ARE YOU GUILTY OF LOAN STEERING?

Are you asking the right questions from your borrowers? Do you keep their best interest in mind or are you just concern in making money and close the deal with total disregard to the borrower's purpose and goal?

We have to remember that we are offering service and solution. If you are only concern in closing loans it adulterates the purpose of offering a solution and service. The service becomes a disservice and solution becomes a quandary.

Many mortgage professionals sell loan products (not a solution) even if it is unsuitable to the borrower. They sell very short term ARM products even if the borrowers ask for a 30 fixed program. They steer them away from what is best for them to a product that can make them more money. Two to three years ago Option Arm products are selling like hot cakes. Do you think it is because that these products are sold to the correct borrowers or is it all about loan steering to make more commissions? Option Arms usually pay a hefty yield spread (2 pts at the back). And guess how you make more points at the back?....by giving them a higher margin! That's right! The higher the margin the higher your yield spread premiums, the higher the true rate you give your client. But some mortgage professionals failed to disclose the true rate, they sell the minimum payment instead. This is a blatant deception!

Do you think these very same mortgage professionals will have the same success selling a higher rate 2-3 points Yield Spread on a 30 Year fixed program or regular ARM product? I don't think so! That's because you cannot use the minimum payment as a sales tool because it does not exist with these programs. This is the motivation of some mortgage professionals with regards to selling Option Arms. It's all about the money and not what is right.

I am astounded that the lenders themselves pay big money to promote such behavior on their sales seminars. They even invite known sales gurus to sell this particular product and not the service or solution.

If you have a client who is 63 years old and about to retire 2 years from now, are you going to offer them an Option ARM or a short term ARM rather than a 30 years fixed? You know that they will have fixed income as soon as they retire and most probably will not see anymore increase in income. You also know that they will probably live in their home for the rest of their golden years and will most probably not refinance anymore. I am surprised to find out that there are quite a number of borrowers in this situation that got suckered into Option Arm or regular ARM. It really does not make sense!

I am just puzzled why lenders offer bigger yield spread premiums on dangerous exotic programs than conservative programs. How come there is more incentive to sell the wrong product?
So what are you going to do? Are you going to sell a solution? Are you going to do what is right? Let's make the mortgage industry a respectable industry like it was a decade ago. It's up to us to make a difference.