aregood, phone is best. Stay intouch. Make it a goal that yourcustomer never has to callyou.



5. Be there at the end. Whenthey go to sign be on stand-byto answer any last minutequestions and clear up anydiscrepancies so that they feelcomfortable making the finalcommitment. Review the finalclosing documents (HUD, etc.)with them over the phoneprior to signing so there are nosurprises.



What do you think we cando to recapture the soul ofour industry and makepeople believers again?



T O L E A R N M O R EBLOWNMORTGAGE.COM

LENDER HOTLINE: 888-581-5008

C L I C K H E R E



Justin McHood is Americas MortgageCommentator and has been providingMortgage commentary forover 10 years.

INFORMATION PROVIDED BY:Justin McHood

MORTGAGE COMMENTATOR

Information Originally Published:March 1, 2007


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recapturing the industry soul

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