The Mortgage Cicerone

Do You Know How To Develop A Business Plan?

A New Post By The Mortgage Cicerone
A Guide for Mortgage Professionals
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Most individuals readily admit THEY SHOULD have a business plan, however once they get down to writing one, they often get overwhelmed.

The first mistake many people should realize is that a personal business plan:

1. Does not have to be a huge document.
2. It need only include key components and serve as a guide to building a long-term mortgage practice. 
3. It's a flexible document that should change as your business grows or the business environment changes.

Consider these simple instructions when writing your own plan.

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What It Takes To Become A Top Mortgage Professional?

A New Post By The Mortgage Cicerone
A Guide for Mortgage Professionals
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When evaluating the evolution of a top mortgage planner, there are countless metrics in which to measure their progress, growth and success. Some sales managers claim the metric in mortgage loan origination is, "How do your customers and clients view you?"

However, mortgage trainer Mike Baker disagrees and believes the most important measure is a loan officers ability to close a sale or influence their clients and customers enough to "want to" do business with them.

In short, "you can't influence them unless you can get them in the door!"

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What Makes You Unique - Are You Compelling?

A New Post By The Mortgage Cicerone
A Guide for Mortgage Professionals
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Do you run your business like a business?

Whether you are a one-person mortgage broker shop or work for a large national name brand company; if you do not think of yourself as the CEO of your book of business, you will NEVER reach the ranks of superstar status in your industry.

It's imperative YOU run your book of business as a CEO of a Fortune 500 company runs their company. While the scale of size differs, the principles remain the same.

All businesses are similar in that they require good management, marketing, public relations, financing, cash flow, good accounting and record keeping, and so on. Yet, it is also important to remember each businesses is unique and knowing what makes yours different.

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Six Steps To Online Networking Success

A New Post By Brian Brady
America's #1 Mortgage Broker
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I contribute to the Active Rain Real Estate Network.  Active Rain is a tremendous resource for an originator looking to practice The Trojan Horse Strategy and make real estate agent connections.  This is a repost from an article I wrote there, today:

There are 11,000 loan originators or mortgage companies on Active Rain and some 55,000 real estate agents or brokerages.  Pretty target-rich environment, huh?  When I started here (August, 2006), the numbers were even better; like ten to one.  Active Rain is the virtual real estate office with a sales meeting every day.  Realtors come here to learn from each other, learn from you, and market their wares through weblogging.

Many members aren't active.  In fact, I'd guess that fully 70-80% of the members aren't posting on a weekly basis.  That's okay; there are plenty of onlookers or voyeurs, reading what everyone else is saying. How can a loan originator cash-in on the Active Rain bonanza without ever writing a blog post?  Here is a 6-step plan to help you close 45 loans, from Realtors on Active Rain, in the next 12 months:

1- Understand your metrics.  If you have a decent relationship with a REALTOR, you can close 3 loans annually for them- that's about it. Sure, some will refer to you exclusively but most have other lending relationships or will deal with listings, only.  I suggest that you search your home state for Realtors who have posted within the past week.  Try to target 20 agents.  You should be able to garner 4-5 loans a month from that group.

READ:  REALTORS are Important To An Originator’s Success…Sort Of.

2- Comment.  The nicest compliment you can give someone is to say that you have read their post.  Comment on all 20 of those "local" agents and try to engage them in conversation.  You can be argumentative, especially if your correcting factually incorrect advice, but try to phrase your discussions in the form of questions so as not to offend.  Work hard at trying to establish a relationship with them.  Do NOT ask for business at this point.

3- Buy a FlipCam and record a 60 second tip of the day.  Upload it to YouTube and post to Active Rain. You can show a video from a seminar you gave, a mortgage market report, loan guidelines changes, or just an inspirational tip.

4- Hold weekly teleseminars interviewing an Active Rain superstar.  Get a free conference line at FreeConferenceCall.com and hold a Tuesday afternoon session.  Record it with a digital recorder and upload it as a podcast, here on Active Rain, so that people can hear the value you add.

5- Offer a weekly newsletter with your "top 5" posts, on Active Rain, about real estate marketing (get it from one of the groups).  Use ConstantContact so you can insert "teasers" with links to the full posts.

6- Now, call those 20 agents and ask each one to be interviewed. Schedule them in for the teleseminars.  Susbscribe them to your newsletter.  Visit and interview them on your FlipCam.  After 2-3 months, ask them for business.  if you're delivering the goods, they won't be able to say no.

Add value first.  Work on establishing relationships.

The Law of Reciprocity will work for you.

Are You Living Life Well?

A New Post By The Mortgage Cicerone
A Guide for Mortgage Professionals
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Sometimes we make living life successfully much more complicated than it really needs to be. Found a wonderful video (hat tip Athol Kay) that both simply and eloquently expresses this point.

