Friday, February 14, 2014

Building the Purchase Business

In the November issue of Mortgage Banking - they outlined some statistics that showed the thrust of originations in 2014 was going to be a result of increased purchase business as refinances continued their decline.  The percentage of refinance originations vs. the total market share was as follows in 2013:
  • 74% in the 1st quarter
  • 66% in the 2nd quarter
  • 54% in the 3rd quarter *est.
  • 45% in the 4th quarter *est.
The article went on to explain that the trend for mortgages will be pushed towards purchase business, though the increase in purchase business will not nearly make up for the steep drop in refinance originations.

Fast forward to a more recent article in February of 2014, where December new home loan applications declined 11% compared with November. (Mortgage Banking, February 2014 issue, pg. 14).  While this could be a function of the cyclical nature of the real estate industry - we do know that refinance numbers surely continued their decline so overall mortgage originations were down year over year. The Mortgage Bankers Association estimated that only $1.12T of originations would happen in 2014 and that is a reduction by over 36% from 2013.

How does this impact lending in 2014? It places a premium on purchase business and serves to elevate the role of REALTORs in their endeavor to help consumers attain their goal of home ownership.  As lenders, it is paramount to provide service levels that meet or exceed the expectations of the consumer and REALTORs that we are fortunate enough to help throughout the homebuying process.

Here are some tips to exceed expectations:

  1. Communicate - It seems easy enough, but trust me when I say that it is sorely lacking in most transactions.  It's not just talking to someone either, communication is about listening, discovering clients needs, and then taking action to help with what they need.  It's about saying what you are going to do and meaning it.  It's about speaking clearly the items and issues that present themselves so everybody is on the same page.  Most importantly, it's about being available when they need you the most.
  2.  Exceed the Purchase Contract Expectations - The real estate contract in AZ calls for a few important dates that are vital to the transaction. 
    1. LSU within 5 days of contract acceptance - yes most lenders find them tedious, but it's part of the communication process and ultimately you have the responsibility to get the application to them within 3 days.
    2. Loan Documents 3 days prior to COE - Just closing on time isn't enough, the expectation is that the loan documents will be to title 3 days before closing.  If you can't come through on that, then make sure everyone knows upfront.  I say go a step further and get the loan documents there a week before closing.  That will ensure that you have exceeded all expectations. 
  3. Lead with Integrity - It is all too easy to only be concerned about the deal and the money at the end of the rainbow.  After all, we are sales people and we need the transaction to close for all parties to win.  So tell the truth, have some integrity, and be willing to collaborate with all parties for the benefit of the entire transaction.  We have a huge responsibility to do what we say and say what we mean - so live that out and the rest will take care of itself.
Here's to a successful 2014 as we embrace the world of a normal market and a purchase driven environment.  What more could we ask for?  So many opportunities to astound the people involved in the transaction.  This could be the year that your legacy is cemented as a top notch purchase oriented mortgage professional.  Start leading the way now.  

9 comments:

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The benefits to owner-financing home mortgages are plenty. In our economy, homes are sitting on the market for up to a year. If you are willing to finance your home yourself for a buyer who cannot get a conventional loan, or to someone in your close circle of friends and family who you can trust, you could really help out a family that needs somewhere to live but can't, or doesn't want, to take out a bank loan.home financing

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