Why it Takes So Long Lately to Close Loans

This is the title of today's post by the Editor of the National Mortgage News, intended to generate some helpful comments for my friend Paul Muolo. Below I have copied my comment in response to his question, in case you don't watch his column/blog posts. Something to chew on.

I know the real reason for this situation today. It started with the industry meltdown during the Fall of 1998 – precipitated by the Russian Ruble’s worldwide collapse. LOADS of mortgage people were unemployed and when the smoke cleared there were a lot of good people looking for work. The industry was timid about hiring them again (salary + modest bonuses), thus grew the notion that big fat commissions are the way to go. From a new employers’ point of view, a great idea – no payroll risk (and since many of them were newly re-opening and climbing out of the ashes it made sense to them). THAT was the beginning of the end for the residential real estate mortgage industry. Too many people became ‘Promise Makers’ since the ‘Promise Keeper’ side of the business didn’t offer those outrageous commissions/bonuses. Those commissions and the widespread excessive use of YSP rarely used to help the borrowers, since it mostly was utilized as yet another bonus for the ‘Promise Makers’ – the result is today’s situation which has resulted in a weak field of ‘Promise Keepers.’