"The key to life is to become skillful enough to be able to do rewarding things." -- Jim Rohn

"Now is the only time there is. Make your now wow, your minutes miracles, and your days pay. Your life will have been magnificently lived and invested, and when you die you will have made a difference." -- Mark Victor Hansen

Generate Loans By Adopting Orphans

A New Post By The Mortgage Cicerone
A Guide for Mortgage Professionals
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The market is shifting and it's much harder getting loans the way we have in the past. That's why it's important to adapt to what the market is giving you.

Dave Savage at Mortgage Coach has provided another excellent example of how to adopt mortgage orphans and ultimately generate more loan production.

In Dave's post, he had this to say:

"Every year, whether you realize it or not, there are customers in your office who become orphans…they get lost among the numerous files because their loan officer has left the company and the connection has been severed, never to be communicated with again. Eventually, when they have a new mortgage need, they take it elsewhere because they no longer have a relationship with anyone in your firm.

But you can capture those relationships. Eric Bohn did, and now he’s generating 13 to 15 new loans a month with this strategy! Bohn, with Shore Mortgage of Birmingham, Michigan, generates new mortgages under management by “adopting” the loans of existing clients from loan officers who have left the company. This guy has only been in the business for 2-1/2 years and he did over $52 million in loans in 2006!"

Go and read the rest of Dave's post and take action immediately!

The market is shifting and it's much harder getting loans the way we have in the past. That's why it's important to adapt to what the market is giving you.

Dave Savage at Mortgage Coach has provided another excellent example of how to adopt mortgage orphans and ultimately generate more loan production.

In Dave's post, he had this to say:

"Every year, whether you realize it or not, there are customers in your office who become orphans…they get lost among the numerous files because their loan officer has left the company and the connection has been severed, never to be communicated with again. Eventually, when they have a new mortgage need, they take it elsewhere because they no longer have a relationship with anyone in your firm.

But you can capture those relationships. Eric Bohn did, and now he’s generating 13 to 15 new loans a month with this strategy! Bohn, with Shore Mortgage of Birmingham, Michigan, generates new mortgages under management by “adopting” the loans of existing clients from loan officers who have left the company. This guy has only been in the business for 2-1/2 years and he did over $52 million in loans in 2006!"

Go and read the rest of Dave's post and take action immediately!

The Power of Planned Presentations

A New Post By The Mortgage Cicerone
A Guide for Mortgage Professionals
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Last week I received a voicemail from my brother Lawrence. While listening to his message I could tell he was very excited and dying to tell me about a very successful day he had just concluded. However, before I continue, allow me to step back and set the story up.

Lawrence had re-entered the mortgage business about ten months ago (great timing wasn't it?). The key word in the previous sentence is "re-entered." He had previously worked in the mortgage industry for five years (1994 - 1999). Those reading this Blog know those years were not easy years in the mortgage business. Yet, Lawrence managed to become a good loan originator averaging five to ten closings a month. Notice I say he was a "good" originator, not great, not excellent nor a superstar, just good. The reason I know he was just ‘good" is my father and I where his sales managers.

Unlike myself, Lawrence has many God given and innate abilities that just came naturally to him and salesmanship is one them. Problem was he never fine-tuned his natural abilities. He was able to be a "good" loan originator without much effort and still fund more than the average loan officer. As his sales managers, we knew he had the ability to be a Superstar, he just didn't have the maturity, yet.

Lawrence married in 1998 and his life drastically changed (for the better). He married the perfect woman for him. Carrie is organized, structured, good with money and a bit of an over-achiever. She helped Lawrence bring focus into his life.

In 1999, Lawrence was presented an opportunity in another industry that was too good to pass up. So, he left the mortgage industry (not because he wasn't funding enough loans...he was) and over the next six years began to fine-tune his abilities and matured as a person.

Fast-forward to 2005 and you will find Lawrence and his family living in a beautiful gated community home in San Antonio, TX.  He is the Texas sales manager for a small engine manufacturer and doing well for himself and family. Yet, he was missing his son (from a previous marriage) that lived in Colorado. His son had just begun High School and was also missing his Dad. Carrie and Lawrence decided this was a critical time in his son's life and they decided they would move back to Colorado.

Long story short, Lawrence re-entered the mortgage business in Colorado Springs, CO. Over the last year, we have been communicating, strategizing and fine tuning his sales delivery several times a week. One of the areas we spent quite a bit of time on is structuring his marketing activities. More specifically, over the last few months he has developed and implemented strategies and tools that consistently:

• Focus and direct his time/activities on efforts that are productive
• Identify niche market opportunities and develop planned sales presentations specific to referral partners
• Retain and track valuable prospects
• Provide better communication to clients and referral partners during the transaction
• Gain more consistent referrals
• Consistently stay in the forefront of clients and referral partners' minds
• Create a valuable, saleable business
• Becoming a marketing consultant to his referral partners

Lawrence has matured and even though we are in a market that has slowed relative to the first half of this decade, he has positioned himself to go from a "good" loan originator to a "superstar" originator over the next few years.

