Origination Systems are critical to productivity in the Loan Origination Business

The July 4th holiday is behind us and the heat of the summer buying season is in full swing. Any professional loan originator who isn’t busy right now closing loans has only one person to blame, himself. All areas of loan opportunities are bursting at the seams with activity, rates are at all-time lows, and the ability to get loans closed couldn’t be more specific. So why are some mortgage originators dealing with full pipelines and multiple closings and others are not? Simple, they don’t have a system by which they identify and work on the business that will really close.


As a business coach to some of the best loan originators in the country, I get to see on a daily basis what the best of the best do, that the others don’t. The difference isn’t as big as the numbers would indicate. Here are five very simple things you can do that will improve your ability to work on the deals that will close, instead of wasting time on rate shoppers and wannabe buyers.


1)    Utilize the ten minute rule. If you spend more than ten minutes speaking with a potential client without seeing qualifying documentation, you are wasting your time.

2)    Set clear and specific expectations about what can be done and how long it will take.

3)    Do NOT lock-in a rate or terms of a loan, until you have a deal you know is going to close.

4)    Make sure all your file submissions into processing are “bullet proof” when you submit them.

5)    Keep consistent and scheduled communication with all parties and hold everyone accountable for their obligation to the loan time line.


If you don’t set the value of your time, others will set it for you. You must accept the fact that people want to go at their pace of events, and that you need to lead them toward the path that tracks the result we all want; a closed loan transaction. All the loan scenarios in the world are meaningless without knowing if the people you are talking too can qualify for the money.


Simple Loan Strategy #1 is to be sure you spend no more than ten minutes or so with a prospective borrower until you have seen the five key items:

1)    Tri-merge credit report on all borrowers

2)    W-2s on all borrowers last two years

3)    Paystubs on all borrowers last month minimum

4)    Bank statements showing all funds, even those not needed for the transaction.

5)    Last two years tax returns for all borrowers, all schedules


Why engage in a conversation without know the facts? Some borrowers may want to shop from place to place before they commit to supplying this information. It is up to you to share the wisdom of having a real factual conversation about what they can really do, verses a hypothetical conversation about thing that may, or may not happen. You may “lose” a few opportunities in this process, but the time you save in working “real deals” will far outweigh any you might “lose”.


Simple Strategy #2 is to be very clear about time expectations. All markets and companies are experiencing different time lines to close both purchase and refinance transactions. Between appraisals times, processing times, underwriting times, and the ability to get a closing scheduled, all need to be clear and well within a predetermined set of reasonable expectations. The phrase “under promise and over deliver” comes to mind. If you get a purchase contract into your office for 15 days for a firm commitment, you need to be very clear with ALL PARTIES as to what will be needed and BY WHEN to meet this time frame. If you get a purchase contract calling for a 21 day closing on an RDA loan, and your RDA region is running 9 day turnaround time, you need to get the contract changed on day one, not day 20!


Simple Strategy #3 is to be very careful about when you lock the terms of your deal. Once you tell the customer their deal is “locked”, you lose all leverage in getting that client to supply any additional materials you may need. Also, once you have “locked” the terms of the deal, the client now has full ability to “shop” your terms in a fluctuating rate market. You need to have a clear and specific conversation about rate locks and lock extensions before making the commitment on your terms, if the borrower isn’t as committed as you are.


Simple Strategy #4 is to get your loan files “bullet proof” before submission. Nothing is a bigger waste of time than chasing conditions and documentation. Know what you need and get it before it goes into processing. Create a checklist with your processor as to what they need from you to make the file flow smoother. Solid and complete files take a little more time upfront, but are well worth it down the road. Be a professional and turn in great files!

Simple Strategy #5 is to have a clear and specific communication schedule with everyone in the process. Certain specific points of communication are required and easy to schedule. A few things you want to include would be:


1)    Connecting with both Realtors® on a purchase transaction within 24 hours of file submission to be sure about appraisal issues.

2)    Appraisal review with the client and obtaining all need insurance information so the policy provided meets the requirements set in the application.

3)    Commitment conditions and clear to close dates to be certain everything is tracking the schedule.

4)    HUD-1 review prior to closing.

5)    Wire receipt confirmation with Realtors®

Five simple steps that take you from being busy, to becoming productive!

