Credit Scores Made Simple for Mortgage Bankers and Loan Originators

No industry focuses on credit scores quite like the mortgage industry. Seems like there are dozens of systems and programs out there that will help originators work with those buyers that need to improve their credit score so they can buy a house. This is a very populated area of the industry. Many “experts” support the effort to tap into this part of the market. I am NOT one of them.

While it is likely that there are programs out there that will help improve scores and you can certainly help council these people through that process; but one thing stands out more than any other fact; it isn’t worth it. Yes, I said it, it isn’t worth it. The math doesn’t support it and there are thousands of cases to prove it. Most people fail to follow the steps to improve their scores, and if they do, very few keep them up. If they do improve and they do keep their scores up, they are also likely to have required a great deal of time and energy, and maybe even go on to use a different person than the one who directed them through the process. Not to mention, that you can’t charge them anything extra for all the help and the extra effort it took to get them to the closing table.

The other argument I want to make is that the biggest factor in the whole “mortgage meltdown” was the urgent need by the government to grow the number of people who could qualify to borrow money to buy a home. And since those with good credit already could qualify to borrow money to buy a home, it became necessary to expand the criteria and lower the level of quality borrowers to take this money. The rest was history.

Let’s look at some numbers. Historically about 60 to 65% of the people in this country have owned the property in which they lived. When you take a minute to look at some very interesting data, you will see why I think it is a complete waste of time to work with the “credit challenged” borrowers for anything more than to share with them some very basic information and allow them to move on. Here is why. According to the three main credit reporting agencies, between 63 and 68% of the people in this country have credit scores 650 or higher. In fact, between 50 and 55% have scores higher than 700, and between 37 and 42% have scores higher than 750!

So the question to be answered is, if 60 to 65% of our population is likely to own their own home, and between 60 and 68% of the population already have credit scores high enough to qualify for a loan; why are some many people spending so much time and money working to attract those who don’t?

There are likely many more people who have credit scores over 800 (depending on the agency, the number is 15 to 21%) than those people currently below 650 who will ever improve their scores to qualify for a loan. The entire pool of people below 650 is between 32 and 37%, how many of those do you think will ever improve enough to qualify?

My point here is a simple one. Spend your time working with people who already can qualify from a credit standpoint. If you want to cultivate a niche market, why not go after the people who already have scores over 800? Far fewer people are marketing to those people. There aren’t thousands of websites and links for people looking for the best of the best as there are for those who are “challenged” or “need repair” of some kind.

In my opinion, you would be much better served marketing to 800+ people than you ever will be, trying to help those who are below 650. Credit scores are important. I understand they are not perfect. I know some bad things happen to “good” people that drove their scores down. But the facts remain, most of the people have low scores because they don’t manage their credit or are over extended. The facts also show that the average credit scores in this country are going UP as more and more people pay attention to their scores and understand the value of a good score. It is going to be quite a while longer before any of the agencies begin to relax their credit standards. Is that really such a bad thing? If everyone knows the rules is it a bad thing to demand that people who want to borrow money show an ability to repay the loan? Would those people who want to complain the most about the higher underwriting standards be willing to invest their retirement money, or their children’s college funds into loans going to finance people with low credit scores?

At the end of the day, this post is about sharing thoughts and ideas. Please share yours with us.  For more information please visit us at

Back To School Rules For Loan Originators and Mortgage Bankers

Yes, it’s that time again. School is starting all over the country and there are some pretty significant things you can be doing to maximize your opportunities. Also there are some basic things you need to do or be aware of:

1)    Collect school schedules from all the schools in your marketing area. Public schools and private, and remember to collect all grade levels. Grammar schools may have different schedules than Middle or High Schools do. It is important to know.

2)    Understand that within a very few weeks of school starting, some parents will have a desire to move. Either closer to a particular school, or to an area more convenient to work or other activities.

3)    Parents of students going off to college will sometimes quickly find the need to change their space, more designed for them, and not their children.

4)    Refinance opportunities appear as parents look to change their current space to better suit their needs or to raise needed cash for tuition and other expenses.

So why are these opportunities important? Well, because it is always nice to locate a few simple transactions while better preparing yourself, your clients, and your referral partners. Know the school calendar often can help avoid big challenges. Specific school holidays may vary from school to school. Testing schedules, conferences, and other events can often signal days that will become difficult for some people to close on, or become dates people want to be completed by. Being aware of these in advance can really help.