Getting back to the first paragraph and why Lawrence was so excited. He had made appointments with several prospective referral partners and they had gone incredibly well. For each appointment, he made a presentation package tailored to each individual that:

1. Outlined their business and needs
2. Provided valuable and saleable solutions to those needs
3. Reviewed communication points and tools he had developed to provide better communication to both clients and referral partners during the transaction.
4. Demonstrated how and why doing business with him enhanced both their revenue and reputation

Additionally, he practiced, rehearsed and developed a smooth presentation that flowed naturally and provided confidence to both to himself and the referral partner he made his presentation to.

When I returned his phone call, he reported the planned presentations went "smooth as butter" and that each of the referral partners was so impressed they promised him future business.

Since being successful is a process and not an event, Lawrence has implemented mechanisms to follow-up his successful sales presentations to position himself to stay in the forefront of his referral partners minds when they have business to refer.

Today, Lawrence just shakes his head and wonders why he never acted upon this advice before. Bottom line...he was not ready ten years ago, however NOW he is!

What about you, are you ready?

Are You Chronically Late?

A New Post By The Mortgage Cicerone
A Guide for Mortgage Professionals
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Wow, did you know employees showing up late to work, meetings and appointments cost the National GNP 1% every year? Forget the macro implications to the national economy, how much is being late costing you personally in relationships. respect and income?

Have to admit, being late is a bad habit I've struggled with my whole life. Fortunately, it is something I now manage, however, when younger it seemed I was always one to two minutes late to everything. Being a chronic multi-tasker, I always tried to sqeeze in one more thing, resulting in rushing off late to meetings...sound familiar?

During my early morning review of news, I came across this video from ABC News Online (thus the inspiration of this blog) about individuals that are chronically late. Click hyperlink below and ask yourself honestly if you fall under any of the categories described in video.

Sorry I’m Late, There Was A…

Wow, did you know employees showing up late to work, meetings and appointments cost the National GNP 1% every year? Forget the macro implications to the national economy, how much is being late costing you personally in relationships. respect and income?

Have to admit, being late is a bad habit I've struggled with my whole life. Fortunately, it is something I now manage, however, when younger it seemed I was always one to two minutes late to everything. Being a chronic multi-tasker, I always tried to sqeeze in one more thing, resulting in rushing off late to meetings...sound familiar?

During my early morning review of news, I came across this video from ABC News Online (thus the inspiration of this blog) about individuals that are chronically late. Click hyperlink below and ask yourself honestly if you fall under any of the categories described in video.

Sorry I’m Late, There Was A…

Just Follow the Instructions

A New Post By The Mortgage Cicerone
A Guide for Mortgage Professionals
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Seems Ben Stein and I have a similar trait of "endlessly putting things into categories and seeking to find  patterns in life." While reading Stein's article, its theme seemed particularly appropriate to achieving success in the mortgage business (notice a pattern).  In his article, he explains the blueprint for success in most any endeavor, field or business has already been tested and documented, however the problem lies in that most people do not follow the instructions.

For example, I want to lose weight. The formula is fairly simple; burn more calories than I consume. Seems easy, doesn't it? I can make all kinds of excuses, but the bottom line is I have to either burn more calories via exercise, ingest fewer calories or both to manage my weight loss.

Does the same formula apply to mortgage origination, YOU BET IT DOES!! As loan originators, do we know how to get more business? Yes we do. Problem is (much like weight loss), we know what we have to do, we just don't do it consistently.

Click on the hyperlink below and read Ben's article:

To Get Rich, Just Follow the Instructions

Seems Ben Stein and I have a similar trait of "endlessly putting things into categories and seeking to find  patterns in life." While reading Stein's article, its theme seemed particularly appropriate to achieving success in the mortgage business (notice a pattern).  In his article, he explains the blueprint for success in most any endeavor, field or business has already been tested and documented, however the problem lies in that most people do not follow the instructions.

For example, I want to lose weight. The formula is fairly simple; burn more calories than I consume. Seems easy, doesn't it? I can make all kinds of excuses, but the bottom line is I have to either burn more calories via exercise, ingest fewer calories or both to manage my weight loss.

Does the same formula apply to mortgage origination, YOU BET IT DOES!! As loan originators, do we know how to get more business? Yes we do. Problem is (much like weight loss), we know what we have to do, we just don't do it consistently.

Click on the hyperlink below and read Ben's article:

To Get Rich, Just Follow the Instructions

The Trojan Horse Strategy

A New Post By Brian Brady
America's #1 Mortgage Broker
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I'm a Johnny-Come-Lately to The Mortgage Cicerone.  While intimidated is hardly an adjective to describe me, the Cicerone Crew is an accomplished bunch. I'm taken by the assembly of talent we have here.

