Loan Originators Wake Up. The Coffee Does Not Smell Very Good.

This Friday morning started like any other. I made a list of items that I needed to tackle to get my fill of accomplishments and have some peace of mind as I entered the weekend. Finally, I could look forward to a couple of sunny days with great surfing conditions. Maybe they’ll even be a dolphin sighting!

So began my routine by logging on to see if some of my approvals had come in, followed by a phone call to the borrowers that I have loans in progress.

Sadly it was not to be.  Instead, I had to dive into the new education certification and other criteria required to maintain my license in good standing. One of the components is a series of courses to help me pass the National and State exams for loan originators. My first call was to an institution that helps individuals pass these exams by providing sample questions for the most commonly tested subjects. As I was about to hang up the phone with the school the gentleman closed the conversation by saying, “please do not procrastinate until the end of the year. The testing centers are reporting that only 11,000 of the 100,000 loan originators nationwide have registered for these exams”. I told the man not to worry, I was on it. But wait, 100,000 nationwide? There were 675,000 loan professionals in 2005. That means that less than 15% have stayed in the business. Is this possible? Is this the new “normal”? Of course the silver lining is less competition and more opportunities for the hardheaded ones that have made it through some very, shall we say interesting times. But for the love of Pete, how much more can they whittle down the number of licensed originators?

Over the last couple of weeks I have sat in 5 different webinars. All were sponsored either directly by the new governing license issuing entity called the NMLS (National Mortgage Licensing System) or the California Association Of Mortgage Professionals. Neither one was intended to give the remaining few a sense of job security. The biggest take away after listening to these decision makers is that we, the now apparently re-aspiring originators, have to pay over $2,000 to go through background checks, credit checks and several waves of exams. Every year. All this before they define in clear terms what the determining factors that allow you to stay in the industry (or not).

There have been some satirical emails floating around about getting disqualified due to a defective DNA that your twice- removed great uncle Jack had, etc. And yet, this is not far from an originator’s reality.  In the after burn of the Great Recession, the 15% of loan originators that survived clearly deserve to be licensed.  And although continuing education is always a good thing, the witch-hunt-inspired personal credit screening is sure to reduce that percentage significantly further.  The Monday morning quarterbacks that still want to fix the problem that triggered the meltdown (back in 2007, mind you) should be careful what they wish for: by weeding out every last experienced loan originator, the world will be left with only the greenest rookies (that work for a depository lending institution hence immune to any of the scrutiny that the rest of the industry has to go through), selling loans they do not really understand, to borrowers that they have not properly qualified…the more things change, the more they stay the same.