Having the ability to target certain groups can also be rewarding. You know how big your clients house is, you also know the number and ages of their children. It is likely that the older the children get, the more emphasis will be placed on bedrooms and bathrooms. It is one thing for younger children to share space, but as they get older, it gets much more complicated. A simple card or letter discussing these issues might prompt a listing and a sale, or maybe just a refinance. Either way, you already have the information, why not use it?

Those who find themselves sending their child or children off to school often have a few different needs. Maybe they want to refinance to lower month payments and improve cash flow? Possibly they would like to reconfigure the space more to their own needs instead of how it worked best for the children? Either way, right after Labor Day is when these thoughts start to materialize. So what will you do to help your clients through this thought process? Do you have the solutions at hand to resolve these issues? How will you communicate these solutions? Will you produce cards, letters, email, maybe a short video? Having a plan and a schedule to implement is the only way to take control of this powerful opportunity.

Back to school often is stressful and confusing to those involved. Any form of change can be very disruptive and challenging. While it often causes a brief slowdown in those looking to purchase property, you can use this time to be prepared for the opportunities that will present themselves to you if you know where and how to look for them.

You are a solutions provider. Part of your professional obligations includes looking ahead at the potential challenges your clients and market may have, and being prepared to offer solutions that resolve those challenges. Back to school and Labor Day can be such a time. Are you ready?


For any questions or comments, please contact the coach at:

Consistency is Currency in the Mortgage Business

When you get to work with and coach some of the best loan originators in the country, it doesn’t take too long before you begin to notice what the above average originators do that those that are average and below don’t do. The number one difference from the top to the bottom is consistency.

Top producing loan originators are consistent either by design or by need. Regardless what area of business I look at, from prospecting to file preparation, the best of the best follow a consistent pattern of doing things the same way, day in and day out. They take their prospecting seriously and understand that without prospecting, there is no business. They have systems in place to be sure everything they want to happen with a file or a client happens. It is not by accident, it is by design. From the type of prospecting that gets done, to the process they use to interview a client, take an application, review documents, prepare a file for submission, to following up throughout the process to be sure everything is done timely and correct, as well as to take advantage of the ability to prospect at each point.

So what are the specific steps? Pretty simple, it all starts with a plan. On the prospecting side, every top producer knows where their business comes from. While some know the details better than others, they have a genuine desire to look for new business and stay connected to those responsible for sending them their opportunities. They are always asking for business directly or indirectly. Either in person, by mail, by phone, or even email, it is part of their basic process to consistently be in front of people and to ask for the business. Looking at their entire process from targeting a potential referral partner, to obtaining referrals or opportunities, each step is in line with a predetermined action plan.

Once established, these elite originators execute the plan according to a predetermined schedule of events. Some much more disciplined than others, all are consistent with a short term, midterm, and long term communication to keep them in front of their prospects, clients, referral partners, and database. This ongoing communication keeps them positioned for that critical “top of the mind awareness” that will generate loan opportunities and endless referrals.

So what are the specific action steps we can all take to improve our consistency and convert it into currency? Here are a few that will get you started.

1)    We all know everything starts with a written plan. What are your plans to stay in front of business?

2)    Focus on both your clients and referral partners. Each maybe similar, but both require different attention.

3)    Have specific actions associated with a specific timeline. You can vary the duration, but never the action. Some people you may speak to everyday; others once a week, once a month, or once a quarter. The important part is that you have it planned out so you can always schedule the next action.

4)    Prospecting is a priority. It can’t ever become the victim of getting busy. You must schedule your prospecting every day and make sure regardless how “busy” you get, you always commit to a minimum of two hours of prospecting each day.

5)    Show up, follow up, and repeat the process! Your career is a marathon, not a sprint. Some relationships take time to develop the trust and comfort factors. Nurture these relationships and allow them to grow.

6)    Use all the forms of communication at your disposal. Nothing is better than a live face to face meeting. Get out of the office and get in front of people. Don’t wait to schedule a meeting all the time. Sometimes just a quick “drop in” so you can leave a note, a card, an article of interest, is a great thing to do. Even if they are busy or not in the office, you can always follow up later by phone or email later.

