Abstract:
A method and model for originating mortgages is provided that includes a team of members for originating a mortgage having a first team member who supervises a second and third team member and provides home buying consulting services preferably as a licensed real estate agent and mortgage consulting services to a home buyer. The second team member is primarily responsible for the mortgage loan coordination. The third team member is primarily responsible for the mortgage loan processing. The first team member is compensated for providing the mortgage consulting services.

Description:
[0001]    The invention relates to a mortgage origination model and more specifically, a mortgage origination model and method that enables realtors to provide a one-stop service to homebuyers by including mortgage services as part of their platform. 
       BACKGROUND OF THE INVENTION 
       [0002]    Traditionally, a home buyer has had to work independently with a realtor and then, a mortgage lender. This does not always provide the home buyer with quick and accurate loan decisions and competitive rates or closing costs. 
         [0003]    Over the past several years, technological advances have opened new information sources for home buyers. For instance, the internet now helps buyers find the house they want, information on specific neighborhoods and areas, mortgage options and other home buying information. Studies have shown over 70 percent of homebuyers now turn to the internet to search for their next home. As home buyers become more knowledgeable, they expect access to broader product and mortgage selection, and better loan rates, closing costs and service in general. 
         [0004]    Accordingly, real estate professionals should adapt to this changing environment. Real estate professionals have begun to embrace computer technologies and online marketing and business expansion products, such as instant messaging and online home searching. However, to be most successful, a realtor should provide exceptional customer service, unmatched product selection, local operations and competitive rates and closing costs all in a one-stop shop environment. 
         [0005]    Real estate professionals have viewed the U.S. Department of Housing and Urban Development&#39;s (HUD) Real Estate Settlement Procedures Act (RESPA) as a (Docket 4090) roadblock to providing this bundle of services. RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and, among other things, prohibits realtor compensation that increases the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD. RESPA is codified at 12 U.S.C. § 27 and is hereby incorporated herein by reference. 
       BRIEF DESCRIPTION OF THE INVENTION 
       [0006]    In an embodiment of the present invention a method for originating mortgages includes the steps of providing a team for originating a mortgage including a first team member who supervises a second and third team member and provides home buying consulting services preferably as a licensed real estate agent and mortgage consulting services to a home buyer. A second team member is provided primarily for mortgage loan coordination. A third team member is provided primarily for mortgage loan processing. Furthermore, training may be provided to the first team member to provide top quality mortgage consulting services. Finally, the method may include compensating the first team member for its mortgage consulting services. 
         [0007]    Other advantages of this mortgage origination method and model will become apparent from the following description taken in connection with the accompanying drawing, and example an embodiment of the present invention. 
     
    
     
       BRIEF DESCRIPTION OF THE DRAWINGS 
         [0008]      FIG. 1  is a chart showing the three tier mortgage origination model of the present invention; 
           [0009]      FIG. 2  is a diagram showing the role of the home buying specialist of the mortgage origination model of  FIG. 1 ; and 
           [0010]      FIG. 3  is a diagram showing the prior art, traditional mortgage origination model. 
       
    
    
