Is there any good news today? I guess at least people who have filed will begin collecting some income.
The mortgage world is in flux and the challenges are coming faster than we can deal with. We play a very important role as mortgage professionals by helping people make the right decisions; what’s in their best interests.
This week I told three customers NOT to refinance. If you are submitting 100% of approvable files you may need to rethink your strategy. You should be able to “pencil sell” by proving why a refinance makes sense or doesn’t.
For originators in the business less than 10 years, your perspective may be coming from an unrealistic past environment. We are in a uncharted waters. Consumers rely on us; they need us. We can either help them or hurt them when they are vulnerable. We cannot offer advice that helps our production at our customer’s expense.
Non-QM lenders closing operations, conventional lenders are adding overlays increasing minimum credit scores, requiring reserves and a whole host of other conditions we have yet to see will make the upcoming months challenging. Next week, is the beginning of April. Defaults may begin at a rapid pace.
All of my students have heard me say there is no right way to do the wrong thing! Remember, when you have knowledge…you MUST disclose it!
Rates will most likely continue to fall. PLEASE stop and think before you MOVE YOUR PIPELINE of unlocked loans from one lender to the other. We need to support those who provide us with our livelihood. Pulling pipelines jeopardizes those businesses and can affect access to credit. It is hard to imagine what they are going through right now. A little loyalty goes a long way and…it’s the right thing.
Since 2000 I have personally trained thousands of loan originators and one thing is painfully clear; this industry never really set the foundation of knowledge required on a good day, never mind during these times. What you don’t know could hurt your customers.
So for the news today, here are nine things you may want to consider to help your business and more importantly your customers now:
- Realize lenders are challenged by demand. being short staffed, have most employees working from home, getting margin calls, are managing their cash flow all while update guidelines and communciating with staff.
- Stop thinking about lost opportunity on rates! Rates will stay low and may get significantly lower.
- Spend more time listening to your customers. They are scared and aren’t sure what to do. They have kids home from school all day, their investments are losing money, their job may be on the line and that’s all aside from if they end up getting sick, or worse.
- Be very careful in advising. We can cause more damage if we aren’t forward thinking.
- Set consumers up for locking. Lenders have the right to temporarily raise rates to manage business.
- Fully document files. Credit will tighten; lock windows will shorten. FULLY DOCUMENTED files have a better chance to catch the rate as they drop!
- Be SO knowledgeable that 10 years from now, consumers will look back thankfully on your advice.
- Determine Net Tangible Benefit! When did they last refinance? How much did it cost? What will this transaction cost? What is the actual benefit. What is their current principal and remaining term? Just because you can…doesn’t mean they should! No churning please.
- Slow down and take more time to understand your customer’s needs before submission. It will be challenging for underwriters to be confident that each borrower really has an ability to withstand job losses and cut backs that may occur AFTER closing. Help your underwriters with cover letters may go a long way to helping underwriters get a clearer picture.
If you need help, reach out to us. If you really aren’t sure what to say to consumers… PLEASE don’t wing it! Email me if you would like access to our announcements and real time knowledge to help explain what we as an industry are really facing right now and what you can do to help. CLOES.online will continue to provide valuable information to help originators help consumers. We are producing classes everyday to help everyone get on the same page about what it means to originate quality and compliant files. Can you afford not to know?
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