Training for Success

Are training programs keeping up with the fast-paced mortgage industry?

Is your mortgage training an “after the fact” initiative or a proactive and ongoing process used to teach your organization’s visions, values, and strategies? Is it an emergency exercise summoned to address the problems of the moment (compliance and fraud), or is training used to placate your management team who feel they must have a training program to be competitive? Disney’s training of an 18-year old, would-be jungle boat driver far surpasses the training many mortgage companies provide their sales and operations teams, which begs the question: Has the role and prominence of training in the last 10 years equaled the tremendous evolution within the mortgage industry?

The following real life example provides an answer: During a recent mid-west annual conference a branch manager told me he had a loan originator who did not know what “CLTV” was. How does a loan officer succeed without knowing exactly how to calculate combined loan to value ratio? When the offending loan officer was queried, he replied that the “computer did it.” The following day, I asked originators about the upside potential and downside risk of an interest only ARM. One individual could tout all the sales advantages of the product and yet, had no concept whatsoever of the long-term implications to the borrower nor alternative products that may also address the borrower’s needs. Another loan officer knew all the ins and outs of tweaking the data in loans submitted for automated underwriting approval, but unfortunately did not understand the possible consequences of an audit. Both of these individuals present an operational and financial risk to their organizations. They also represent a training need.

Although the spectrum of available training is greater today, the days of “here’s the desk, here’s the phone, now go to work” still seem to exist. This article will examine the multiple sources of training available and how both managers/training directors and individual originators can best utilize each.

Available training has been significantly impacted by industry professional standards and licensing requirements. Certification requirements have also created a wide range of industry specific training. There are multiple sources of training for those willing to search. Web-based training through CampusMBA or NAMB are just two examples of a wide assortment of online and self-study programs. Regional, state and national conferences are great for educational opportunities. Seminars conducted by mortgage professionals such as Mortgage Originator’s “Superstars 2005 Tour” Series are additional opportunities for quality learning. Of course, there are also a number of individual professional trainers, many who have been successful loan originators.

National lenders such as Wells Fargo Home Mortgage have also recognized the value of training brokers with whom they work on a wholesale basis. One example is seen on NAMB’s Web site in Course Listing #0006 Reverse Mortgage (provided by Wells Fargo). “The rationale and value behind this effort is simple,” stated Jeffrey S. Taylor, vice president, Senior Products Group, Wells Fargo Home Mortgage. “Today’s loan officer must have a thorough knowledge of the programs and products they represent, this is especially true for reverse mortgages. We recognize the success of this program is dependent upon how well loan officers understand the nuances of a reverse mortgage. We have therefore made available to NAMB a course specifically designed to help loan officers recognize the ways in which a reverse mortgage could be another opportunity for additional business. We have sponsored and conducted this course for two years and it has proven to be effective.”

Quantification of training is always a critical issue, but bottom line results are difficult to refute. Today Wells Fargo Home Mortgage generates one of every three reverse mortgages written in America. These results document and support the value of training, specifically for those new to mortgage lending.

One of the industry’s more demanding concerns today is filling the holes of new hire needs. Individuals who have been salespeople in another industry are often not the “salespeople” they profess to be. Sales training involving automotive products or even basic retail floor sales for example, will include developing skills in detecting a valuable prospect from a weak lead that would cost time and money. Fair lending laws prohibit many techniques used in other industries to discourage, ignore or handle differently an unwanted prospect. It takes a lot of work to re-train someone who is not used to the concept of helping someone with complete mortgage information, equally and under all circumstances.

“This scenario is most dangerous when loan originators do not understand the specifics on what constitutes fraud and fair lending,” says Jan Wetzel, CEO, Wetzel Trott, a national quality control firm. “Originators very often feel that all liability rests on the borrower, not realizing they have perpetrated fraud by ‘making the paperwork easier’ for the borrower. Automation has built a generation that is a wiz at using the technology but have not worked for a supervised lender to understand how highly regulated origination is.” Wetzel continued, “The most critical training need in today’s market is not sales training, it is fair lending, fraud detection, and prevention.”

As a sales trainer for over 20 years, Wetzel’s perspective did not meet with my immediate support, until she mentioned the following: “I understand that without sales, none of us have a job, but some sales are not worth the price to be paid. Take the recent case where several lenders incurred losses, due to one loan officer, totaling over 20 million dollars in 30 days on seven homes with five mortgages on each property. Fill the fraud training hole and you can save your organization a lot of money.”

