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Michael Zuren

Stay Focused. You can make a difference!

Wednesday, January 22, 2014 - Article by: Michael Zuren - American Midwest Mortgage - Message

Many loan officers pride themselves in the fact that they help people purchase a home they may not otherwise be able to buy. Loan officers often council individuals on their credit, savings histories, employment, and down payment sources to prepare prospective homebuyers to obtain a mortgage. Regulations including the Dodd-Frank Act and all of its layers of bureaucracy have made the mortgage industry extremely challenging to help the consumer. The most recent implementation of the Qualified Mortgage regulation has taken mortgage financing to unimaginable levels of governance. Common sense has been replaced by legislated framework. For my dissertation, I interviewed loan officers who lived through the sub-prime mortgage experiences to investigate how they believe the mortgage meltdown in 2007 impacted the mortgage business.

Many of the participants cited the Dodd-Frank Act's restrictive licensing requirements, disclosure requirements, and the way the Act has changed how loan officers' are compensated. Most of the 22 loan officers interviewed commented they were concerned about pending regulations impeding their ability to assist home buyers. Many of the loan officers interviewed had 20 or more years' experience as a loan officer and recounted the changes that have occurred in the mortgage industry prior to the mortgage meltdown. One of the main themes discussed was regulation and disclosure. Below are some of the excerpts from the interviews.

Many participants cited mortgage companies' uncertainty had created multi-disclosures that confused homebuyers. One participant declared when he first started in the mortgage industry 25 years ago, a mortgage application contained approximately 15 forms, while today it has over 80. Another participant estimated the average loan application had 72 forms and stated it was a good example of regulation overwhelming and frustrating consumers. Yet another participant explained the recent regulations had created numerous additional forms as well as layer after layer of additional procedures needed to meet current lending guidelines.

Another themes discussed by the loan officers interviewed was consumer frustration. One participant explained the additional disclosure requirements had created increased confusion and frustration for customers and reported disclosures are now in legal verbiage, which is nearly impossible for average consumers to understand. Another participant commented that recent regulations had created a significant amount of new paperwork and disclosure. For example, this participant contended much of the federal and state documentation required was redundant. The new good-faith estimate required loan officers to review a minimum of three different loan options for consumers, even though most consumers specified they wanted a 30-year fixed rate mortgage. The additional discussion increased frustration and created confusion.

Many of the participants in the study 86% believed the recent regulations and the speed with which they were implemented caused significant confusion and frustration to the consumer.

The Qualified Mortgage (QM) regulations including the fee limitations, the APOR to interest rate test, the APR to APOR test, and Ability to Repay (ATR) mandates implemented on January 10, 2014 have exasperated the frustration and confusion throughout the mortgage industry. Most long-term mortgage professionals began their career as loan officers to help assist individuals purchase their first home or purchase a home after an unfortunate life-changing event. Even after the wave after wave of new regulations this is still possible. Helping one person or one family at a time is still feasible and is still the ultimate goal of reputable loan officers. Stay focused, you can make a difference!


Zuren,M. D. (2013). The subprime mortgage crisis: A phenomenological approach to understanding the loan officer's experience. Capella University.

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