Guiding Loan-Mod Clients: 11 Tips
Loan-modification waters can be choppy for borrowers — but you could show the way
By Ray Williams, founder and president, Greenway Capital Management
Until early , most loan servicers and lenders either had a small loan-modification department or none at all. Moreover, most consumers had never heard of loan mods.
Recently, however, innumerable inquiries about modifications have flooded
servicers and lenders as consumers nationwide attempt to modify their mortgages.
This has caused backlogs of three months
or longer for many companies and has led
to efficiency problems.
A growth in the number of loan-modification companies has resulted from this
situation, though many of these companies purport to be more helpful than they
actually are. With loan-mod-company
regulation still to come at the state level,
many people enter this side of the industry simply because it’s easy to get into and
business is plenty.
On the other hand, loan-modification
specialists with experience and know-how
can provide quality service and favorable
modification results. Mortgage brokers
who decide to enter the field must conduct
thorough analyses of their clients’ situations to determine the best approach for
favorable long-term results for homeowners, servicers and investors. Gaining modification expertise is particularly important
in light of the high level of modified loans
Brokers who would like to provide
modification services and help solve their
borrowers’ problems for good should note
the following 11 tips.
Understand clients’ total situation: 1.
Brokers often can help their clients if they’re
able to spot financial mismanagement during a cash-flow analysis. During this process, you should get a clear picture of the
clients’ cash flow and determine whether
the problem is the mortgage payment or
bad spending habits. Although mortgage
brokers often should not step into the realm
of financial-planning if they’re not certified
to do so, this process may prompt borrowers to adjust their spending.
Discover unconsidered cash: 2. When
speaking with clients or potential clients,
gather as much information as you can
about their financial and personal situations. This will help you determine who
and what you’re working with.
For example, a 62-year-old client might
mention she has $50,000 in her 401(k) and
40-percent equity in her home. Because of
her age, she could use some of the money
to save her home and could be a candidate
for a reverse mortgage.
Or, she might tell you she has a whole-life-insurance policy that’s paid up — and
7.1771 x 4.8332
that she may be able to borrow against.
Ask clients questions to discover which
ones have cash access they don’t realize or
Educate your clients: 3. During your conversations with clients, explain what loan
modifications entail and provide other pertinent information. For example, if a client
tells you his car payment is $640 per month
on a 5.25-percent loan and that his car is
two years old — and that he’s never had a
late payment — it’s likely worth mentioning
the option of refinancing the car loan for a
lower monthly payment.
You also might learn that a client carries a low deductible on his auto, homeowners’ or health insurance that can be
changed to a higher deductible to increase
cash flow. Or, a client might pay for a home
phone and a cell phone when he doesn’t
need both. These things might seem simple, but clients can overlook them.
Be there when needed: 4. For most
homeowners dealing with potential foreclosure, the stress can be overwhelming.
They seek a mortgage broker for help
because they don’t want to deal with the
situation on their own in their time of
need. Brokers who maintain an open line
of communication during and after the
modification process let their clients know
that they care.
Ray Williams is founder and president of Greenway Capital Management in
Fort Worth, Texas. The company specializes in mortgage-loan-modification
assistance and credit-management services. He also is founder of the Loan
Origination Training School, an educational facility that specializes in mortgage
education and training, including mortgage-loan-modification training. Reach
Williams at (817) 489-0922, at firstname.lastname@example.org or via www.gcmc.
Increase your knowledge: 5. Brokers who
understand all aspects of loan modification
can provide a higher level of service. These
aspects include the types of servicers and
their function, what portfolio-investors
seek in loan submissions and why, and
the latest regulations and how they affect
borrowers. Brokers should communicate
that knowledge effectively with clients and
other industry professionals. By increasing
your knowledge, you can increase your
client base and referrals, not to mention
positioning yourself to cross-sell other
products or services.
Get involved locally: 6. With all the noise
about foreclosures and loan modifications,
it benefits anyone providing modification
services to be as visible as possible in their
local community. There are plenty of opportunities to get involved. You can volunteer to conduct free foreclosure-prevention
seminars for churches or other organizations, join various chambers of commerce,
teach free classes, write articles for community newspapers, or offer some pro-bono
services. Make a point to let people know
you are a modification specialist and that
you care about and want to help people
through difficult times.
Help clients get ahead: 7. Many of your
clients will have needs aside from a mortgage modification. They may need someone
to help them solve their credit problems,
find a job or encourage them. Seek clients
who have the skills to help you grow your
business. If you find a client you’d like to
employ, don’t hesitate to bring up potential
openings. This can be a great way to grow
Organize: 8. Is there a formal mortgage-modification organization in your area?
If not, consider starting one. With negative news and loan-modification scams
floating around, a professional organization that promotes values and ethics in
the modification industry can provide
homeowners assurance when they search
for a trustworthy professional to solve
their mortgage woes.
Speak and educate: 9. After becoming a
modification specialist, one great way to
promote yourself is to educate consumers
wherever possible, regardless of the type
of event. Speaking to groups can sharpen
your skills and help you understand
Become an industry advocate: 10.
Industry leaders strive to help federal, state
and local officials and law-enforcement
organizations crack down on unethical and
fraudulent activity. You can send letters to
government officials and let them know
of any wrongdoings or trends for which
Be honest: 11. This is where your professionalism really will come out. There
are thousands of people falsely claiming
to be professionals in the loan-modification industry. If borrowers come to you
seeking advice about another offer they
received, tell them your honest opinion
about it and let them know if you think
it could be a scam. Offering free consultations and advice allows you to show
If you don’t have the answer, be honest
about it. Clients and potential clients will
appreciate knowing that you don’t make
things up just to seem like you know.
Your reputation defines you as a professional, so be honest — even if it means not
Illustration: Dennis Wunsch