Making a Plan For a Changing Market

Brian Morley, even though he is already a top producer, has taken steps to prepare his business for the day when interest rates start to rise. Photo: Brooks Kraft

Preparing for the future at a time when you are already doing a lot of business is a difficult task for many. After all, many mortgage originators have seen their personal production benefit greatly from the large amount of refinancings due to the record low interest rates of the past few years.

But months before the run-up in rates during May, Brian Morley, an originator with The Columbia Bank/Fulton Mortgage Co., Columbia, Md., began to take action to deal with the switch from a refi market to a purchase one.

Morley has been with The Columbia Bank for eight years, starting in its call center and then moved into the wholesale home equity unit.

About six years ago, he transitioned into the mortgage banking side at the bank, “and I happily did it!”

But the transition into first mortgages came right as the boom period was ending. “It was pretty crazy, especially coming into the industry fresh. The idea of a stated income loan just kind of blew my mind a little bit. So I was very naive when I came into the business,” he continued.

Still in that short amount of time, Morley has become one of the leading originators in the business. On the Origination News 2012 updated top 200 producer list, he ranked in a tie with three other originators at 75th, with $100 million in volume.

“I got very lucky, my timing worked very well,” he said noting that when he started rates were in the area of 6%. Volume wasn’t very high at that time, “so it really gave me an opportunity to learn what I was doing, learn the different products, procedures and guidelines.”

Within 18 to 24 months after he started in the mortgage business is when rates started their declines to record low numbers and volume started to pick up. And by then, Morley said he was ready to hit the ground running at full speed to deal with the influx of applications, primarily refinance, which were coming in.

Of his 2012 production, 20% was purchase and 80% was refinance. But in anticipation of the market shift, Morley hired an assistant last October.

“One of my goals in hiring an assistant was to be able increase my purchase business [by making contact] with Realtors, builders and other referral sources.

“So we put some plans into place that would, at least I hope, transition the volume more towards the purchase business as opposed to the refinance business. Refinances will come and go, but purchases—we hope—are there for a while,” Morley said.

The way he envisioned how his assistant would work is that she splits her time between helping with his day-to-day production, with the other half spent working on marketing.

Morley said he personally takes every loan application and reviews every file that goes in for processing.

Morley’s offices are located in Howard County, Md., which is slightly closer to Baltimore than Washington, but people who work in either city live there. He also has referral sources in Montgomery County, which is more of a Washington suburb.

Values in the area are starting to come back, with good houses coming onto the market selling quickly. Properties are getting multiple offers and appraisal contingencies are being removed.

“It’s kind of scary how quickly everything turned around,” he said, adding that appraisals are supporting the current values. Realtors are aware of what products are available for borrowers and working within those guidelines.

“The late winter and spring markets have been much better than I expected,” he declared. His production so far this year is in the area of $49 million. The purchase business is slowly but surely beginning to take up a larger share of his volume, although year-to-date it is just 22%.

With the increase in purchase business, one change he has noticed is that he is getting more referrals from sources other than Realtors, such as past clients.

Morley said these referrals “have given me the opportunity to audition for two new agents.” Even if a Realtor he works with has referred their customer to him, he noted there is an opportunity to audition for the seller’s real estate broker.

So he has put a plan into place where he and his assistant stay in touch constantly with the buyer’s and seller’s real estate agents. The plan calls for touching each agent six times during the process, keeping them apprised of what is happening. Morley notifies them of events such as the borrower filling out the application, the appraisal has been ordered, the appraisal has been received, the commitment has been received and the loan is cleared to close.

“I think that proactive approach to staying in touch with agents is very appreciated,” he said, recalling one instance where the seller’s agent had been put into this system, but had not said one word to Morley during the process.

But at the closing table, the agent said how impressed she was and now Morley said he is getting some business from her. “As rates creep up and more lenders shift their focus to the purchase market, I think service will really set individual lenders apart from each other,” he continued.

The Columbia Bank is part of Fulton Financial Corp., which has a number of affiliated banks in the mid-Atlantic region. Being part of a financial institution which has the option to portfolio loans can be one of those service advantages.

While the bank is a Fannie Mae/Freddie Mac seller/servicer (and as of now it sells its Ginnie Mae production to others), there are some products it does portfolio.

Thus, being a bank allows it to look outside the conforming box when it comes to originations, if it makes sense to do the loan. Morley gave the example of a bank commercial client who would not qualify for a conforming loan. It can look at other factors and if they would support the loan, then the bank can put it into portfolio.