In what will probably be the biggest merger of the year in the mortgage industry, Bank of America has purchased Countrywide Financial Co. at the tune of $4 billion.
I have blogged about the various articles that have been released today about this acquisition in my Loan Officer Tips blog. I would love to hear your comments on this since it will be one of the major factors in the overall economy throughout the year.
I wanted to briefly let you all know that I have updated my Loan Officer Sales and Marketing Tips blog. I went a little off topic in the past post with the concept of The 3 F's of Sales, but I am back on track with the Pre-Qualification 2.0 Series with today's post!
Also, I will be making this series into a mini-book for Loan Officers. If you would like to get a copy emailed to you, feel free to either leave a comment, or shoot me a quick email!
I wanted to give you all a quick update on my blogging world. Even though I love the AR community, I was asked by a couple of people within the industry to start a secondary blog about Loan Officer Training. So, I have started the Loan Officer Marketing and Sales Tips blog.
If that link doesn't work, you can try www.LOTrainer.com. I look forward to all of your comments and ideas, and I will update you all when I update that blog (Typically Monday, Wednesday, and Thursday).
I hope everyone is having a fantastic beginning to 2008!
Over the past couple of years, equity has been extremely accessible to our clients. Times in our industry are changing with regard to guidelines and lending ability. However, that shouldn't distract your from creating a relationship with your refinance clientele. I have touched on the refinance with debt consolidation clients in my previous post, and I would like to touch on the refinance with Home Improvements clientele as well for this post.
These clients are just like any other refinance client where they are looking for the loan program that fits their needs and overall goals. They might superficially want the best rates and fees, but it all comes down to relationships and rapport. I stress again, that finding out these goals and true needs in the first contact will help establish a relationship and better rapport with your clients, and most likely make or break them from financing with you!
So, how will you be different from the mortgage broker down the street, and create that lasting relationship? You know...the one you get referrals out of? Simple, right?
Right! We ask the right open-ended questions that will trigger emotionally driven responses!
Put yourself in their shoes and get involved with what are their primary reasons of why they need/want to do the home improvements. Here are some key questions that might help emit poignant answers:
Tell me about the project you're looking to do
What led you and your family to want to do this project?
How will these improvement benefit you and your family (besides most likely adding value to the home)
Tell me about the steps you've already taken for this (estimates, etc)
What do you think are the next steps prior to the improvements? (more estimates, or are they just waiting to close...hint, if you phrase it right, there could be a potential buying sign here)
How long will it take before the project is completed?
Once you start getting into how long the project is going to take and you know overall idea behind the improvements, you can keep a conversation going about pictures they can take with their family in their new living room, or maybe by the new in-ground pool. You can go into how good the barbeque chicken is going to taste and how nice it will be to use a grill on that new deck off the back door. There are a plethora of things that you can bring up in discussion that will help them paint a picture of what is to come after they finance with you!
They, most likely, didn't get this feeling from the other guy down the street which puts you ahead of the game even before you've presented figures or programs, and even before you've taken a look at their credit situation.
It's really that simple; to make a conversation out of this first contact instead a straight up, no-conversation, closed-ended 1003. And guess what? If your rate and fees are off a little bit, the client will most likely come back to you anyway because you truly know the value of their refinance. You've also shown that you care about their home, and you care about their unique financial and living situation.
Be different from the average Loan Officer, and create those relationships! I wish you all the best!
I just wanted to wish everyone a belated Happy Holidays! I apologize for not getting on and posting this sooner, but some unexpected family emergencies had risen. I wish you all the best, and I hope you all had a safe and happy holiday so far (we still have New Year's to go).
If you haven't read "Phase 1: Your First Contact With A Client" then please feel free to do so prior to reading this post which is an extension of the first contact.
I briefly mentioned that the first contact with your client should be a relationship building experience. You should be getting to know your client, and your client should be getting to understand that you care about him/her.
With that being said, we have to remember that relationships aren't built on standardized questions from a blank paper (or Calyx Point 1003). Relationships and trust between two individuals are built with the sharing of emotion. Dictionary.com defines a relationship as, "an emotional or other connection between people".
