Lenders Step Up Training to Get Ahead of Problem Loans










With an eye on eliminating mortgage buybacks and adhering to increasing regulatory compliance obligations, mortgage lenders are redoubling their sales training efforts for both rookie and veteran loan officers.

Avoiding compliance violations starts on the ground level with a lender’s mortgage sales force, and that means teaching new originators how to create loans that avoid potential problems in the first place, said Deb Killian, president of Charter Oak Lending Group in Bethel, Conn., who’s the force behind the Mortgage Bankers Association’s School of Loan Origination.

“The underlying theme here is how do you take an application so well that you get business by being so good at what you do, while avoiding the risk of repurchases by the company you are employed by,” Killian said.

She wrote and teaches the MBA’s course, which comprises of 12, two-hour webinar sessions over four weeks, plus an additional 25 to 30 hours of homework, quizzes and a final exam.

The course differs from the education and testing requirements mandated by the Dodd-Frank Act for loan officers working at nondepository mortgage lenders, and thus is applicable for all types originators, she said.

The course covers the history of mortgage lending, the role of the loan originator, how to take a complete and compliant application. One of the two-hour sessions is dedicated to a case study, and there is even a session on how to examine tax returns to look for qualifying income. Other segments include product and pricing and structuring mortgage loan transactions and marketing for a purchase environment.

While Killian’s efforts are aimed at supporting the industry as a whole, some companies are implementing their own programs to make sure their new hires, experienced or not, meet the firm’s standards.

Mortgage Network in Danvers, Mass., has a program for rookie hires called “mortgage banker in training,” said Executive Vice President Brian Koss.

“We do it on a limited basis. What we do is we take people who have shown an ability to sell; we actually have them take a sales test (that) determines their ability to deal with call reluctance and sell themselves.”

Those who score well get a paid opportunity to learn “from the back of the process forwards,” Koss said. “The goal is to have them touch 1,000 files. You learn in a case study, like in law school, that this is how it works.”

During the day, trainees help process loans, while in the evening, they take courses about the industry provided by sources like AllRegs and private mortgage insurers’ online training platforms.

Mortgage Network also assigns trainees a mentor. “We’re not making that loan officer teach them the basics of mortgage banking. We’re having them teach sales,” Koss said.

By learning the basics the right way, such as what questions to ask and what pitfalls to avoid, trainees see what loan files need to make the origination process run smoothly, Koss said.

There is a cost to this, approximately $30,000 to $50,000 per trainee over a six-month to one-year period.

Like in baseball, top teams want a mix of free agents and players groomed through the minor league system. The experienced recruits are the free agents; the trainee program is Mortgage Network’s minor league system, Koss said.

Training new loan officers the right way is important in an era when regulatory penalties for origination errors have increased and carry more liability for lenders. When it comes to bringing an experience loan officer on board, “the key is to underwrite the candidate correctly,” he said. Culture matches matter. Mortgage Network knows its ideal candidate to hire.

“What are their priorities? Do they match with ours? That’s No. 1,” Koss said

Even with experienced originators, Mortgage Network has a defined boarding process for new hires, which includes training on the lender’s proprietary technology. The firm also has a “concierge system” with staff who answer new hires’ questions.

Mortgage Network’s training philosophy is designed to ensure that new hires don’t try to do too much too soon. “It is a whirlwind for them; they want to hit the ground running. It is hard to change to another culture and we try to manage those expectations for them,” Koss said.

Meanwhile, JPMorgan Chase has initiated an effort to hire top producers to stock its sales force, recruiting people who have established relationships with referral sources and a history of strong production throughout the business cycle.

“For people to be successful in this marketplace, they really do need to have experience,” said Joe Cartellone, Chase’s senior vice president and mortgage banking national sales executive.

The bank also hires novice originators, who can bring in fresh blood and new ideas, he said, and often have experience on social media. “Some of us crusty veterans that have been around a long time, we could really use that injection of new thoughts and ideas,” said Cartellone, who works out of the Chase’s Columbus, Ohio office.

Today, most Chase hires have previous experience in the mortgage industry. The shift toward hiring more experienced loan officers is because of the change in the market to a purchase dominated business. Experienced loan officers already have the referral networks in place.

But from 2010 through 2013, Chase filled positions in its mortgage sales staff with people who have different kinds of experience, such as retail banking or other areas of financial service sales, which worked well during the recent refinance cycle, he said. During that time, Chase worked with those employees to leverage their sales skills and create a relationship-based business.

Whether they are experienced or not, Chase puts them through its “very structured on-boarding and training process,” Cartellone said. The company has a regimented process for the first four months, “not only to teach them how to operate on our systems, but (also) the environment and the culture,” he said.

The Chase mortgage division is integrated with its retail bank, “so it is important when folks join our organization that they really learn about the culture of the total corporation and how mortgage is a part of the overall Chase corporation,” he said. It is also important they learn about the internal partnerships existing at Chase that are just as important to the organization as its external ones.

While Chase doesn’t have a formal mentoring program, it does look for synergies to match new and experienced staffers, which helps reinforce the culture and knowledge about the internal workings at the bank.

Chase uses a lot of different tactics for recruiting, including relying on its local mortgage bankers and managers who are familiar with their area’s market. There is also a recruiting team in its human resources department.

Most top producers aren’t actively looking to make a change, Cartellone said. But the company looks to sell them on the advantages of working for an organization like Chase and the strength of its brand and overall customer base (not just in mortgages but other products as well).

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