Is the Loan Officer Going Away?
2018-11-20 | NFM TV
Rob Chrisman, mortgage industry insider, and author of the popular Rob Chrisman's Daily Mortgage News and Commentary spoke with NFM TV's Greg Sher to talk about his popular daily blog as well as the current and future state of the mortgage industry. Is the Loan Officer going away? What do rising interest rates mean for the market? How does he come up with the ideas for his commentary. Rob shares this and more.
Here is a transcript of the interview:
Greg- Welcome into a very special edition of NFM TV news I’m your host Greg Sher, delighted to bring you today Rob Chrisman, he’s the author of The Chrisman Report. He’s been putting this thing together, so chalked full of information for people in the mortgage business now for over two decades, Rob joins us from the West Coast. Thank you so much for your time, we really appreciate having you on.
Rob- You bet, Greg, glad to be here.
Greg- So I want to just start out by asking what inspired you to do this? Where did The Chrisman Report originate from?
Rob- The fact that I write a daily commentary came from working on a trading desk, because that’s my background, capital markets. And we would have accounts that would call in every day and we had to read to them explain why the interest rates were doing what they were doing, or the bond market was doing what it was doing, and so forth and so on. When email came along, it became easier to send it out via email, and that’s when things took off. To some extent, early 1990’s, and the genesis of it was just to inform people as to what the market was doing. What different investors were doing, why interest rates were moving, what was going on in the bond market and so forth. And it took on a life of its own over the years. So I think people appreciate it because I try to give them an unbiased perspective on what’s going on with all aspects of things that might impact their business so that they can help their customers, their clients, whether they’re borrowers or other businesses. And I think that people appreciate the effort I’ve put in, and it’s not, I don’t view it as a hard job. I enjoy it, and when I stop enjoying it, I’ll stop doing it.
Greg- Do you ever run out of jokes? I know you like to throw in jokes towards the end. I always wonder if you’re gonna recycle material, but I don’t recall reading the same joke twice.
Rob- Well, every May 5th, I break out the Cinco de Mayo joke. I try not to recycle jokes, but some are so good I try to recycle them. And the jokes come from people who send them to me. I don’t go looking for them on the internet. So thanks for noticing that, I try not to have a lot of duplication in those.
Greg- Well it’s good to have a little levity, especially in these times. Let’s just jump right into it. Rob, rate compression. I want to talk about this moment that we’re in, we read a lot about it, we read about some of the proposed changes that are out there, that you bring to light, things like comp changes which could be coming down the pike. I want to ask you if you feel like that’s going to happen here in a minute, but before I do, does this rate compression moment feel any different than all of the other moments we’ve overcome in the last 10 or 20 years? The elimination of the good faith estimate, going to the CD, there have been so many. Way too many to account for here. Is this any different?
Rob- I would say that it’s different because the reason for a lot of those changes is because the investors wanted those changes. Coming out of 2008, many investors felt burned or misguided or misled or lied to based on either the underwriting guidelines that lenders had, that they didn’t adhere to, maybe the rating agencies mis-rated these things, maybe the investment banks had a part in it, the borrowers had a part. There’s plenty of blame to go around. So the changes that we’ve seen in the last ten years are, in order to correct and hopefully head some of those things off. In terms of the interest rate environment, sure. Rates have come up, the press for a while was talking about historically, rates are still low. And they are still relatively low. Nonetheless, if you are a person who is in their 20s and 30s and most of what they’ve seen has been rates in the threes or fours, and now we’re in the fives, yeah, I think they might have a feeling that, gee, boy, we missed the window there. Nonetheless, I think the top loan officers out there that I talk to who tend to sell payment rather than rate, they could put those people into a 15 year loan, maybe they put them into an ARM security, maybe they help them with their down payment in order to help them obtain financing. So, there’s a way to get a loan, there’s always been a way for borrowers who want a loan and who qualify to finance a house. The system has never been broken, it’s a little frayed. You start talking about Fannie Mae or Freddie Mac, talk a little bit about the Jumbo Market, we’ve got non QM and so forth, so there are plenty of programs out there to help qualify borrowers, the question is whether or not they’re qualified. So when you ask if this time is different, I’d say the big thing that I’ve noticed, is different is that there are millions and millions of borrowers out there that have three and a half percent 30 year fixed rate loans. They’re in no hurry to refinance. And so obviously lenders and investors know that and so pre-payment speeds will be slower, you know the rate-and-term Re-fi’s are, have diminished dramatically, we’re into the cash out Re-fi business. Which will certainly occupy a portion of the applications going forward but in terms of rates, rates still aren’t bad. And there are a lot of programs out there that will help compensate for slightly higher rates, but I think for people who really want to own a home, there’s a way to do it and there’s always been a way to do it.
