The Mortgage Institute For Financial Services Professionals, an educational program for mortgage-based financial planning, offers a course that is designed to teach real estate agents and mortgage originators to help consumers make better mortgage-planning decisions.

“Mortgage originators and real estate agents want the knowledge and skills necessary to provide sound ethical mortgage planning advice rather than relying on a tag team mortgage planning scheme for a quick commission. These professionals may be the first ones consumers look to for mortgage advice — and many recognize that a consumer’s mortgage decisions shouldn’t be made in a vacuum and see the benefits of blending sound mortgage advice with ethical financial planning strategies,” said Leon Morris, executive director for the educational program.

After completing the course, mortgage and real estate professionals can receive a “Residential Mortgage Planner” designation, according to an MIFSP announcement.

Morris said he’s concerned about the proliferation of marketing schemes he refers to as “tag team mortgage planning.” He described a two-prong marketing approach in which the mortgage originator persuades the homeowner to pull equity from their home and then refers them to a product-oriented financial planner who convinces the homeowner to put the equity into investments.

“The home is an exempt security. Therefore, financial advice on the home escapes the scrutiny of the SEC, NASD, and Federal Reserve Board. There are many financial planners and mortgage advisors who may inappropriately recommend that homeowners pull equity from their homes, and use it to make riskier investments elsewhere without any determination of suitability.

This leads to a growing opportunity for fraud and misrepresentation, even if it’s committed inadvertently. Consumers may not realize risk differentials or potential pitfalls in investing ‘other people’s money,’ which is what a mortgage, including home equity lines, represents,” Morris also said.

MIFSP recently asked the SEC to explore the need to further define “suitability” in light of these types of equity-to-investment business models. “What should concern regulators is that there are no requirements for determining suitability when advising a homeowner to access home equity for purposes of making investments, which is analogous to trading on margin,” Morris also said.

“In seminars, I recommend that homeowners ask marketers three questions when they’re approached with such schemes: Is it necessary to achieve my financial goal? Can you document that it will be as successful as you say? Will you sign your name to that?” If the people approaching consumers aren’t willing to sign their names to it, consumers shouldn’t either, he said.


Send tips or a Letter to the Editor to or call (510) 658-9252, ext. 137.

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