As a mortgage originator, you’re the owner of your own business. You already make sure you’re working with quality management, processors, underwriters and closers. In addition, you should take an honest inventory of the other professionals you surround yourself with.

Successful mortgage originators thoroughly understand the importance of standing apart from their competition. To accomplish this, they must be able to provide their clients with more than uncompromising knowledge and service, competitive pricing and access to a wide selection of mortgage products. They must become a one-stop shop for their clients to access local knowledge.

Easing transition

Imagine that you’re embarking on a move to another state. So many concerns cross your mind. Of course, you need to find a place to live and have the money to afford it, but moving brings with it many other challenges. You’ll need to find reputable movers; establish new relationships with doctors, dentists and veterinarians; set up utilities; find new schools and child care; and find stores for shopping and new restaurants to try, just to name a few.

How much would you love your mortgage originator if they went above and beyond by providing you with trusted recommendations for other services that someone new to a community needs? What if they not only accommodated your home financing needs but also connected you with a competent real estate professional, title company, home inspector, insurance provider and moving company? An originator could make this transition easier for you if they came through with all of that.

Successful originators already surround themselves with third-party service providers tied to the homebuying process. They refer their clients to partners who help make the experience of finding a home, securing financing and transitioning to a new environment much easier and more pleasant than it could otherwise be. There is, however, much more to referring clients to third-party service providers than amassing a list through your favorite search engine.

Just like every loan originator is of a different caliber, other service providers vary in terms of their specialties, levels of expertise and competencies. Real estate professionals, title companies, closing attorneys, accountants, insurance professionals and other referral partners should be vetted thoroughly before you recommend them to your clients.

Scrutinizing partners

Imagine you’re being pursued by a local title company that is desperate for referrals to your borrowers. You agree to meet and offer them the opportunity to convince you why you should partner with them.

Instead of meeting at your office, you insist on meeting on your terms, at their office, at a time convenient for you. When you arrive, their office is disorganized, dirty and cluttered, and their professionalism is subpar on many levels.

Had you simply referred a borrower to them prior to conducting this due diligence, your professional credibility could have sustained some real damage. In your clients’ eyes, your recommended referral partners are an extension of yourself. Always remember this.

When developing your professional referral portfolio, be certain to interview your prospective partners from a borrower’s perspective. Here are some things to consider:

• Their level of professionalism
• The appearance and comfort of their office
• Availability, punctuality and accommodation of unique schedules
• The depth of their product offerings and their level of execution
• A variety of channels to communicate and interact with customers
• Safeguards for the borrower’s personal information (ask for proof)
• Evidence that they’re properly bonded, insured and licensed

If you ultimately decide to engage with them, be sure to note when their insurance policies and licenses expire, and request to see copies of their renewal certificates. These considerations can make the difference between providing a wonderful experience and damaging your professional reputation beyond repair.

●●●

By becoming your client’s one-stop shop, you will surpass the levels of service provided by much of your competition. You will establish your professional reputation far beyond that of the average mortgage originator, giving clients more reasons to refer and come back to you. ●

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No competent tax professional would ever consider preparing a client’s tax returns based on estimations. Doing so would be ludicrous at best, malpractice at worst. So, why do mortgage originators frequently accept loan applications based on estimates, with the borrower’s supporting documentation to follow? Often, it’s because they want to avoid inconveniencing the client and potentially losing the deal.

The initial goal of the client meeting is to take an application. The ultimate goal is to fund the loan. Many times, however, mortgage originators are so consumed with “getting the application” that they compromise the application’s integrity.

Their fear of alienating the borrower by holding them accountable — by requiring proper documentation prior to or at the time of application — often overrides their responsibility for submitting quality applications. Ironically, it’s the client who ultimately suffers when originators cut corners. This causes a straightforward application to become far more complicated than it needs to be and it takes far longer for the loan to consummate than it otherwise should.

For every estimate used in a loan application, additional documentation will typically be required when the supporting documentation ultimately arrives and the application is updated with accurate data. The ensuing ripple effect is almost guaranteed to spur irritating and unnecessary delays for the client. 

By requesting that the applicant provide the loan originator with all supporting documentation prior to or at the time of the application, these forms can be completed accurately and will include the correct data that will ultimately be considered and verified by the underwriter. Originating in this manner avoids additional delays and detours. Even though this requires the applicant to exert some additional effort in the beginning, doing so will ultimately result in smoother loan processing and an easier, more streamlined transaction.

