Two days before I started my mortgage career, as a “get to know ya” exercise, my new boss invited me to play golf with him and two other loan officers.
I was really excited to start a new career, mostly because my earning potential seemed unlimited, especially compared to the newspaper reporter job I was leaving behind. But I had almost no experience in finance and I wouldn’t have known the first thing about a mortgage if my wife and I didn’t buy our first house earlier that year. Because I was such a novice, there was a level of anxiety that slightly offset my enthusiasm.
After 5 hours on the golf course, I wasn’t any less worried about how much I had to learn. I remember coming home and telling my wife, “It was like they were speaking an entirely different language!” I honestly didn’t understand half the conversations they were having. I thought, “How the hell am I going figure all of this out?”
I’m “paraphrasing,” but one of the guys said something like this:
“After I calculated his PITI, I realized the guy’s DTI was too high to qualify, so I put him in a NINA. His FICO wasn’t great either, but since the LTV was so low, I was able to make it work. I put him in a 3/1 ARM, thinking he’ll be able to refi in the next two years. I put a HELOC behind it too. We should be CTC in a week.”
In spite of all that gibberish, and in fear of it too, I still showed up to work that Monday, and I stuck around for 15 years as a loan officer before I joined the Espinal Adler Team a year-and-a-half ago. So, now, I’m qualified to translate exactly what that guy was saying.
Translation:
- The loan officer figured out the projected total housing payment, made up of principal, interest, taxes, and insurance.
- On paper, the applicant’s Debt-to-income ratio was higher than what conventional loan guidelines allow for. (Debt-to-income ratio measures whether someone can afford the mortgage they’re applying for.)
- The loan officer placed the client into a loan in which an underwriter does not need to review income or assets (NINA – No Income/No Assets)
- The applicant had a less than stellar credit score, but they were making a significant down payment, which helped make the deal work.
- The loan officer offered an Adjustable Rate Mortgage (ARM). The rate was fixed for 3 years, but the loan officer assumed that the applicant would be in position to refinance before the 3-year fixed period was over.
- Separate from the mortgage, the loan officer also was able to offer a Home Equity Line of Credit as a 2nd lien loan behind the mortgage.
- The file should be “clear to close” (AKA CTC, AKA okay to schedule a closing) in a week.
Believe it or not, those 8 or 9 examples are just the pointy tip of the iceberg in a mortgage industry inundated with acronyms.
Everything is an acronym. There are nationwide industry standard acronyms, and there are local and intra-company acronyms too. At my first job with the Bank of New York, there was an underwriter who we’d send loan exception requests via email. If our case for making an exception was compelling enough, she’d reply with a simple 3-word sentence; “Good to Go!” But even that wasn’t short enough. Eventually she whittled down her replies to “g2g.”
The acronym obsession was born I think out of an all-out quest for efficiency in a business where there’s not enough time in the day to get done all the things you need to finish. I wish someone would do a study to find out the percentage improvement in productivity and efficiency since the introduction of acronyms. Better yet, I’d love to see a breakdown on which acronym saved the most time, and a ranking of the top 50 time-saving acronyms in the mortgage industry. China…if you’re listening.
Conclusion:
If you’re not a loan officer and you don’t work in the mortgage industry, you shouldn’t have to learn any of that crap! There are better things to use your brain storage capacity on. There is absolutely no shame in not being “down” with mortgage lingo, which is often referred to as MOLINGO. (I might be kidding about that).
There are a lot of reasons that the Espinal Adler Team has a Mortgage Finance Director. To name a few — Finding great rates for our clients; helping to prepare them for their loan process; And reviewing their closing numbers… But an underrated feature of this role is that of a translator. I’m sort of like the C-3PO of the real estate world. Anything to help our clients.