Chapter 38 — Exercises

Items marked † receive worked solutions in the answers appendix. Everything else is for your own practice, your study group, or your manager. No answers appear in this file.

Where an exercise asks you to invent numbers, invent them — but label them constructed, the way this book does. Where an exercise asks about a real rule, do not guess: look it up and cite what you found. And where an exercise asks about your own production, use your own real numbers, even if they are ugly. Especially if they are ugly.

A. Recall and definition

38.1 In one sentence each, define: book of business, value proposition, lunch-and-learn, database marketing, niche.

38.2 † The chapter argues that a loan officer sells neither a rate nor a loan. State what it argues is actually being sold, and name the four forms of evidence a referral partner can verify.

38.3 What is the difference between compliant co-marketing and RESPA-safe marketing as this chapter defines them?

38.4 Define referral rate two ways — for a single partner, and for your whole book — and write the formula for each. Then name the four currencies an agent is actually paid in, per §38.3.

38.5 What is review generation, and what are the three rules the chapter attaches to it?

B. Applied reasoning

38.6 † Why does the chapter say a value proposition that could not possibly be false is not a value proposition? Give an example of each kind from your own market.

38.7 † A colleague says: "I don't need to measure my on-time close rate. I know I'm good — my agents keep sending me business." Give three separate reasons this is a weak position, at least one of which does not depend on the possibility that they are wrong about being good.

38.8 §38.3 says an agent "does not owe you a referral because you closed their last file." Argue the opposite position as strongly as you can, then say where the argument breaks down.

38.9 † A loan officer has a partner who has referred nothing in four quarters but is genuinely a friend. Write the decision rule you would apply, and then write what you would actually say to that person.

38.10 §38.7 argues that the ninety days after closing outperform the ninety days before. Name the three asymmetries and rank them by how long each one lasts.

C. Write it

38.11 † Write your value proposition. Both versions — borrower and partner — on one page, following the five-part structure in §38.2: who, the problem, the commitment, the evidence, the limits. Rules: every commitment must be falsifiable and inside your control; the evidence section must contain at least one number you have actually computed; the limits paragraph must disqualify a real category of business you could otherwise pursue. If you are new and have no numbers yet, write the evidence section as what you will measure and by when.

38.12 Rewrite these three lines so that each one becomes falsifiable: (a) "I provide world-class service to every client." (b) "I'm always available." (c) "We have the most competitive rates in the market."

38.13 † Write the two sentences you would say at the closing table to ask for a review — the actual sentences, not a description of them. Then write the text message you would send within the hour with the link. Then write the single follow-up you would send if nothing posted in two weeks.

38.14 Write the referral ask you would make to the Linden Street borrowers at day 90, using the fact from the day-5 application call that Borrower 2's sister rents nearby with a lease ending in the spring. Then write the version you would use if you had no such fact in the record, and explain why the second one is weaker.

D. Design the session

38.15 † Design a lunch-and-learn. Pick one topic from §38.4's list — or one from your own market — and build the full forty-five-minute session using the agenda structure: the three-minute introduction, the problem framed from the agent's side, twenty-two minutes on one topic worked against a real document, questions, and the takeaway artifact. Deliverables: the agenda with timings, the document you would put on screen (describe it precisely; construct it if necessary and label it), and the one-page artifact.

38.16 For the session you designed in 38.15, write the three measurements you would use to decide whether it worked — and say explicitly why attendance is not one of them. Then write down the three questions you would ask your compliance department before buying lunch for eighteen agents, and say what you would do if the answer to any of them were "no."

38.17 An agent asks you, at the end of your session, a question you cannot answer: whether a seller-paid buyer-broker fee counts toward interested-party contribution limits on the program her client is using. Write your answer, in the words you would actually use, in under forty words.

E. Co-marketing: sort these

38.18 † The sorting set. For each arrangement below, mark it COMPLIANT, NOT COMPLIANT, or NEEDS MORE FACTS — and in every case name the specific fact that decides it. Do not answer from instinct; answer from the four tests in §38.5 (is a good or service furnished, is it at fair market value, is the benefit proportionate, is it documented).