It’s important to recognize, however, that as a condition for receiving a loan estimate, no lender or loan originator may compel an individual to produce supporting documentation under the Truth in Lending Act and Real Estate Settlement Procedures Act, or the TILA-RESPA Integrated Disclosure (TRID) rule. By setting the appropriate expectations from the start, however, as well as by explaining to the applicant why it is critical that they have their supporting documentation with them at application, this obstacle can often be compliantly surmounted.

The initial goal of the client meeting is to take an application. The ultimate goal is to fund the loan.

Set expectations

From the start of the transaction, the mortgage originator must possess and display the confidence to take control of the interaction and guide the borrower. After all, the originator is the professional expert. A successful loan originator will never hesitate to fire a client if that client does not want to do what is needed of them. 

If a borrower defects to an originator who isn’t as demanding, the client will most likely return to the original loan originator weeks later after experiencing numerous delays and setbacks, all resulting from initially cut corners. Setting the appropriate expectations involves being realistic when interacting with one’s client. 

It is far easier for someone to recover from immediate disappointment than from disappointment incurred after a prolonged period of excited anticipation. From the very beginning, the loan originator should inform the borrower about what will be expected of them, in order to facilitate a fluid and efficient transaction.

Explain to the client that they should gather up and bring all of the necessary documentation with them to their application meeting (or provide it beforehand to the originator). Further warn that, if they neglect to do so, or if the documentation cannot be collected in time, the originator will need to reschedule their application.

Do not fax or e-mail the list of required documentation to the client. If you do so, there is a strong likelihood that the first time they review this list will be immediately prior to their appointment. By insisting that they write down a dictated list of the documentation they will need for the application, they will immediately know what is expected of them, and they will begin thinking about where and how to gather this material. Additionally, a dictated list can be personally tailored to the client’s specific circumstances and loan request. A personal touch always goes a lot further than a generic one.

Deliver quality

The Uniform Residential Loan Application is the canvas upon which your masterpiece is created. The vast majority of underwriter complaints stem from sloppy, poor-quality applications. The difference between the successful and unsuccessful loan originator largely correlates to the quality of their applications. 

Mortgage originators who take the time and effort to complete their applications accurately and thoroughly by using verifiable data typically have fewer problems, experience quicker closings, amass far more satisfied borrowers and ultimately receive more referrals. Originators who are quick to cut corners in order to initially make things easier for their clients ultimately experience longer closing times, a greater number of problems, the need to repeatedly request additional documentation from their applicants and often wind up with borrowers who don’t remember their name months later.

When underwriters fight over loan files because they know that the originator submits complete, thorough, accurate and high-quality files, success is usually automatic. Additionally, how likely would an underwriter be to approve a borderline file when the originator of that file is someone who typically submits exceptional, high-quality files, versus an originator who typically submits sloppy ones? When the loan originator makes the underwriter’s job easier, the likelihood is higher that the underwriter will be inclined to return the favor.

Prove worth

Commission-based mortgage originators who typically take sloppy applications rife with inaccuracies, missing information and estimated data can be easily identified as the individuals who experience “roller-coaster” income patterns. These patterns are typically caused by a month of successful originations followed by a much slower month, followed by another successful month, followed by much a slower one. 

The reason why this occurs is because, after a successful month of originating, instead of continuing the momentum, the sloppy originator spends most of the next month extinguishing the fires caused by the previous month’s sloppy originations. After extinguishing these fires, the originator once again can focus on originating new loans, only to have the pattern repeat itself.

Mortgage originators who submit thorough and accurate applications from the start generally experience consistent income growth as more happy clients refer new business their way. These loan originators prove their worth by consistently pleasing their clients, rather than devoting valuable time toward cleaning up the mess caused by sloppy originations and the cutting of corners.

At the application, the successful loan originator will set the appropriate expectations and complete the winning mortgage application thoroughly, correctly, compliantly and completely.

Gain momentum

A pleasant client experience is critical for ensuring borrower loyalty, satisfaction and the incentive to refer new business. Even if the client is expected to work a little harder at the start of the process by gathering up the necessary documentation prior to their application, their efforts will usually prove thoroughly worthwhile.

