By Leslie Rennell
CEO
Resource Title
Defaults Got You Down? fault t o
Brokers can embrace inevitable loan problems as opportunities to shine
Many mortgage brokers today wonder how to keep originat- ing new loans and also are
seeking ways to help troubled clients
from the past. In the fourth quarter
of 2009, more than 10 percent of U.S.
mortgages were past due, according to
the Mortgage Bankers Association’s national delinquency survey. In addition,
RealtyTrac reported that 315,716 U.S.
properties received a foreclosure filing
this past January, a 15-percent increase
from January 2009.
Brokers shouldn’t panic, however.
Defaults and foreclosures are an inevitable part of the mortgage cycle and a
fact of life for industry participants. In
fact, brokers who approach today’s elevated default and foreclosure activity
from the right angle often can find new
business opportunities.
Today’s market offers savvy brokers
the chance to differentiate their busi-
ness and establish long-term rapport
with customers and lenders. The secret
lies in establishing yourself as a trusted
adviser who will stand the test of time
and survive current and future market
shifts.
Point of origination
Although many of today’s mortgage defaults and foreclosures resulted from
changed circumstances such as job loss,
health declines and divorce, brokers
who gather all appropriate information
on the front end of mortgage transactions take the first step toward building
their business and their reputation.
Good brokers know that the best
mortgages are those that best fit
their borrowers’ individual needs and
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capabilities. A strong borrower-to-
mortgage match leads to a healthy
repayment schedule for the life of a
loan. Solid matches also can lead to
new business when
borrowers go back
to the same broker to
refinance or to get a
new loan to purchase
another home.
Putting borrowers
in to the best-possi-
ble mortgage prod-
uct requires thorough
due diligence. By col-
lecting all pertinent
details about custom-
ers — including their
income and existing
debt — and treating
that information properly, you can de-
crease the likelihood of revisiting loans
in delinquency or foreclosure. Although
many customers still hope to close their
loan as quickly as possible, they also
realize the importance of providing com-
plete documentation in today’s market.
By letting borrowers know that
you’re working to provide them with
the best-possible mortgage for their
situation, you can counter any com-
plaints about speed and cement your
relationship simultaneously.
every type of loan with which you work,
the better prepared you’ll be to answer
clients’ questions.
When distressed clients come your
way, you also can
use professional
relationships to
your advantage.
By making a call
on clients’ behalf, you can help
them and lenders,
many of which feel
overwhelmed by
foreclosures and
welcome solutions
that avoid adding
to their real estate-owned inventories.
When you provide
“When you
provide beneficial
solutions u for
troubled borrowers and
overburdened lenders,
you create a strong
bond with everyone
involved.”
beneficial solutions for troubled borrowers and overburdened lenders,
you create a strong bond with everyone involved.
One way you can help is by identifying opportunities for distressed clients
to refinance or modify their loan. When
doing this, it’s critical to know the latest updates to the Home Affordable
Modification Program (HAMP) and the
Home Affordable Refinance Program
(H. A.R.P.). You can stay in touch on
the latest HAMP and H. A.R.P. developments at makinghomeaffordable.gov.
Strengthen your role
When borrowers experience mortgage
problems, many will turn to their mort-
gage broker right away, and ask ques-
tions such as:
When you help ease clients’ stress
with lower loan payments and more-
favorable terms, you take another step
toward creating customers for life and
receiving referrals.
What can we do? • and
•••
What should we expect next? •
If you can answer such questions
confidently and accurately — and if you
did everything in your power to originate a solid loan from the outset — you
have a better chance of strengthening
your role as a trusted adviser rather
than losing it. To do these things,
you must stay current on regulatory
changes and shifting options for distressed borrowers.
Mortgage brokers have long served as
the go-to contacts for homebuyers — before and after loans close. To continue in
this role, brokers must help not only clients with strong credit and solid income
but also past clients facing financial
trouble, default and foreclosure.
The U.S. Department of Housing and
Urban Development Web site, hud.gov,
is a tool every broker should know well.
Various trade organizations and nonprofit groups also provide quality updates and industry education. Many
real estate brokers, title-insurance
companies and community banks also
will offer their broker partners updates
and seminars.
Admittedly, the reputation of the brokerage business absorbed a major blow
in the past few years. To turn things
around, brokers should track the severity of the market downturn and prepare
to help those in need.
Brokers who treat troubled borrowers
as valued clients and who help them
find solutions can realize their full po-
tential, build business for years to come
and restore the public’s respect of the
profession. •
If you feel like you’re lacking in any
regard, consider attending workshops
or participating in webinars that cover
topics you want to learn more about.
Seek educational opportunities geared
specifically to mortgage brokers. The
more you understand about the cycle of
Leslie Rennell is the CEO of Cleveland-based
Resource Title, one of the nation’s largest
independent title agencies and real estate
owned and default-servicing firms. She can
be reached at lrennell@resourcetitle.com.
