Sep. 9: Letters about cybersecurity & blockchain, transitional licensing, and the role of formal training for lenders

Knowledge, training, learning, and awareness are life-long activities, lasting well into the golden years. Thus, today’s joke at the bottom.


Several weeks after a young man had been hired, he was called into the personnel director’s office.

“What is the meaning of this?” the director asked. “When you applied for this job, you told us you had five years’ experience. Now we discovered this is the first job you’ve ever held.”

“Well,” the young man replied, “in your advertisement you said you wanted somebody with imagination.”

I received a fair number of notes when, on August 30th I wrote, “I love it when a roomful of 50, 60, or 70-year old residential lenders is complaining to me about a lack of ‘new blood’ in the business, and I ask them if any of them have training programs for new loan officers or underwriters or AEs. Or any job. And they look around in kind of a startled, ‘I’d never thought of that’ way, and then find someone and ask, ‘Herbert, didn’t you guys have one?’ and Herbert snorts, ‘We stopped doing that in 2003 – don’t the big banks do them?’ I hope that you have an answer for a young college grad who wants to enter the business and work for a company that will train them.”

Ken Perry with the Knowledge Coop sent, “Hey Rob, I had a really interesting conversation with a credit union this morning that perfectly framed the training epidemic in the mortgage industry. I asked what they do for training and she referenced what most mortgage people have experienced since the early days of the industry. Their company buys off-the-shelf compliance training from a big vendor that never updates their classes and forces their employees to sit through it so they can check a box that makes them feel compliant. Since the training is never updated the LO’s take screenshots of the test answers so they can pass the test next year. They learn absolutely nothing, yet the company can prove they have forced their people to pass a test.

Three major problems occur because of the industry not changing their ways. First, the company has taken a symbolic action that makes them feel like they have covered their bases, so when asked about ‘training’ they just think of this requirement they are meeting and don’t think about how the training impacts the people at the company or what other training needs to be done at the company. Second, nothing has been customized to the company, so the employees may know what the BSA (Bank Secrecy Act) is but they have no idea how to file a SAR (Suspicious Activity Report) because the template training didn’t cover that. Finally, the feeling people get when they are assigned a training is negative. They feel insulted by this requirement and their attitude towards compliance is one of contempt. You really can’t blame them. Go ask any loan officer how they feel about compliance training and they will roll their eyes, gag a little, and tell you it’s a waste of time.


“The most amazing thing happened to me in San Diego when I was meeting with one of the owners of a Knowledge Coop client. He told me that they bring every potential recruit into a room and show them the entertaining and effective training videos that we produce. Their message to the loan originator is that they want to help them grow in their knowledge and be better at their job without boring them or making them hate their training. And it’s working! Many of the companies we have in the Coop are building giant training databases and the employees are eating it up!

“When companies can bring on training that is similar to the way humans are learning outside of work (think YouTube) we can begin to bring value to them and give them a reason to stay at the company. It may cost more in the short term, but how much do you lose when a high producing loan officer leaves because they don’t feel valued, appreciated, connected to their company, and made to sit through boring repetitive training?”

All the way from Oregon The Mortgage Coach’s Dave Savage delivered, “We all know training is even more important today than in the past as the mortgage space undergo a digital transformation, especially for loan officers how have to compete with digital players.


“As we enter the digital mortgage revolution, it’s more critical than ever to ensure that lenders and their teams are up-to-date on industry best practices and technologies that can help grow business and improve the borrower experience. The Mortgage Coach YouTube channel offers free educational videos for loan officers and sales managers. This extensive video library of hundreds of videos that includes dozens of interviews with top producers, coaches, top Realtors and industry lenders who share their best practices and best strategies. From big ideas to scripts to walkthroughs of how mobile technology is used in the real-world. CLICK to check it out and share an MC video with your team today.”

From Georgia Casey Cunningham, CEO & Founder of XINNIX, The Mortgage Academy, penned, “Hey Rob, I had to respond to your recent commentary about a group of 50, 60 or 70-year old residential lenders complaining about a lack of ‘new blood’ in our business and no plan to solve our current problem.

“We’ve frequently observed the same ‘it’s not our thing’ new LO philosophy you’ve described. Our industry, as a whole, has spent decades neglecting new talent development for a multitude of reasons: shrinking margins, lack of resources, immediate pipeline with experienced LOs, etc. I believe the lack of focus on building new LOs is simply the inability to successfully onboard them since most models are not performance-based. Every lender would adopt ‘new blood’ if they knew how to ensure predictable success.

“The bigger challenge is to change the collective mindset to one that brings new people into the industry. The old models: ‘managing headcount,’ ‘recruiting/recirculating LOs from competitors,’ ‘learning on-the-job,’ etc. These are the models that lead to the current state of underperformers, 9 to 12-month ramp-up time for new loan officers, an aging salesforce, etc.

The new model must be: attract, grow, and retain new talent through ongoing career development. New people are attracted to career development and it is consistently among the top three reasons early career candidates choose a company. We are seeing lenders experiencing new LOs, just last month, averaging 5.6 applications in their first month in the business… yes, real numbers with lenders that have a strategic plan and a performance-based learning that starts with engaging and relevant training and continues with accountability and real outcomes! Oh, and another thing…the other big question… Who should pay for it? We definitely have an opinion to share for another day!