     DETAILED DESCRIPTION 
       [0011]    Referring to  FIG. 1 , a diagram of the method for originating home loans is illustrated and shows a generally three-tier home buying and mortgage origination model  10 . A mortgage company  20  uses three tier teams  22 , each of which include a home buying specialist  30 , a loan coordinator  40  and a loan processor  50 . 
         [0012]    Although  FIG. 1  shows a mortgage company  20  with three teams  22 , it should be understood that the mortgage company  20  may have any number of teams  22 . Furthermore, although the three tiers  30 ,  40  and  50  are only shown with respect to one team  22 , it should be understood that each team  22  has these same tiers. 
         [0013]    The first tier in the team  22  is the mortgage counselor  30 . This counselor  30  is a licensed real estate agent, insurance agent or financial planner  32  as well as a trained mortgage team manager  34 . The mortgage counselor  30  works closely with each home buyer/borrower  36  throughout the entire home buying and mortgage process. More specifically, as the real estate agent  32 , the mortgage counselor  30  assists a home buyer in finding the desired home to buy. Thereafter, as the team manager  34 , the mortgage counselor  30  maintains delegation and supervisory control over the mortgage team  22 . Thus, the mortgage counselor  30  oversees and controls the entire home purchasing process, from the home shopping phase to the loan application phase and finally to closing. 
         [0014]    Because the mortgage counselor  30  maintains her qualification as a real estate agent, insurance agent or financial planner of another firm, her employment relationship with the mortgage company  20  is preferably as an independent contractor. This independent contractor status may provide other benefits, i.e., tax, as well. 
         [0015]    As further detailed herein and shown in  FIG. 2 , this team model highlights the value of the mortgage counselor  30  to the home buyer  36  while also creating the optimum home buying experience for the home buyer  36 . It allows the home buyer  36  to quickly and easily locate mortgage lending information and options while staying connected to one source who can offer not only home buying counseling but mortgage counseling as well. This is in contrast to the traditional model, as shown in  FIG. 3 . 
         [0016]    As the mortgage counselor  30 , the mortgage counselor  30  originates loans. To do so, the mortgage counselor  30  must be in compliance with RESPA regulations. To be compliant, the mortgage counselor  30  must meet certain state licensing and continuing education requirements, be willing to offer certain disclosures and offer the home buyer three choices for mortgage services. Preferably, the mortgage counselor  30  will provide the mortgage company  20  and two additional mortgage lenders referrals to the potential home buyer  36 . 
         [0017]    More specifically, the following eight services are preferably performed by the mortgage counselor  30 :
       1. Gathering information from the home buyer/borrower and filling out the loan application.   2. Analyzing the prospective borrower&#39;s income and debt and pre-qualifying the prospective home buyer to determine the maximum mortgage that the prospective home buyer can afford;   3. Educating the prospective home buyer in the home buying and financing process, advising the home buyer about the different types of basic loan products available, and explaining how closing costs and monthly payments could vary under each product;   4. Collecting financial information (e.g., tax returns, bank statements) and other related documents that are part of the application process;   5. Initiating and/or ordering inspections, such as the house inspection, radon inspection, etc. or engineering reports;   6. Assisting the potential home owner in understanding and reading the credit report;   7. Maintaining regular contact with the home buyer/borrower and the lender, from application to the closing, to apprise the home buyer of the loan status and gather any additional information as needed; and   8. Participating in the loan closing, including reviewing the HUD, communicating with the home buyer the closing date and time and attending the closing if possible.       
 
         [0026]    HUD, through Section 8 of RESPA, prohibits payment from mortgage lenders/brokers to realtors unless a certain number of compensable services are performed by the realtor. In a letter to the Independent Bankers Association of America dated Feb. 14, 1995 (IBAA letter) hereby incorporated herein by reference, HUD identified further services normally performed in the organization of a loan including the eight services identified above. HUD concluded that five of the fourteen identified services must be performed to meet RESPA guidelines for payment. Accordingly, by this method, the mortgage counselor  30  not only meets but exceeds the RESPA regulations and may be compensated, and the mortgage counselor  30  can earn a commission in addition to the real estate agency fees. 
         [0027]    Preferably, the mortgage company  20  trains the real estate agent  32  to become qualified as a mortgage counselor  34 . The training may be in person or online. Additionally, the mortgage company  20  preferably offers access to a web-based software that assists the home buying specialization with her mortgage counseling duties. One such software is sold under the brand name Encompass® by Ellie Mae® of Dublin, Calif. Such software enables a mortgage counselor  34  to obtain timely approvals from Fannie Mae® and Freddie Mac®. Such software also allows the mortgage counselor  34  to track each home buyer&#39;s loan twenty-four hours a day, seven days a week. Finally, this type of software assists the mortgage counselor  34  with services 1-2, 6 and 7 above. 
         [0028]    The second tier of each team  22  includes two members, the loan coordinator  40  and the loan processor  50 . The loan coordinator  40  is the team&#39;s mortgage expert and is responsible for finding the best mortgage loan, rate and closing costs for each home buyer&#39;s needs. The loan coordinator  40  may meet with the home buyer  36 , lock the loan, produce Good Faith Estimates, truth-in-lending documents, run pre-approvals as needed, etc. 
         [0029]    Once the loan is locked, the loan is passed to the other member of the team&#39;s second tier: the loan processor  50 . The loan processor  50  validates information, orders documents and prepares for closing. 
         [0030]    This two-tier team model  10  allows the mortgage company  20  to offer very competitive rates as a result of the high loan production (as opposed to high profit per loan). Furthermore, the mortgage counselor  30  can be rewarded every time one of her home buyers returns to the mortgage company  20  to refinance, relocate, take out a second or investment loan or refers another potential home buyer/borrower, the mortgage counselor  30  requires a commission in that loan also. The mortgage company&#39;s staff, i.e., the loan coordinators  40  and the loan processors  50 , is preferably on a fixed compensation plan, with no overages permitted. This is in contrast to the more traditional practice of paying loan officers based on net profitability so the higher the interest rate and the higher the closing costs the home buyer accepts, the more the loan officer is compensated.