NMP - October 2016 - 56

To Credit Repair or Lose the Deal: BY CHAD hough opinions range widely on the topic, like it or not, credit repair organizations (CROs) have proven to be a valuable niche within in the industry. It's rumored some companies generate nearly $250 million annually helping consumer's obtain accurate credit reports and accomplish their financial goals. It would be short-sighted to subscribe to the notion that restoring a damaged credit report is easy and consumers can do it on their own. Credit reporting, credit scoring and consumer protection laws are three independent, highly complex subjects which are encompassed within the consumer credit industry. Unfortunately, the consumer credit industry has been riddled with some bad actors which has created a stigma that has stuck since the Credit Repair Organizations Act or CROA was passed in 1996. Much like predatory lending in the early and mid-2000s, compliant CROs have had an uphill battle proving their legitimacy. As my company approaches its 10th anniversary, we still have challenges differentiating ourselves from those who are less than scrupulous. My goal today is provide insight and food for thought to lenders that are considering adding a CRO to their list of vendors and to offer vetting tips to those that already engage in referring their turndowns. Finally, I want to potentially opening dialogue with those that are not open to the practice. T OCTOBER 2016 n National Mortgage Professional Magazine n NationalMortgageProfessional.com 56 Credit is not as simple as a number As an originator for nearly a decade, and a credit professional for an additional 10 years, I consider myself a career student and self-proclaimed credit nerd. I am a Supreme Court-accredited educator, expert witness, serve on the board of the industry's trade association NACSO and host a three-day annual event dedicated to higher learning in credit. Despite this experience, I still to this day learn new information and nuances regarding credit on a daily basis. This industry is fluid and changing faster now more than any time in history. Expertise is crucial and having competent and ethical credit professionals as a service provider can be invaluable to your business model. What does a CRO do as a partner? I cannot speak to the efficacy of all credit repair organizations, other than having colleagues in the industry that are serious about providing value added service to their clients. But as a referral based credit service organization, we have modeled our firm to specifically service the mortgage and real estate industries. We work together with our partners, on many levels, helping them convert their lost opportunities, educating their originators, providing CE classes to their real estate agent partners, as well as act as a point of reference for credit reporting and consumer law on a case by case basis. In most cases, our relationships are long-standing and based upon a long record of quality customer service. We take pride in our performance record and work tirelessly to maintain our accounts. With that being said, I cannot say that establishing these relationships has been easy. In today's regulatory environment, lenders have to be cautious about who they utilize as third party vendors. To clarify, the purpose of this article is not to advertise our services or make the case about the asset a credit repair company can be as a third-party vendor. However, it makes no sense to weigh the risks if you do not see a reward. Understanding the benefits of such a relationship can provide, gives sufficient insight to garner benefit from reading this article. From a metrics perspective, the return-on-investment (ROI) from consistently referring qualified turndowns returns approximately two or three in every 10 referrals as mortgage-ready borrowers. Breaking down the numbers, approximately 20 percent will not benefit from credit repair, half of that may benefit from the service are likely to enroll, and about half of those follow through with the steps necessary to be successful. Our partners as a whole, are very pleased with a 20-30 percent return on opportunities they most likely would not have realized without our help. I would like to add that you should be leery of any CRO claiming higher conversion rates. Now that you have a small bite of the potential benefits, let's move forward and discuss if the effort is worth the return on investment.

Table of Contents for the Digital Edition of NMP - October 2016

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NMP - October 2016 - 1
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