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   ARTICLE   |   From Scotsman Guide Residential Edition   |   September 2011

Education Starts at the Top

Mortgage companies must implement a comprehensive and ongoing training program

The mortgage industry has undergone enormous changes in the past few years that have affected compliance, product offerings, underwriting and business development. It is a daily challenge for mortgage professionals to stay abreast of all these changes. As a result, training and education should be a staple in every company's platform. Our people must be taught the right way to do loans in today's challenging loan environment.

Mortgage bankers and brokers must be dedicated to expanding their knowledge base and must devote time and resources to develop training offerings for employees in all job functions. This training will give employees knowledge that will result in increased profitability for loan officers and their company. The training program must provide value to all individuals involved and must be offered regularly and systematically to be effective.

A comprehensive training program should start with the on-boarding of new employees, and ongoing training should include compliance, program guidelines, business development and industry changes. It also must target the specific needs of processors, loan originators, underwriters and operations staff.

On-boarding and assimilation

The on-boarding and assimilation process for new branches and employees must address all training areas. Mortgage companies should develop an on-boarding system that helps branches and individuals understand company policies and procedures, origination processes and operations support. Employees will experience less frustration during the transition and have fewer file errors, which can more quickly result in a more profitable branch.

"A company's training program must be ongoing. This ensures that best practices are being followed at every step of the loan-origination and sales process."

The assimilation process is the time required until branches or individuals can operate effectively and efficiently on their own. A monthly orientation is effective in training new employees on how to assimilate to their new company. The training should cover human resources, branch-support topics and who to contact in each department for questions about specific topics.


Regulatory guidelines continue to tighten in the mortgage industry, and it is imperative that mortgage professionals understand these guidelines and originate loans that are compliant.

Mortgage companies must offer compliance training regularly to cover recent guideline changes and how they should be implemented in the origination process. A comprehensive training program should also include weekly compliance calls to review proper procedures and include a frequently asked questions (FAQ) segment to discuss specific loan-file issues. The trainings must address how to properly disclose and re-disclose within federal guidelines and the company's specific loan-origination software (LOS) system.

For instance, many originators continue to struggle with the Real Estate Settlement Procedures Act's guidelines for a change of circumstance, and each LOS has a different system to re-disclose when a qualified change of circumstance has occurred. Training should be continual and repetitive to support ongoing questions and concerns.

Program guidelines

Program guidelines have become more restrictive in the past few years, and originators are forced to adapt with the credit markets. Biweekly or monthly training should be offered that discusses in detail conventional and government loan programs and their specific qualifying factors.

Many investors offer program-specific training on niche loan products such as Fannie Mae's Homepath Mortgage, Freddie Mac's Relief Refinance Mortgage, Fannie Mae's Desktop Underwriter (DU) Refi Plus, the Federal Housing Administration's (FHA's) Section 203(k) rehab program, etc. Additionally, investors often are willing to offer a company specific training on a loan program that will allow originators to become experts.

Mortgage-insurance guidelines also have changed, and with FHA's recent annual mortgage-insurance premium increase, private mortgage insurance may be a better fit for some borrowers. Mortgage-insurance companies also offer specialized training, and many are willing to further specialize trainings for individual company needs.

Executive Summary

If you are working on developing a comprehensive training program for your company, you should ensure it entails the following subjects:

  • On-boarding and assimilation for new employees
  • Compliance training
  • Program-guideline updates and changes
  • Business-development tips
  • Company-policy information

By involving management and all employees in the training process, as well as making it an ongoing program, mortgage companies can keep themselves and their employees up-to-date and in compliance with any changes.

Originators and processors must know how to credit-qualify borrowers per program guidelines accurately. Training should include how to accurately read automated-underwriting-system findings; how to calculate income for wage-earners and self-employed borrowers; where to locate guidelines and how to read them; how to understand investor overlays; and how to present the file to an underwriter.

There are many tools for income calculation, such as the scheduled analysis method or adjusted-gross-income method, and investors and mortgage-insurance companies regularly offer online courses to train individuals on how to qualify.

Also, companies should offer monthly processor training and include training on a specific topic and an opportunity for discussion and questions. Input on topics can come from processors, underwriters and closers. Processors are crucial to good file submission and get a feel for the loan being submitted. They should be trained to submit only complete files to minimize underwriter touches. This can speed up underwriting turn times for the whole company.

Business development

Business development includes product knowledge, credit qualifying, and sales and marketing. These tools are necessary to originate and process loans within program guidelines. They also allow originators to prequalify a borrower accurately; speak knowledgably and confidently about loan programs; and effectively sell themselves to borrowers and referral partners.

As refinance demand and production decreases, for example, originators must know how to market purchase business effectively. They should be provided the training to know how to systematically capture this business.

There are numerous marketing companies that are willing to show originators their products and how to implement them. The key is to figure out which products are effective and help originators set up a systematic approach to marketing to increase business from referral partners.

Most companies already have originators who have developed an effective marketing plan, and many of these successful originators are willing to teach other originators how they established their system. Monthly calls highlighting these originators' successes are motivating and can help other originators develop their own marketing plans.

Company policies

Information about changes to company policies and procedures and how they affect origination activities must be discussed regularly. Having a weekly post that includes all changes by department minimizes the number of e-mails sent and provides a place for all important information.
Many of these changes must also be included on a training call to show employees how to implement them and to answer any questions. This training should be provided in a timely manner and multiple times to reach all employees. 

•  •  •

A company's training program must be ongoing. This ensures that best practices are being followed at every step of the loan-origination and sales process. Federal and state regulations, as well as agency and investor guidelines, are changing at a record pace. Continual training can help mortgage professionals keep up with these changes and stay compliant.


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