Sometimes Even Bosses Just Need a Good Cry
There is a new law going into effect Friday. It is a law for bad guys. But you know who it affects? The good guys. I got the scoop from my boss.
How My Bosses’ Lives Change Tomorrow
An Interview with my Boss, James Beaver
Just the Assistant: First thing’s first… do I still get paid after Friday?
JA: Do you still get paid after Friday?
JA: Okay Boss, what’s changing?
Boss: Everything. The Dodd-Frank Wall Street Reform Act will change the way in which mortgage loan officers are compensated.
Starting Friday, a person providing a home loan cannot be paid based on any terms or conditions of the loan, like the interest rate, or length of the loan.
The reason this change has been implemented is that some lenders started using abusive practices. For example, in the past, some lenders would push people into sub-prime mortgage products that the borrower didn’t necessarily need, because their commission would be better.
JA: Now Boss, did you do that?
Boss: Heck no!
[Note: I’m teasing him. James is so ethical it’s nauseating.]
So through this law, the government basically said, “We don’t want the person providing the loan to be incentivized by a commission that is based on the terms and conditions of loan.”
In the end they want us to be paid in the same way for every loan that is completed, regardless of our profitability. Some loan officers will be paid about the same, and some will see a decrease in their pay.
JA: So this law was created for the bad guys?
JA: So what does this mean for my girlfriends?
Boss: The borrower’s experience won’t change much. They probably won’t notice a difference. It affects the people working in the industry more than the consumer.
But, if it goes into effect, it will result in higher costs associated with getting a mortgage.
In the past, if a loan officer extended an interest rate lock for a client, or had to have documents re-ordered, or anything else in the process of providing a loan that costs money, the loan officer would have that money directly deducted from their commission. But with this law, many have interpreted it to mean that the loan officer’s pay cannot be decreased for those additional costs. Instead, those costs will be absorbed by the lending institution. If the costs to conduct business go up for the lender, then ultimately those costs will get passed down to the consumer in the future.
JA: Boss, why don’t you have a seat in my therapy chair? How do you feel?
Boss: I feel like the pendulum has swung too far in the other direction. At this point in our industry, most of bad people are gone. All of the bad loan products are gone. So you’ve got the good guys left dealing with all the new regulations.
I’m just ready for all of it to be done with. It’s all we’ve talked about for six months, and I’m ready for it to be in our rearview mirror.
JA: Boss, would you like a tissue?
Boss: No, I’m good.
JA: Are you nervous?
Boss: I’m really not. I’m curious to see how all of this unfolds. I know we’re at a great company that has done its due diligence in this process. I’m just ready to get on with all this and see how things shake down.
[Note: “Shake down” – Listen how my boss is trying to sound all cool.]
I’m optimistic though because we’re in a really good place to weather this change. I think in 36 months we’ll have a considerably smaller list of competitors, so there is light at the end of the tunnel.
JA: Boss, do you need me to spot you a twenty?
Boss: What are the terms and conditions of the loan? Ha!
[Note: I typically have a strict “Nobody is Allowed to be Funny but Me” rule, but I’m going to let this one slide.]
Just the Assistant: You’re so funny, Boss! [He’ll eat that up.] Now go answer all those phone calls!
I’m going to take a seat in the therapy chair now. It saddens me that the reason all these regulations are being put in place is because other people cheated. My bosses are the good guys, and they have to deal with every new regulation and law that goes into effect. After Friday, they are going to be just as nice to me and all their clients, even though they are dealing with a lot of stress that comes along with all these changes.
So listen up friends, when you call my bosses asking for a nice purchase or refinance home loan (the one where you say I referred you?) please be very nice to them. And tell them they are really funny.
Now, I’m off wait in back alleys for the bad guys so I can beat them over the head with my laptop bag that is currently weighted with back issues of Glamour Magazine.