“The Re-valuation Situation!”

What a ride! The mortgage backed securities market has seen a great deal of price improvement since the “Brexit” vote. We have spent the past couple of blog posts pointing out a winning strategy to help you ignite your business! One piece of the puzzle you can’t afford to miss out on is being sure you revalue all of your pre-approvals to reflect the new purchasing power of lower rates! Yes, as rates go down, that same monthly payment qualifies for a bunch more money! Depending on where you were pricing, and how much they qualified for, it could be just the thing to help you get your buyers off the fence and into a home!

So here is what we do. Go back to ALL the pre-approvals you have issued in the last six to nine months that haven’t closed a loan with you yet. Look at each pre-approval and recalculate their loan size given today’s new lower rates. Create a short thirty second, to one minute video explaining the new letter and why you have issued it, sort of something like this:

“I am sure you have heard a lot about the “Brexit” vote and the reaction in the financial markets. While your 401K might have taken a hit, these very same market conditions have caused interest rates to fall dramatically! This means your monthly housing payment now affords you a great deal more money! I have taken the liberty to rework your numbers and I will be sending you your new pre-approval letter by email. Please understand that rates may again rise quickly, but right now you have an opportunity to get more home for the same monthly payment!”

Post the video, email the video, and then get to work reworking your re-approvals and get them out! Don’t forget to send the video to your Realtors®! Also be sure you send the Realtor® a copy of the new pre-approval! This may be just the thing your agent needs to get their borrowers in contract! But don’t stop there! You need to call every Realtor® you work with right now and make sure that everyone they are showing property too, calls you for a revaluation!

Refinances are great! But lower rates provide so much more in the way of opportunities! Revalue all your pre-approvals! Call all of your agents and let them know NOT to show property to anyone who hasn’t had their pre-approval redone in the last ten days! These are two simple steps that will really help you provide value to your clients and your referral partners!

Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com

“The result proves the theory”

I had an interesting coaching call this week with an originator who I have been working with for about a year, and just shortly after she got into the business. She works for a major lender and for a branch that is widely respected and diverse in the types and quality of originators working there. With all kinds of different styles and approaches to the business, with varied results that is pretty typical in our industry.

I have always pushed my clients to understand that my approach is built through systems, schedules, and the sharing of value. I hit hard on setting expectations and the understanding that we are looking to become the local expert on residential lending in our market, and that our systems, policies, and procedures will help us locate the very people we want to do business with. That by being clear and consistent with the message, and by the execution of a success plan, we can close transactions faster than our competition and with a much higher level of customer satisfaction because we set and exceeded the expectations for the process.

Like all new originators hitting the street, this newbie wanted to believe that she was that expert, she wanted to believe that all she had been taught would make her exceptional; she wanted to believe she could deliver on high expectations and that people would notice her when she did. All the things we say we want to accomplish but with a healthy dose of fear to keep passion from becoming cockiness or arrogant.

Going out into the world sharing these beliefs can be challenging for originators who are faced with an industry that thinks there is no such thing as a mortgage professional, or that the only thing of value an originator can bring to the table is a rate. But she went out trusting her training and that this was going to be a business for her based on relationships and value, not transactions and price.

As she shared her message, most ignored her but a few saw the opportunity to work with someone different. As transactions began to close, as one deal after another exceeded the expectations and the timeline set by contract, people began to see that there was a different way to do business, and that they liked working with a true professional!

So today on our coaching call she shared that a client she had just closed shared with her what a great experience it was to work with her. That she had heard all the horror stories about how tough it was to navigate the loan process and to get her deal closed on time. But that this was actually a good experience. She felt that she was informed and educated from the very beginning about what to expect and what was going to happen. And even while those around her told her that she would never close on time or that she was going to have to be prepared for the last minute price changes and fees, she believed that this experience was going to be different. It would be so because the person she chose to work with was different!

The loan went from contract to issuing the CD in 18 days. The loan could have closed a full week before the scheduled closing date if they wanted to do so; and all the charges were either the same or less than what she was told they would be. Imagine that?

The client called her to thank her again for all of her work. She said that it was truly an exceptional experience and she wonders why more people don’t do things the way she does. She shared her story with some friends and they have already made phone calls to start their own process. Oh yes, the listing agent on the deal was so impressed with the communication and the ease, in which the process took place, that she has begun referring her new business.

We can all make a difference if we choose to. Choose to!

Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com

Action Plan #12 – Appraisals

With TRID requiring the Closing Disclosure to be issued three business days prior to closing; it is really important to be aware early what could cause delays to your timeline. One of the issues that may cause a delay for any number of reasons is appraisals.