(a) You pay \$300 a month for a quarter-page panel on a co-branded flyer. The printer's published rate card prices a quarter page at \$300. You are invoiced by the printer directly. (b) You pay \$600 a month for a quarter-page panel on the same flyer, "splitting it fifty-fifty" with the agent whose listings fill the other three panels. (c) You pay an agent \$500 a month under a written marketing services agreement. The agreement lists five deliverables. You have never seen any of them and have never asked. (d) You rent a desk in an agent's office for \$400 a month. A commercial broker's opinion of market rent for that square footage in that submarket is \$395–\$425. You use the desk two days a week. (e) Same as (d), but you have never once used the desk. (f) Same as (d), but the rent is \$150 a month. (g) You buy lunch for a brokerage sales meeting of twenty agents, once a quarter. (h) You buy lunch for one agent, weekly, and you track her referral volume in the same spreadsheet where you record the lunches. (i) You sponsor an agent's client appreciation event for \$2,000. Your name appears on a banner. The event's total cost is \$2,400. (j) Same as (i), but the event's total cost is \$8,000, there are four sponsors at \$2,000 each, and each gets equal signage and a table. (k) You pay a share of an online listing portal's advertising cost. Your branding appears on 20% of the impressions. You pay 20% of the cost. (l) Same as (k), but you pay 50%. (m) You offer past clients a \$100 gift card for every friend they send you who closes a loan. (n) You pay for professional photography of an agent's listings. Your logo appears in the corner of each photo. (o) An agent asks you to print her listing flyers. You decline, and instead offer to buy the bottom quarter of the flyer at the printer's rate, paid directly to the printer.

38.19 For every item you marked NOT COMPLIANT in 38.18, write the one-sentence substitution you would offer instead — the "I can't do that; here's what I can do" move from §38.5.

38.20 † Compute the excess. A co-branded digital campaign costs \$2,400 a month. The platform's published rate card prices the placements as: agent branding on 6 of 8 placements, lender branding on 2 of 8. You have agreed to pay \$1,200. State your proportionate share in dollars, compute the monthly and annual excess, and say what that excess is under Section 8. Then state what you would change to fix it, in two different ways.

38.21 Build the co-marketing folder for arrangement (a) in 38.18. List every document, who produces it, and how often. Then say which single document, if missing, would leave you unable to demonstrate the arrangement was fine.

F. Read this document and find the problem

38.22 † Here is a draft social media post from a first-year loan officer's personal account:

"🏡 CLOSED! Congrats to the Linden Street family on their first home!! We got them in at under 6.75% with only 5% down and their payment is under \$2,400/month. If you think you can't afford to buy — call me, you'd be surprised. Rates are dropping. 📲"

List every distinct compliance problem you can identify. For each, name the requirement, the chapter of this book that owns it, and the specific edit that would fix it. Then write a compliant version of the post that still accomplishes something. (There is also a factual error in the post that has nothing to do with advertising law. Find it.)

38.23 A loan officer's public profile reads: "Top 1% Originator | Fastest closings in the state | Rates as low as 5.99% | Let's get you approved today!" Identify the problems and rank them by severity, explaining your ranking criterion. Then do the same for this marketing services agreement clause: "Provider shall use commercially reasonable efforts to promote Lender to Provider's client base. Compensation shall be \$1,500 per month, adjusted quarterly by mutual agreement based on the parties' assessment of the arrangement's productivity."

G. Qualify, structure, and clear — carried from earlier chapters

38.24 † Using the Linden Street figures — \$10,500.00 monthly qualifying income, PITI plus mortgage insurance of \$3,033.72, other monthly debts of \$1,446.00 — verify the housing ratio and the back-end ratio, then recompute the back-end with the \$611.00 furniture payment added. Show your arithmetic to two decimal places. Then explain, in the language you would use with the buyer's agent on day 44, what those two numbers mean for her transaction.

38.25 The lock extension on Linden Street cost 0.250 point on \$365,750 and was lender-paid. Compute the dollar amount. Then answer: who actually bore that cost, and what would you have had to do differently on day 12 to avoid it?

38.26 For the Cypress Court file — a \$540,000 contract, 20% down, appraisal at \$505,000 — compute the maximum 80% loan against the appraised value, the revised required down payment, and the gap. Then write the ninety-second explanation you would deliver at a lunch-and-learn.

H. Niches and the plan

38.27 † Evaluate a niche. Choose one niche from §38.9's table, or one specific to your market. Produce: (a) the population and how many of them plausibly exist in your market, with your reasoning shown; (b) the referral network — the profession or institution that already advises this borrower; (c) the artifact you would build in quarter 2; (d) the two conditions this file type always generates that you could learn to pre-empt; (e) an honest statement of what you do not yet know. Then state the rule that prevents a specialist from simply being paid more per file, name the chapter that owns it, and explain why an originator who does not understand that rule might design a niche strategy that cannot work.

