Barriers to Entry

[Secret!]

Barriers to Entry

Back when I wanted to go out on my own as a broker and open up my own shop, there were many hurtles I needed to jump over and several significant barriers to entry which would tend to keep a lot of riff-raft out of this industry. Virtually every young broker like me that I met, had previous portfolio institutional lender training - not like today where most have no previous lender etc.experience/ training. Therefore they lack the values and mind-set a portfolio trained person has. Back then, unlike today they knew the long term value of only putting together good quality transactions, instead of that's the wholesalers problem!

First off you needed to spend anywhere between $20k to $40,000; sign a multi-year term commercial occupancy space lease, buy and/or lease office furniture fixtures and equipment. Lobby furniture, plants, clocks, pictures, desks, chairs, tables, bookcases, faxes, copiers, computers, typewriters, staplers, chair mats, pens, pencils and many other supplies to get started once you were licensed. That's called owning a 'real' business and having career goals.

Next the credit bureaus had their field people inspect my location, it needed to meet certain confidential standards, because not just any Tom, ***, or Harry couldn't pull credit reports, so the location needed to be acceptable and I needed to qualify and get approved by them. Many were rejected.

After that I needed to get approved to do business with the various wholesale funding sources I liked, just because I had a transaction for them, meant ZIP - they were picky about who they would accept loans from, so the quality would hold up! Little or no experience? Then you had no business dealing with credit applications and packages, can got rejected - thus no access to credit reports and no access to the money the wholesalers coveted.

The model has changed a lot since then, now days no license, and working out of a furnished apartment, no experience, no training or industry education, and handling the most important financial and emotional transaction in the lives of most American families is left up to just about anybody with no investment and virtually nothing to lose. These three barriers alone are pretty much gone now - the industry has done to itself; that's resulted in many problems.

Many of these individuals poking around in the unsupervised darkness, have caused the industry to have the black eye it has today - a roll back to the basics in many areas is long overdue for things to significantly improve. We don't need more laws and regulations, more enforcement surely is long overdue - plus extensive training and industry education is a good place to start from right now to get things headed back the other direction

[Troy]

Secret

I'd be doing a dis-service if I didn't state my opinion on this one...

In my opinion, you sound like a crotchety geezer on a soap box. "A roll back to the basics" is a statement of someone who can't (or won't) look forward to the future. It's a statement made by a politician trying to point the finger somewhere. And once you are able to place the blame, you have found yourself a loyal follower. You don't offer a solution....just a "shame on you" statement. If you want to stand on a soap box like that, then I suggest you offer a path... a timeline... some guidance.
Is educating the everyday LO going to change the unscrupulous activity? I really don't think so. Those out to make a quick buck are still going to try and make a quick buck... No amount of education will change that. Those who really care about serving people as a mortgage professional will seek out the educational opportunities. Most of the education that you need is dirt cheap and available to anyone who takes the time to look for it. Hell...most lenders offer some kind of free training/education.

What is the point of your article? "I will shame you into buying my CDs and educational materials" If that is your methodology, then I say shame on you. If its been a few years since you've originated loans, then I'd give a second thought to purchasing materials from you. Especially in the technology field.

People from the days of yorn with their 20-40K in offices & supplies had to pay for that somehow. Guess who paid for it....you guessed it, the borrowers. All of your start-up costs and overhead were paid for by points/fees. The technology that exists today allows me (and many other mortgage pros) to do loans smarter, faster, and cheaper....which ultimately brings savings to the client.

The industry is evolving. It won't be long before state borders almost don't matter. How long do you figure it will be before LOs as a whole are obsolete? I anticipate that within the next 10 years the vast majority of mortgages will begin and end with a biometric swipe of the finger that pulls two years of bank records and automatically calculates how much they can be approved for. All of the technology exists, it's just a matter of someone integrating it. I'm positioning myself and my team to take advantage of it.

I see possiblity, hope, & business solutions. I feel like you long for the days of the handwritten app.

just my .02

Anyone else? Am I just the naive optomist or do I make a point?

troy

[Secret!]

As the owner of this site, I think your opinion is worth more than 2 cents troy. Whether it's prudent for the owner to publically confront and be defiant towards the opinion of it's members is a sound business tactic, id naturally, a matter of opinion. I can telkl yo the reason this piuece doesn't resinate with you is that you haven't lived throuigh the ups and down in this industry as I have, so what's wrong and how we got there, is not yet as obvious to you.

Hopefully your marketing for this discussion board will attrract some others who have been around for a while, and who are brave enough to speak their minds all in the hopes of effecting the values of you readership - which is EXACTLY my goal!

Far as any dis-service, I'll enjoy seeing your coments on my It's Long Ovedue topic thread I'll be posting in a few minutes