I'll start off with a simple social media marketing strategy every originator should employ; The Trojan Horse.  Look for online communities filled with real estate agents and few or no originators.  The proliferation of real estate networks like Active Rain, Wanna Network, and RealTown offers us a chance to show up and add value to the community.  SEO should not be the focus of your participation on those networks but you'll get that benefit, nonetheless.

Here are six quick and easy rules to The Trojan Horse strategy of social networking:

1- Add value through educational posts- understand that your readers are real estate agents.
2- Sit back and watch for the talented agents to reveal themselves.
3- Comment and engage those talented agents in an online conversation.
4- Pick up the phone and introduce yourself- ask permission to keep in touch with them via e-mail.
5- Add them to your weekly e-mail newsletter for REALTORs.
6- Call them at the beginning of every month and ask them, "What specific information do you need from me, this month, to help you close a transaction?"

You'll be surprised how quickly you'll build, what social media marketers call, "platform". Before long. real estate agents will go viral about you and recommend you to their colleagues.  They'll be commenting on your posts, calling you for advice, and referring you clients.  Old-timers will remember how we used to gain REALTOR referrals; we banged on office doors and showed up with donuts and rate sheets.  Think of a social network as the busy corner in town with 3-4 real estate offices on it.

The principles remain the same.  Show up regularly, add value, and ask for the business.

Jeffrey Gitomer: Single Biggest Rule in Sales

A New Post By The Mortgage Cicerone
A Guide for Mortgage Professionals
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I have read every book written by Jeffrey Gitomer. If you haven't and you call yourself a sales professional, boy are you missing the boat. Jeffrey doesn't write or speak with theoretical pretense, he only teaches stuff that works in the real world.

I once had superstar originator Greg Clements speak to my sales team about what made him so successful. First let me give you background information on Greg and what type of production numbers he put up. In his last year of originating (2004), Greg funded 912 purchase loans. To say the least, he is a legend in his neck of the woods. Long story short, when Greg was introduced to my sales team, everyone there wanted to hear what he had to say. Greg walked up to the group and pulled out Jeffrey Gitomer's "Little Red Book of Selling" and told them everything they needed to be successful was contained in between the cover of the book he was holding in his hand. That was a pretty bold statement from someone who considered funding only 500 purchase units in a 12 month period a bad year.

Greg then read bits and pieces of the book and related it to our industry. While I had read the book several times, I consider that afternoon one of the most beneficial mortgage sales training sessions I had ever received.

Take the time to hear a snippet of Jeffrey sharing his single biggest rule in sales:

5 Tips To Make Sure Your FHA Loans Get Approved And Close On Time

Here are five quick tips loan originators can use to help prevent FHA mortgages from falling through during processing. For some mortgage originators these tips will seem ridiculously basic. Unfortunately, conversations with FHA underwriters show me that many loan officers haven't caught on to these ideas yet.

1. Make sure the loan you are submitting makes common sense.

Incredibly, this is one of the most common mistakes made by originators who entered the mortgage business within the last 5 to 7 years. Subprime programs generally only required that the loan fit into their matrix and never cared about the reasons the person had credit problems. Make sure that you can verbalize a good case that it makes sense to believe that this borrower can reasonably be expected to make the payments on the loan. Often this requires asking a lot of uncomfortable questions of the borrower to make sure that you truly understand their situation. Even when your submission is approved by the automated underwriting system and theoretically the underwriter needs only to validate the information and does not need to make a credit decision, the underwriter may well find something wrong if the loan does not make common sense. Lenders are held accountable by HUD for loans that default. They can always find a reason to override the automated underwriting findings if they want to.

Stating a good case for loan approval is even more important when the FHA Total Scorecard underwriting system has referred your loan to an underwriter to make the decision. Do not ever assume that just because the debt to income ratios meet guidelines and the borrower hasn't been late on any payments in the last 12 months that you don't need to submit a well constructed cover letter with your loan - in addition to the borrower's own credit explanation. Make sure that both your cover letter and the borrower's explanation fully account for what happened to cause the borrower to have credit problems and why the underwriter should now believe that the borrower has solved the problem.

Loan officers who "grew up" in the days of subprime lending based on credit scores and matrices often foolishly leave it up to the underwriter to probe through a huge stack of papers in the submission to come up with their own justification for approving the loan. Rest assured that the underwriter is too busy to do that and will only gripe about you to their colleagues after they give you an approval with a stack of conditions which are often impossible to comply with. This is one of the most common rookie causes for real estate closing delays. Let the underwriters know what you want them to base their decision on and you stand a greater chance of getting an easy approval with conditions you can comply with.

2. Check the CAIVRS number before processing the loan.

CAIVRS stands for Credit Alert Interactive Voice Response System. Don't ask me why HUD sometimes transposes that to CAVIRS instead of CAIVRS in their own documentation. I guess it sometimes serves their purposes to keep the public confused?

