I work with a terrific top producer who used to drive me mad. After a few years of everyone around him wanting to kill him, he finally gave up on his compulsion to micromanage the final HUD-1.
Every good mortgage transaction starts with a solid Good Faith Estimate. A great loan officer knows the market and the program and gets the details right. Can they be perfect? No. I tell every closing consumer that a final HUD-1 number that is within $200 either way of the bottom line of a Good Faith Estimate is a bullseye.
Considering tax proration, escrows and interest, you really can’t get any better than that, right? I have yet to meet a consumer who when they hear that, doesn’t understand. They may WISH it was an exact estimate but they understand once the expectations have been readjusted.
To back up for a moment, this really speaks to the previous post about setting expectations. A great real estate agent or mortgage lender sets the stage for a consumer reaction to the bottom line. Consumers should understand from the get go that the bottom line of a Good Faith Estimate isn’t exact, so don’t expect it. See? Set the expectation……..the bottom line isn’t exact. Consumer understands, consumer doesn’t go ape crap all over you or your closer. Think about that for a moment. If you have a HUD bottom line that is $75 over your GFE bottom line, you have done an outstanding job on the GFE. If you set the correct expectation and the consumer knows that $200 either way is a bullseye, you’ll get a pat on the back. Don’t set the expectation and you have an unhappy camper at the table.
OK, back to my top producing micromanager. He habitually forgot small stuff on his Good Faith, things like municipal lien letters which in his market run around $50, and the closing services letter which in PA is $35 – otherwise his GFE was always excellent.
What was killing us was that he WANTED his bottom line GFE to match the final HUD and what he would do is wait until his own closing department generated their doc package with instructions, sent it to us, we did the HUD and cut checks, the closer made all the copies and was on the way to closing. While we were on the way to closing and after the consumer had gotten a cashiers check, he would decide to waive a fee……that’s right, waive a fee.
Why? I seriously thought it was just to drive everyone crazy, but he’s not an S and M kinda guy, it was a just a point of pride. He would waive the fee even if the consumer had not raised any objection to the bottom line. If his number was off, he wanted it right and of course, he couldn’t get the actual number until everyone had done their work.
So, he would call his closing department and waive the fee. They would have to redo their instructions and TIL, get them to us, we would have to redo the HUD and change a check or two or three, and get all this to the closer who was almost always closing in a remote location. Thank goodness our closers are on-staff and have the ability to cut checks at the table.
This all took place during the boom times so it wasn’t like we had time to twiddle our thumbs and since he was a top producer, no ACTUALLY wanted to tell him to jump off a cliff. So, how did this get fixed? I really don’t know but I suspect his own closing department and he finally had a “meeting of the minds” on the issue. Thank heavens.
It was such a weird relationship because he’ a great guy and we have always loved working with him except for the intense moments when we wanted to KILL him, figuratively, of course….heh heh……
Have you ever met a top producer in any profession that wasn’t a bit off?
Got that right. We’re all in the wacko club. Milktoast and success don’t usually live together.
Remember the study of the clerks in the candy store? The behaviorists observed two clerks, one who was very popular with customers and one who wasn’t. They discovered that the one who was popular always put less candy in the bag than was requested, then carefully added more pieces until reaching the correct weight. The unpopular clerk did the opposite: starting with too much, then carefully removing pieces until it was right. While customers got exactly what they paid for regardless of who served them, it was determined that they liked the first clerk better because she appeared to be careful about making sure the customers got as much as they paid for. The other clerk, by starting with more and then removing pieces appeared to be carefully making sure that the store wasn’t giving out excess candy. Customers perceived the first clerk as an advocate, the second as an adversary.
On that note, I always added $250 to my GFE and labeled it “Buffer” even though my processor was careful to put all the small stuff in, and we also assumed that the payoff was going to include a full month’s interest even though that usually wasn;t the case. Being off at closing wasn’t a problem for my borrowers as long as the HUD1 figures came in lower than the GFE and not higher. There were a couple of times when I paid a couple of fees to make sure it never came in higher than expected. Exceeding expectations is so much a theme here, at every stage in the transaction.
Gina: I’ve never heard about the candy store study. THAT is fantastic. Thank you for sharing it.
Hello, I am a student journalist. I’m working on a piece exploring the way loan officers are (or were) compensated. In my research, some experts have told me that officers would knowingly sell faulty loans in an effort to meet high compensation and/or bonus requirements set by companies. I am wondering if anyone would be willing to speak with me about this, either on or off the record. My e-mail address is mortgagestory@gmail.com
Thank you.
Hi, Journalist:
I’ll shoot you an e-mail.