So, how can you stand apart from Joe LoanOfficer who is looking to make a quick buck on these "borrowers"? Simple...ask the right emotionally attached questions in order to establish a caring relationship, and always build toward closing questions.
For a refinance for debt consolidation, instead of asking how much they are looking to pay off and be done with that part, dive into the subject a little deeper. Try asking:
About each individual debt that they want to consolidate (what school was the student loan used at, what was the credit card used for - vacation, etc)
What kind of credit cards are they? (if applicable...Visa, MasterCard, etc)
How high is the interest on each of those debts?
How much money are you paying out per month?
How much of that money that you are paying is actually going towards the balance?
If you didn't pay these off with the refinance, when do you think you could be free of these debts?
All of these questions build to an emotionally-tied closing question prior to filling out the entire application. And, guess what...you just got the liabilities section of the 1003 filled out.
Here's an example of how you can close this topic: "I definitely understand where you are coming from, Mr. Smith. I can see how consolidating that high interest credit card debt is going to relieve quite a bit of stress from your life, and make your life a lot easier with regard to your monthly financials. Along with that, paying off your car loan to make that an added tax deduction is going to be a nice benefit as well. I'm sure you are looking forward to the day of not making those payments anymore and having that extra tax deduction, right"?
Simple questions can lead into some of the most emotionally driven conversations for these clients. The bottom line is to keep driving home benefit and try your best to tie emotion to every question that you ask. Lastly, make sure that your questions are building toward an overall buying sign....a "YES" at the end of a simple closed-ended question.
I will come back to this example in later posts when I will touch on the sales aspect of the process. Each of those questions plays a key role in the proposals, so they definitely hold a huge role in a debt consolidation refinance.
Whether your client has called in, submitted something on the internet in the form of a paper lead, or is a referral they all want to know two things: rate and payment. Right?
It's our job in the mortgage banking and loan origination industry to shift our client's focus from rate to service and benefit, and it all starts with the first contact.
How many of your battle with your client to give up an application in the first phone call? I am assuming quite a few (unless you have been listening to David Bartels in action). Let's flip it for a second:
If you were contacted by a loan originator and they automatically started going into the application, or asked only 2-3 personal questions and then went into the full out application, how would you feel? Would you feel comfortable, or would you feel defensive and not want to give out information?
My point is: the first contact is a relationship building experience. You should be trying to get to know your client and build a rapport. Whether it's a purchase or refinance, the person always has a goal. And, no the goal is not just to get cash out to put in a pool or to consolidate credit cards because of high interest. Their goals are to have pictures of their families in the pool and cherish the memories that will create. Their goal is to be able to sleep at night knowing that they don't have to worry about 3 credit card payments making it on time and being able to go out to dinner once a month because of the extra money that they have now.
It is our job as industry professionals to really get to the root of their goals, and to establish that relationship. And guess what: it begins on the first contact.
So, here's what I do since they have already given me enough information in the lead to give them a general idea of what I can do:
Provide the client with an estimate of rates on several refinancing options or purchase money options (up to 10 in some cases)
Provide the client with enough service that they will not need to go shopping elsewhere
Build a lasting first impression so they feel comfortable sending their friends and family to me (even after the first phone call)
Ask Open-Ended questions that reach out and make them respond based on emotion
The bottom line is that the clients truly know what they qualify for, and they will key you into certain aspects without you having to pull a credit report or take a full 1003. My philosophy is that I am willing to help you (the client) out with information (since that's really what the lead is looking for...information).
Here is my closing line for the first contact:
"Here is the information you requested. I am going to leave this with you and follow up with you tomorrow at 11:30am. Look over all the information that I have given you, and please be ready with any questions or concerns that you and your spouse (if applicable) might have. Ok?"
