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Mitigating Fair Lending Risk-Loan Denials-Part Four

How do you treat the people who are not ready to buy a home?  Do you email them a denial, send them a letter or just not return their call?

If you are like many people in this industry you enjoy this business because you help people’s dreams come true.  Lately, that has been a challenge; as the regulatory environment begins to settle out, more opportunities will come.

In the meantime, what are you or your company doing to prosper and remain efficient?  I can give you a hint that letting go of your denials is not a good plan.

  1. Do you have a regulatory friendly “denied loan” plan?
  2. Do you have a methodology for hanging onto all of those clients you cannot help presently but may be able to assist one day?  After all, you spent money and time on your clients.  Having no follow-up plan or methodology is wasteful and greatly impacts your bottom line!
  3. Do you give people hope?  Or, do you just send them on their way?

All of this can be systematized to assist you in helping your clients, pleasing the regulators and building a pipeline that will continue to flow business your way!

Here are some ideas to make 2016 much better than you may have thought!

•For each loan that you are unable to do, put together an action plan for your client. As a trained professional you know why they don’t qualify, so give them an action plan for some hope.

•Next, build your partnerships with the home-buying counselors.  They are happy to work with your clients to achieve their goals of homeownership.  The home-buying counselor is loyal to those who send them business and make sure your client gets back to you.

•Their non-profit also appreciates the fee that they earn by counseling the homebuyer. Under RESPA, the lender is permitted to compensate the non-profit for counseling services performed. Additionally, their grant funding rewards the non-profits for creating homebuyers that are ready to own a home. The client wins, your partnership grows within the underserved areas of your MSA, and you have a continual source of business in the works.

Getting business in the door next year will be more of a challenge, so why not start the year with a plan that is efficient, profitable and assists you in Fair Lending?

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

More posts by Tammy Butler, Master CMB

Join the discussion 4 Comments

  • Jim Begley says:

    As a broker we’re starting to see some of the QM nuances from the investors. Here are a couple of surprises, at least to me. A lender with an affiliated AMC is continuing that relationship and will only count the AMC’s portion of the appraisal fee in the calculation of the 3% cap. The appraiser’s portion won’t be counted as a fee under the 3% rule.

    A lender is stating the amount financed from the TIL is used to calculate the 3% cap, not the actual loan amount. A small difference, but a potential problem nonetheless. Any comments?

    • Hi Jim,

      Yes, they are guiding you in the right direction. The recent clarification on affiliated arrangements is that only the portion that is profit to the lender will be counted in the points and fees.

      Additionally, the regulation has always stated “amount financed” and not the note loan amount. Unfortunately, the CFPB kept saying “loan amount” in their regulations but defined what they meant by that in the document. This caused quite a bit of confusion. Their definition of the loan amount is amount financed.

      It is certainly going to get interesting! Thanks for your comment!

      • Jim Begley says:

        Thanks Tammy. So does that mean, in the case of a lender keeping the affiliated arrangement with the AMC, that a nonaffiliate AMC’s profit must also be included under the 3% cap when using that same lender?

        • To my knowledge if you have an affiliate relationship it does not matter where the client goes for the services. The profit or what would have been the profit is counted in the points and fees. Of course, just like the original regulation where all of it was counted, I’m sure we will see some refinement of this policy in the future.

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