You who believe that as a loan counselor you can't be replaced by lower cost operations please wake up. Here's how it can be done. First of all, if you are not using Desktop Originator/Underwriter or Loan Prospector your days are really numbered. Do you realize that I can originate an application with a laptop computer and submit my file electronically and get a loan approval in merely minutes, then order the appraisal (if required at all) and title report and head for the closing? I don't need a processor for these loans. I can do this for 50% less money and still net more than you guys and gals out their who are still processing loans. I am the loan officer of the future. I may be a Realtor, I may be a loan processor/counselor, or someone else. You figure it out.

When you fax an application to your favorite lender for them to enter the information and submit to DU or LP, you easily lose a day, and it costs the lender more money. You have to get the information anyway, so why not just submit it yourself and demand better pricing from the lender?

Oh, I know, you say that I can't get all the business. OK for now, but I can get 50% of your business, beginning right now! What will you do with 50% of your business gone. You see I'm computer smart. I have all the reg's and the loan programs on my laptop. I take it everywhere. I have access to internet information sites, and I have a home page. And I will take away 50% of your customers because they qualify for automated underwriting guidelines and reduced documentation. I will take away your realtors, too, because I can do it for less. I will even offer your Realtor a piece of the action. You can't do that because it's against the law for you to pay for referrals. Not a problem for me, I have many ways around that hurdle which are perfectly legal.

If you think that just because you are very good customer oriented mortgage counselor and that you are trying to keep up with technology that you can avoid becoming extinct, let me paint a little picture:

My son is 26. He is a computer junky. He works at it all 24/7 as a computer software developer and then plays games and surfs the net at night. Like all "kids" his age, he had to learn how to work on a computer in college. We actually bought him one when he was in high school. I have been working on small computers since 1982. I even had a Kaypro II, which I carried from home to work every day. Nearly all people who work today have to come in contact with computers. Many work at them all day, and many are even using the Internet every day. All college students must have a computer. They are teaching Internet and computer literacy in elementary school. And now there is interactive television and Web TV.

What I am trying to say is that people who work with computers, aren't afraid of them. If my customer could make application directly to a lender via computer, he would do it in a heartbeat, IF it meant that he would have almost instantaneous loan approval and especially if it would be cheaper. There is no time invested. Sophisticated buyers don't need hand holding IF there is the anticipation of instant approval.

Let's look seriously about where the industry is today. Several years ago if you went to buy a car, you had to wait a day or two for loan approval, while your credit application was sent to the bank and to an underwriter. OR, you went to your bank, made application and in a day or two you would get a check to take to the dealer. Today, you can go into a dealer, make and offer, complete a brief credit application and drive out in your new car within an hour. It is all done by computer link and credit scoring. If you pass the credit score you get the car NOW. That is where the mortgage industry is headed and it is available today. The technology is there and working. Not yet for everyone, but for maybe 50% of YOUR BEST CUSTOMERS.

Internet commerce is here. If you haven't bought anything over the internet you are probably in the minority. Sales of merchandise and loan applications over the internet are expanding exponentially in the thousands percent per year. I heard recently that Holiday Sales over the internet were in the Billions of dollars. Mortgage applications over the internet will become easy as more people get comfortable with buying books and CDs over the intenet.

Real estate companies are still forming mortgage companies or alliances. The office brokers are instructed that they are to refer their agents to the inhouse lender, or CLO. Furthermore, the CLO has about 10 lenders and the "loan officer", or whatever he/she is called, takes the application on a laptop and shows the 10 lenders, rates, and various programs that the buyer will qualify for and then sends the file electronically to the lender they select. The lender does the processing and issues the commitment.

On the other side, and I don't know exactly how it works, are the mortgage bankers. They also have a high tech system and are working with real estate companies. What ever the relationship, it is designed to get fast electronic approvals and closings.

Now consider the potential for cost savings and profit maintenance. If you streamline the mortgage application/process/closing procedure, how much could you cut your pricing and still either maintain your present profit margin or even improve on it? Don't you see? If you have the qualified buyers, and the expertise, why do you want to turn the borrower over to a Realtor to allow them to make 2 to 3 times as much money per transaction than you do? You need to either be the listing agent or the buyer's agent. Your RE brokers and agents have good cause to be worried about their future.

The key principal is this. Financing in a real estate transaction is SECONDARY to the process. We have got to start thinking about the primary purpose... to CLOSE THE SALE, not to close the loan. Our Purpose should be to bring buyers and sellers together. With automation, the middleman becomes obsolete. When you desktop a file and get an approval, you also get a list of all the things needed to complete the approval. We have the capability to re-structure our business and instead of loan officers, we could have buyer's agents. We have the tools and the expertise, and we are getting to the buyers first. Can you afford to lose 50% or more of your best customers? Think about it. As a full service agency, a mortgage brokerage firm could have a first crack at not only the buyers, but all the buyers that we had before and all their financing needs in the future. Do you think that the RE broker is interested in refinancing and home improvement loans? I like my little specialty of being one of the best in mortgage lending, but the cost of my services is being undercut and price does make a difference. I have to change to remain competitive.

Mortgage brokers have succeeded in capturing 75% of all originations. We have been successful because we can do it cheaper, and faster and better. Automation and regulation have taken away some of the edge and will only make it more difficult in the future. Once we can look at financing as secondary to the process of buying real estate, then we can view the function that we provide as closing the sale. We are already in the real estate business. When was the last time you saved a deal for a Realtor? When was the last time that you killed a deal that the Realtor had no business writing? Did they thank you? How many times have you had to correct errors in purchase contracts because your Realtor didn't know what they were doing? How many times has your Realtor made promises for you that you couldn't keep? And then blamed you for it?

With technology available today, you could show customers homes for sale by computer, video tape, and fax on demand flyers. You could also do it for less. Not that you would have to. Some mortgage brokers are already doing this on a limited basis, but I have not seen any real successes. No one that I know of has done this on a large scale.

The Point of Sale is the place where the buyer signs the contract; the open house, the real estate office, or Denny's, wherever the Realtor makes the sale. To be at the point of sale, the loan originator must be there as well. Many Realtors have developed "partnerships" and "alliances" with mortgage people to sit at open houses to be available to take loan applications. However, partnerships and alliances are weak sisters. They are fickle and subject to minimal controls. Like contract processing, there are very distinct disadvantages and it works much better when you can control it yourself. You are also very correct about the brokers who are not keeping up with technology. They are not reading these dialogs. And they are going to be rudely awakened. By then it will be too late. You will be able to hire them as buyer agents if they will accept computer training.

Do you now think, having seen the business from both sides, that maybe you could do a better job for your customer if you had control of the entire process? Furthermore, consider the profitability of banks since they have integrated additional financial services, insurance, stock investments, and financial planning. Becoming a financial planner is also a method of additional services mortgage brokers are and can offer in the future. I know some who are doing it today. But it all means that you have to do something. You can't stay the way you are. You either grow and expand, or you get small and maintain your customer base. I don't believe, however, that there will be more mortgage brokers in the future, as we have known them in the past.