The CAIVRS system verifies that the borrower has not been disqualified from using government insured financing because of past defaulted FHA/VA mortgages, student loans, or any of several other reasons. An amazing number of people are not aware that they have officially been excluded from FHA financing. This commonly happens due to "charged off" student loans that the borrower may have long forgotten about and which also do not show up on their credit report any longer. Just slightly less common are cases where the borrower's ex-spouse was foreclosed upon and the borrower says they were not even aware of the situation. Strangely, even this fails to show up on the borrower's credit report fairly often.

Whatever your company's procedures, make sure you check the CAIVRS as early as possible.

3. Collect all the correct documents.

Make sure you have documentation to support the information you entered into the automated underwriting system, or that was mentioned in your cover letter and the borrower's explanation letter. Surprisingly again, many loan originators fail to think ahead strategically when compiling their loan submission package. Loans which started out with an approval from FHA Total Scorecard often revert while in process to a "referred to underwriter" status.

First, this would occur much less often if originators took the extra few minutes necessary to verify the information being submitted by examining original paystubs, W2s, divorce decrees, bankruptcy filings and other support documentation before turning the loan over to their processor.

Second, if the loan is later unexpectedly downgraded to refer status, much more documentation is needed.

Here are a few quick but painful examples of that.

When there is no valid automated approval the borrower's rental history must be verified. I have seen many loans fall through at this stage because the loan officer failed to even ask the borrower if their rent had been paid on time! Remember, the rental history is not a factor if the loan is approved by automated underwriting because that history is not shown on a borrower's credit report.

Another common version of this problem occurs when the loan officer fails to examine documentation showing that extra income (for example, child support payments) has been received consistently in the past and that payment is going to continue. Again, the loan ends up falling apart well into the processing stage, leading to much greater frustration and anger from borrowers and real estate agents thus disappointed.

An equally common mistake is not verifying that a retirement account submitted on the application as an asset can legally be liquidated if necessary. For example, many teachers have substantial funds in their retirement accounts, but these funds often can not be liquidated unless the teacher is fired or dies. These funds are not considered to be liquid assets but many rookie loan officers get automated approvals based on these funds which subsequently go down in flames.

4. Compute the income accurately.

Sounds obvious, I know, but tales of mortgage closings which fall through because the borrower's ratio of debt to income is too high are legion among real estate agents as they swear to never use that particular mortgage broker or lender again. Real estate agents and borrowers are reasonably amazed that such a basic element of the loan approval process could have slipped by the mortgage originator's attention until so late in the process.

Here's what happened. The loan officer asked the borrower "How much do you make?". The borrower told them an amount from their last paycheck, or worse an amount from their best paycheck. The loan officer submitted the loan through automated underwriting and received an approval so they told the agents and borrower to go ahead with their purchase offer only to find out after finalization of the purchase contract that 30% of the borrower's income comes from overtime pay they have only been receiving for the last year. Oops, this doesn't fit into FHA guidelines. Alternatively, the loan officer does look at the borrowers paycheck ahead of time, but fails to note that part of the gross pay comes from overtime or bonus pay or commission pay. So the originator submits the gross income, but it isn't entered into the system correctly and factors such as commission income actually play an important part in the automated systems risk analysis of the loan. Either way the result is not good for the parties involved.

One effective strategy to prevent this is to be very conservative in determining the borrower's qualifying income and not count bonuses and overtime pay when submitting the loan for automated approval unless absolutely necessary. If the borrower has been qualified with less than the maximum income that can be squeezed into the loan officer's calculations, unpleasant surprises are less likely to occur.

5. Be sure you have ALL the borrowers assets listed and listed correctly.

Loan officers frequently fail to gather complete information on all the borrower's assets once they have an automated approval. Once again, automated approvals are downgraded to "referred to underwriter" status fairly frequently for many strange and different reasons. A good strategy for the mortgage originator is to gather documentation for every dime in every account the borrower has squirreled away anywhere, but submit the loan through the automated underwriting system with the fewest assets necessary to get an approval. When the loan is downgraded later on, the extra assets can often save the loan officer's reputation.

Another common mistake regarding assets has already been mentioned. The assets must be verifiably liquid. For this reason, FHA guidelines require that the loan file include proof that the assets would be available to the borrower without being fired or dying. In addition, due to potential withdrawal penalties, FHA loan guidelines will allow only 60% of the vested amount of the account to be counted towards the borrower's liquid reserves. Frequently, the entire balance has been submitted into the automated underwriting system.

These 5 tips won't guarantee your deal will go through underwriting without a hitch. After all, FHA guidelines seem to change daily now, but a little attention to these details will go a long way toward improving your reputation among borrowers and real estate agents.

________________________________________

Reproduced with permission from Carl Pruitt. To visit Carl Pruitt's website, go to http://fhaloanadvice.com/index.php/about/  Copyright 2007 Carl Pruitt. All rights reserved worldwide.