Hypothetically they say "Yes", or "No Problem"
And I say, "Great. Also, please keep in mind that these are average going rates for today's market, and we still have not reviewed your credit to give you a full qualification package. These figures are derived from what you have told me, and when you decide to move forward I will give you a full Good Faith Estimate and full disclosures. At that point, we will lock you in at that rate and offer a complimentary Float Down Option just in case the rates drop you are protected.
Well, Mr. Jones, it has definitely been a pleasure getting to know you. I look forward to your questions tomorrow at 11:30, and if you need anything before hand please feel free to either email me or call me. Think about those options that I sent you, and have a great night!"
In conclusion, all of us in the industry need to get to know our clients on a personal basis, and we need to tie emotion to the process. We will provide better service if we care for our clients and they will take care of us by sending referrals as well. It all starts with the first contact!
Obviously, all of us like using Active Rain to get our "blogs" out there. Do any of you take advantage of other forms of Real Estate Networking?
I guess the reason that I bring this up is for SEO purposes. Networking is a form of branding and self-promotion. When you have a series of links coming from higher Page Rank (PR) sites, your PR will also increase and therefore increasing your google-ability. That being said, I want to share other sources of blogs to help you get your links out there and increase your PR.
There are 5 sources that I try to blog on a consistent basis. So, I ask you and invite you to do the same and blog all over the place to get your name out there! Heck, free self-promotion is free self-promotion no matter how you slice or dice it!
Over the past couple of days, I have recieved several questions regarding HECM/HECL loans vs. proprietary bank Reverse Mortgages. Here's the deal on these:
HECM (Home Equity Conversion Mortgage) or also known as HECL (Home Equity Conversion Loan). These programs are backed by FHA, and typically have significantly high closing costs. These closing costs are standard to the industry (2% origination for FHA, and 2% origination for the bank). However, the HECM's/HECL's typically allow for a higher net benefit (overall cash proceeds) because there is less risk involved when FHA insures the loan. This means that you can use a higher LTV on these than the proprietary programs produced by banks.
However, there is an upside to the bank programs as well. There, typically are less closing costs associated with the loan since there is no 2% being paid to FHA. Along with this, you do not have to adhere to FHA loan limits. So, hypothetically, if you had a borrower in a $2mm home that needed a RM, you couldn't take it through a HECM unless the borrower didn't care about the total net proceeds. The better program for this would be a proprietary program that would yield a signifcantly higher net benefit to the client and therefore relieve a significant amount of financial stress!
Keep in mind that Reverse Mortgages are an educational process with each and every one of your clients! If you need help with any RM questions, please feel free to contact me at any point, and I will do all that I can to help you understand these great products!
Ok, so I am going to be extending my lock recommendation from anything within 60 days to anything with a 90 day period; lock those loans. Here is why:
The bond market this morning opened slightly higher at +9/32 while Ben Bernanke didn't help the stock market out with his testimony to Congress' economic committee. The Dow is currently down by 85 points, and the Nasdaq is down by 82 points. That being said, mortgage pricing has slightly improved this morning from yesterday's.
Unemployment claims were less than anticipated (325,000 expected, 317,000 filed). Even though this is good news for all of us in the working fields, this is not really relevant information in mortgage pricing.
As mentioned in the beginning of this post, Ben Bernanke spoke in front of Congress' Joint Economic Committee this morning, and once again reinstilled the lack of confidence in credit. I cannot give all the credit do Ben Bernanke for this, though, as Senator Charles Schumer from New York stated that the "Four Horsemen" of economic crisis were before us and ready to attack with a recession (defined as two quarters with a decreasing GDP). The "Four Horsemen" as Schumer referred to them are: housing prices, price of oil, credit confidence, and the weakness of the U.S. dollar.
Let's put it this way: The Federal Reserve can go ahead and instill a renewal of spirit in the housing industry by cutting interest rates significantly. However, because of high concerns of inflation, and the current weakness of the dollar, they are very very limited in their "wiggle room".
Tomorrow, we have the final two economic reports of the week being released in the morning. But, as I said before, if you haven't locked your loans yet, please do so. This is only my personal opinion based on the facts and information mentioned above.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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