You can learn more by visiting http://www.ImproveMyTomorrowCoaching.com

Opportunities through Expired Listings

An important part of any loan originators life blood is referrals from Realtors®. No training program can ignore this vital area of business. One of the key ingredients to any lender – Realtor® relationship must be for the lender to understand the Realtors® business cycle, almost as much as their own. If a lender can’t understand why a Realtor® does what they do, it isn’t a relationship as much as it is and order – order taker system.

This week we want to look at expired listings. Traditionally July is the single largest month for real estate listings to expire. July also represents a critical point in the season for those people who either want to sell a home, or need to sell a home before the end of the summer and the return of the kids to school.

Mortgage professionals need to understand that many Realtors® may or may not even be aware of this situation. While you would think it would be a fundamental part of any full time Realtor’s® business plan to market to, and be connected with expired listings, many don’t have even a simple plan to attract this business.

So how does a loan originator engage in this arena? Simple, get out of the office and go talk about it. Yes, I said GET OUT OF THE OFFICE AND GO TALK ABOUT IT! Nothing works better then face-to-face communication. Stop all the cards and letters. Stop all the emails and electronic nonsense and get out of the office and go talk to somebody!

Here is a simple plan you can easily engage. Expired Listings are people who wanted to sell their house and move on. They had an expectation when they listed that the home would be sold and they would be long gone before this point in time. So what happened? Well, likely the price they were asking for, didn’t meet the value of what they had to offer. Simply put, everyone has a different perspective on what value is. People often don’t agree on all the specifics as to what things are worth, but in real estate, we have certain tools that help us understand what the general public perceives value to be, and what the professional community will acknowledge as the value of any property.

So here is where a good loan origination with a plan, can help his Realtor® referral partner. Since emotional value of a property has no definition, we can only look to the factual definitions like price per square foot, property condition, and other tangible items to compare what has actually been sold, to what is still waiting on the market. One of the best ideas I have people use is to invite a number of people who have their current listings expiring to a small meeting, either at a Library, school, community center, or even a large conference room, and bring in a licensed real estate appraiser to explain property values from the finance side of the business. You see, a home is worth what someone is will to pay for it, ONLY if they are paying CASH! If you want to finance the transaction, the home is worth what an appraiser says it worth!

The other piece of the puzzle for expired listings you can help with is the financial ramifications of accepting a lower price from the sale of their current home. If a seller has to reduce their price by thousands of dollars to get a deal together, they often see that “loss” as something they can’t deal with. However, nothing is really a “loss” if you never had the money, or if you are prevented from achieving the real outcome you wanted, which was selling a home and moving on. And since most people selling a house are only going to buy another one, here is a simple strategy to help change the focus from the seller losing money, to one in which we work on completing the original goal of selling and moving into the next home.

A simple strategy is to look at the money in a number of different terms. Number one, $10,000 is a lot of money. $35 a month isn’t such a big deal. You see, one is a statement of a total value; the other is the monthly impact of the situation. In today’s market, what is the difference in the monthly payment while financing the difference between what they wanted and what they can accept? Often, converting the terms of a perceived loss into monthly payments changes the perception of the “loss” dramatically.

Other strategies also include the fact that since the seller first listed the home for sale, loan interest rates have fallen significantly. Much of the information they used to think about the cost of selling and buying a new home was based on loan information that has long since become outdated. Spending a few minutes with a seller to translate dollars into payments, and back the other way, can open their eyes to see that even taking less money for the house they are selling, still provides a keen advantage because they are going to be financing their new home under much more favorable terms!

Having a strategy to work with your referral partners in their business can only lead to better and stronger relationships. You need to be aware of their market cycles and what you can do to help them, help you!