Carl Pruitt is a 22 year veteran of the mortgage/real estate businesses who specializes in using FHA loans to get low fixed rate mortgages for borrowers who have had credit problems. He also coaches other loan officers on the best methods marketing, packaging and processing FHA loans.

3 FHA Mortgage Niches To Help You Survive The Mortgage Crisis

The advice I'm about to give goes against the grain in the mortgage business where everyone likes to advertise that they offer 1200 different loan programs for borrowers with all types of credit. I'm going to give it anyway.

The very best way to make your mortgage marketing successful is to concentrate it on a very tightly defined niche and position yourself as the expert in that niche. Borrowers aren't attracted to those one size fits all ads and you are throwing away your money.

Here are three niches that an FHA mortgage specialist can use to close more loans in less time with more profit and, most importantly, happier customers that are anxious to refer their friends and relatives.

1. First Time Home Buyers.

This is the most obvious FHA niche market. After all, this was the reason the FHA program was created in the first place. In spite of what you hear in the news, a housing downturn presents the best time for smart and well advised first time home buyers to enter the market.

The key to marketing to first time buyers is to understand that they need a lot of information and guidance before they trust. Study their needs in today's market. Those needs are a little different than they were during the boom times.

Create a free report that shows how FHA mortgages can help meet those needs and put that home buyer in a position to profit when real estate values start rising again - as they always do. Create a series of follow-up letters and reports that you can send out over time. Get their email addresses and set up an automatic series of emails that can be sent out to them over a long period of time. Educate them and they will trust you.

2. Manufactured Home Refinances and Purchases

This is actually 2 niches in one and each category has slightly different needs. They are both high on the list of the most lucrative FHA markets that exist. This is because potential borrowers in these 2 areas have problems that the FHA loan program provides a better solution for than they are getting elsewhere.

Get set up with some of the lenders still offering FHA financing on manufactured homes and become a master at knowing what loan characteristics those lenders prefer. In spite of tightening guidelines, this market is still huge. Locate reputable local structural engineers and foundation contractors to help you quickly determine whether a manufactured home qualifies for FHA financing or what it will take to get it there.

Then, if you want to enter the manufactured home purchase market, get in contact with manufactured home dealers and offer them a solution to help get their homes sold. Use the same free report techniques to market your services directly to buyers. Use those buyers to help establish a relationship with some of those dealers.

You can enter the manufactured home market and have fewer parties to keep happy by locating owner financed manufactured homes in your area. In some parts of the country, many investors bought renovated and owner financed or lease purchased FHA qualified manufactured homes during the housing boom of the last few years. These loans often included very high interest rates and balloon notes which the buyer must pay off soon. You can often locate these situations through the local tax records. Keep in mind that if locating them was easy, this technique wouldn't be as profitable. A mortgage originator who has mastered the process of getting manufactured home loans approved can really help these people out of a tough situation and get paid well doing it.

3. Cash Out Debt Consolidations - With A Twist

I know every subprime call center on earth has been pounding these prospects with solicitations, and taking advantage of them, for years. Yet there is a growing group of consumers who are now realizing that they need to get rid of the debt in their lives if they ever want to make it through tough economic times. These people are very wary of mortgage brokers calling them to try to lower their payments using some sort of subprime teaser rate mortgage that traps them in a bad situation later on.

In fact, if they watch the news much, potential borrowers think every mortgage broker they meet is skillfully hiding his or her horns, tail and pitchfork long enough to get that borrower's signature on the contract selling their soul. Here is a strategy that might help get around that predisposition.

This subset of home owners who wish to get rid of debt as quickly as possible is already prepared to cut back their lifestyle in order to pay off debt. Unfortunately, a lot of their debt has crazy high interest rates. How much better might their situation be if all that debt was refinanced into one 15 year fixed rate mortgage. Yes, you did read that correctly. I'm talking about probably raising their payment. However, if they qualify I'm also talking about lowering the interest rate on that debt so they can get it paid off without the interest eating up all the payments they are making.

These are just a few of many possible niches still available to loan originators today. The mistake most mortgage brokers and lenders make is that they never realize that a specifically targeted advertisement will always draw in more prospects than those one size fits all ads they are running now. Surprisingly, marketing tests show that specific ads perform even better at drawing in prospects they were not even targeted for than general ads do.

________________________________________

Reproduced with permission from Carl Pruitt. To visit Carl Pruitt's website, go to http://fhaloanadvice.com/index.php/about/  Copyright 2007 Carl Pruitt. All rights reserved worldwide.

Carl Pruitt is a 22 year veteran of the mortgage/real estate businesses who specializes in using FHA loans to get low fixed rate mortgages for borrowers who have had credit problems. He also coaches other loan officers on the best methods marketing, packaging and processing FHA loans.

