Picking the right niche to originate is in the difference between being an ordinary originator and being a top producer. For example, consider finding a niche where your B2B partners feel they are underserved by the mainstream marketplace.
Rolan Shnayder of New York’s Home Owners Mortgage, ranked 27th in NMN affiliate Origination News’ top 150 producers ranking for 2009, occupies such a niche. His title is director of new development lending, and he originates loans primarily on new condominiums.
His product line runs the gamut between Federal Housing Administration-insured loans for first-time homebuyers and jumbo mortgages at the high end of the market.
Prior to entering the mortgage business, Shnayder was a financial advisor. But when the markets took a tumble in 2002, he said, “I decided that I wanted to do something where I actually had control over the outcome. A friend of mine was doing mortgages and he said, 'You can sleep at night.’ You are doing a service for someone, you can get them into a home or you helped them refinance.”
He started as a mortgage broker, and after a year realized that if he was to do this as a career mortgage banking was the way to go and he joined Home Owners Mortgage.
Control was again a key factor in his decision. Mortgage bankers, he said, have total control of the transaction, as opposed to a mortgage broker.
Besides new condominiums, the niche also includes originating loans on buildings converting apartments to condominium ownership. His market, while mostly being Manhattan and Brooklyn, does include the tri-state New York Metro area. When the housing markets crashed, the government-sponsored enterprises changed their rules drastically regarding loans on condos.
“What I was able to do was put together a group of lenders that were interested in taking the risk on new development and was able to provide a product that the national lenders didn’t provide,” Shnayder explained.
This is still true today, as national lenders still have constricting rules in place. So for a new development to get off the ground, they have to use companies like Home Owners to finance the purchase of the apartments by consumers. When a building is ready to start selling units, his firm helps the building get approvals with different lenders. “We really become a part of their team in working with them to get their sales going,” he said.
Demand in Manhattan came down in a huge way in 2008 and through most of 2009. But at the end of last year, and through the first three quarters in this year, business has picked up again. His group is 25% ahead of where it was in 2009.
Low rates have contributed to an increase in refinancings, but in addition, the pendulum on prices has swung back to a point where buyers and sellers are agreeing on where the price should be.
Consumers need to understand that there is financing available for a unit in a building prior to that building being 50% sold. Buildings will market that fact, Shnayder said, noting that Home Owners Mortgage is the approved lender on a building.
Because of the large number of buildings the company has relationships with (and given that consumers are more than likely to look at more than one property before buying), the consumer has heard of Home Owners, is comfortable with the company and knows it can be at the closing table with funds even if the building has not met Fannie Mae guidelines, he said.
There is a different workflow when a consumer applies for a loan with Home Owners. Most mortgage originators have their first contact with a client over the telephone.
At Home Owners, Shnayder does not speak with a client until the client applies online. The Realtor in the transaction makes the potential buyer comfortable that the building is approved for funding and then they send the client to visit the company’s website and fill out a user-friendly version of the standard 1003.
Once the company gets the application, it runs a credit report and then it contacts the borrower. It has all of the information in advance this way and thus it is able to quickly put together a pre-approval.
Shnayder said personally, he believes the whole mortgage industry should adopt this workflow. “It is impossible to quote someone anything real. The first question when a buyer calls me without taking the application first is 'What’s your interest rate?’
“Well I don’t know what the interest rate is until I know more about the buyer. Is it an FHA purchase? Is it a Fannie Mae purchase? Is the building approved? What is their FICO score? Can they get a loan?
“This way, when I call them, I have all of their information in front of me and we are able to get to the bottom line a lot quicker.”
He said he has had pushback from real estate agents regarding this, ranging from the client is a first-time buyer and needs a lot of handholding to they are very wealthy and they need more handholding.