Learn more, visit www.improvemytomorrowcoaching.com

“Back in the Box” by Michael White

The last ten to fifteen years everyone and their brother has been working to “get outside the box.” Well, it worked. Nobody is in the box any longer. As a person who has always found it more appealing to go in the opposite direction of the crowd, I am here to say; get back in the box! Old fashioned fundamentals work. The so called, “blocking and tackling” of commissioned sales works! Yes, new technology has made it easier and provides more ways to connect with your clients and referral partners, but often that technology causes huge amounts of waste, mostly your time. If you lack discipline and structure, you can get lost using the very tools that were supposed to help improve your productivity.
Let me give you a quick example of what I am talking about. Fifteen years ago I had to limit the number of phone numbers on my business card because I found instead of helping the client, it caused them to dial four or five numbers and leave four or five messages, just NOT to talk with me. The sad part is, not only did my clients find it frustrating not to reach me after making all of those calls I had to listen to the same message over and over just to return what should have been one call. This now holds true for email, texting, social media, and all of our auto-responders! Imagine the frustration of a client trying to reach you using all of these wonderful devices, only to have you in a meeting with another client or referral partner! Instant access becomes instant frustration! You will also have to have a set time and strategy to use these new social media outlets. Set a specific amount of time to spend in each area and stick to it. I have already seen clients spend HOURS on keeping people updated, not the best use of time.
We need to make it simple and easy for our clients to work with us. How about one phone number and one email address? What about leaving our message to explain WHEN we will return their call and give them OPTIONS as to what works best for THEM? Wow, no more phone tag! Specific appointments at specific times to communicate with you, that is really old school! Same holds true for when you first speak with someone. Imagine if you just shared how and when you return communications? Something simple like: “call in before three and I call back before five and call after three and I will call back before ten o’clock the next morning?” A simple message like: “today is Monday the fourth and I have meetings and appointments scheduled throughout the day. I will be returning calls today between 9am and 10am, 1pm and 2pm, and again between 5pm and 6pm. Please leave your name, contact number, and which one of those times work best for you and I will be happy to call you back then. If one of those times does not work for you, please leave me three times tomorrow that will work and I will be happy to schedule a call with you then. Simple!
Simple solutions and fundamentals will get you where you need to go. People do business with people they know, like, and trust. More than 60% of people do business with the first person they talk too that appears to be skilled and competent in the area of need. Knowing the math is important. It tells us that each one of us has a ratio of opportunities to closed transactions we need to track and improve! Focus on generating opportunities and transactions will follow.
In the mortgage and real estate industry, the focus needs to be getting in front of opportunities and then following up with them until they close. People close deals every day in your market that you didn’t do and it has nothing to do with the fact they didn’t like you. It has everything to do with the fact they didn’t know they were supposed to use you! I call it the “Raffle theory”. Each transaction is like a raffle. In a raffle, there is a known prize (the deal) and a set number of available tickets (the number of people that have a chance of doing the deal). Unlike a lottery where nobody has to win each drawing or any number of people can split the winning prize, in a raffle, you know the odds based on the number of tickets outstanding. Old school theory is to go out and collect tickets!  Every action needs to include the question: “Who do you know that I need to speak with?” This question leads to raffle tickets; the more tickets, the better your odds of winning; no tickets and you can’t win. Plain and simple, you got to be in it to win it!
Realtors® and mortgage professionals need to do a better job sharing opportunities. While some do a great job working together on those clients that are looking to purchase a house, they almost always do little to nothing together to work with the client that is selling a house. In fact, I feel it is far more important for mortgage professionals to work with the Realtors® listings than their buyers! Here is why: Knowing if the current mortgage can be assumed on your listing. Finding out if a seller qualifies for their next loan early saves time. If there are credit challenges with a seller, you have time to correct. If you could save that seller up to 3.25% on their next loan, would that be a good idea for the client and a bonus to everyone? Since the seller that has just listed may not have begun the loan process yet, getting in front of them first improves the lenders chances of getting the deal and keeping the Realtor® in the best possible position to negotiate. If the listing can’t buy the next home, you can keep them from entering into a contract to sell and forcing them into the street!
Realtors® and lenders also need to work in step with the potential buyers they come across. Qualifying for a loan requires more patience and documentation than ever before. While those that are qualified will find plenty of money available, the price they pay to borrow can range as much as 3.25% of the loan amount based on the program they choose and their credit scores. Now it takes as much as 25% down and a 740 or higher middle score to find the best rates. Getting people to a qualified and licensed professional is your best chance of avoiding big challenges down the road. Do you know what your lender looks at before they issue an approval? Do you verify each approval letter with the person that signed it to determine what work they have done? If not, why not? How many people need to get sued because they didn’t do proper due diligence? Why not know before you start that you have the best possible chance to get the deal done? Nobody gets paid when deals don’t close! Why take a chance on potential loss of a client and a damaged reputation when you can do a little due diligence in the beginning to avoid potential known challenges?
Working together, Realtors® and lenders can help provide exceptional value for their clients and take much of the turmoil out of the purchase process. Careful and clear explanations on how the process works should be done as early in the process as possible. Realtors® need to know more about a property listing so they can make a fair determination of financeable value. Financeable value is not market value. Financeable value is the specific terms and conditions a typical borrower may expect when trying to obtain a purchase money mortgage.
No longer is the value of any property the price someone is willing to pay. Well, it is if they are paying CASH! If the property will require a mortgage loan, the terms and conditions in which the property can be financed will have a direct bearing on the real value of the property. Example, two identical condominiums are for sale, one right across the street from the other. Every aspect of the condos is the same except one resides in a complex with a large number of investor units, and the other complex is all owner occupied properties. One of these properties can be financed by conventional means and the other can’t. Clearly the condo that has a larger variety of financing possibilities and more favorable terms is clearly a more marketable property and will command a higher price.
Realtors® and lenders need to keep each other informed as to market conditions and advise each other as to any conditions that may cause a challenge during the process. Like anything else, the time to fix a problem is before it becomes a problem. It is up to the professionals to keep each other informed so they each can keep the clients informed.
A comprehensive strategy needs to be in place so that Realtors® and lenders can work together to improve the quality of service for the client. Sharing a strategy can help provide a specific plan of action for the following:
1) Working with buyers