7)    Always be asking for opportunities. Who do they know that you need to speak with? Buyers, sellers, other potential referral partners, all are people you want to connect with.

8)    Always make it about value. Provide information, connections, opportunities, discounts, or whatever you have at your disposal, just keep providing value to those you come in contact with and your consistency will become your currency!


For questions or comments, please contact the coach at:

Focus on the Purchase side of the Mortgage and Loan Industry

I get to coach some of the best originators and managers in the industry. While markets come and go, there is only one sure thing about loan originations, the people that maintain a certain level of purchase loan business can survive any market. The simple fact is, those loan originators that fall into the trap of getting off the streets and retreating into their offices to focus on nothing but refinance transactions, are doomed to suffer a painful reality that refinances are going away sooner than you think, and when they do, there will significant challenges to finding streams of purchase business.

While I will concede that a majority of all loan applications and loan closings taking place today are refinances, the hidden fact is, refinances take more time to do and are less profitable than purchase transactions. Why do I say this? It is quite simple, look at these examples:

1)    Refinance clients are not under any legal pressure to perform. So, they are not in any hurry to supply documentation or close a transaction.

2)    Refinance clients will continue to shop you right up to closing and even beyond the closing because they can always rescind the deal for 3 days after closing.

3)    When an appraisal comes in for less than the value thought, it is most likely the deal dies on the spot. In a purchase transaction the deal is often renegotiated and closed.

4)    When you work on a refinance you work alone. When you work on a purchase, you have a number of other professionals or people depending on this transaction to close who are in a position to help you.

5)    Refinances slow down to a trickle when rates begin to rise while people continue to buy and sell homes.

Working on refinances transactions often are won or lost based on a single factor, price. The very reason most people refinance today isn’t because they need the money, it’s because they want to lower their payments or reduce their term for near the same payment. That can’t happen while people have 3% loans and the future market is higher. (And who here doesn’t believe that rates are much more likely to be going up in the future instead of further down?)

I am not saying that you shouldn’t engage in refinance business. It is an important part of servicing your clients and your community. What I am saying is that you can’t give up prospecting for purchase business and you must seek and maintain important purchase loan referral partner relationships so you can maintain a solid level of purchase transactions.

So what is a “solid level” of purchase transactions? Well, let use the same method I use with my clients. What I do is to look at what “normal” production levels would be in a “average” market and use a fact of between 70% & 85% as a guide as to the number of transactions or total loan volume needs to be, should be purchase transactions. So that said, if I have a client that has a personal production goal of ten closed loans per month, in an “average” market, then I expect that they should close between seven and nine purchase transactions per month. Since we are NOT in an average market, and purchase transactions are about 25% lower than what most people would say is a more average market, than I push that client to maintain a monthly goal of closing five to seven purchase loan transactions per month.

Using this strategy, they are free to pursue refinance transactions as part of their regularly scheduled focus on their database as well as some of their consumer direct marketing time. If they wish to focus more time on refinances than this, they are welcome to work “overtime” on evenings and weekends to locate and prepare those files, but never are they allowed to reduce the regular prospecting activities for purchase loans, or pursuit of new purchase loan referral partners.

I speak to Realtors® on a regular basis and they are all wondering where all the loan originators are? Mostly they believe that they are sitting in their offices doing refinances, while the agents are now being told that they need to write 45 and 60 day contracts because lenders can no longer close deals in 30 days or less. I tell them that this is not true. In fact, some mortgage companies have taken a very strong stand on getting their purchase deals closed in 30 days or less. Some even guarantee the fact that they will close as scheduled! Those select few have made a pure business decision to place a priority on purchase transactions and the referral relationships they have built by having that commitment.

In the long run you can’t survive without a solid base of purchase transaction and referral partners that provide you with purchase loan opportunities. You need to make the commitment to your own long term survival and remain committed to purchase transactions. For those who want to grow their market share of purchase business, or forge new relationships with those that can provide you those opportunities, NOW is the time to take action. Get a plan, schedule the work, track the results, and close the loans!

For more information about Michael White or Improve My Tomorrow Coaching please visit



A Question of Professional Integrity

A recent personal experience has triggered this post. I will start out by letting you know that this is likely to be more of a rant than an educational exercise, but I feel the words need to be said and at the very least, I will vent and feel better.

