Do You Publicize Why Mortgage Brokers are Better Than Banks?

Mortgage brokers took the brunt of the criticism for the subprime mess and the collapse of the housing market that followed.  In the eyes of the average consumer, mortgage brokers seemed to be the ones pushing homebuyers into products that were unsuitable for them.  Because the housing market collapsed, many mortgage brokers could no longer make a living and thousands left the industry.  As one of the survivors, you need to educate the public on how you can better help them with their mortgage needs and how you can get them a better deal than they would get by going to a bank.

Although mortgage brokers held about 70% of the mortgage origination business at one time, that percentage has dropped significantly.  Your customer base has shrunk for a variety of reasons.  Fewer people are buying homes.  Even when buyers fill out a 1003, it may be questionable whether they qualify for a loan.  Or the property may not appraise high enough to get a loan commitment.  With the lowest interest rates in years, refinancing is not as big a part of your business as it should be because so many homeowners are underwater or there is not enough equity in the property or their credit history is not clean enough.  So you have to fight for every customer you can find.  You need to give them a reason to come to you rather than the big banks that everyone has heard of.  Can you make a list of those reasons that a customer should come to you rather than where they keep their checking account?

It is a smart exercise to make that list even if you never give out that list to your customers.  It helps you focus on why your business is better than your competitors.  Thinking through your competitive advantages will help you get new customers.  Can you help borrowers with less than clean credit history?  Do you have investors for borrowers who are self-employed?  Are your fees better than a bank’s?  Can you offer a better rate than the banks?  Did you spend time answering their questions when a bank loan originator didn’t have the time or inclination?  Did the bank loan officer know about different types of loan products?  If a customer is shopping for a new loan, why specifically should they choose you?  If you are stuck on the answers, survey your current customers and your past customers.  Find out what they liked about working with you.

Once you have figured out why you are the better choice for a consumer, you need to educate the public.  Most consumers don’t know enough about your world to even ask the right questions.  You need to ask the questions that they should be asking and then answer them in a way that shows your advantages over the banks (and your mortgage broker competitors).

Whenever you are creating materials that may be categorized as advertising, don’t forget to include all required disclosures that your state law requires for advertising materials (and that kind of disclosure may be a competitive advantage itself).

Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you need help with licensing (company or MLO) or compliance issues. I’ll keep what you tell me confidential but I cannot give you any specific legal advice until you become a client of the firm. This is done by written agreement only.

Why Mortgage Companies Should Hire an Outside NMLS Administrator

Right about the beginning of October, you should have received an email or two from the Nationwide Mortgage Licensing System (NMLS) reminding you that you will need to renew your license fairly soon (the starting date for renewals is November 1 of each year).  In addition to your company licenses, all of your loan officers (including you) must renew all of their licenses.  This can add up to a lot of time – time that you and your loan officers could better spend finding new business.  If you hire an outside administrator, that person could be the one spending all the time it takes to get through the renewal process.  It could save you a great deal of money that your business would lose if your loan officers are spending hours trying to remember how to use the NMLS.

 In most companies, the owner inputs the NMLS information himself and requires each loan officer to also input the information himself.  Since this procedure is done once a year, most loan officers and owners have forgotten even their log-in names and passwords.  They don’t remember what steps they need to take to renew their licenses.  The NMLS is not particularly user-friendly and it may take hours for each loan officer to get through the procedures.  In addition, most loan officers have no idea what requirements they need to meet in order to get approval for their renewals.  As usual, each state has its own checklist in terms of continuing education, additional documents, and fees.

An outside administrator will know what requirements are in effect for each state and should be communicating to each of their clients, in advance, what will be required for each company, branch and loan originator in order to get the renewals approved.  That information, coupled with an outside administrator’s expertise in working with the NMLS system itself, will save you time and money.  You don’t want to find that you don’t have your licenses renewed when January rolls around.  You could lose your entire business if you can’t close loans in January.

 If you do decide to hire an outside administrator, you should do some research to find someone who works well with you and knows what they are doing as far as working with the NMLS and licensing laws are concerned.  Check their websites to see what kind of information they provide to the public.  You should also interview each outside administrator that you are considering.  You should be asking that person (or company) several questions: 

1.  Are you the NMLS administrator for other mortgage companies and loan officers;
2. How long have you worked with the NMLS as an outside administrator;
3. Do you only do the input onto the NMLS system or do you follow up until the state regulator makes a decision on the license application;
4. Do you provide licensing information to your clients during the year or only at renewal time;
5. What fees do you charge and when do your clients pay them.

You should be talking to each outside administrator (or the person at the company who would be doing your work) to get a sense of how comfortable you feel with them.  Does each person you talk to actually answer your questions?  Do they seem knowledgeable?  Was it difficult to reach them, either by telephone or email? 

 If the administrator does not seem knowledgeable or interested in working with you and your loan officers (maybe your company is too small, maybe it’s too big), move on to the next name on your list.  Choose the administrator who gives you the answers that make you comfortable and whose personality meshes with your own.  Selecting the right NMLS administrator will save you both time and money while decreasing your stress level.