2) Working with sellers

3) Finding FSBOs

4) Expired listings

5) Help us pick your new neighbor

6) Social media – Twitter®, Facebook®, Craigslist®, etc.

7) Websites

8) Current and closed client events and communication
Each one of these areas needs a special plan and a series of scheduled tasks that will help generate opportunities. Let’s take a look at some things we need to be aware of so we can construct a strategy that will lead us to opportunity!
Having a clear understanding of what goes into a loan approval can help the Realtor® know the quality of the offer. The more work done before the approval is written, the better the borrower. If your lender can’t explain the approval process so it is clear and specific, it may be time to find a new lender or be certain you qualify every offer by sharing the fact that the approval being used has not been clearly verified. Also, rising interest rates costs a borrower some buying power. As rates go up, the amount of money a borrower qualifies for goes down. Both lenders and Realtors® need to speak to an approved borrower on a weekly basis to be sure that they have looked at property, or are scheduled to look at property. Failure to do so means that client may buy a home with a different Realtor® or use a different lender!
We all know that working with a seller is more than just sticking a sign in the ground. Realtors® need to know everything there is to know about the property being sold and be certain that the property is as financeable as it is marketable! Just like the property, the sellers themselves need to be sure that they have done everything they can to be the best possible borrowers they can. Why wouldn’t you talk to a lender as soon as you go to sell your property to find out if there is anything you need to do to become a better borrower? With credit standards and guidelines changing almost on a daily basis, why wouldn’t you talk to an expert early? Time can be your friend or your enemy, the earlier you get started, the better chance you have of saving real money. Did you know that current risk based pricing models have the best rates at 75% LTV with a credit score over 740?
We all know that selling a home is a process. Why not accept all available help? Do you have a lender that will work with you on the following items?
1) A professional third party endorsement letter to the seller.

2) A home finance guide detailing finance options for the property.

3) An “Open House” strategy to find buyers and new listings.

4) Shared technology to provide information and track interest.

5) A client retention system to keep in front of closed clients.
If you don’t have one, would you like to know where you can get one?
Thousands of Realtors® and mortgage professionals have left the industry over the past few years and more will leave this year. Licensing requirements and compensation issues are working to reduce those in the mortgage industry; the lack of activity in the real estate market has already reduced the number of full time Realtors®. Those that remain need to do more to get more. We all need to establish new standards of expectation. We need to find our way “back in the box” to provide the personal service and exceptional value to our customers that will generate ongoing opportunities.
Now is the greatest time in history to be involved in real estate. History shows us that the greatest increases in market share have occurred in so called “bust cycles”. Housing prices may not be at an all time low, but home affordability for the average qualified buyer is either at or near all time numbers. The cost of buying and owning a home over time is going DOWN! Even with interest rates starting to rise, opportunity is still exceptional for those looking to take advantage of them. Do you have a plan? Do you have a referral partner? If not, why not? I believe you always need to be going in the opposite direction of the crowd if you want to find an advantage. The crowd has gone away from face to face communication and fundamental business plans and strategies that have always been the core of successful sales people. Get back in the box and find your opportunities!