Greg- Hey, let’s jump into technology if we can, for a few minutes here. What do you think about the loan officer and their role moving forward in the future. A tech heavy future, five, ten years down the road?
Rob- I don’t see the loan officer going away, I think people like doing business with people they like doing business with. I would imagine that auto pilots could have done away with pilots long ago, or co-pilots. And I still see pilots and co-pilots in the, up on the flight deck. I think that what loan officers need to consider though, is that their jobs are changing. And for them to go back 20 or 30 years, and break out the Rolodex and flip through the business card stack or whatever it is, to try to find clients that way and when perhaps the extent of their technology was an HB12C, maybe a laptop, or maybe a computer, I think those days are gone. Now the successful loan officers that I talk to and visit with, they are very aware of what technology is out there, they’re very choosey about what technology is out there, and they’re very good about picking what can help their clients, or what can’t or what won’t. And what is in a cost effective way, what is easy to roll out in some kind of you know, time manner that will, generally, help them. They don’t want a very expensive technology play that’s going to take six or eight months to roll out. They want something that’s cost effective, and that’s going to help them more quickly. And so, like I said, I think the good loan officers out there realize technology isn’t going away, they’re able to pick and choose what technology is best going to suit them and then they take advantage of that.
Greg- The NBA recently kind of galvanized a bunch of C-suite executives in the mortgage space to kind of appeal to the CFPB to loosen and change the ways that loan officers are paid. Can you go into that a little bit and let us know if you think that there are changes coming?
Rob- I do think that there are changes coming. I think, to take a step back the CFPB under Richard Cordray kind of put out this blanket L.O. Comp rule, or series of rules or situation, situations that I think any seasoned loan officer quickly found fault with. But you know given the times, you know the CFPB did what it did, so now under new leadership and potential new leadership, that regulatory body I think is much more open to regulations with better input and trying to take into consideration what the industry is saying, what consumer advocacy groups are saying and so forth. So, you know for a quick example, I received countless letters and emails from loan officers who could not lower their comp in order to get the deal done. Could not lower their comp in order to help their borrower and I think things like that are, will change. And I think they need to change, and I’m hopeful that they will change. So it’s a step in the right direction, this letter that the NBA sent to regulators. I think we will see that bear some fruit down the road for the betterment of the borrower and the industry.
Greg- Rob, how many emails do you get a day? From people wanting to chime in either responding to the Daily Chrisman Report or suggesting new pieces of material that you should insert in there. – Well it depends if I make a grammatical mistake I get all kinds of emails throughout the day. You know, it varies based on the controversy that’s going on. If it’s kind of a mundane day, like Veterans Day, I don’t receive many, on the other hand if its a you know a new work week, a new work day, and a new year I tend to receive a lot of emails. Many of the emails are people looking for help. Frankly who are out of a job or about to lose their job and they’ll write to me and say, “Rob, do you know of anything that’s going on out there” or “Can you help me with this” and I genuinely feel their pain because you know they want a job, they want to feed their families and so forth. But in terms of the current events, you know I tend to get probably 20 or 30 emails a day from people that have an opinion about something that’s going on, especially if the regulator or or a politician just did something. The big thing that I see coming up frankly is and I wrote about it on Veterans Day, is with Mel Watt who will soon be exiting the FHFA which oversees Fannie Mae and Freddie Mac. The Trump Administration will appoint somebody new, and there is a lot of chatter that’s already begun in the industry in terms of what that new director will want to do in terms of Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac have done a very good job about not royaling the mortgage market. They realize their place in the primary and secondary markets and so for some kind of dramatic change to take place, or be recommended by either top regulators or the Trump Administration I think, will possibly spook the market in which case I’ll receive a lot of input, lets hope that doesn’t happen but that’s kind of the chatter out there, that something big is going to happen and it may not be helpful to the borrowers or to the industry.
Greg- Well I can’t tell you how many times people will text me “Did you see Chrisman today?” “Did you read the Chrisman Report today?” It happens so often, I just want to thank you for all that you do and for being kind of a beacon of information to so many people in the mortgage space. It’s such a useful tool that I know I and so many others look forward to receiving on a daily basis so thank you so much for your time and for being special guest on NFM TV News. Rob Chrisman, author of The Chrisman Report. And for those people who want to subscribe and join the more than 60 thousand people that get this report on a daily basis, how can they go about doing that?
Rob- Well first of all Greg, thank you very much for the very nice words, you didn’t have to say those things. if somebody wants to sign up, it’s easy It’s just at the bottom of WWW.ROBCHRISMAN.COM there’s a link at the bottom, takes about 60 seconds to sign up.
Greg- Rob Chrisman. Thanks so much.
Rob- You’re very welcome.
Greg- Alright we’ll talk to you again soon hopefully. We appreciate you watching this special addition of NFM TV News if you want to see more of our materials you can head on over to NFMTV.COM