Appraisals present a number of touchy points of contention. First there is the issue with ordering the appraisal and getting the physical inspection done. Since lenders are NOT in control of the appraisal process; by law all appraisals are ordered by an independent third party NOT in the control of the lender and selected from a previously approved panel of appraisers, it is best if the listing agent notify the loan originator within 48 hours of contract that an appointment wasn’t scheduled. This will help the originator start the process of finding out why this hasn’t been done, remember, it is ILLEGAL for the originator to have direct contact with the appraiser about the subject property, all the originator can do is contact the appraisal management company and ask for an update.

The second area of possible concern is your current market turn-around time for appraisals. In some markets appraisal turn times are just a few days. In other markets appraisals can often take a few weeks from order to delivery! So being very clear up front with your current market turn times is critical to understanding the timeline for which the loan can close.

Third issue we can see is TYPE of appraisal being done. Depending on the loan being applied for, or property type, you may see even longer delays in getting the appraisal done. It is really important that the Listing Agent is accurate with the property specifics. A condo may not be a condo. A townhouse may not be a legal townhouse. A single family home may very well be part of a PUD. All of these things matter because they can cause possible challenges and delays! Different loan programs require different appraisals. These may require different appraisers or longer times to conduct. Switching loan programs may also require a new appraisal and addition time and cost to the borrower. Remember that appraisal fees are one of the items that are NOT allowed to change during the loan process.

Fourth item we need to discuss is value. Once again, the lender does not control the appraisal. It is up to Both Realtors® to supply accurate information to the appraisal at the point of inspection as to how and why they came to the price point agreed too. The person meeting the appraiser for the inspection should have that information to give to the appraiser. They should also ask the appraiser at the end of the inspection if they saw any issues with the property and share with them their contact information if the appraiser has any issues reaching value. Again, short appraisals are an issue for the REALTORS® not the3 lender!!!

Fifth issue can be one everyone misses, re-inspections. If an appraiser has to go back for a re-inspection of the property either to look at repairs or job completion in the case of new construction, the originator will have had to disclose these fees and the potential number of inspections needed. Once the loan is disclosed to the borrower, you can’t change the fee structure of the appraisal costs. This makes it important for everyone to know what program the borrower is using, what condition the property is in, if the property is going to require re-inspections and that when the re-inspection is called for, the property is complete and ready.

These are some of the potential things that can cause delays in your transaction timeline. Being aware of them before a transaction gets started can help avoid delays and potential for missed closing dates. Everyone wants a smooth and hassle free transaction. Having everyone aware of the issues that can cause delays is the first step in this process.

For questions of comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com

Action Plan #4 – Timeline!

So the CFPB extends the date of TRID until October 2015 but that doesn’t change the fact that our action plan needs to be shared and implemented for everyone to understand and be ready. A two month extension just gives those already prepared an additional two months to share solutions and expand the “Gap of Excellence” between those that have committed to being ready to comply, and those that would run around spreading fear or complaining that it isn’t “fair” to have to do all of this work. As you know, I prefer to work with those who have made the choice to become the professionals.

Today we really need to drill down on the timeline. While each market will be slightly different, and certain loan products may result in different turn times, it is important to establish a framework and set expectations so you can communicate effectively during the loan process. This can be done by understanding where the important milestones are, and all the tasks associated with them.

We began by doing a “Full Document Pre-approval” for those clients that saw the value in being prepared and affording themselves the best opportunity to be selected as the winning bid by providing all the documentation needed for you to issue this pre-approval. This pre-approval letter should explain the documents reviewed and contain specific language that alerts everyone to their obligations toward a timely closing. In fact, a short video would also be a great idea.

This timeline begins with the contract. The purchase contract needs to be specific as to the intent to comply with the timeline and the responsibilities of all parties to their piece of the process. If you MUST have a ten-day inspection period, then just understand that you can’t ask for a 30 day closing. Many home inspectors will be happy to inspect the property and provide a report in 48 hours. If issues are found, negotiating these items further delays the process. So again, be clear that you will close the loan within 28 days OF A COMPLETE LOAN SUBMISSION PACKAGE! This includes the contract and all documents and fees required to proceed.

Within three business days of application we need to be sure all support services are ordered and we have a timeline of their competition.  What are the turn times for:

  • Appraisal
  • Title Insurance
  • Home Owners Insurance
  • Inspections
  • Repairs
  • Processing
  • Underwriting
  • Supporting documentation like Condo questionnaire

All of these items can and will be different based on your area, property, and loan program. It is important that you are clear as early in the process as possible as to these potential delays. Especially if you are using a loan program like USDA where underwriting turn times can go from a few days to a few weeks overnight!

The second important milestone is submission. When you submit a COMPLETE file into underwriting is an important point in the process. The better you have done your job, the fewer conditions likely to be dealt with. Once you have your file submitted, you have to begin to line up the remainder of the timeline.

