November 29th, 2017

No matter what you’re buying, if there’s a salesperson involved, you probably ask yourself: “What’s their motive? Are they just trying to get over on me?” Loan officers’ hurdle poses much higher than most–they’re negotiating mortgage contracts worth hundreds of thousands of dollars in terms lasting up to 30 years. In effect, loan officers need to establish and develop trust with their clients and prospects. Borrowers don’t just want a good deal, but want to know they’re not being taken advantage of.

Transparency

Mortgage companies and loan officers alike can look at Wall Street for how to increase transparency. A lot of brokerages and money managers switched from commission-based models to fee-based models. In doing so, they more easily displayed how they profit. By increasing transparency, brokerages and money managers alike improve consumer sentiment and build trust. After the 2008 Financial Crisis, consumers didn’t just distrust Wall Street, but grew skeptical of the housing market and mortgage industry. Just like Wall Street, the housing and mortgage industries need to implement change and rebuild trust with consumers. The best way to build trust is by embracing transparency and clearly communicating what you’re doing.

Communication

Embracing transparency entails effective communication. Through effective communication comes a more informed borrower. A more informed borrower is a happier borrower. A happier borrower is better your business. Take the NFL and national anthem debacle, for example. The NFL failed to properly communicate its reaction. In return, it faced a load of scrutiny, tons of negative media coverage, and a disappointed fan base. The NBA, however, chose a proactive route and clearly communicated how it would address the national anthem issue. As a result, it received no scrutiny or negative media coverage– not even from players or fans.

Compliance

Just as Wall Street underwent reforms after the 2008 Financial Crisis, so did the mortgage industry. As a result, loan officers face strict regulation on employing fair and equal lending practices, disclosing mortgage agreement terms, and producing compliant loans. In doing so, loan officers must disclose fees, break down costs, and provide a closing disclosure to borrowers. Loan officers must maintain compliance in order to avoid fines and prevent loss of business. Moreover, maintaining compliance ensures the production of better loans and a healthy mortgage business.