The Garrett Watts Report - All Comments

re: Originator Comp Debate: Minimum Wage Labor Laws

Charles Dailey — Sat, 14 May 2011 20:05:34 GMT

This is why we're erring on the side of caution: http://www.nka.com/Cases/CascadeMortgage.aspx?CaseRef=175

re: Originator Comp Debate: Minimum Wage Labor Laws

Gary Clark — Wed, 11 May 2011 20:29:58 GMT

The issue is the Department of Labor and their issuance of Administrator's Interpretation No. 2010-1 in March of last year. This unsolicited interpretation withdrew a 2006 opinion letter issued by the DOL to the MBA which gave loan originators an exemption from the Fair Labor Standards Act requiring the payment of overtime. As a result, unless you are classified as an "outside sales person" (which requires 51% of your time spent outside of any physical office selling), originators should be receiving a min wage and overtime, if applicable. The MBA did file suit against the DOL in January of this year asking the courts to set aside this ruling. Legal action on this suit is still pending at the current time. We have moved to comply with this requirement, classifying our origination staff as either outside sales or inside (even though they may be out calling on clients). We then pay a recoverable draw to those classified as inside and require everyone to complete time cards. In addition, we have our outside sales staff complete a quarterly certification that they are still in fact spending the proper amount of time outside selling. As always, do not consider this as legal advice, and seek the advice of your own consel. We used two separate firms, including a labor specialist in our home state and a mortgage banking specialist on a nationwide basis.

re: Originator Comp Debate: Minimum Wage Labor Laws

Brett — Tue, 10 May 2011 21:19:36 GMT

We have always had a draw against commission. I would consider myself an outside sales person, since most of our business is what individual originators bring in from outside sources (realtors, financial advisors, friends/family, etc.). In fact, our bank does very little marketing, so we definitely don't have any kind of a call center environment. If we were being paid a draw to begin with, couldn't we have just continued doing it the way we always had (i.e. no minimum wage, no clocking in and out) and still be in compliance?

re: Originator Comp Debate: Minimum Wage Labor Laws

Renee Doran — Mon, 09 May 2011 19:33:34 GMT

Your local Department of Labor Wage and Hour Division can help you with this. There are very specific conditions for employees to be paid commission only whether they are not referral based. It is more related to their distinctions of being classified as an inside or outside salesperson - and even if we are traveling - typically we are not qualified as outside. Auto dealers are the only ones that are exempt because they pay weekly/regular draws agains commissions rather than an hourly wage. This has been largely ignored by employers and LOs because LOs are paid more as commission only employees.

re: The Downside of Hedging Interest Rate Risk with Mandatory Loan Commitments

john chang — Wed, 30 Mar 2011 14:56:58 GMT

Can you explain how the $3M loss from the increase of rate is derived?

re: Mortgage Darwinism: Do You Have a Plan B for 2011?

Tracy Landis — Thu, 24 Feb 2011 00:08:49 GMT

Brett-Just a few referral source ideas: Builders, accountants, and marketing to medium sized companies directly to get set up as their preferred lender. It's a service that you offer to the management of the company, then the company can offer it to their employees with no cost to the company! If you parter with some title companies, inspectors, etc, you can offer discounted closing costs to those using your services and also offer in-house quarterly seminars for first time buyers, people interested in refis, etc.

re: Do High Volume Loan Originators Cost Companies More in the Long Run?

George DeVine — Thu, 10 Feb 2011 12:27:21 GMT

In the book "Good to Great" the author explains that a great company learns to get the right people on the bus, but more importantly, the wrong people off the bus. He uses an analogy of a professional sports team where all players work hard and are talented. He surmised, can you imagine the Boston Celtics having a handful of guys on the bench who are on the team, but don't know how to play basketball, and the effect that would have on the overall pride, and morale of the team. Low level producers with a lack of motivation drag the entire team down.

re: Outlooks for the Future of Mortgage Lending

Tim Souza — Wed, 26 Jan 2011 13:23:30 GMT

While I agree with the fact that professional is the key word and I consider myself a professional in the industry for close to a decade I do not agree with your mudslinging of the used car salesman. We are experiencing a negative stigma in the mortgage industry as a whole because of the actions of a few. Your comments would lead one to the same negative stigma toward used car salesmen. There is no reason why a used car salesman could not transition into the industry if propertly equiped. I have a Masters in Finance that supposedly qualifies me for my job but I am smart enough to know people and you should never stereotype a group that you just did.

re: Mortgage Darwinism: Do You Have a Plan B for 2011?

Brett — Wed, 19 Jan 2011 15:30:37 GMT

Phil: Aside from realtors and financial advisors, what are some other referral contacts with whom you have had success, and what is the best way to make contact with them?

re: Mortgage Darwinism: Do You Have a Plan B for 2011?

Phill Wright — Tue, 18 Jan 2011 16:06:08 GMT

The Key to success in 2011 is marketing all of your referral partners, not just Realtors. Realtors are also scraping the bottom for sales and the last thing they want is for 20 million mortgage officers to be banging on their doors keeping them from finding more business. If you want to impress a Realtor and gain a new referral contact give him/her a referral!

re: Mortgage Darwinism: Do You Have a Plan B for 2011?

Ken Crute — Sun, 16 Jan 2011 00:52:26 GMT

PLAN B, continue to focus on the few niches I do well, and be prepared to really roll up my sleeves and work harder than ever and start writing the 9 Million Dollar LO, I skipped 8 so I could get ahead of Brett and Curt

re: Mortgage Darwinism: Do You Have a Plan B for 2011?

Jason Harris — Sat, 15 Jan 2011 14:35:14 GMT

Craig...the only products for the condo purchase you mention will be portfolio loans. I would suggest speaking with a small local bank or credit union. The builder may be able to suggest a lender as well.

re: Mortgage Darwinism: Do You Have a Plan B for 2011?

GERALDO RIBEIRO — Fri, 14 Jan 2011 19:38:07 GMT

I believe the 2011 will be a great yr for loan originators that could survive the suname. Florida. In 2006, have around 86000 LO and after after january first with the new NMLS license the number drop to around 14000. And, after the dead line, april first, probably will drop even further. Also, the new compensation, that starting 4/1 will be another reason more people will leave the business. Mortgage Brokers Corp, drop from over 7000 to around 900 and branches from mid 3000 to 600. All that hapens thanks to Frank and Dodd. I suvive teh first wave and get my new NMLS license, but I am waiting for april first to decide if I will continue to work as LO.I wish everybody the best in 2011.

re: Mortgage Darwinism: Do You Have a Plan B for 2011?

Craig Mednikow — Fri, 14 Jan 2011 06:07:03 GMT

Might be off the subject a little... But I have people wanting to buy new condos that are NOT FHA approved (small complex less than 50% sold) and as far as I can find there is no product for them... You guys are the pros, But these are good people good credit 10-20% down... Maybe someone can help thanks

re: Mortgage Darwinism: Do You Have a Plan B for 2011?

Curt Sandfort — Fri, 14 Jan 2011 04:19:55 GMT

Brett, your book is already obsolete....I am working on the 7 Million Dollar Loan Originator :-)