Like many in this industry, I didn’t plan on a career in mortgage lending — it just sort of happened. But a fax I received more than 20 years ago reminded me recently why I’ve stayed all these years… It was titled “The Life of a Loan.”

🏠 The Life of a Loan: A Mortgage Industry Journey and Reflection

Like many of my peers in the mortgage industry, I didn’t go to college with a plan to build a career in lending.

In fact, my undergraduate degree was in Health Promotion, which is not the obvious path toward mortgage technology or loan decisioning. Like so many others, I found my way into this industry out of necessity, but I’ve stayed for reasons far more meaningful:

• It challenges me intellectually, especially the puzzle of enhancing mortgage pricing and underwriting.

• It’s filled with incredible people who’ve become lifelong friends.

• And it helps families achieve the dream of homeownership.

🎓 A Familiar Question

My youngest daughter is in college now, wrestling with that same question many of us once faced: “What should I major in and what should I do for the rest of my career?”

I changed my major at least two times during my time at Brigham Young University, and after the last 28 years in mortgage lending and mortgage technology, none of those majors predicted where I’d end up. So, I’m not sure I’m the best person to give advice on choosing the right major where you end up doing what you graduate in through college.

But while reflecting on her question, I came across a faxed document from early in my career at Flagstar Bank that helped me realize this industry was a good fit for me.

📠 The Life of a Loan — February 2003

"The Life of a Loan - The model is to give a basic understanding of how the industry works. There is much more detail to every function, but it would take an entire textbook to explain. 

The Borrower (Joe Public) It all starts with the borrower who is looking for a mortgage. In this example we'll say Joe Public is looking for a $100,000 mortgage for 30 years. Johnson Mortgage Company, an approved Flagstar mortgage broker and Correspondent Lender, can offer this mortgage to Mr. Public at an interest rate of 8.00% (which equates to a monthly P&I payment of $733.76). Johnson Mortgage has a warehouse line of credit, so they can close the loan when it is convenient for Mr. Public. 

The Lender (Johnson Mortgage Company) The going rate through Flagstar is only 7.75%. So Johnson Mortgage delivers to Flagstar a mortgage .25% higher than the going rate. This represents the yield spread premium and Flagstar Bank pays the broker's warehouse line of credit so that the broker can close another loan. 

The Wholesale Bank (Flagstar) Flagstar bank now owns the loan, but not for long. The mortgage then gets put into a pool and sold to FNMA or FHLMC (a mortgage pool is a group of loans with the same rate and program - this is done because FNMA only buys loans in large quantities). FNMA does not service loans, so they pay Flagstar a fee to service the loan for them. 

The Secondary Market (FNMA/FHLMC) FNMA/FHLMC pays Flagstar the $100,000 so Flagstar can close another loan. Fannie Mae's/Freddie Mac's purpose is to enable the bank to recoup the money within days/weeks of closing instead of 30 years. How does Fannie Mae/Freddie Mac recoup the money? Simple, they sell the mortgage-backed securities on Wall Street. 

The Investor (Mary Smith) Mary Smith has retired early and has $100,000 she is looking to invest. Because she is now on a fixed income, she is looking for a way to supplement her monthly income. The stock market is too risky and CD’s are only paying 6.00%. So Ms. Smith decides to invest in a mortgage-backed security. The risk is low and she can earn 8.00% interest on a 30 year from Fannie Mae. So she invests her $100,000 with Fannie Mae (which they can use to invest or buy more loans) and receives $733.36 each month. This includes the principal she has invested as well as interest that is earned. 

In a way, Mr. Public's monthly mortgage payment is helping Ms. Smith enjoy her retirement. The point for us to realize is that every loan we handle impacts many lives."

🔁 A Full-Circle Moment

Over the years, my work has evolved from loan operations to mortgage technology, from banks to software companies, and it’s all revolved around the same principle: the life of a loan.

When I showed that old fax to my daughter recently, it didn’t resonate with her quite the same way it did for me. But for me, it was a reminder of why I started in this business and why I’m still here.

Because behind every rate sheet, loan file, automated underwriting system (AUS) decision, or system configuration there’s a story being written about opportunity, trust, and the pursuit of homeownership.

That story spans many parts of the mortgage ecosystem:

• Origination & loan decisioning, which are the front lines where borrowers meet mortgage professionals.

• Warehouse lending and the use of a warehouse line of credit to fund originations.

• Wholesale relationships where brokers and correspondent lenders deliver loans to secondary market buyers.

• The secondary market where Fannie Mae and Freddie Mac transform loans into mortgage-backed securities (MBS).

• Loan servicing and investor reporting, which keep the system functioning for mortgage investors.

• The vast product set including non-QM, jumbo loans, HELOCs, and business purpose lending (BPL) products that continues to expand how we think about underwriting and risk.

Each of these elements depends on the people, policies, and technology that make modern mortgage lending possible. As the product mix grows, with more portfolio and specialty loan programs, the need for flexible loan decisioning, better underwriting data, and modern mortgage technology platforms becomes clearer.

That’s the life of a loan.

🗣️ Closing Thought

Most of us didn’t choose this industry intentionally, it somehow chose us. But once you see the ripple effect a single loan can have, it’s hard not to feel grateful to be a part of it.

👉 What was your moment? The one that made you realize you’d found your place in the industry you find yourself in today?