Linda Smith-Ellsworth has been through quite a few business cycles, but remains a top producer through her dedication to her clients.
If you have been a part of the mortgage business since 1969, you have seen more than a few up and down cycles. For Linda Smith-Ellsworth, who was on our top producers list for 2009 at No. 21, 2010 has been a year of rebuilding. Her previous firm went out of business and she is now working at Rand Mortgage.
She started in the business because her father was a Realtor in Bronx and Westchester counties in New York State. She started working at a company that he gave his business to.
Back then the business was entirely Federal Housing Administration/Veterans Affairs loans, with little conventional loans. And Smith-Ellsworth said over the years she has remained a government product originator.
“Anybody can do vanilla stuff. When it comes to the government (loans), that’s really a specialty for some people.”
That is because of the nature of the rules and guidelines of the government lending programs.
For many years, FHA and VA took the back burner to the conventional programs. Now, Smith-Ellsworth said, they are the “new wave” in lending.
Even in the higher-priced markets, the government products are becoming popular. There are some originators in Westchester County going the FHA route on a $700,000 loan.
During her career she has even had her own company. In 1993, she opened Horizon Funding Equities in Mamaroneck, N.Y., which merged with another firm, Rochelle Financial Services, in Larchmont, N.Y.; that firm operated for seven years.
Smith-Ellsworth then worked for First Source Mortgage before joining First Alternative Mortgage, where she was director of business development.
Now she is at Rand Mortgage, an affiliated company with Rand Realty, which has 800 Realtors working for it. She is in production/operations and her offices are in Dutchess County and parts of Westchester County. She is also a member of National Association Professional Mortgage Women.
What she is finding is that it is very difficult today for mortgage brokers to do business. “This is a very cyclical industry and with all of the new RESPA and TILA laws we have to abide by, and NMLS, it’s making it a lot more difficult for people to support their livelihood.
“I find a lot of the changes to be prohibitive,” and with the revisions coming up as a result of the Dodd-Frank bill, Smith-Ellsworth finds originating is extremely difficult today.
The consumer doesn’t always understand the mechanics of the lending process, and those mechanics have become a lot more intense with all the new disclosures.
She does not believe the new disclosures are advantageous to the borrowers. For example the old good-faith estimate was very “precise and concise.” The new GFE doesn’t explain items as well to the consumer. The reason why mortgage brokers will be able to flourish is that lenders are now being overly cautious.
What sets her out from the competition is that she prequalifies the borrower. Much of what Smith-Ellsworth considers to be her business advantage is the work she does with the client at the beginning of the process.
She said her ability to communicate with the borrower and structure the loan was the most important part of the deal. Continuing with the theme of the borrower being able to understand what’s happening, Smith-Ellsworth has found the process to be overwhelming to them and so their ability to have access to her is paramount.
She is available to her clients seven days a week and all have her residential phone number. This was something she said successful loan officers taught her a long time ago. It gives her clients a sense of support, because the entire home buying process can be a very overwhelming experience for consumers, especially first-time buyers.
“The more information they have, the more powerful they are,” Smith-Ellsworth continued. The old-fashioned approach to mortgage originations is important to her, and she admits it has sometimes been to her detriment. “But usually I won out.”
“A face-to-face conversation is also important. Phone and Internet are wonderful, but there is nothing like the old fashioned way and meeting someone and putting the face to the name for all parties,” Smith-Ellsworth said.
And during that meeting she is very exacting on what she explains to the client. This includes in some municipalities having to disclose a year’s worth of taxes the borrower would have to pay as a homeowner.
The result is that closing costs could double and the borrowers usually don't understand, she said.
But after that meeting, the consumer has an idea of their purchasing power, the taxes of the area they want to look in, what it will cost them monthly and what it will cost at the closing table.
Smith-Ellsworth said her expertise is seeing the worst part of the deal first and then fixing it before moving forward with the borrower’s application. Many other originators jump in to the deal feet first, she said. She looks at the income and credit first and if there is a problem, fixes that first before moving ahead.
And this is what Smith-Ellsworth tries to get across to the real estate agents she works with. But in a lot of cases, the agents start showing people homes that they might not qualify for a mortgage for. So, getting the customer in prior to looking for a property is in “everybody’s best interest.”
A lot of agents are starting to realize, she said, that it is great to get the consumer into their office, but to have those clients pre-approved and their financial profile as part of the agent’s knowledge is more powerful because of the options they can provide.
Smith-Ellsworth notes that even being part of an affiliated company, she has to market to those real estate agents. “What we try to do is tell them that we are here to support them and answer their questions and guide them,” she said.
The point is to give the customer as much information as they can. Smith-Ellsworth is dealing with a client now, who told her “I just love the idea that you don’t leave me hanging, you answer my questions, you’re always there.”
Her father’s advice to Smith-Ellsworth included, “Never take a back seat to anybody,” especially as a young woman growing up in a man’s business and that shows in the success she has had over the years.
The government programs (she also does the USDA Rural Development program) give a person with who doesn’t fit the conventional loan profile the opportunity to buy a home. There are some caveats to this, but it does give an advantage to someone who can afford to buy a home the opportunity to do so at a decent interest rate, Smith-Ellsworth said.
When she meets with a new client, one of the first questions she asks is “are they are a veteran?” so they can take advantage of that program’s benefits.
“A good loan officer knows what’s out there. And that’s the beauty of being a broker as opposed to a lender,” explaining that lenders typically specialize in one product. When something happens and the loan falls out, the borrower has to start over.
As a broker, she can take the appraisal and find another lender that has a product that fits the client’s needs. Appraisals for government loans are portable.
Instead of being pigeonholed into one product by going to a bank, consumers who go to a broker open themselves up to a choice of six or seven lenders, Smith-Ellsworth said. Brokers have a menu of places to go to get a loan approved.
But the new compensation rules coming out in April could change things all over again, she said.
Besides the government programs, she has access to a no income verification and a stated income program, as well as a foreign national program from Emigrant Savings Bank.
So in spite of the popular perception, the current environment does give the mortgage broker a “cutting edge” advantage in terms products to offer the consumer when compared with a lender.
Overall, the real estate market “is very cyclical. We will come back. It will take four to six years, maybe more. But I am seeing a movement in the market, especially in higher-priced homes.”