The third important milestone in the process is loan approval. This should be no less than five to seven business days prior to closing. It is at this point we can dial in the balance of the transaction. You can talk about rate locks and any other unresolved items. Once the rate is locked and you have all the final numbers supplied by the outside parties, you can issue the Closing Disclosure. Again, depending on who will be issuing the CD and their time frame to deliver, you should be ready to close easily within a traditional thirty day window if everyone is working together.

Establishing the timeline early is important to clear communication and a hassle free transaction. The better everyone does their job being prepared EARLY in the transaction, the more likely the transaction closes smoothly and well within the time allotted. If everyone gets better, the entire experience is better for everyone!

Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com

“Me + Me = We”

Prospecting can be challenging; sometimes so challenging that it often gets put off or deleted from the schedule for no reason at all. Often I find my clients hide behind being “too busy” to be committed to their prospecting schedule. I ask them, what is more important than the beginning of the business cycle? How is it ever acceptable for you to eliminate prospecting from your daily routine? The answers I get are simply amazing. “I had to return phone calls”, “I had emails to reply to”, “I had files to work on”, excuse after excuse. This lack of schedule discipline causes the very production roller coaster most originators complain about. The very lack of consistent prospecting IS the cause of the roller coaster effect!

One of the ways to eliminate the possibility of even thinking about canceling your prospecting is to set yourself up with a prospecting partner. Sort of an accountability partner if you will. It is simple to do, find one or more of your referral partners that want to and NEED to generate more opportunities. You can spend one day a week working with another loan originator spending time calling your database using any of the strategies we have talked about.

  • Forever Home Strategy®
  • Annual Mortgage Fitness Check-up & Identity Theft Screening®
  • Collecting 9s & 10s®
  • Thursday Pre-approval follow-up

Any or all of these can be used to generate opportunities and are easily done so you can keep each other moving through the list of calls and sharing success as you find opportunities. A little friendly competition is good to keep you going. It just takes two people, but you can have your entire origination staff join in. Maybe make Wednesday night from 6pm to 7pm pizza and prospecting night. Anything to be committed to taking the very actions you know you should be doing!

You can also get your Realtor® referral partners to participate. Pick an agent and work a neighborhood together! Remember, Me + Me = We! You will get more done if you work TOGETHER! So many Realtors® today are complaining about a lack of inventory. As we have discussed here in the past, there is no lack of inventory. There is a lack of people sharing the reasons it makes sense for people to list and sell their homes and buy another one!

We have spent many posts explaining all the strategies:

  • Forever Home Strategy®
  • Help Us Pick Your New Neighbor®
  • Neighbor’s Only Open House®
  • First Time Home Seller Strategy®
  • Sharing today’s value of their current housing payment

Any or all of these are simple to do, don’t take a great deal of preparation, and cost almost nothing to do other than your commitment of time, energy, and mutual support! ME + ME = WE! Together we get more done, more quickly, more consistently! This generates more opportunities for both of us!

There is never a good reason not to prospect at least two hours every day. Prospecting is the life blood of your business. Prospecting with others makes the time more enjoyable and more productive because you have an accountability partner working with you to help keep the process moving and to share the success with!

  • Look at your weekly schedule.
  • Be certain you have a minimum of two hours each day scheduled for your prospecting efforts.
  • Find prospecting partners to help make more of your efforts more fun and to increase your chances of success.
  • Create games, competitions, prizes, anything at all to help keep you focused and committed.

Alone you can only do so much and are likely to allow yourself to become distracted or become less than completely focused. Together, you have the ability to help each other move forward and find opportunities that you might have missed!

ME + ME = WE!

Questions or comments: Mike@IMTcoaching.com  or visit us online at http://imtcoaching.com

Looking at the Numbers

I am a big believer in following the numbers. Tracking efforts and results are often the best way to measure the value of many things. Numbers are also used to measure business cycles and if markets are getting “better” or “worse” than they were before. Today I want to talk about the numbers used to measure our industry and that of the housing market in general. The main focus isn’t so much the specific numbers or which numbers to follow as much as it is the comparisons that are made and the opinions people have based upon those numbers.

Here is what I am looking at specifically. We all know the first part of 2014 was fairly ugly in the housing markets. Bad weather and the change from a buyer’s market to a seller’s market quickly changed the paradigm of housing inventory as well as the total volume of sales. What made those bad numbers look worse was the numbers they were comparing them too; the numbers from 2013. If you look back at the beginning of 2013 you will remember that we were still riding the wave of refinances as thirty year fixed rate mortgage money was down around 3.5%. We also still had a significant number of short sales and foreclosures which made it more of a buyer’s market. The combination of these things made for an active market.

This trend continued into spring. It wasn’t until the end of May into June of 2013 when interest rates began to soar into the mid to upper four percent range. This sudden move up slowed the market pretty quickly, and while some were fortunate enough to have been locked into the lower rates, many saw affordability slip away. For some, they chose to bite the bullet and buy what they could, while others sat back and waited to see if rates were going to go back down. The result was significant as the pace of refinances fell, almost as fast as the desire of those to purchase.

