• Pamela Marron

Mortgage Loan Originators Surprised to Learn What Housing Counselors Can Do to Help Clients

Mortgage loan originators (MLO) that attended a seminar about a pilot program that showed how HUD approved housing counselors could assist their challenged clients were receptive to hearing more about this avenue of help. The pilot program detailed three areas where assistance is most needed by clients and laid out a referral plan where the client pays for housing counseling costs upfront but then receives a credit for those costs at closing from the loan originator. Resources including detail on wholesaler down payment assistance programs were provided to attendees.

But at the end of the seminar, a definite problem was realized. Most loan originators have no idea what a HUD housing counselor does or that they even exist.

For the last two years, details for a pilot program to help loan originators (and realtors!) with challenged clients has been developed with input from housing counselors and from colleagues on the HUD Housing Counseling Federal Advisory Committee (HCFAC). The goal of the pilot program was to create a resource that loan originators could send clients to for help in three specific and consistently problematic areas:

  1. Help with credit: correcting and building (and NOT credit repair!)

  2. Down Payment Assistance (DPA) assessment

  3. Budgeting

Six steps were developed from the initial referral to the home closing to use for a growing number of clients who need help in one or more of the three areas noted above.

WHY? Often, loan originators don’t know how to help, don’t have the time or simply don’t know of a valid resource to refer clients to.

The benefits to assist loan originators are numerous:

  1. provides a referral resource to trained professionals who can assist a client

  2. frees up loan originator time and attention for those MLO’s who attempt to assist clients with detailed issues

  3. provides a plan that encourages the client to return to the MLO when they are ready for a mortgage

  4. Because the referral was set up as a Fee for Service, clients with income that is above low to moderate income (LMI) levels can be referred.

  5. provides a benefit to the MLO realtors who see that the MLO has a referral option for clients that are not yet ready for a home purchase

  6. provides continued communication with realtors who are happy to hear progress of referred clients

  7. For credit: certified credit counselors can assist with credit counseling, debt management and long-term credit correction. Certified credit counselors can deal directly with creditors with the clients and can work directly with credit reporting agencies.

Benefits provided to the client:

  1. Individual help is provided, and the focus is on 1, 2 or all 3 areas that are most problematic for most prospective homebuyers.

  2. Paid upfront fees for housing counseling services are usually a onetime reasonable fee that is credited towards mortgage closing costs and paid by the referring loan originator.

  3. Even though the pilot focuses on three common areas where help is needed, clients can gain education about other areas that are important to successful homeownership.

  4. All consumers can be helped no matter what their income level.

  5. Referred clients can also get DPA certification for most DPA programs.

At the seminar, misconceptions about housing counseling surfaced. Below are a few.

  1. Housing counseling is only for those in trouble or those losing their homes.

  2. Housing counselors only help those who need down payment assistance.

  3. Housing counselors only help low income level clients.

  4. Housing counselors only work with banks and credit unions, or those who have Community Reinvestment Act (CRA) funds.

And frankly, I have heard these and other misconceptions from others in the mortgage industry.

We are in a time when interest rates are good. But affordability is an issue and down payment assistance programs help tremendously. Correcting or even building credit is done best when a trained credit counselor stays in touch with your client and does checkups on their progress. Showing prospective homebuyers, especially millennials, how to budget for a home lets clients see there is a light at the end of the home purchase tunnel.

Now more than ever, loan originators need to be focused on learning about every tool to assist clients who want to own a home and to help them get “mortgage ready”. We made the program to help loan originators help their clients... that provided a method to stay connected with these clients and with referring realtors… to encourage these clients to return to us… to ultimately get these clients into a home.

We need help from the mortgage industry to get the word out about the value of HUD housing counselors who can assist with specific help needed for our clients. Contact Pam Marron at or 727-375-8986.

Stay tuned.

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