With interest rates rising, we are seeing changes in the mortgage industry. Not all lenders, though, are created equal. They have various levels of education and experience, just as real estate agents do. They need to be the expert in the loan department for our clients. Like so many areas of our work, we need to have some knowledge of the process to help our clients, and be on top of the process. In this episode, our guest, Debra Killian, has been in the mortgage business for over 25 years. She has financial, banking, accounting, and business experience. She has also been a contributor for the Home Finance Resource Certification Course. In this episode we are going to discuss loans, lenders, money laundering and so much more!
[3:41] This episode will touch on the importance of having an understanding of all the major loan types, and the best ways that we can work with lenders to improve the experience for our clients.
[4:32] Deb explains that there are so many misconceptions about how the mortgage lending business works. There are differences between banks, credit unions, mortgage bankers, and mortgage brokers. Most real estate agents don't see the big differences between these lenders.
[5:16] The first big difference is the licensing and education requirements.
[8:07] There is a fine line between representing your client with questions and asking too many questions of the lender. The missing piece is understanding why the lender is doing what they are doing. There are so many moving parts.
[14:19] Just as agents need to have a formal consultation with their clients, so do lenders, to get to know them and share all the information. Filling out the application online is not the way to do it. Deb says technology has really hurt the process in a lot of ways.
[15:13] Deb discusses 10 questions every originator must ask their customer before starting an application.
[16:24] The originator needs to set the expectations with the customer and also with the REALTOR® from the standpoint that there is a high level of trust between the agent and the originator.
[19:06] Deb explains lender turn times, and how they affect the contract date. How many delays will there be from missing documents? Deb tells how the inspections and appraisal fit into the timing.
[22:02] Deb's advice to REALTORS®: Don't write the contract until you've got the agent and the lender on the phone to set the contingency date and closing date and lock the loan.
[25:03] Deb discusses conforming and non-conforming loans.
[32:27] Deb discusses pre-approval and pre-qualification letters.
[34:07] Contingency dates may vary by location. Deb explains how a mortgage contingency date can protect the seller.
[42:13] Deb talks about fee sheets. They are specific to all service providers involved, such as the title company and the attorney.
[47:25] Deb shares statistics. Over the last five years, according to a December 2022 report, over $2.3 billion has been laundered through U.S. real estate.
[49:00] Most crimes involve money laundering because they don't want to pay tax on the money and they're trying to hide it.
[52:50] A real estate agent cannot advise someone how to convert cash into usable funds. If a client asks, direct them to a financial professional, their bank, title company, or an attorney.
[54:39] If you're required to comply with anti-money laundering, you must take annual education.
[55:40] Money might be laundered if it is in large amounts of cash. Deb explains beneficial ownership.
[1:01:42] Deb gives some history of anti-money laundering legislation.
[1:02:56] Deb's final word: "If you can develop good, strong relationships with the lenders that you work with, individual originators (not the company reputations), … Let them do their job, you do your job. We need to stay in our lanes but we need to be communicating about what's going on in those lanes.
"There are a lot of lost opportunities when we run into problems because then it becomes heads butting against one other sometimes. Many times it is for that reason because the customer didn't give us what we needed." — Debra
"There is no reason for any experienced originator not to know every single piece of paper that an underwriter's going to ask for. … We don't have to wait until the file goes to underwriting, wait for the approval to come back, and say, 'Now I need five more things.'" — Debra
"There are these misconceptions about things and nobody asks those questions." — Debra
"Nothing's risky with full disclosure. If a buyer understands that they're taking a three-year ARM with a 9% interest rate and they understand what that means, and they understand what's going to happen after three years when that ARM expires, … then it's not risky." — Debra
"[The agent could tell the mortgage originator] Don't be surprised if something goes wrong here because they're not being upfront." — Debra
"There is no right way to do the wrong thing" — Debra
About Debra Killian
Debra Killian, our guest, has been in the mortgage business for over 25 years. She has financial, banking, accounting, and business experience. She started originating retail residential mortgages in 1994 and has overseen and managed over $1 billion in closed mortgages, representing thousands of buyers.
Debra has a passion and a unique background and lots of experience in writing and delivering her courses to mortgage and real estate professionals. In 2011, Debra co-authored The Mortgage Professional: National Residential Mortgage Loan Originator, a textbook for the 20-hour pre-licensing course for U.S. Licensing and Mortgage Loan Originators. Debra was the driving force, author, and instructor for the MBA School of Loan Origination. In 2018, Debra founded cloes.online, an online education platform for real estate finance. She is an NMLS-approved provider and course developer and trainer.
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