Fair Lending isn’t just evaluated based on applicants that apply with you. In fact, many of the referrals to HUD or the CFPB involve Mystery Shoppers or a phone call. Client parity means that all clients are treated with professional courtesy and with the same procedures; equally!
So, the first step is to build policy and procedure around this issue. This can be a little tricky unless your loan originators are all in a call center. You may have no idea what goes on in the field. So, how do you self-monitor this?
Before The Client Becomes an Applicant:
1. What is your policy on returning a phone call or email? What time frame is considered proper? Business etiquette in our industry is pretty poor. Mystery shoppers consistently report that originators do not return a phone call or an email. Even if they were not ignoring the person on a prohibited basis, it can seem that way.
2. What is your mystery shopping policy? If you do not have the staff to do this, do you contract it out? Do you add performance objectives for your sales managers that require mystery shopping evaluations in their bonus program?
3. Is your staff fully trained on Fair Lending, it’s implications, what it looks like and what can cause the company huge problems? This directive starts at the CEO and involves complete cooperation from the entire Executive Team. If everyone is not on the same page with the same objectives and goals, then consistency in actions will be suspect.
When The Client Talks With the Originator:
Part of the issue with commission only employees is that they spend their time on highly productive activities, which yield the most income. I certainly cannot blame them for doing that as it is smart business.
Incentive based employees need……well, Incentive!
Incentives: How can you “score” the loan originator? How will that affect any performance or customer quality incentives?
Alternatives: If the originators are going to ignore areas of your footprint (read MSA), you are going to eventually have big and costly issues. One way to correct this is to have employees who specialize in the loans and areas that may present financing challenges. This is a great job for former processors and underwriters who want the security of a paycheck, with some bonus potential. They may be salaried or on a different commission schedule (as long as their rates/prices are the same as others). The loan originator may receive points for their “score card” if they refer business into the specialist instead of ignoring the call or email. You just have to get creative and think through the “what’s in it for them”.
It is unlikely you will change the nature of the salesperson, but you can change the way you accommodate prospective clients that make it a win-win for everyone. Just like any financial services provider, you are expected to provide accommodations when your present business model does not accommodate the area that you serve. Trying to fit a square peg into a round hole is unlikely to accomplish this.
After Application and Through Loan Closing or Rejection:
Once the loan is in the pipeline, what is expected of the operations staff to ensure that each client is treated fairly and without bias? Do you have a double-check procedure on pricing and program, policy for escalation of complaints or second reviews when a client is rejected? All of this should be thought-through to ensure all of your clients are treated with the same degree of service. Then be sure to build monitoring around this to demonstrate your compliance management system.
Don’t be surprised that when ALL of your clients are treated like Kings and Queens, how quickly the word will get out as to where to go for home financing!
Next Series: Drilling Down Into The Workflow!