38.28 Using §38.9's hours arithmetic as a model, build the same calculation with your numbers: your actual average hours per file, your actual monthly closings, and your honest estimate of the learning curve for the niche you chose in 38.27. State clearly which figures are measured and which are estimated.

38.29 † Build the twelve-month plan. One page. Deliverables: the standing weekly blocks with hours (and the annual total), the four quarterly themes with three concrete actions each, and the nine-number dashboard with your current value for each — or "not yet measured," which is an honest and common answer in month one.

38.30 Compute your own source concentration: the percentage of your last twelve months' closings that came from your single largest referral source. State the number. Then set your own threshold and justify it — do not import one.

I. Judgment and ethics

38.31 † Your highest-volume agent — 22 of your 41 closings last year — tells you over lunch that a competing loan officer has offered to pay for her listing photography, and that she would rather keep working with you but "needs the same level of support." Write out how the conversation goes. Include what you say, what you do not say, what you offer instead, and what you do in the following week regardless of her answer.

38.32 A file closed nine days late entirely because you failed to order a verification of employment until day 38. The borrowers are gracious and the agent has said nothing. Walk through your post-close sequence and state, item by item, which parts you run, which you modify, and which you do not run at all — with your reasoning for each. Then answer a harder one: a past borrower posts a five-star review containing a factual error flattering to you — that you "got them a lower rate than anyone else in town," which you did not. Leave it, respond, ask them to edit it, or report it? Defend your answer and name the compliance issues in each option.

38.33 An agent offers to add you to her brokerage's "preferred lender" list for a monthly fee. She explains that the fee covers "inclusion in the office's marketing materials and introduction at sales meetings." Identify which portion of that could conceivably be a good or service furnished and which could not, and say what you would need to see before you could evaluate it at all.

J. NMLS-style exam questions

Answer without looking back. Then check the chapters named in each stem.

38.34 A lender pays a real estate brokerage \$1,000 per month under a written marketing services agreement. Which fact is MOST important in determining whether this violates Section 8 of RESPA?

(a) Whether the agreement is in writing (b) Whether marketing services were actually performed and \$1,000 reflects their reasonable market value (c) Whether the brokerage referred any loans during the month (d) Whether the lender disclosed the arrangement to borrowers

38.35 † An originator pays 50% of the cost of a co-branded advertisement in which the originator's branding occupies 25% of the space. Under Section 8 analysis, the additional 25% of cost is BEST characterized as:

(a) a permissible marketing expense (b) a thing of value conveyed to a referral source (c) an affiliated business arrangement (d) an unearned fee split prohibited only if referrals actually followed

38.36 Under the Loan Originator Compensation rule, an originator's compensation may NOT be based on:

(a) the number of loans closed (b) a term of the transaction or a proxy for a term (c) whether the consumer is a new or existing customer (d) an hourly rate for time worked

38.37 † A borrower with an original property value of \$385,000 and a conventional loan reaches 80% of that original value at payment 125. What is the borrower's right at that point, and what happens at 78%? Name the statute.

K. Loan File extension

38.38 † Extend the Loan File. Build the complete post-close record for the Linden Street borrowers as it would sit in a customer relationship management system: every field from §38.6's record specification, populated with the file's actual frozen figures where they exist and marked "unknown" where they do not. Then add the six future-dated triggers you would set today, with the dates computed. Two of them are more than a decade out; compute them anyway.

38.39 Write the agent debrief you would conduct on day 54 with the buyer's agent — this being her fifth closing with you. Structure: what happened, what you would change, what you are asking her. Then answer honestly: is there anything in that conversation you would be tempted to leave out, and what does the temptation tell you?

38.40 † Compute the Form 1098 mortgage interest for the closing calendar year on the Linden Street loan: prepaid interest collected at closing plus the interest portion of the December 1 payment. Show both figures and the total. Then write the two-sentence note you would send the borrowers in January — including the sentence in which you decline to give tax advice. Finally: the borrowers' reserves fell from \$12,623.66 (4.16 months of PITI) to \$7,423.66 (2.45 months) after the furniture payoff. Write the month-six call you would make on the strength of that fact, and state the line you would not cross.