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   ARTICLE   |   From Scotsman Guide Residential Edition   |   October 2010

Don't Need No Education? Think Again

Having an education expert on your team could keep you on the right track.

Don't Need No Education? Think Again

For many mortgage brokers, staying up-to-date with education requirements has become a necessary daily task. But keeping track of new requirements also can slow business growth.

As you look to meet federal and state mandates while also keeping up with other business demands, adding an education expert to your team can help.

Here's how.

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Mortgage brokers have long known the importance of building a team of professionals that helps them exceed borrowers' expectations. Typically, team members have included loan processors, appraisers, real estate agents, underwriters, and escrow and title officers. Dramatic changes in the lending landscape, however, call for a new team member: an education expert.

In today's mortgage market, having a top-notch education professional on your team can be the difference between a business that hums with efficiency and one that finds itself in regulatory and financial trouble.

The best education experts will prepare brokers and loan originators for mandated licensing tests. They also can inform you of industry changes, improve your overall professionalism and help your company grow.

Here's a closer look at what an education professional can bring to the table and why you should consider adding one to your team.


The Secure and Fair Enforcement for Mortgage Licensing Act (aka, the S.A.F.E. Act) requires mortgage-loan originators who don't work for a federally regulated depository institution or a subsidiary of one to pass national and state components of the S.A.F.E. mortgage-loan-originator test. Originators also must pass state-specific components for each state in which they seek licensure.

Preparing for these tests and increasing your knowledge in other areas can be expensive and time-consuming. It also can be a waste of energy if the person teaching you does not have relevant expertise.

This expertise includes knowing the ins and outs of prelicensing- and continuing-education requirements. It also includes keeping track of who in your office has taken which courses, who needs to take what next and who is a good candidate for future courses in a particular niche.

Education-providers must prepare loan originators for all possible questions on the S.A.F.E. test. They also must do it in 20 hours, which is how much prelicensure education the S.A.F.E. Act requires.

If a provider's course material focuses on the wrong areas, loan originators face the prospect of failing the licensing test despite completing the education requirement.

On the other hand, some education-providers may play on testing fears and scare brokers and loan originators into overpriced cram courses

The test is designed to ensure that licensees understand the legislation that governs the industry. The Conference of State Bank Supervisors continually monitors all test questions to make sure they meet appropriate testing standards for validity and performance. Education-providers should develop methods to track changes in the test and to adjust their training as necessary.

You can add an education expert to your team in various ways, including as:

  • Full-time, in-office employees;
  • Consultants; and
  • Independent providers.

When interviewing education professionals, ask about their expertise and experience with the S.A.F.E. test. Choose providers who can prove their ability to increase test scores and to enhance your staff's knowledge base. Ask about their familiarity with mortgage-lending procedures and make sure they understand how the industry works.

Most important, make sure they are on the list of approved education-providers authorized to offer prelicensure and continuing education in accordance with the S.A.F.E. Act (see sidebar).

Beyond the test

Education-providers should be S.A.F.E. Act experts. With so many recent changes to the mortgage-lending industry, however, the best providers offer more than just exam preparation. They also keep close tabs on all legislative and regulatory alterations and understand the subtleties involved.

For example, did you know that FICO scores fluctuate based on overall credit trends? In many cases, people who had a score of 620 in 2006 would have a score of 650 today, assuming no other change in their credit history. This reflects a shift in response to more consumers becoming delinquent in their payments.

Education experts should thrive on learning and teaching little-known facts such as this. The more you know, the less mystery will surround many of the industry changes taking place.

Other examples of changes education experts should know well are those implemented by Fannie Mae and Freddie Mac. Do you understand all the products Fannie and Freddie offer and their differences? Education experts should. There are times when Fannie may approve a loan that Freddie won't -- and vice versa. Knowing about this upfront can save you time and money.

An array of changes handed down by the U.S. Department of Housing and Urban Development and the Federal Housing Administration (FHA) also requires attention. Are you familiar with all the FHA changes that have occurred in the past two years and those that are forthcoming? Do you know, for example, how condo guidelines have shifted? Your education-provider should.

What about the U.S. Department of Veterans Affairs (VA)? Do you know about its origination-fee cap and the impact it has on origination charges listed on good-faith estimates? Education experts should be able to discuss such things and guide you to a well-informed decision about whether VA lending is feasible for your office. They also should provide or recommend courses that fit your interests and help you build your business and your niche lending areas.

In some cases, you can use elective courses to fulfill mandated education requirements, as well. This can make a big difference in the quality of education you receive.

For example, in some cases a management course may be more appropriate than a class on loan- application basics. Then again, even experienced professionals occasionally need a refresher on the basics, especially in the wake of fundamental industry changes. Education experts can help you think through your options.

Moving forward

On the Web

Adding an education expert to your team also can help you save time. By hiring someone to focus on education and testing changes -- and who stays abreast of shifting rules and regulations -- you allow your staff members to spend more time on loan origination.

Moreover, by making sure you and your team get the best education and the best information available, you can increase your confidence and provide your clients with better service. Brokers who take education seriously and who make a point to exceed licensing requirements can find themselves building a business based on client referrals and trust.

Top producers build their success on a foundation of education and experience. But experience without education can lead to painful lessons. Education, on the other hand, offers context and meaning to every experience. It also can help you increase your aptitude and make your job easier and more enjoyable.

Clients respond to loan originators they trust and to those they believe genuinely enjoy helping them find the best mortgage possible. When the market begins to pick up steam -- whether that be next month or next year -- educated originators with satisfied clients will be in the best position to receive referrals and keep up with growth.

By adding an education expert to your team, you can position yourself for future success and keep up with federal and state changes that will continue to affect your business for years to come.


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