November
1, 2000
Why
do I need a web site?
A
web site is the means by which you declare who you are and what you do.
By placing the UMB commitment on your site, you are announcing to
the public that you are prepared to do business in accordance with UMB
principles.
Your
web site is also the channel through which you will get referrals from my
site, which will list UMBs by URL, not telephone number.
Consumers referred to you from my site will probably have read the
pages describing what an UMB is and why a consumer will benefit from doing
business with you. They will
be informed loan prospects.
A
web site also provides you with an opportunity to communicate other
important information about yourself, and perhaps prepare the customer to
do business with you. For
example, you may want to indicate just what you expect of the customer, as
the counterpart to your commitment to him.
You might even want to specify what the customer should bring to
the initial meeting.
How
do I deal with consumers who aren�t ready to deal with an upfront
mortgage broker?
You
are obliged to follow the UMB commitments at a customer�s request.
Customers who find you through my web site will expect you to act
as an UMB. Customers who come
to you from other sources may not. If
the customer is unaware of the UMB option, it is up to you to decide
whether to explain and offer it, or to operate in the more customary way.
As
an UMB, how can I protect myself against being under-compensated in cases
where the work required turns out to be far greater than I anticipated at
the beginning?
Brokers who
are not UMBs can protect themselves against this contingency in some
cases, but not in others. Where
the broker is able to raise his compensation, it is usually without the
customer�s knowledge. This
is an underhanded way of doing business, even if the broker feels that the
workload justifies it. The
cloak of deception that allows such �pricing flexibility� also allows
the rogues in the industry to charge whatever they can get away with,
whether justified by the workload or not.
The
UMB gives up the right to adjust compensation as the transaction proceeds.
To protect themselves against being exploited by consumers, they
should develop other approaches. They
can interview the customer more carefully at the beginning to identify
potential roadblocks that may impact the broker�s workload.
They can also be explicit in specifying exactly what the broker
will and will not do, and what the customer�s obligations are.
If the customer drops the ball, they can drop the customer.
A
practice of laying out the responsibilities of both parties at the outset
should deter customers from treating the broker�s time as if it were a
free service.
Can
UMBs protect themselves against multiple-apping?
Brokers
who are not UMBs have no way of protecting themselves against
multiple-apping. Because
most consumers have no way of distinguishing one broker from another,
brokers who charged a non-refundable fee would lose business.
Furthermore, consumers have maximum incentive to submit multiple
apps because they have no other way of protecting themselves against being
overcharged. To me, it is
surprising that there isn�t more multiple-apping than there is.
Consumers
selecting a UMB should have less reason to multiple-app because they have
less anxiety about being ripped off.
Will
being a UMB help me attract customers?
I would expect that consumers will
seek out UMBs as they become aware of their existence.
One of my jobs will be to help promote this awareness, through my
newspaper column and web site. But
UMBs can also promote themselves, on their web sites, in local media,
through their contacts with real estate agents, and in many other ways.
On
FHA and VA loans, I receive a servicing release premium from the
lender. As an UMB must I remit this premium to the borrower?
Not
at all. UMBs are not subject to price controls. Your
obligation is to include the premium in the price you quote the borrower
at the outset.
I
Am a Correspondent Lender, Delivering Loans to Wholesalers. Can I Be
a UMB?
Yes,
provided you are prepared to stipulate to the consumer upfront your markup
over your wholesale prices. You will be slightly disadvantaged,
however, if your wholesale prices are lower than those offered brokers who
perform fewer functions.
How
Do I Operate If on Some Loans I Act as a Lender, Selling Directly Into the
Secondary Market, Rather Than a Broker?
You
explain to the consumer that on some loan types you act as a lender, and
that the relationship between you and the customer is different in such
case. For example, you might
say something like the following:
"On
FHA and VA loans, we act as a lender. We will quote our rates and points
to you so that you can compare them to those of other lenders. Please bear
in mind that our quotes are valid at the time we provide them. We don't
