Your Questions About Mortgage Loan Officer Compensation

William asks…

As a mortgage loan officer, can I repair client’s credit for them if I don’t charge a fee?

When I close the loan, will that count as compensation? Is there a license I would need or do I need a Power of Attorney? Will a Borrower Authorization Form suffice? Why is it that only lawyers do this? I just want to save them some time by sending the letters for them and create some loans for myself at the same time. If there are no licensing requirements, can I charge for this service to make a small profit and make sure I’m working with serious home buyers?

John answers:

You can assist borrowers in fixing their dented credit scores but you cannot have power of attorney in most sates because they are your customers in a financial transaction and that is a conflict of interest.

You can have draft letters you furnish them with, but don’t get involved with fixing their credit because you will be conflicted and you don’t want the regulators breathing down your neck.

Also there are a lot of firms that do credit repair work, it is not the sole province of lawyers.

Robert asks…

I refer 10 homeowners policies a month. Need sponsor in NY. What do I have to do for compensation??

I am a loan officer and refer 10 policies a month to a reliable company. It is an excellent relationship but they do not pay commission. Is this legal. Can I become an employee for an insurance company as well. As long as it is disclosed this is ok in the mortgage industry. I am looking for feedback from an experienced insurance professional. Thank you.

John answers:

You cannot be paid commission unless you also are a licensed agent in the state the policy is written. It is illegal to pay you as this would be called a kickback.

Daniel asks…

Need Advice on a New Career?

Here is my dilema: I am burnt out, I need a new job, and I also need to find a career.

For ten years, I have been at several jobs, all of which involved appointment setting, the call center and telesales (to various degrees). Talking on the phones all day long and dealing with demanding and unreasonable people has finally taken it’s toll. I have been in my current postion as a mortgage loan officer for over five years and there is the constant threat of being written up or fired for not meeting sales goals and the ever constant change in the compensation (my income has dropped drastically to the point that I am beginning to live from paycheck to pay check–and I have always lived within my means).

I have a BA in English Lit. I really do not know what kind of field I want to go into, but I have to get out of the mortgage business. I really do not want to teach because the Michigan Public Schools are horrible: the teachers are always getting laid off and the pay is ridiculous. All I know is that sales is too stressful for me and I need to find a new position–but more importantly, a new career.

The problem is that I do not know what I want to do with my life. I am in my 30’s and feel like I am having a mid-life crisis. I have researched positions like becoming a professor (takes too long and not enough pay), Med or Vet school (I don’t think I am smart enough), Financial field (hate Corporate America), Physical Therapy (Michigan market seems to be flooded with outsourcing agencies; job market does not seem to be stable), and working with animals (I would love to do this, but not enough pay).

If someone could offer some advice–any advice–I’d be grateful. Right now, I feel totally worthless and clueless. Or even if you are in the same position as I, please write back. I need to feel that I am not alone (misery loves company, I guess).

John answers:

The physical therapy job market is actually growing vastly. The “flood” of outsourcing agencies actually asserts it’s demand. The demand is high enough that outsourcing agencies are actually placing employees on a regular basis because the demand is so high…staffing agencies are TRIVING. If the market were truely flooded, you would see these agencies disappear…they were not there to this extent 8 years ago…believe me.

The only potential down fall is if we get a national healthcare plan. I think you would see a TEMPORARY market adjustment, but after that, it would quickly rebound.

PT was recently named the second most satisfying career. It’s a good time to get in…and very exciting too.

Maria asks…

County property tax and mortgage escrow question?

My wife and I just closed escrow 1 month ago. Our property taxes were to be included in our mortgage payment. The property taxes are included, but it looks like not enough.

Looking at our settlement statement (HUD-1) under “Reserves Deposited with Lender, I see next to County property taxes– 8 months @ $ 218.75 per month. I also see on our first mortgage bill the breakdown of the “Escrow payment.” County taxes for 6 months = $1312.50 or $218.75 per month.

I just received the county tax bill that has our taxes at $1603.32 per 6 months. That comes out to $267.22 per month. I called the county tax rep today and they confirmed the $1603.32 amount is the correct one and they don’t have a clue where escrow/ my loan officer got the $1312.50 ($218.75 per month) amount from. This would come out to an extra $48.47 per month (in reality it’s an extra $88.47 per month because my mortgage company, Bank of America, said they require an extra $40 as a “cushion” for any unexpected tax surprises.