My wife and I are looking to buy a new house here in Palm Beach County Florida. I will tell you, past experience we have had with the “professionals” we have encountered has taught us a great deal. Florida isn’t known as the fraud capitol of the country for no reason and given what I do for a living; you would think I would be in a position to find quality people to work with. Clearly, I have yet to develop the proper skill set, but after this recent experience, I think I have it figured out. Let me explain.

Since a large number of transactions here in Palm Beach County are short sales or foreclosures, you do get used to the fact that homes will be listed at below market prices and provide a limited window for people to make offers, or even be placed in a position to enter almost an “auction” like situation. Not that this is a bad thing, certainly if the process is transparent, no complaints from me on that count. It is when you start to see that the “highest bidder” was not the person who got the house. To make matters even worse, the very professionals who are engaged to handle the process are often the people who either know nothing about the process, or ignore the corruption of that process.

I have two recent situations that have really got me questioning if there is any professional integrity in the local real estate community? Here are the two situations I speak of and I will let you decide if I have a case here. First situation was a short sale put on the market at well below its value, $299,000. Property came on the market on a Saturday, bids were being accepted through Monday, and the sellers would make their choice by Tuesday afternoon. After viewing the house and looking at recent sales in the area, I offered $350,100 for the subject property. By Tuesday evening my agent had called to say that no choice had been made and as soon as they knew something, we would be notified. It was Thursday morning when I was told our offer wasn’t accepted.

While disappointed, we kept looking. While searching the internet for homes a few weeks later, the same property is once again on the market, this time listed at $349,200. The listing states that this is now the bank set price and that offers will be accepted for 48 hours. Imagine my surprise. I had a firm offer in for more than the bank asking price, “lost” the prior bid, and now the house is back on the market for LESS than my offer. I once again called my agent who spoke to the listing agent. It appears that the seller of the house wanted to negotiate a private deal for all the appliances, light fixtures, closet units, etc. All things that were listed as not being conveyed with the house, but could be purchased from the seller and help reduce possible damage to the property by their removal.

So let me get this straight, I have to buy the things from the house that should have come with the house from the seller, or they won’t accept my highest offer, which is more money than the bank is willing to accept for the property? Really? My agent speaks to the listing agent and gets back to me saying that my offer satisfies the banks requirements; we just need to take care of the seller so they accept my offer. Now I guess I don’t have a choice here. If I want the house I have to buy the stuff from the seller. Not fond of the idea, but I don’t get much of a choice. So I tell my agent to find out what the seller wants for the property and let’s see if we can put together a deal. Next day I am told the sellers have accepted an offer, not mine, and that the house is off the market. Very fishy if you ask me, but we move on.

We locate a home, not a short sale, just a seller trying to sell a house. The property is listed at $479,000. Given the area and the condition, the property is much more likely worth $425,000 to $450,000. I offer $400,000 to get things started and the counter offer is $458,000. Nice to see solid movement, so I come back with an offer of $425,000. This is met with almost an instant reply from the listing agent that there is another offer, but if I want the house, I can have it for $448,000. My reply was for them to take the other offer, because I wasn’t going to go that high.

A few days later, the property appears as available for $459,999. I once again call my agent to find out what happened to the “other” deal. I am told that it fell through. Really, in just a few days, what could have happened? So I tell my agent to offer $430,000 on the house. The counter is $450,000, and I counter with a final and best offer of $440,000. The seller comes back at $443,000. I tell my agent that I am as high as I am going and if they want to lose the deal over three grand, I have no challenges with it.

My agent comes back and states that if I am willing to use the listing agent’s mortgage company for my loan, we have a deal at $440,000. Seriously, do you have any idea what I do for a living? Do you think I am going to throw my L/O under the bus to put this deal together? So I ask my agent about this and the reply I get is astounding. I am told it happens all the time and that some of the time when closing happens, the people are shocked at the terms and conditions of their loan.

So I ask all of you, where is the professional integrity? Is it no wonder so many people have such a low regard for the real estate and mortgage profession when things like this are allowed to happen and nobody does anything about it?

