I am noticing an increased amount of stress and hassle around the mortgage financing process, and it’s not all about the still present overwhelming volume of business the industry is trying to absorb.
Let’s look as some trends and then with your indulgence, I’ll make a radical conclusion about the direction the industry is headed:
- We have more sophisticated Underwriting engines that automate the process of approving or declining applications for financing. The decisions themselves are no less complex, in fact may even be more so due to the increasing amount of regulations, guidelines to manage, and government intervention and now even government ownership to protect us from ourselves.
- Advanced 800 answering services that feature voicemail jail in ever more sophisticated technology like voice commands, intensely personal data entry requests, and long waits that need I say can end up in a scripted call with someone in another country.
- Keeping up with longer transactions and less clients that qualify is taking its toll on the mortgage professional, taking a lot more energy at 1/2 their previous income.
- Emerging government intervention and control of FNMA (Fannie Mae), FHLMC (Freddie Mac), and now even partial ownership of the banking system.
- Understanding how to navigate this landscape is a skill that only experienced professionals have and even they have little or no time to invest guiding their clients the way they used to. In part, we can look to the volume of lending, but another perspective is their declining compensations.
- Power in transactions is shifting. The most dramatic of these shifts is the new practice of randomly assigning appraisers to a transaction through a handful of national companies not connected to any lender, but whose process guarantees no appraiser will have a close working relationship with any lender.
This is the erosion of the most basic need of the consumer in a complex transaction and the desire of every professional, SERVICE! While currently not pleasant, we are moving toward an automated system of obtaining financing in the future. In fact the day is coming where you will likely carry a data card similar in size to a credit card in your purse or wallet that contains all information necessary to be qualified for and obtain a mortgage loan. This will work for roughly 30% of the population who are the best qualified, who easily meet the criteria, and who don’t mind trading speed and convenience for cost.
However, for the rest of us, like trying to deal with credit bureaus; we will never completely understand how to navigate the criteria and guidelines that will control our ability to get mortgage financing.
We could turn to a loan representative in one of our favorite lending firms whose job it is to deal with all those who do not fit the automated standards. Doing this, we would need to overlook the inherent conflict of interest working with someone who will be compensated for selling that company’s products. Ask yourself, would they have your interest, or selling a loan first, on their list of objectives?
The independent mortgage consultant is emerging as a more practical, valuable, and viable solution to this increasing dilemna. A consultant is compensated for working specifically for you and paid by you for what you want to accomplish. This can be the most balanced relationship in business.