Todd Duncan launched a free resource for loan officers called the High Trust Business Builder. Click here to download his free resource.  It promises breakthroughs in creating a bulletproof sales pipeline that will improve your income, with less time and stress. It’s worth checking out!

Transitional licensing

A couple months ago H.R. 2948, the SAFE Transitional Licensing Act was introduced, supported by the MBA and other industry groups. Putting aside the debate if Congress can pass anything that doesn’t have to do with an emergency, the bill would amend the SAFE Mortgage Licensing Act of 2008 to provide a temporary license for loan originators transitioning between federally-insured depositories and non-depositories, as well as across state lines. It would require states to issue a transitional license to individuals who are already employed by a financial institution and are a registered loan originator. These individuals would be able to continue originating loans for 120 days when they move from one type of lender to another, or move to a new state.

The commentary had a note from Bill Kidwell opposing bills for transitional licensing. “I had the opportunity to go on record with my opposition as a mortgage professional to the two bills that, if passed and signed by the President, could open up our industry to thousands of inexperienced MLOs. These bills provide for transitional licensing of federally registered LOs with a four-month period in which to originate loans while they attain the required education, testing, etc. I encourage you to spend the 10 minutes or so to watch the exchange between Brian Stevens of the National Real Estate Post and me as we discuss my opposition to the bills as written. Click here to go to the video.”

But from Texas John Hudson writes, “Mr. Kidwell paints a picture straight from Game of Thrones…one would think that ‘Winter is coming’ and that the ‘thousands of inexperienced MLOs’ are like army of the dead marching south towards Westeros to take advantage of and harm consumers trying to buy a house.

“What he fails to remember is that every mortgage banker that is to hire one of these ‘transitional MLOs’ is still responsible for any and all actions of their employees. Every Sr. Exec, Manager, and small business, independent mortgage broker I talk to are excited about the opportunity to grow with transitional licensing but of course are concerned about UDAAP and reputational risk.

“Bottom line, any mortgage company hiring one of these ‘transitional MLOs’ will certainly be vetting their prospects before letting them originate on their behalf. In my opinion, the best part of transitional licensing is that it creates a vehicle within the state regulatory agencies to allow for non-bank to non-bank transitional licensing, which of course would help everyone – consumers included. Just my $0.02.”

The Fed & mortgage rates

This note came from a lender in Nevada. “The Fed says it will start to unwind the balance sheet soon, meaning either ending its buying of, or gradually selling its holdings of, bonds and MBS securities. Since most of those bonds and MBS instruments are at low rates, many filled with 3.50% 30-year fixed-rate mortgages, I assume they will sell at a discount. And a discount means a realized loss to the seller, correct?” Yes, although remember that these are already being “marked to market.”

The note continued. “Also, ending its buying, or selling by the Fed, will increase yields on future auctions, correct? If it is not in buying securities, that will increase the supply of product, both Treasury securities and agency MBS, available, which in turns means a buyer’s market, correct? Price down and yield up? We have a strong market now in my area, and prices are up due to supply and demand – I think that is called capitalism. With my borrowers, if rates push up 1% that will knock out a large part of the entry level buyer, and in my area the housing food chain will slow. I hope that the Fed is careful about such things.”

Cybersecurity & blockchain

Six major banks have joined a UBS-created project to create a form of digital currency that can be used for clearing and settling transactions using blockchain.

Of course, the industry is talking about the failure of Equifax to safeguard citizen’s credit information. I wrote about a shift in security a few weeks ago: visit my periodic blog at the STRATMOR Group web site. The current blog is, “Will User Names and Passwords Go the Way of Thermal Fax Paper?”

Morrison Foerster reminds us that, “On August 28, 2017, the first transitional period for the NYDFS cybersecurity rule (the “Rule”) ended. Covered entities are now expected to satisfy several requirements established by the Rule, including those relating to the implementation of a cybersecurity program and cybersecurity policy, as well as to the designation of a chief information security officer. The next deadline for the Rule is September 27, 2017. Covered entities that have determined that they qualify for a limited exemption under 23 N.Y.C.R.R. 500.19(a)-(d) are required to file a notice of exemption with NYDFS on or before this date. For more information about the Rule’s requirements and the transitional compliance deadlines, please see our previous Client Alert. In addition, you can visit the NYDFS webpage for more information about the Rule, including FAQs on the Rule provided by NYDFS.”

Regulators must work harder to help individual investors appreciate the risks presented by new technologies that cybercriminals use to commit fraud, said Securities and Exchange Commission Chairman Jay Clayton. He said he plans to give cybersecurity a high priority in the SEC’s enforcement actions.

(Thank you to Len T. for sending this one.)

Amazon Echo for Seniors? Yes, here you go.

Visit 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, “Will User Names and Passwords Go the Way of Thermal Fax Paper?” 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.


(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are over 300 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 Copyright 2017 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.)

Rob Chrisman