FHA - Writing Effective Credit Explanation Letters

Loan officers who have lost their subprime golden goose are streaming into FHA loan origination. Their FHA loans are being turned down left and right by frustrated underwriters who can't believe such junk was put on their desk.

I'm about to place in your hands one of the most powerful tools there is to make sure you get your loans approved by FHA underwriters - the ability to excel at packaging a loan submission.

First things first. These tips are worthless without the proper foundation. Here it is: Make sure you have a borrower who really deserves a loan!

I know loan officers think everyone who wants a home deserves a loan as long as there is any way to squeeze them into the guidelines. Use common sense though. Make sure you really do believe someone will be able to make the payments before you go out of your way to get a mortgage approved for them.

Don't use the typical excuses so common during the mortgage boom years that you "aren't their parent" or "it's up to them to know whether they can make the payments" or "they'll just go on to someone else." The loan officers spouting those excuses are a prime reason that today you are having to fight tooth and nail to get loans approved that were once easy to close.

I'm not telling you all your customers must have pristine credit. I am saying you should not be helping deadbeats who haven't changed their habits, but want a home because "they are tired of throwing their money away on rent." Market yourself better and find the people who really did have an unexpected problem ruin their credit and who have learned their lesson. Remember FHA will cut you off from the program if you allow too many deadbeats through your filter anyway.

With that in mind, here are 3 power tips for writing an effective FHA credit explanation letter.

Tip Number 1: Don't write the credit letter. Let the borrower put it in their own words.

Probably not what you were expecting, but this is very important. A perfect letter put together completely by the loan officer can easily be detected by the underwriter and it will hold less weight when they see it. Allow the borrower's own words and own personality to make their way into the letter.

Tip Number 2: Don't leave the borrower completely on their own to write the letter.

Most loan officers still simply give the borrower a list of derogatory accounts and ask them to explain them. Don't do that. Give your borrower the proper guidance. Tell them what you expect from them.

Sadly, the average high school graduate today is functionally illiterate when it comes to the task of putting together such a letter. You are doing good people a disservice when you leave it all up to them. They could probably do a fine job of explaining it themselves if they were speaking directly to the underwriter and the underwriter could ask follow up questions. That doesn't happen anymore, so you must help them get it right from the beginning.

After the borrower explains the details of the situation which caused the credit problems and you have informed them that it is a crime to lie in this instance, have them write out exactly why the problem happened. Make sure they address and account for every single negative item on the credit report no matter how old or how insignificant it appears. Get them to explain in their own words why they feel this problem won't happen again and exactly what they have changed in their life to prevent it from doing so. Then have them explain why they feel the underwriter should reasonably expect them to be able to make the payments.

Don't skip any of those points. Once the borrower understands what is needed, let them put it in their own words.

Many loan officers tell their borrowers to keep their explanation letter short. Don't fall into this trap. Make sure the borrower explains everything in tedious detail to the point that anyone who picks up that loan file 10 years from now can easily understand why this borrower ended up being approved.

Here's a bonus tip: To satisfy the underwriters who don't like to read, always include your own cover letter in the submission file briefly summarizing the borrower's credit explanation and adding your own interpretation of which compensating factors the underwriter should consider.

When you structure the explanation part of your file this way, you are helping the underwriters make the decision without having to figure out on their own how they are going to justify it. This makes them more comfortable giving you an approval with fewer conditions.

Tip Number 3: Document the borrower's credit explanation and solution.

This is the extra punch even experienced loan officers often leave out, but it is the step which can take you above the level of the average loan officer into the category of miracle worker in the eyes of your borrower and their real estate agents.

Get some documentation to prove the borrower's credit explanation is true and that their explanation of how they have changed things is true. I know this involves extra work for you and for the borrower. It is worth it. If the borrower had a medical problem get something from the doctor, or include bills in the file. If the borrower was laid off, include a copy of their termination letter or evidence of receipt of unemployment benefits. If the borrower said their problems occurred because they had no medical insurance, prove they have it now. You get the idea.

Of course the borrowers often have difficulty finding this type documentation. That's why the average loan officer never gets it. Push them. It doesn't take much documentation to add considerable punch to your case that the loan should be approved.

Every day I talk to loan officers crying over turned down files that should have been approved. The common element in almost all of these cases is that the loan officer left it up to the underwriter to figure out why the loan should be approved. To avoid extra work which might be wasted, loan officers submit the loan hoping it will slip through without having to provide this documentation. Underwriters don't have time for this. When you put them in this position their answer will be to turn the loan down or approve it with approximately four thousand conditions of approval.

Times are difficult in the mortgage industry today. The mortgage originators who survive will be those who find a way to help the people other originators aren't helping. Becoming an expert on FHA loans can be the best way for a loan officer to do that. Use these tips to get more loans approved and get more referrals from your happy customers.