In the fall things got a bit better and people were resigned to the fact that three percent on a thirty year loan wasn’t coming back; they still saw the value in buying a home. Housing prices kept inching up month after month and the long feared “shadow inventory” seemed to disappear almost overnight. As prices kept rising, each month more and more people got “above water” on their houses, maybe not enough so they could afford to move just yet, but enough to make it possible to see the light at the end of the tunnel.

As we hit 2014 and what was the worst winter in many years for most of the country, the numbers started to come in and look bleak. Year over year sales and mortgage closings were in the tank. As spring tried to break through, the housing market’s numbers still looked bad, again, as compared year over year.

Spring arrived and the pace of sale began to rise but still not a traditional “peak” selling market. We found ourselves in a seller’s market and fielding multiple offer situations and clients bidding on a number of homes over a few months trying to get a deal accepted. As all of this happens, we are still comparing these numbers to the peak numbers of the first half of 2013.

Well that all begins to change now. Slowly we will have 2014 numbers compared to the less favorable second half 2013 numbers. While the 2014 numbers won’t look much better than they are right now, the number we will compare them too will begin to get worse, making our numbers appear better! Just watch the year over year numbers come in for July, August, and September. It will begin to look like things are improving. The numbers will indicate that things are getting “better”. Since so much of the housing market is about consumer confidence, don’t be surprised that as these numbers get reported, activity levels improve just a little bit each month.

Now I am not forecasting a housing boom. I am not even sure that we will even see a modest rally. But what I do see is that my loan officers are still carrying large pipelines of pre-approved borrowers and a rising number of contracts to closings. Nothing historic by any means; but activity that will be steady and solid for the at least the next few months minimum. If this happens, watch and see as we may very well have a good fall buying season. If Mother Nature cooperates, we may even have a good winter.

While none of these numbers are going to be great, as we begin to compare them to worse numbers they will begin to look better. As they begin to look better, they might actually become better! Watch the numbers and be ready to have the conversation. Things are certainly not great; but they don’t have to be in order to be better!

Questions or comments: Mike@IMTcoaching.com or visit us online at http://improvemytomorrowcoaching.com

Processing Timeline

Many of my loan originators and even some of my managers have been talking about the month-end closing rush that seems to happen each month. The stress on the system and the people can be unbearable at times. But why does it have to be this way? A smoother process begins with getting your files cleared to close earlier in the process. Let’s be honest, most of us procrastinate and don’t do things as timely as we could when not faced with a difficult deadline. What I have been able to do with my people is to have them look at their file flow process and create new timelines so that files move much more quickly through the system. We do this by setting a processing timeline with clear check points. While every system is different and each company may have different areas of responsibility for originators and processors, I have a simple flow timeline you can use as a template and just change fields of responsibility or individual tasks. These are BUSINESS DAYS – YOU MUST ACCOUNT FOR WEEKENDS AND HOLIDAYS!!!

Day one: Loan originator prepares file for submission and turns over completed file to processing along with a clear cover letter and proposed timeline.

Day two: Processing team reviews submission, notes deficiencies, orders title, appraisal, transcripts, verifications, and send disclosures to clients with a list of any additional needed documentation.

Day six: Confirmation of returned documentation/track any missing items.

Day eight: File review/note any missing items and post delay message to originator if needed or submit.

Day twelve: Review underwriting conditions and notify originator/client of any needed documentation requested.

Day fifteen: Resubmit/post delay message to originator/manager.

Day eighteen: Clear to close. Notify originator/note insurance requirements and any closing conditions.

Day twenty-four: Order Doc’s/post delay notification.

Day twenty-seven: Review HUD-1

Day twenty-eight: Order wire

Day twenty-nine: Confirm wire

Day thirty: Close

This is a thirty day timeline. You will note that some days may move forward or back during the process with the exception of days one and two, and days twenty-seven through thirty. These are “set in stone” dates that can’t be pushed back for any reason.

Originators, managers, and the processing/closing teams need to sit down and review the process for each office/company. When we have a timeline, we often find the delays earlier in the process so we don’t have a log jam at the end of the process.

Each file should have an established timeline for completion. As you see in this example, we have hard dates built in to check we are on schedule and a process to notify the originator and manager early if there is any kind of delay. A two day delay on day fifteen will appear seamless to the client and referral partners, where as a two day delay on day thirty may not go over so well.

We all want the same thing. Close clean and on time. This can’t happen by accident. There must be a schedule we all can live with so we can each do our job and go on to the next loan.

Questions or comments: mike@IMTcoaching.com or visit us online at http://improvemytomorrowcoaching.com