Daily Mortgage News & Commentary

Mar. 9: Letters on LO comp, lack of concern about cybersecurity, advice from women for women new to our biz

“Women who seek equality are underachievers!”

So goes a recent quote from a letter from a reader.

Here’s a story, the subject being female firefighters from Ghana launching the first gender discrimination case, based on a woman who was fired while in labor!

A seventh woman has joined a proposed $100 million class action alleging that Morrison & Foerster held back the careers of mothers and pregnant women through unequal pay and promotion opportunities. Scott Flaherty reports that an unnamed former associate at the firm identified as Jane Doe 7 added allegations under the New York City Human Rights Law and proposed a subclass of women who worked at Morrison & Foerster in New York to the gender and pregnancy discrimination first brought nearly a year ago. The case is in San Francisco federal court.

“Encourage other women to apply for jobs and roles that they are suited for. Don’t be judgmental of physical attributes large, ugly or sexy. If someone is doing something the wrong way and trying to get noticed, identify how they should be dressing or acting if they want to be taken seriously and focus on their mental aptitude. I have seen the parade of title company “girls” in their tight short skirts and now I just think to myself, that poor girl. Invest in the potential, invest in the mental ability and teach them the other skills. Be professional at all times in front of all employees.

“Women need to behave at work differently than they act at home. As women, we tend not to lean in, we want to be the team player, nurturers, motherly and we think of others first, so we do not demand the income we deserve. We like the work life balance that we have established since we often bear the role of raising our children, so our work emulates our personal life and we don’t want to disrupt anything. I know personally I will not think twice about buying the shoes my kids want that cost $100 but I would never spent that much on a pair of shoes for myself and never have. We often sacrifice for the company or our staff and shortchange ourselves.

“Also, there is no crying in mortgage, but unfortunately as a woman, that is often how we react to stress, frustration and anger. Men should know this, but they view it as a sign of weakness and emotion, so it is critical you keep that in check, but teach your male peers where it comes from so they are not so judgmental about it. As an executive it has always been my role to teach the other guys the why and the how, some get it better than others. Question the golf tournament mentality: typically just the guys benefit, and not the women.”

Annemaria Allen, CEO & President of The Compliance Group, Inc., remembered, “When I first started in this industry I was just out of high school. We didn’t have a lot of money growing up, so it was impressed upon me to get a job that paid decent and provided health insurance. The only place I could think of where I didn’t need a degree was working for a bank which also meant weekends off. At that age weekends were way more important than health insurance. Nonetheless, I spent 12 years in operations, processing, funding, underwriting and appraising. I never felt completely fulfilled.

“What I didn’t realize at the time about myself was that I was very methodical, analytical and creative and those areas of the mortgage industry that I was working in just didn’t hit my heart. I felt like I was pigeon holed in this area of the business and there was no growth for me. It wasn’t until 12 years in… that I started really looking at the entire industry. I had no idea there were so many facets to our industry, all the way from taking an application to selling a loan into the secondary market and beyond. I found that I loved researching all the legal requirements that pertained to WHY we make a loan. It was fascinating to me to understand the history of RESPA and the REASON I was providing a Good Faith Estimate. When my eyes opened to the road of possibilities, I quickly found my niche in Compliance.

“When the compliance door opened up, I decided that it was extremely important for me to educate myself as much as possible on all the laws surrounding the mortgage industry and take as many courses available to make this happen and allow me to grow and be successful in my job. As I continued with my compliance career and kept up with my education and networking one day I realized, that from the time I was a little girl I always wanted to have my own company. After 5 years of practicing compliance with my employer an opportunity arose to open my own company. This is where I was able to really tap into my creative talents which had significantly been missing in my life. Now, after almost 19 years as a successful business owner and 31 years in the industry, I look back and reflect, and I tell that young girl and all the other women entering our industry. Don’t limit yourself. Educate yourself and keep growing. Network to your heart’s desire and ask lots of questions. Know yourself and what makes you happy and don’t allow yourself to be pigeon holed. Work hard. Follow your dreams.”

Cybersecurity: Is Anyone Listening?

Ken Perry from The Knowledge Coop sent, “Hey Rob, I was down in Orlando for the NMLS conference recently where the FBI and state regulators spoke about cyber security. Their thoughts and ideas were good, but their recommendations seem lofty for an industry that doesn’t have as much control over their sales people as would be necessary to be totally safe.

