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When a lender finds out that they have been mystery shopped, they often wonder “why me”?  I can assure you that you didn’t just magically appear onto a spreadsheet somewhere.  Chances are very good that if your originators are being shopped, you have reason to be concerned.  As I discussed in the introduction to this series, mystery shopping of mortgage originators is a way for regulators to get an inside and unbiased look at your business practices.  The methodology is quite strict and generally based on some concern that elevated your company to the proverbial radar screen.  You may have been chosen due to complaints, size of your company as it relates to your impact to consumers or other reasons.

In Part One of my series on Mystery Shopping, we take a look at how lenders are “scoped” to become a mystery shopping candidate.  If you missed the introduction, you can find it on our blog.

HMDA Data Scoping

HMDA data is analyzed by many people because it is public information and tells a great story.  The limited data collected may not reflect the real story, but it at least gives the regulators, consumer advocacy groups and educational institutions a small peek into your company practices.  HMDA data is about to get more public, in the near future with expanded HMDA reporting requirements.  HMDA is also used to scope you for a fair lending exam, so understanding what it says about you is extremely important!

Targeted Scope

Mystery Shopping may occur with just one lender in one or more markets where a potential issue has been raised.  Generally, the regulator has received consumer complaints, referrals from local authorities, complaints from competitors or consumer advocacy groups.  The lender is not informed that mystery shopping is occurring because that would defeat the purpose.

General Market Scope

Mystery Shopping also occurs in metropolitan markets to test the overall fairness of many lenders in the area.  This scoping derives the data necessary to see if there are problematic lenders that have not been discovered, or as a way to target specific problems in that area.

For instance, if the Hmong population (very large Asian population in the Minneapolis/St. Paul area) has filed concerns that they receive unfair treatment from the lenders in the Minneapolis area, an investigation into the experiences of the Hmong population may begin. Issues may be picked up with certain lenders, which may then help the regulators define the scope further and target mystery shopping just towards those lenders.

Defining The Shopping Experience

Mortgage testing can be extremely complex.  Therefore, you will generally find that the shoppers focus specifically on one type of testing scenario.  For instance, a popular scenario for testing is first time homebuyers who are trying to figure out what they qualify for.

Once the lenders have been chosen for testing, the tester will structure the methods behind the characteristics of the clients.  Mystery Shopper Profiles are part-two of my series, so stay tuned for that posting, as it will help you prepare sales staff in identifying when they are being tested.

Worried about your originators passing the Mystery Shopper Test? Contact me for my comprehensive training program on “Passing the Mystery Shopping Test-What Every Originator Needs to Know”.  It makes a great conference training session!

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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