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mortgage_loan_officer(MCT)—When a mortgage borrower selects a lender with whom to deal, the identity of the company is much less important to the borrower than the identity of the individual loan officer.

Real estate agents have always understood this. In looking for the smoothest possible financing process, they refer home purchasers to an individual loan officer, not to a company. If a preferred loan officer moves to another company, the real estate agent usually will follow.

This suggests that an easy way for home purchasers to select a loan officer is to follow the recommendation of their real estate agents, and without doubt you could do worse than following that rule. But you might also do a lot better, because the real estate agent’s criteria for selecting loan officers are not the same as yours. The real estate agent wants a loan officer who will get the loan processed in time for the loan to be available on the settlement date, and you want that as well. But you also are very much concerned with the price of the loan, and with the quality of decision support you receive: what type of loan and what combination of interest rate and upfront fees best meets your needs. These issues are of little interest to the real estate agent.

The problem is that the typical borrower has no reliable way of determining which loan officers do well in providing these services, and which don’t. I have long tinkered with the idea of providing a certification process for loan officers, and finally have one in development that should become available early in 2014. In the meantime, it occurred to me that it might be helpful to prospective borrowers if I explained what will go into the certification process. Astute borrowers can do their own certification.

Certified loan officers will offer price integrity, discussed below, and quality decision support, which is discussed next week.

PRICE COMPLETENESS: For prices to have integrity, they must include interest rate, upfront charges expressed as a percent of the loan, called “points,” and upfront charges expressed in dollars. On adjustable-rate mortgages, they must include the margin, index value, maximum and minimum rates, and rate change caps. It is not unusual for loan officers quoting prices to omit fees expressed in dollars, and omitting important features of adjustable-rate mortgages is more the rule than the exception.

POSTED PRICES: Mortgage prices have integrity only if they are the lender’s “posted prices” — those at which the lender is actually prepared to lend at the indicated point in time. Lenders distribute their posted prices every day to all loan officer employees through a variety of electronic systems. Borrowers seldom have access to these systems.