A successful mortgage originator will explain the importance of dictating the list of required materials to the borrower at the time that the application appointment is scheduled. The originator will then dictate a thorough list, tailored to that unique and particular transaction, while holding the borrower accountable by rescheduling the application in the event that the applicant cannot or does not collect everything that’s needed in advance.

At the application, the successful loan originator will set the appropriate expectations and complete the winning mortgage application thoroughly, correctly, compliantly and completely, utilizing the supporting documentation that the applicant provides. Doing so will minimize the likelihood of having to repeatedly contact the applicant to request additional documentation.

Applications completed this way will typically lead to highly satisfied clients who refer more business and remember the loan originator’s name when needing a mortgage in the future. In turn, this will afford the loan originator a far more stable income pattern while leaving the roller coasters in the amusement parks.

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Every mortgage professional who originates loans for a non-FDIC-insured entity must be licensed. And being licensed means having to pass the National Mortgage Licensing System (NMLS) pre-licensing exam.

The exam is relatively standard. It includes 100 computer-generated, multiple-choice questions that must be answered within three hours. Ten of the 100 questions are “test” questions that do not affect your grade. Of the remaining 90 questions, originators must achieve a passing score of 75% or better. That’s just a little pressure, especially considering that many people who fail do so by only two or three points. And according to the NMLS, between July 30, 2009, and this past Oct. 30, the pass rate for first-time national-component test- takers was 69%.

If you fail, you must wait 30 days after each of your first four attempts to retake the test and six months after that. Can your business afford to be sidelined for that long?

Consider the following tips if you are among the originators who must retake the exam or if you are new to the industry and taking it for the first time. They may help you swing the odds of passing the NMLS exam in your favor.

1. Take a live class. As a mortgage professional, your time is valuable. You may wonder why you should “waste” two or three days sitting in a classroom when you can take the class online and simultaneously manage your business. Think about it: What is the likelihood that you’ll allow distractions such as the phone, emails or visitors while you “watch” the webinar or take the online class? In which setting do you think you’ll be less distracted? Sitting at your desk or in a classroom where you are compelled to pay attention? 

Taking a live course taught by a skilled instructor with whom you can interact captures your attention far longer than any other format would. And captured attention means greater levels of understanding and retention. By taking a live class, the inconvenience of missing work is clearly justified by passing the exam. After all, if you fail the exam, your hiatus may be longer than just two or three days.

2. Be rested. Although it may sound like common sense, you’d be surprised how many people don’t take it seriously. Do yourself a favor and say no to the revelry the night before your 8 a.m. test. Missing one happy hour is certainly worth hitting the ground well-rested and clear-minded the day of your exam. Plan to use all three hours. You may have colleagues who’ve bragged about how they finished the exam in an hour and a half. That’s fine — and maybe you will, too. If you do, you’re certainly free to leave. But if you plan to spend only an hour taking it and schedule something for an hour and a half later, you might find yourself squirming should 20 to 25 questions remain when you’d planned to leave. You’re afforded three hours, so allot for three hours. Consider getting out any earlier a bonus.

3. Use your tutorial. This test is too important for you to miss a question or two because you didn’t know how to access the online calculator or how to go back to review a question. If your test offers a tutorial, take the time to go through it.

4. Read each question twice. The NMLS test questions are frequently tricky, and your eyes and mind often work at different speeds. Imagine the following question: “At what equity position is mortgage insurance automatically removed?”

           A. 80% 
           B. 78%
           C. 22%
           D. 20%

Your mind races — you remember your instructor emphasizing that once the loan-to-value ratio (LTV) reaches 78%, mortgage insurance is automatically removed.     

So you choose “B,” and guess what? You’re wrong. The question didn’t ask about LTV. It asked about equity position. Clearly, the correct answer was “C,” but by reading it quickly, you picked the wrong answer and possibly found yourself waiting to retake the exam. 

Do yourself a favor: No matter how simple the questions seem, be sure to read each one at least twice.

5. Answer each question immediately. To register your answer, you have two choices: “Confirm” or “Confirm and Review.” If you choose “confirm,” your answer is registered and there’s no going back. If you answer “confirm and review,” you move to the next question while retaining the opportunity to return to it once you’ve answered the last one. 

The idea behind answering all questions right away is to answer all the ones you’re absolutely certain about immediately. Imagine struggling through 30 questions only to find that time is up with 70 questions you still have to tackle. By answering all the questions immediately, you can register the answers to the ones you know for certain and then go back and wrestle with the trickier ones. 

