Over the past five years the mortgage industry has seen an explosion in growth. With super-low mortgage rates and a vast array of loan programs available, new purchases and refinances surged. And along with that boom came an influx of young, uneducated workers, joining the ranks of veteran mortgage men and women.
It seems that everywhere you turn these days you hear people talking about mortgage. And if you ask around you’ll likely have at least one friend or family member actively working in the mortgage industry.
The potential to make a ton of money with little experience or education has brought in an entire new breed of workers to the mortgage industry. And brokers, banks, and mortgage lenders took on as many of these employees as possible to keep their business hot.
One position in particular requires very little experience or training, if any at all. This position certainly doesn’t require a college degree or professional training to gain employment in this industry. The position? Loan officer.
Loan officer is a fancy way of saying salesman, or better yet, telemarketer. Loan officers rarely get paid a base salary, and the only compensation they receive comes from the commission (yield spread premium) on funded loans.
Sure the motivation is there. They must fund loans to make money, and they’ll surely work hard to make that happen. But would you trust someone who knows a fraction more than you do about lending handle your mortgage?
When homeowners put their trust into a loan officer who may have called them out of the blue on a random lead they are definitely taking a risk. Sure everything may work out, but it can really be dumb luck. And that’s not the way one should approach the largest financial decision of their life.
Loan officers can present themselves in a well-spoken manner and may make all the promises in the world. But while they have the motivation and the charm, they may not have the expertise to get your mortgage closed efficiently and effectively, or even legally.
Potential homeowners often put their trust into these loan officers, thinking they must know what they’re talking about if they’re working at a reputable mortgage company. But the simplicity of acquiring one of these positions would surely make homeowners think twice. Many of these employees are getting paid minimum-wage or no base salary at all.
And many high-school dropouts turn to the mortgage industry as a place to do business. Often brokers could care less about who is working below them, as long as they have a warm body making calls and bringing in deals, they’re happy.
Mortgage brokers usually won’t take the time to educate their loan officers beyond the basics about sales, as their main priority is getting them on the phone.
This can be quite detrimental to a potential homeowner looking to purchase a property. Loan officers may give them false hopes or misleading information that will lead to huge problems and big losses down the line. Common mistakes by rookie loan officers can kill your credit, boost your interest rate, or put you in a loan program you never wanted. They may also rip you off in an effort to make a quick one-time profit, with no intention to work on a long-term relationship or to even stay in the field.
The lack of education in this industry is so bad that I’ve even come across brokers who didn’t know the simplest facts about mortgage, yet somehow obtained a brokers license. It can be quite shocking knowing these people have the fate of borrowers in their hands. And that they’re making so much money!
So do your part by researching the company you decide to do business with. Ask for references if need be, and learn as much as you can about mortgage and credit. The mortgage industry is known for its uncertainty, but the more you know, the more you save.