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Reproduced with permission from Carl Pruitt. To visit Carl Pruitt's website, go to http://fhaloanadvice.com/index.php/about/  Copyright 2007 Carl Pruitt. All rights reserved worldwide.

Carl Pruitt is a 22 year veteran of the mortgage/real estate businesses who specializes in using FHA loans to get low fixed rate mortgages for borrowers who have had credit problems. He also coaches other loan officers on the best methods marketing, packaging and processing FHA loans.

Pricing...How Do You Do It?

A New Post By Chris Johnson
Business Survival Consultant
Read other posts by Chris Johnson

One of the things that's lost in the great YSP debate is the idea of pricing.  How do you price your loans?  There are at least 5 ways I can think of that loans get priced:

1. Opportunistically: You squeeze every dime you can out of people, every time.  This is the "as much as you can get away with," model.
2. Haphazzardly: Similar to #1, but less intelligent about it.
3. Flat Price:  One broker I know charges $4500 per conventional loan and $6,000 per government loan.  He's booming.
4. % of loan amount.   Pretty straight forward.  MAny do things that are based on a percentage of loan amount. (2 out the front, 2 out the rear)
5. Per Work Involved: This is how I price; I do things based on a fee schedule, with modifiers on the loan.

However you price, we want to have a real business.  We want to make sure we're doing everything on purpose, and with the customers best interests at heart.  A rookie originator is worth less than a Mike Mueller is ever going to be (but they often charge more).  I can kick the teeth of any bank in any time I want to, that's the broker advantage...that still exists.  

So I'll tell you how I price loans currently, and I'm looking for feedback of the great cicerones, and those following us.

Minimum: $2,250 in total revenue (I'm on something like a yours-mine-ours with my company).  I will occasionally do a deal for a cooperative home buyer for less, but rarely.  Since I instituted this in July of 2007, I've only come under the wire one time.

Maximum: 4.5% of the loan amount, unless it's a small loan, then it's subject to minimums.

• Basic pricing for a vanilla purchase = 1.5% of loan amount, subject to the minimum pricing.  (Ohio still has its share of $95k houses that are not huts on the river.  Middle America rocks for affordability).  I also add a $425.00 junk fee for processing and paying for the expense that has become the credit bureau. 
• Basic Pricing for a vanilla Refi= 1.875% of the loan amount.  Usually refis take longer, and stress the system out more.  So I charge more.

Now the positive  modifiers:

• If it's for someone who has referred me business: $1,000 in the customers favor, subject to minimum pricing.
• If it's someone that gets their docs to me within 48 hours of request or at appointment:  $600 in the customer's favor.

Now for the negative modifiers (all adjustments are to fee)

• If either the customer or their Realtor is a jackass: .5% my way.  A jackass is clearly defined, and I'll get to that in another post.
• If the customer gets their parents/significant others/any non engaged non professional involved halfway through:  .25%-.50 depending on their level of hostility.
• Government Loans: .75% my way.
• If I have to chase docs for more than a week: .25-.5 my way.
• Investment Loans: $3,000 minimum, 1.0% my way for the first 2 loans from customer.
• If the customer tells me incorrect information: 1.5% my way, and the loan may die if it was organicly dishonest and malicious. 
• Stated, Bank Statement, 1099 or Self Employed Loans where I have to dig through a morass of paperwork: +1.0%, and I give the customer a referral to somone else.
• 911-emergency loans: .5%.  I love these loans, so I don't ding them much.
• Loans with an affiliate title company that does not get me paperwork in 72 hours: .5 (that one is for you, Diane Cipa)

This is for loans that come through my channels conventionally.  I'm experimenting with different marketing and different pricing right now, and I have no problem with big fees--especially when talking to Brian Brady.

I base everything on the amount of work I have to do, as a standard.  I've thought this through, and it seems to add up, but the real gist is that if a customer makes things easy on me, refers me business, I can work cheap.  If a customer is a nightmare, they pay for it.  The most common one I get is the customer being a Jackass and an Investor.   I absolutely love it when I'm saving a deal on a house in contract for an investor, and they try to compare my quote to the one that never closed, and make me compete against a fictional loan. 

Everything is properly disclosed, and I have a very specific spiel for each part of the process, so the customer knows how to get me to work cheaply and what I want from them.   I tell them if things happen that take time, that the loan is subject to repricing and redisclosure.  This is  how Zillow's mortgage marketplace can work for originators.  "All quotes presume that the customer can get necessary documents within 48 hours of request,"

I'm actually rethinking this,

So:

I have three questions: 

1. How Do You Price? 
2. How do you want to price,
3. How should originators price?

Oh, finally, I'm in the last days of selling Loan Officer Survival Guide for $13.50.  I offered 'em dirt cheap in May, and the response has been fabulous so there's no reason to extend my introductory offer.  So if you haven't bought it yet, you've got till Wednesday to buy it, and see what the fuss is about.