I will be calling my loan officer, but I want to be prepared with my requests
So my questions are:
Has anyone experienced something like this?
What recourse do my wife and I have (small claims court) if we can pinpoint who made the mistake (escrow, loan officer, etc..)
What kind of compensation for these damages could we seek and reasonably get?
Also, is this $40 “cushion” from Bank of America a standard fee for the industry or are we getting ripped off?

thanks for any help…

John answers:

When an escrow account is set up for the collection of taxes and insurance payment through the mortgage serving company the taxes and insurance figures are an estimate, not the actual figure. Setting up an escrow account is required for VA and FHA mortgage loans, and for certain mortgage loans.

Bank of America has told you this is an estimate, by adding an additional $40.00 per month for any possible overage. If the figures were accurate then there would be no reason for a possible overage. This is normal for escrow accounts though the amount might be different for other escrow accounts.

You need not call your loan officer about anything concerning your mortgage loan, this person is no longer in the loop of things. You now have a serving company, which apparently is Bank of America. They are the ones that would be able to assist you in any current or future problems. You should have received a loan packet from your loan servicing company again probably Bank of America, they should have included a telephone number listed in the documents you received indicating when and where to pay you monthly mortgage. These are the people that would be of assistance to you now, not your mortgage loan officer.

Your loan officer have nothing to do with the setting up of the escrow account nor the requirements to fund the initial escrow. Your mortgage company set the requirements for each escrow account.

If there is a shortage in the escrow account and the current amount is not sufficient to pay the insurance and taxes, your escrow account will be adjusted, thus your monthly mortgage will go up to make for this adjustment. If there is a sufficient amount of overage you will be sent a check as an adjustment.

What you should be doing is challenging the tax bill and the value of your property. The county might have raised your taxes without merit as property values might not be as high as those on your tax statement from the county.

If you are not required to pay your insurance and taxes through an escrow it is better to pay your own taxes every six months and insurance once a year. The bank is holding your money in an account that you have no control over.

You could place these same funds in an interest bearing account. As it is now you are just paying your money to a company without benefit of interest or your control.

There is normally no recourse for over and under involving an escrow account or in the estimating of the monthly payment as counties raise taxes, individuals might request additional insurance. Your mortgage service company would have no control over these items.

I hope this has been of some benefit to you,good luck.

“FIGHT ON”

Linda asks…

Do I have a case in court over property tax mistake on our settlement statement (loan documents)?

My wife and I just closed escrow 1 month ago. Our property taxes were to be included in our mortgage payment. The property taxes are included, but it looks like not enough.

Looking at our settlement statement (HUD-1) under “Reserves Deposited with Lender, I see next to County property taxes– 8 months @ $ 218.75 per month. I also see on our first mortgage bill the breakdown of the “Escrow payment.” County taxes for 6 months = $1312.50 or $218.75 per month.

I just received the county tax bill that has our taxes at $1603.32 per 6 months. That comes out to $267.22 per month. I called the county tax rep today and they confirmed the $1603.32 amount is the correct one and they don’t have a clue where escrow/ my loan officer got the $1312.50 ($218.75 per month) amount from. This would come out to an extra $48.47 per month (in reality it’s an extra $88.47 per month because my mortgage company, Bank of America, said they require an extra $40 as a “cushion” for any unexpected tax surprises.

I will be calling my loan officer, but I want to be prepared with my requests
So my questions are:
Has anyone experienced something like this?
What recourse do my wife and I have (small claims court) if we can pinpoint who made the mistake (escrow, loan officer, etc..)
What kind of compensation for these damages could we seek and reasonably get?
Also, is this $40 “cushion” from Bank of America a standard fee for the industry or are we getting ripped off?

thanks for any help…

John answers:

You have no cause of action because you didn’t suffer a loss, just an inconvenience. They’re not charging you more than you owe. They’re only changing when you pay it.

My lender also periodically increase my escrow deposit to increase the cushion. It’s perfectly legal and it’s still your money. In some states it’s a requirement. When you sell the house you get back any reserves that are being held in escrow.

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