Remembering The Good ‘Ole Days In the Mortgage Industry

15 Nov

Posted by Rich Dent as Lead Generation, Marketing, Mortgage

I have been at DoublePositive Marketing Group for almost a year, and the mortgage market has changed so much in that time. Mortgage companies as well as individual loan officers have had to adapt to the changes - especially in regards to marketing.

To give you a little background, prior to working at DoublePositive I was in the mortgage industry for over 6 years. I started back in 2000 and moved up through the years to the point where I was managing the day to day operations for a mortgage company in Baltimore. I spent a lot of money over the years testing out every type of marketing. When I started, rates were over 8% for a 30-year Fannie Mae fixed loan and 2nd mortgages and 125s were the market that we targeted. We purchased internet leads and telemarketing leads as well as dabbled in direct mail. Leads were super cheap and I would burn through them at an alarming rate. Then the refi boom came and so did all the marketing companies with the best leads ever generated. Conversion rates were unbelievable and cost per funded loan was not even an issue. All you had to do was pick up the phone and you were going to close loans. I will get 20 leads a week and I would have ton of apps and would be pitching deals daily. Those were the good ‘ole days!

We now fast forward to 2007 and the market is a mess. Every day the media is painting another picture of how bad the mortgage industry and the amount borrowers that are in foreclosure. Reports come out daily with how much money banks and lenders are losing each quarter and if it will ever end. Remember the good ‘ole days? Well I hate to tell you, but they are gone.

The days of applications flowing like a water from a firehose are over. The $200 cost per funded loan are over. Today is a new day in the mortgage industry and we all need to embrace this if we expect to survive. I speak to clients daily and one issue that has come to the forefront is “expectations.” I speak to loan officers who understand that the market is tougher than ever, but they still expect the same conversions they had in 2002 and 2003. If you think about it, how can they make sense? If less people can qualify for a loan, then you should expect that you would need to speak to more people than ever before to get a loan. When I explain this to loan officers they agree that the closing rates have gone down, but they say that they want workable deals. That simply cannot work under the current market conditions.

Today, the two biggest issues are LTV and credit, and these are issues that the market has not had to deal with in sometime due to the refi boom and basically anyone could get a loan. For most, this is the first time that loan officers have had to deal with this issue, but for those who have been in the business this is no surprise.

2 Responses

Dale Stouffer

November 21st, 2007 at 11:00 pm
1

Rich,
Yes it’s true that many many loan officers have never had to deal with their customers’ credit issues because there were so many customers out there to work with. Who needed to spend time with a customer to improve their credit for a long range plan of 6 months to get them mortgage ready? It is a shame that more loan officers couldn’t see past the immediate paycheck to build some real depth and knowledge about the industry that they helped put into the position that it is in today.

For those who are still in the business and need a resource for their clients keep reading.

GetPrequalified.com has a huge section for credit management for the consumer and loan officer alike. Both can find resources to find out what they want about credit, credit scores etc. We also have a large section of articles that talk in more detail about different aspects of credit.

Thanks for your post. Dale
Tanisha

November 26th, 2007 at 3:59 pm
2

Dale & Rich. It is enlightening to see true industry professionals debate and provide raw front lines exposure to our industry today. I think we all knew what was ahead of us but were dealing with an industry that had been prosituted and pimped with the lure of fast fundings and YSP incentives that created instant millionaires of average working class people who found an easy “in” to celebrity. Obviously, you can tell I’m from California and am very passionate about using the current market to create a better industry that we can still use to pass down to our children as legacy. Oh, Dale, I contribute to your “tidbit” by sending a plug for Funding Suite credit reports. Visit them at fundingsuite.com. Their niche is building in credit repair “triggers” in their tri-merge reports giving you a score enhancement “range” that you can cure to give a boost in the score, often times the cures can be resolved and updated with a Rapid Rescore, but I must forewarn you — they are in the infancy stages of this product, they’ve already had some system issues, they have a product … when it works. In all, I think we’ll all need to reset the standards we have for “production” in our workplace. In building our corporate infrastuctures we have to “add value”, but most importantly we have to require our peers to aspire to become those of high trust because let’s face it, if we don’t, we’ll never be able to repair the damage done. Just my “tidbit”. Tanisha