One important note: If you leave an answer under the “confirm and review” status, it won’t be counted.

6. Look out for negatives. You’re almost certain to find wording such as “everything but,” “everything other than,” “except for” and “not” in questions. Be careful — overlooking one “not” might cause you to choose a wrong answer and end up with a failing grade. And that would not be pleasant. Read each question carefully.

7. Answer every question. A blank answer is a wrong answer. Even if you have no idea what the correct answer is, guess. If you leave it blank, it’s wrong. If you guess, you have a 25% chance of getting it correct.

8. If it’s not there, don’t add it. No matter how tempting it might be, do not add information that’s not there to a question. For example, if a question describes parties engaged in an activity that would violate the Real Estate Settlement Procedures Act (RESPA), such as someone offering someone else an item of value, and asks who’s in violation, don’t add more to the question. For instance, if the question does not state that the other party accepted the offer, the only violator is the party who offered it.

9. Do not assume questions are incomplete. If a question seems incomplete, don’t panic. For instance, what if the question is, “Which of the following characteristics would an originator be compelled to note if an applicant refuses to answer?” but neglects to stipulate that the interview is taking place face-to-face? According to the Home Mortgage Disclosure Act, an applicant has the right to refuse to answer certain questions if the application occurs in any manner other than face-to-face. But just because the question didn’t mention the face-to-face component doesn’t mean that you can’t identify the correct answer. Use your best judgment to work with the information you’re given.

10. Choose the best-possible answer. You may sometimes see a question with two correct answers. What do you do? Call over the proctor? No — proctors can’t answer any questions anyway. If you find yourself staring at multiple correct answers, the answer’s pretty simple: One has to be better than the others. Follow your instincts and select the one they point you to.

11. Know your regulations. Although you’ll be tested on mortgage-loan-origination activities (25%), general mortgage knowledge (25%) and ethics (15%), most questions will involve federal mortgage-related laws (35%). So it’s essential that you know the regulations. Several regulations are described by letters — e.g., RESPA is Regulation X, the Equal Credit Opportunity Act is Regulation B, the Truth in Lending Act (TILA) is Regulation Z, etc. Know your regulations, as well as which one is associated with which letter. 

You might see a question such as, “According to Regulation Z, which of the following is prohibited?” All the answers will constitute regulatory violations, but only one will violate TILA. So obviously, it’s helpful to know that Regulation Z is TILA.

12. Don’t “memory dump.” Do you plan to memorize information so that you can immediately jot it all down in case an applicable question appears? Don’t. Memory dumping is not allowed and will earn you a reprimand by the proctor if you’re observed doing it.

13. If there’s too much information, simplify. One clever way the exam tests originators is by presenting questions jam-packed with extraneous information. If you’re overwhelmed by truckloads of details in one particular question, stop, breathe and focus on each answer. Rule them out one-by-one until you find the one that applies.

14. Use the process of elimination. Even if you have no idea what the correct answer is, ruling out one or two greatly improves the odds that your guess will be correct.

15. Study! Whether you’ve worked in the mortgage industry for one month or for 25 years and one month, if you want to pass the NMLS exam, you must study. You may be a seasoned professional, but that doesn’t mean you know that the U.S. Department of Housing and Urban Development regulates RESPA or that loans closed on or after July 29, 1999, require numerous disclosures in accordance with the Homeowners Protection Act.

The test covers more than your origination experience. You might know how to calculate LTV, combined LTV (CLTV) and total LTV (TLTV), but you also must know what an air loan is, as well as the four components of an ARM.

16.Take the course and then schedule your exam. Allot ample study time, but also schedule the exam soon enough after your class to remember what your instructor taught. And use practice exams; they are invaluable.

The good news is you’ll learn your grade before you leave the exam room, and it hopefully will be 75% or higher. The bad news is that if you fail, you’re not advised of your incorrect answers.

The reason most people fail the NMLS exam is that they don’t study, pay little attention in their pre-licensing class, panic when they don’t understand a question or read the questions too fast. This test is extremely important to your career, so prepare for it seriously. By adhering to these 20 suggestions, you’re bound to be smiling as you leave the testing center. 

• • •

Rich Leffler is the president, CEO and senior instructor of mortgage consulting firm AxSellerated Development LLC. Reach him and learn more at nmlstraining.com

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