“A quick example of this is the requirement to document every device and all apps on those devices. I don’t know of one company that has done this. Yes, many companies assign computers and have policies against the use of personal devices for work related messaging, but do we honestly believe that loan originators would not respond to a text from a borrower? If we don’t face this reality then we can never solve the problem.

“So, baby steps, right? Every company can begin today by taking the following actions: 1. Ask every branch of your company to document and report every device that is being used. 2. Create policies around the use of those devices and roll out those policies through effective company specific training. The hard part comes next. 3. Monitor the behavior of your employees. Random audits work well here. 4. Finally, be willing to punish those who violate the policies and assign more training based off of the results of the testing.

“Sounds pretty painful right? And yet this is just the beginning of securing your company against cyberattacks. Companies that choose to ignore this will have to figure out how to survive an audit. So many state regulators last week told us they are prioritizing cyber security audits when they visit licensees. It’s time we take this seriously before more breeches, hacks, and cyberattacks shut companies down. The bad guys have figured out that this industry has lots of data and very little protection.”

LO Comp

Of course one of the reasons LO comp rules were put in place to help stop unscrupulous LOs from steering borrowers toward programs that were of greater financial benefit to the LO. But there is still confusion regarding comp plans, and as LOs see their basis points per loan dropping it is important that things are spelled out as clearly as possible by companies and regulators.

I received this grim but not inaccurate note. “LOs are still being compensated much better than alternatives that are open to them. If you have an LO who was making $200K and is now down to $150K, that is still more than an alternative job will pay her or him. Same with going from $150K to $120K and the same for $120K to $100K. So, these people tend to stay around the industry and are part of the competition. Many lenders have let go, or will let go, the bottom tier of their originators go. But those LOs don’t work very hard, have a flexible schedule, and are worth almost nothing in the rest of the business world. This is one reason that the wringing out of capacity is so slow.

“My guess is that in 2019 we will have a top line consolidation number of maybe 10-12%, but most of the LOs will recycle, so you will only have, just say, a 5% net reduction in competition. This is a big reason that this consolidation is going to be such a slow process and the pain will be here for several more years. We’ve been talking about a big correction for years but it just keeps dragging on.

“The wholesale reps are the ones who have nowhere to go. This TPO ‘price war’ that I see as a ‘bear hug’ is going to run many of those people out of business. They will have nowhere to go and will be forced to exit. I think that the majority of small wholesalers will be squeezed out pretty much by the end of 2019, that we will see a 20-30% reduction in TPO capacity with a corresponding drop in AE numbers.”

Instead of the usual trivia or humor in this spot, today is a note from Kip Portz, VP of Business Development with Redwood Trust, about his father. It helps to keep things in perspective. “March 9th marks the one-year anniversary of the passing of my father and 40-year industry veteran, Kenneth ‘Ken’ Alan Portz. He was a hard yet thoughtful man.  A focused and driven competitor with a self-proclaimed Eddie Haskell streak. A true creature of habit and routine.

Anyone who ever saw him run race gates surely witnessed just how seriously he took it. Race clinics, special edging tools, Spyder race onesie and crazy helmets with face masks like that of a 1980’s field goal kicker. His passion for hobbies, life, and friends was not limited to skiing but the hills were never far from his heart. To fill his anything but quiet days of retirement in Durango, Colorado, he joined a special organization called Adaptive Sports Associates, a non-profit focused on providing outdoor sports experiences for those with disabilities. After being named ‘Rookie of the Year’ in 2008 he became a certified Professional Ski Instructor and was active with ASA Durango and their clients until the day he left us. While I was a more formidable opponent while we fly fished together all over the western U.S., most of my favorite memories of the past 11 years were watching him play, ski and interact with his 4 grandkids. Not a day goes by that we don’t miss him terribly. His death was a shock. Losing him while he was skiing is oddly comforting. As you are reading this, I am attending the Hurt No Mor Mortgage Ski Trip in Park City, UT. The same event, with many of the same mortgage vets that my dad skied and networked with every March for the last 30+ years. Rest in Peace, Dad.”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Changes in the role of the LO and Their Compensation.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)