self-help guru, Dr. Spencer Johnson,
wrote a little book nearly 20 years ago
with the unlikely title of “Who Moved
My Cheese?” Even though it sold 26 million copies, today the book has largely been forgotten. But now might
be the right time for our industry to re-read it.
The book’s message, in a nutshell, is that when environments
(or market conditions) change, participants have two choices. They
can move to a new, unfamiliar and sometimes scary place to thrive
again. Or, they can stay where they are, keep doing what they’ve
been doing and risk extinction.
You see where I’m going? For decades, refinances have been the
“cheese” that sustained the mortgage industry. But that market is
shrinking fast and, thanks to rising rates, probably not coming back
anytime soon. Yes, the purchase-mortgage market is growing, but
not nearly fast enough to make up for the drop-off in refinance. And
now, nearly every lender and mortgage originator is positioning
themselves as purchase experts and frantically chasing every deal.
So, where’s the smart next move — or less-crowded market? Well,
it could be an opportune time to get off the beaten path and start
specializing in renovation lending, with a laser focus on a few prime
products in that niche.
One of these renovation-loan products is pool loans. Think about
it. The economy is cruising along. Tight inventory and higher prices
are discouraging move-up buyers, so more homeowners are adding
amenities, including swimming pools.
Today, depending on where you live, the average inground pool
can cost between $35,000 and $100,000 (the national average is
$49,498) to purchase and install. And that’s not including the many
popular backyard makeovers that often go with the pool — think
patios, decks, firepits and so on.
Pool contractors, of course, are the originators’ connection to the
end borrower. It’s fair to say that both the referral sources and their
clients probably aren’t entirely up to speed on some of the newer
In many cases, however, they could benefit from today’s renovation-loan products that let borrowers finance improvements.
This is often particularly attractive in situations where someone
is building or buying a new home and wants to add a pool at the
Helping referral sources solve problems for homebuyers and
homeowners has always been one of the strengths of our industry.
Why not leverage your expertise and experience as an originator to
help new partners find ways to delight their customers? If this works
for pool contactors, what about other specialty contractors, like
By now, most Realtors have been barraged by cold callers and loan
officers telling them they’re experts on purchase loans. Maybe it’s
time to try a new approach.
The lower end of the housing market has been tight for the past
few years, making it a seller’s market. As a result, many buyers are
forced to grit their teeth and buy homes that they are often less than
Probably everyday your Realtor referral partners hear something
like this: “We’re not crazy about the kitchen and the bathrooms. Is this
all you have to show?” What if you positioned yourself as an expert
on renovation financing who can offer workable, affordable financing
solutions to your Realtor partners?
Sitting down with the Realtor and the homebuyer,
working through different options — like buying
and upgrading a home with a single loan — is one
way to differentiate your business from the online and loan-by-phone lenders. Those competitors may have bigger ad budgets, but they
likely have far fewer seasoned originators
on the ground in your community. There are
several options for renovation loans
available. Among them are conventional
financing as well as Federal Housing
Administration and Department of
Veterans Affairs (VA) programs with
loan-to-value ratios based on “
Continued on Page 78 >>
Jeff Leinan is the executive vice president of Plaza Home
Mortgage. He is responsible for the company’s wholesale-,
reverse- and renovation-lending businesses. Reach him at
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