Identify Training Needs
To protect against some of the risks cited above, lenders will try various approaches that can range from a hiring revolving door to a full menu of training programs that cover every base, twice. The former is not a good business model and the latter is potential overkill. “The solutions depend upon on a few simple factors; are you trying to identify holes in a potential new hire, a candidate for a promotion, career planning, or is there a performance problem?” stated Alice Alvey, president of Mortgage U, Inc., a mortgage training and consulting firm. “To find a specific hole in a person’s mortgage knowledge before it becomes a problem in a file, lender’s should include both open and closed book testing. An open book test that can be retaken multiple times, allows the student to self-determine the areas of their responsibilities that need attention. The administrator of the test should expect the student to eventually attain a 100 percent score. Then, by following up with a closed book test that allows only one attempt on the same topic, the employer can identify what information has actually sunk in.” Alvey reminds us that before testing the lender must make sure equal employment opportunity requirements are followed.

According to Fortune magazine, the top 100 best places to work in America, averaged 40 hours of training per year for every employee last year. Although there isn’t a magic number of hours that guarantees all mortgage holes are filled, personal training plans for each employee will help insure effective and targeted education.

Basic Plan
A basic skills development plan provides education specific to the employee’s goals, strengths, and weakness. A customized education plan can be designed for each employee using the following elements as an outline:

  • New employee orientation
  • Selling skills
  • Soft skills development
  • Technical skills development
  • Mentoring

When building an education plan, decisions should not be based solely on cost and convenience. The content, goals, and student’s learning style must be factored in as well. For example, selling skills training works best in a live environment in order to create the energy and motivation most people seek. If the topic requires frank discussions about subtle vs. overt discrimination, a classroom environment is only successful if students feel it’s a ‘safe environment’ in which to speak freely. You need a solid instructor to handle this topic and Web-based training just can’t reach the participant at the same level. On the other hand, many technical skills work great in a Web-based format such as FHA and VA loan programs. Alvey added, “Everyone grasps the information at different speeds and an Internet based class allows students to move forward when they are ready.”

Training Recommendations
Unfortunately, training today is too often perceived as a “have to” and not a “want to.” Branch managers are often less than enthusiastic to take their production team out of the field for any period of time, for fear of “lost production,” never mind the potential HUD fine. If you have lapsed in the training department, the following key steps will help you to get back on target:

  1. Assign responsibility to an inside coordinator to identify the multiple resources available.
  2. Develop a predetermined training regimen to be completed by all personnel within a specific time frame of hiring—exceptions not allowed.
  3. Start an internal library. Industry publications abound—use them wisely. Grab a few file folders and allocate specific labels for each. As you see articles that fit the subject matter you have chosen, tear them out and insert into the correct folder. Soon you will have your own subject-specific, cost-effective library. Download the same and keep a file internally that all personnel may access online.
  4. Pre-determine the percentages you will allocate to your various training resources, for example 30 percent in-house, 30 percent external seminars and courses, 30 percent web-based training, 10 percent bring in an outside professional mortgage trainer.
  5. Identify the competencies required for each role within your organization and design a training plan most closely aligned with those competencies.
  6. Re-evaluate your investment in skill development and make sure your training regimen specifically addresses those skills.
  7. Complie a list of 52 different weekly topics that you can discuss for ten minutes during your weekly meetings. Sales meetings are an additional training opportunity, not simply a reporting exercise.
  8. Regularly quantify all training attended. This is a step that is often totally missed. When you send a loan officer or processor to training, whether internal or external, you should always predetermine the areas of the course most beneficial and even more importantly, discuss the course with them upon conclusion. This is a manager’s responsibility. How will you know the training was successful if you do not discuss with the attendee what they learned?
  9. Make your training fun. It does not have to be boring and dogmatic. It is actually possible to learn and have fun at the same time, even with the most mundane of topics.
  10. Do not make the mistake of saying you are “too busy” to address your internal training needs—stated more succinctly, you have just chosen to make other things a higher priority.

There is no shortage of quality training opportunities. Exist is one thing. Identifying and maximizing is another. Make the commitment today to re-examine the manner in which your company is accepting the training responsibility. Doing so is well worth the effort.

By Bill Evans