If the seller in my negotiation was willing to “give up” $3,000 in order for me to use his agent’s mortgage company, what could possibly been the motivation? They certainly weren’t going to match the terms I had from my current lender. Since my credit package was already underwritten and approved, couldn’t be an issue if I were going to qualify for the loan. Since I had a guaranteed close in 30 days or less from my lender, it could not have been about timing. So I ask you; what could possibly been the motivation behind such a condition?

I also need your opinion on why my own agent acknowledges that this happens, yet it doesn’t seem like anyone ever complains to anyone about it. So here we go, I am going to forward this blog post to my local real estate board and to the Florida State Attorney’s office to see if they think this is how business should be conducted in Florida.

Integrity is not an option as a professional. If I am wrong, and the local real estate board and the State Attorney think that what took place is acceptable, then I will accept their findings and continue to write, speak, and educate as many people as I can about raising the bar of professional integrity because, in my opinion, the industry needs to do better.

What are your thoughts?


Do You Know Michael White from Improve My Tomorrow Coaching?

If you answered no and you’re in the mortgage industry, you should!

Michael White is a nationally known mortgage coach who looks at the challenges facing the mortgage and real estate communities and provides a complete plan on what is actually taking place in our markets. His philosophy is simple: when change happens, you need a plan and a strategy.

He has more than ten years as a coach to mortgage professionals and companies all across the country when coupled with more than 25 years directly involved as an originator and manager in residential loan origination.  This gives Mike a unique perspective to not only understand the mortgage business, but the insight on how to take information and prepare a message and a plan for any market.

Mike offers Private Coaching, Group Coaching, and Training for companies and individuals.  You can visit Mike White at


Loan Orginators and Mortgage Brokers Assessing The State of The Union

Mortgage Brokers all over the country are trying to figure out what their future looks like, now that the largest mortgage lender in the country has left the wholesale arena. While this information is not a surprise, many had hoped that it wasn’t going to be a reality. While there are still many smaller wholesale conduits, when the 800lb gorilla gets going, it is hard to see how bright the future can be for the broker side of the industry.

In the past, brokers had significant local and national channels to place their loans. One area that comes to mind where insurance companies; at one point, many insurance companies were engaged in wholesale mortgage lending for both residential and commercial applications, not now.

Brokers are a huge part of the mortgage market. This is a blow that will have many looking to see if they can survive. Those that have the financial ability to make the transition to the correspondent lending will have to strongly look at this option. For those that don’t, they are going to have to hope they can find smaller entities to welcome the business.

Either way, contraction is here. Those that aren’t already gone have to become more professional and productive if they want to survive. For many, finding a new career is a solid option, especially if they have been living off churning refinances for the last few years. If you don’t have a pipeline of consistent purchase business, you might as well start looking for the exits, the party is soon over.

For those brokers with a high level of purchase business and significant referral channels, the next option is to locate a solid correspondent lender in your market and see if making the more will work in your best interests. Since many high volume brokers are responsible for most of their own originations, the idea of making less money on each file while someone else is responsible for the overhead and operations side of things may just be a wonderful marriage.

There are always good companies looking for great people. Networking with other mortgage professionals and other professionals like your Title Reps, PMI Reps, and wholesale reps can often point you in the right direction if you are thinking about finding a new home. Whatever you do, you need to be aware of the current market trends and have a plan in place to ensure your personal and professional survival.

For those of you who are managing originators or own correspondent branch operations, now is the time to RECRUIT! Thousands of mortgage brokers are reeling from the news that the largest wholesale lender has left the building. You need to be aware of your market and start pounding the pavement. There are quality people, solid loan originators that need to find a new home. You need to be engaged and active to find the cream of the crop in your area that may need you to provide a new home for their business.

You need a strategy and to be ready to engage now. You need to talk to your Realtor® referral partners about who they know, and get them to help you set up a meeting. Same holds true for all of your associates. Every mortgage broker with a purchase pipeline is now in play. Do you have a plan to find, connect, and convince them that you are the direction they need to be moving in?

Remember, mortgage brokers are already licensed. They know the business and are in a position to add to your bottom line if you take the time to find them and make it easy for them to get on board. An added bonus can also be found in the possibility of additional support staff that may also need new homes. Processors, openers, closers, and other support people could be part of the recruiting process as well.

With every change in the industry, we must look at the opportunities that present themselves. With thousands of mortgage brokers now looking how to move forward after the latest news, you need to see how you can profit from the change, and set up a plan to take more market share.