Santa Barbara, Calif.-based originator Kelly Marsh has been successful in getting out the word to real estate agents and homebuyers in her marketplace about the benefits of getting a loan through the
During the boom times, California had been considered a no-man’s land for FHA, as the program’s limits had been too low for most markets in the state.
But as a result of the bust, the FHA limit was raised to the same level as the expanded conforming loan limit, and it remains at that higher amount.
For Marsh, all the work she did educating Realtors and buyers about the product has paid off. On the revised Origination News top 200 producer list for 2012, Marsh ranks 44th, with volume of $125 million.
She got into the mortgage business after returning to Santa Barbara because she reunited with her high school sweetheart (now ex-husband). His family was in the mortgage business and she started working there doing loans.
After three years, they decided it would be best if they would leave the family business and she started to work for a mortgage broker in Montecito, which is in Santa Barbara County.
Marsh was there for about a decade but in 2009 “I started feeling like I needed to go back to my roots in mortgage banking.” And after speaking with friends in the business from nearby Ventura County, she got some reassurance about branching out on her own.
Currently she is a producing branch manager for Broadview Mortgage. There is one other producer in the office. To open that office just as the bust hit its peak was a leap of faith. But it has been a successful move.
“My business has only grown since the down time,” Marsh said. And the reason why is “I really was an advocate for government loans in Santa Barbara.” And that was a huge undertaking because of the negative perception the market place had about the FHA and Veterans Administration products.
Many people still believed the area had housing prices too high to qualify for the government products. She still does education sessions for local Realtors. Twice a year she hosts a “Lunch and Learn” at the Four Seasons Biltmore hotel in Montecito.
The event is invitation only and the main goal is to educate the real estate sales people on products that can help homebuyers.
“I always had a good book of business; I wouldn’t have been able to branch off on my own if I didn’t,” she said, continuing that these sessions have created stronger relationships with the Realtor community.
Until some recent changes in the program, given the higher limits and the mortgage insurance premium cost for FHA, for a number of years it was a superior loan choice to be able to offer to homebuyers, March noted.
That is what she said she tried to explain to the real estate industry to help get her borrower client’s offers accepted. There might have been a little bit of the fear of the unknown with the FHA product, but “it is not a scary product.”
Many would see an offer which would include the borrower getting an FHA mortgage as being a weaker one, when in fact the government insurance makes it a more secure loan.
The recent changes in the FHA MIP will make now an inferior product in many cases, “but still it is going to be a loan that will fit a lot of buyers,” she said.
Because values have started to rise, her current business strategy involves taking those clients who she put into an FHA loan and now that they are in a better position, refinancing them into a conforming loan.
Even for purchase clients, for those who qualify, the conforming loan right now is a better choice for them, Marsh said.
With the changes in the FHA program coming up in June (including requiring the borrower to maintain insurance for the life of the loan), Marsh said she sees this kind of a financing as a bridge for her clients. On the loan amounts in the area, the borrower could be paying $600,000 to $700,000 just in premiums if the loan goes for a 30-year term.
That does not make sense for the borrower. So she is looking at programs such as those that have a five-year fixed term so the payment remains affordable and the borrower is able to build equity in the property as fast as possible. The strategy includes regular consultations with the borrower to see if the time is right to refinance into a conforming loan.
“Unfortunately that is what the FHA changes have dictated. It is not going to be a long-term loan for people,” Marsh noted.
She called the VA guaranteed loan “a phenomenal product. When you look at VA financing for an eligible borrower, it is far superior than a 10% down Fannie loan.”
The VA limit in Santa Barbara is $593,000,which means the borrower is able to purchase a home valued at $700,000 (with a downpayment) “and your putting that client into a better loan long-term with no MI and lower interest rates than Fannie Mae.
“So I’ve had to do a lot of education around VA financing with the real estate industry,” because, once again, there is a fear factor.
That education includes giving Realtors and home sellers a copy of a newspaper article she wrote about VA financing that reminds them not to forget why the client is eligible for this kind of loan in the first place. These buyers have served or are serving our country and everyone should think about that as well, rather than thinking that an offer which includes VA financing is a weak one, she said.
Marsh said she likes to meet with every purchase client face-to-face. She has an hour to hour-and-15-minute consultation, which she termed “a very A-to-Z type meeting.” She educates the client on what products are available to them, and explains the pros and cons involved. She teaches about how interest rates work (how they are set by the securitization process) and just build a foundation of knowledge for the client about the loan process so they feel comfortable and it makes sense to them.
Regarding refinancings, Marsh said she believes in the no-cost offerings. Since the loan amounts are higher in her area, she is able to structure such deals.
She called herself a no- or low-cost advisor when it comes to refis, preferring to stay away from products that charge points to the borrower. The strategy has enabled her to do a lot of refinance business as a result.
In the Santa Barbara market, properties are starting to see multiple offers again and those offers going above the original asking price. It can be concerning in ways, especially for new buyers, she said, but on the other hand, it is good for her clients who are existing home owners.
Like many other areas, there is a shortage of properties. Starter homes in the area run between $550,000 and $750,000 and that market has become very competitive.
“Santa Barbara is an amazing place to live,” she said, adding “it is a real family town.” There are also a lot of second homes in the market.
Much of her marketing is handled through Broadview, including updates sent to her database.
But other than the Lunch and Learns and the newspaper articles (which had been written for a now-defunct local daily), her basic marketing is word of mouth from past clients and business connections.
