Mortgage Daily

Published On: January 12, 2012

2011 Loan Originator Survey

Survey and analysis of the nation’s top-producing mortgage loan officers

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Pressure Points: New Regulations


The survey focused on a seasoned group of industry veterans who are originating huge numbers of loans and are being well compensated for it. Yet, they are frustrated by the massive increase in rules and regulations that must be painstakingly navigated in order to close loans, and they are facing unwelcome additional regulations affecting everything from how they are compensated to how they market their services to the training standards they must meet.

Specifically, top producers were asked which regulatory changes in the industry were most challenging for them. Numerous respondents mentioned changes in compensation rules. Others expressed frustration with new rules regarding appraisals. Many respondents cited the general rush to increase regulations.

As one respondent remarked: “We have become compliance officers who occasionally get to do a loan.”

Here is a selection of candid responses to the question, “What are you most concerned about currently on a regulatory or compliance level?”

  • “Regulations [have] become more difficult all the time, even for the very well-qualified borrowers. Excessive documentation requirements! Increasing downpayment requirements and higher credit score requirements.” 
  • “Appraisal ordering. MLOs should have the ability to determine home values via conversation or contact with an appraiser in the market to determine current values, rather than relying on AVMs, which are grossly inaccurate and very poor indicators of market values.” 
  • “My concern is that overzealous lawmakers with good, but ill-guided intentions will continue to over-regulate and pass new regulations without any regard to the unintended consequences. They could easily put our entire housing market at risk to protect the rights of a minority of (ill qualified) homeowners that should never have been allowed to purchase that home in the first place.” 
  • “Too many to list. The regulations that have come out and continued to come out have, in my opinion, done worse for the consumer than help. Yes, there were a lot of bad guys in the business, and many have exited because of the overbearing regulations that the rest of us (seasoned professionals) have to pay the price.” 
  • “The [new] compensation program is now increasing the costs to borrowers and reducing our pricing flexibility with our customers.”

  • “There is too much paperwork for originators. The amount of signatures required during the process is overwhelming.”

It should be noted that in the survey, a few top originators commented favorably about the tougher regulations. From their perspective, not only will the regulations reduce or end the improper practices that were rampant a few years ago, but they personally will benefit because competitors will leave the business.

As one California-based survey respondent wrote, “I think the licensing requirements should be tougher …and if someone fails their NMLS test twice, they should have to wait one year before they can take it again. I also think that everyone [in California] should have to get a California Department of Real Estate license to go along with the NMLS license. This will get rid of all the non-professionals.”

Regardless, most originators feel that the regulations have already gone too far.

However, they recognize that the rules appear likely to stay intact.

Firms must find ways to help their originators achieve compliance, but with the least disruption possible to company business processes. Firms will need to invest in additional training and continuing education and they will have to install systems that help to automate aspects of compliance, such as e-mail retention and loan documentation.

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