Friday, June 17, 2011

Locking Made Easy

I can't understand how there are so many firms that haven't streamlines their pricing and lock process. Just about every pricing engine is integrated with the large LOS players and trust me, there is NO good reason not to take advantage. Of course there could be some holes in the integration but those can be filled with some custom LOS work.

A manual pricing and lock process means sales and secondary working in two systems. Dozens of data entry fields, emails, faxes, poor audit/tracking mechanisms and you have a labor intensive process with numerous areas of exposure creating data integrity concerns. All we hear about now is the rising cost of originations and how each file takes so much more time and effort. If lenders are looking to streamline their process and improve efficiencies, they should tart with their pricing procedures. This integration could double the output of their lock desk and give sales more time to actually speak with clients!

And for the firms who are hedging or delivering via mandatory or direct trades, this process is essential to trade managing positions effiiciently.

What is everyone waiting for?!?!?!?!?!?!

Thursday, June 9, 2011

Who's Compliant?

It's the topic that just won't go away. Over the last three weeks I spoke with five lenders who, in my opinion, are clearly violating the new LO comp regulations. The crazy part? They all honestly believe they're in full compliance. I can only imagine how many others are out there and then add those who know they're being aggressive and pushing the envelope. Here are some of my simple tests:
-Can sales offer premium pricing?
-Is premium pricing always used as a lender credit?
-Can sales charge origination fees?

If you answer Yes, No, Yes, you may have an issue. Hey, I understand there's nothing explicitly forbidding these practices but take about a red flag or better yet a smoking gun! All a regulator or auditor (whoever they may be) has to do is ask "Why?" And you know what, there's no sound response that won't convince them these policies are going to in some way compensate sales. Why else would an LO choose to sell higher rates and fees? We all know they aren't looking to make originations more challenging! And we all know the regulators are will be looking to levy fines right out of the gate.

There are countless plans which allow for corporate objectives and profit margins to be maintained, some are compliant and others not so much. Lenders out there better think hard and be careful.