Before we find out how to make the most out of 2013, let’s first address the opportunity.
I’ve always found it interesting how some folks have to be hit in the head with an idea before they accept the fact that it’s really going to happen. We see it on Capitol Hill all the time, but we’re guilty of it in our own business as well. Take, for instance, the idea that:
There is more opportunity for lenders to make money on purchase deals in 2013 rather than refinances.
Plenty of people have been saying this for some time now, but most lenders seem to have little interest in retooling their shops to make purchase money loans. And yet, I can tell you that the shift it coming. I’ve been saying this for months.
This week, I heard someone else say it. Brad Finkelstein wrote the story about the Mortgage Bankers Association’s application data. According to the MBA, “purchase applications have risen to their highest level since April 2011, contributing to a 15.2% increase on a seasonally adjusted basis in total mortgage application volume for the week ended Jan. 11.”
This number represents a huge opportunity for lenders who understand what these numbers mean and act quickly. Remember, by the time everyone agrees that the business is shifting it will be too late for the majority of lenders.
What should you be doing now to get your shop ready for the coming purchase money business?
1 Adjust your marketing efforts to start targeting these borrowers. Users of Marksman will find this simple, but anyone can adjust the targets of their outgoing marketing.
2 You’ll want to recognize that not every consumer who comes to the table ready to buy a home and take out a purchase money mortgage will actually be able to get a mortgage. Underwriting guidelines are still tight and the new QM and QRM rules are not likely to change that in any way that makes it easier on consumers. That means that many of your applicants won’t qualify.
3 Make sure you have technology and processes in place to keep tabs on the borrowers that just barely miss the mark. Help is available for these borrowers and while the lender generally doesn’t provide it, you should work with companies that make certain the lead comes back to you for the loan when the borrower will qualify.
4 Get your loan officers back into training now. There are plenty of programs available and some of them are extremely affordable. Make sure your front line originators have the skills they need to seek out these borrowers, get them qualified and get them closed. Only then will you be in a position to benefit from the coming purchase money business.