They don't want to go public. They are already making money. They just want to pay Realtors to help them do more loans.

Computer Mortgages of America, Inc. operates in 30 states encouraging real estate agents to become loan originators.

According to national sales manager Bob Hurd, Realtors already do much of the work involved, prequalifying the customer, collecting paperwork, and introducing the customer to a lender. They just haven't been paid for the job until now.

Hurd says the company's average loan is about $150,000. With a one percent loan origination fee, a Realtor can leave the closing table with $1,500 more in his or her pocket.

"Our company was started by a Realtor, " says Hurd. "He decided that he is the one who comes up with the customer, spends his time and then refers them to a lender. The Realtor develops the customer. You might as well take them all the way."

What activities are involved in loan originations? It's not hard, says Hurd. "There are some activities like the loan application, the Realtor will collect the basic information like pay stubs, w2's and bank statements. They will choose their own appraiser and title company and once that is done, the loan is downloaded to us. The documents are faxed, depending on the Realtor. Sometimes they are scanned."

"Most like the ability to order their own appraiser," adds Hurd. "It allows the Realtor to keep better keep in touch with what is going on in the transaction."

Sounds easy enough, but RESPA regulations are enforced by the HUD who doesn't want to see anyone get paid for handing a lender a name. In order to comply, Realtor loan originators have to be an active participant in the origination and/or processing of the loan. Realtors also must disclose that they have an interest in the loan and will be paid. Consumers must be able to go to any lender of their choice and not be made to feel that they are forced or coerced into selecting any particular loan originator. Consumers are also allowed to switch to another lender if they choose, which also satisfies RESPA requirements.

The up side for the Realtor? In a business climate where more clients are asking Realtors to cut their commissions, adding loan originations to their service offerings makes sense. It can also help them hold onto and close more deals.

"By the time they are ready to make a loan application, the consumer has a comfort level with the Realtor, and they don't have to be turned over to another individual," says Hurd.

As the loan originator, the Realtor is tipped early on the buyer's credit worthiness, and is better positioned to handle the buyer more efficiently. A Realtor can pre-qualify a buyer in his/her own office, and get back a loan approval from the Computer Mortgages of America system within 30 minutes. The system includes up to 30 lenders from which the buyer can choose, including Providence Funding, Countrywide, North American Mortgage, Old Kent, Chase Manhattan, and Wells Fargo, or they can choose a lender outside the system. With an idea of the amount the buyer can borrow, the Realtor can better select homes for the buyer to view.

Hurd claims that the company's loan rates are as good or better than other lenders. "If we were charging higher interest rates or points, it wouldn't benefit the Realtor or us," he explains. "Consumers are too savvy for that."

The loan software package allows Realtors to track the status of the loan anytime so they can remain the contact point for the loan. That makes the Realtor the first to know, not the last to know if anything is delayed or goes wrong.

To assure their compliance with RESPA regulations, Computer Mortgages of America provides REALTORS with training by phone, and retains attorneys to address questions. Tutorials will soon be offered on the Web site state by state.

"This is another way to keep some more money in the Realtor's pocket," sums Hurd. "They are the ones who have to bite the bullet, sometimes. We've had some Realtors take the fee and use it to buy a homeowner's warranty for their buyer. Some do it strictly for the extra money, and some refund the loan origination fee at closing by reducing the commission from six percent to five. The main thing is it gives the Realtor some wiggle room."

Published: August 11, 2000

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