Brokers who embrace and explain regulatory changes can reap rewards

Brian Brady, managing director, World Wide Credit Corp.

As published in Scotsman Guide's Residential Edition, November 2009.

Are you still complaining about the hurricane of regulations that hit the mortgage industry? If so, now is the time to temper your criticism and seize the opportunity to position yourself as a customer advocate.

Suspicion and confusion now reign in mortgage borrowers' minds. Brokers who use new disclosures and regulations to their advantage can help clients find clarity and can help return the profession to its rightful place of honor.

As most brokers now realize, the source of capital in mortgage lending has shifted from the secondary markets to the government. Necessity and a lack of investor confidence caused this change, which comes with a new set of rules.

Regulators and elected officials are trying to develop a lending model that offers consumer protection while also inspiring confidence in an asset class tarnished by a rapid and steep decline. Rather than embrace those actions, many brokers publicly resist the changes, leaving customers to wonder why.

Rather than resist change and risk poor public relations, brokers should take time to learn about the new rules and lending standards. From there, you can determine the best ways to explain those changes. By embracing and incorporating regulations into your business practice, you can regain business and reclaim customer trust.

Disclosures as a sales tool

The disclosure process represents a great opportunity to educate customers. One thing many customers care about is how their lending professional is paid. Brokers who highlight their independence often can negotiate fees without resistance. They also can point out that bankers and direct lenders refuse to disclose compensation structures, claiming exemption under a federal banking law.

Defining yield-spread premium as a cost-containment tool, while demonstrating compensation transparency, gives mortgage brokers a competitive advantage against larger lenders. Retail-banking sales representatives rarely explain internal compensation models or offer consumers any kind of transparency about such things.

Page: 1 2 3 Next