I was 21 and out of the Marines just ten days when I went to work for a small loan company, a week later I was making loan decisions affecting peoples lives. Just two weeks more and I was in the field making collection decisions that could literally destroy peoples lives. 14 months later, and not yet 23, I was now a bank loan officer with millions in authority! I sat in a large dark red leather chair, behind a dark cherry desk in an office paneled in rich cherry, with an impressively large 4 inches thick solid door!
Two large heavily padded leather side chairs sat across form my desk. Those chairs or rather how people reacted sitting them are what this is all about. When friends or colleagues stopped to talk they were comfortable and relaxed. I loved those chairs, switch the desk for an ottoman ad a good book and I'd have been in heaven!
When the chairman of the board brought people down and said "they need $23,000.00 would you please write it up" these people were relaxed. But, when our receptionist brought people in and they had to say "we need $5,000.00" you would have thought they were sitting on a bed of very sharp nails!
At first I couldn't believe it, these people were acting like my small loan clients had when sitting in little plastic chairs, talking about their desperation to a kid in an open room full of people. It didn't take long in this new setting to figure it out. I was a judge. These people felt like criminal defendants standing before the bar. That beautiful huge desk and the large chair behind it were as intimidating as the large raised "Bar" at the county court house. If the intimidating setting weren't enough, there sat a banker! Bankers have some common traits that are even more upsetting that the bank itself.
Bankers start young, out of collage in most professions you are aged before having the huge authority bankers used to have. Except for medicine no one gets as much of your personal information as a banker. Bankers have settled for a mediocre income with lots of security, they do not personally take chances. Instead of money bankers have their egos stroked, often causing a false sense of personal importance! Worst yet, I started under the "Old System," if we didn't like you, you didn't get the money!
It's now three decades later, the "Old System" died in 1972, banks haven't dominated the mortgage market since 1974 and have lost most other markets. "Loan Officers" no longer exist, "Loan Officers" use to make decisions, we decided wether or not you get the money, almost no one has that authority anymore. And yet, people still feel their being judged!
The idea of judgement exists because so many incompetent loan originators make their clients feel guilty. You, the client, don't understand you are no longer judged, you haven't been for the last thirty years. Today thanks to civile rights laws, you're not judged, you're weighted! Your credit history is put on the scale, it's nothing personal, you're assigned a number and treated accordingly. Just like your doctor's scale tells your weight.
The bad news is that credit scores are arbitrary. It's true that most people with credit problems have low credit scores, but it's not true that most people with low credit scores have credit problems. Life is arbitrary, my doctor's scale is set so that each pound contains 16 ounces I think 24 oz. would be just about right. The good news is that like my weight we can do something about bad numbers.
There's more good news, like clothes for the pleasingly plump, there's a loan program available for almost everyone. I pay slightly more for my close at the large and tall stores, than the skinny guys pay at Walmart. If you have low credit scores or other high risk factors, you'll pay a little more for the money from a non-conforming lender.
Is it fair? Yes! Under the "old system" the important thing was "who you knew." Under the current system the important thing is "who you are." I can change who I am, I like the system!
There are some things you can do to avoided that awkward feeling of being judged. First you can make sure your credit is as good as possible, you can determine who you are. Second, always start with a mortgage broker, brokers are paid on commission they get paid to get you the money not to judge you. Third, answer all questions, fully and honestly, but don't over embellish. Many a person has talked themselves out of the money. Fourth, understand there is a difference between discussing facts and condemnation "You didn't make two payments?" is acceptable. "You didn't make two payments! Is not! Don't let your originator condemn you, his job is to get you the money you qualify for. Lastly, you're the judge, is the originator worthy of your business?
Bill
William J Archambault Jr
The Real Estate Investment Institute
©REII
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