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National Mortgage Professional
Feb 03, 2005

Quicker, better and cheaperCharlie Elliott, MAI, SRAproduct innovation, conference attendance, customer expectations Recently, I had the opportunity to attend a mortgage trade conference that was sponsored by one of the suppliers of mortgage connectivity system software. The conference was attended by representatives of many of the nation's major banks and mortgage companies, as well as a number of national closing service vendors. I don't know about you, but I like attending conventions and conferences for a number of reasons. In addition to the formal educational opportunities, for my time and money, there are usually other advantages to attending such conferences as well. These include the value of networking and the opportunities to learn from the other attendees. What is it about a competitor that makes him or her willing to give way trade secrets in the hotel bar after a day in the classroom and a couple of beers? Perhaps it is that all parties believe that they are willing to give up certain trade information in exchange for other information more valuable to them. Whatever the case, I enjoy such events and usually do my share of networking with vendors, customers and competitors as well. As is often the case, I left from my recent conference armed with a lot of information and ideas. I can hear my staff now: "Charlie is making a lot of changes and giving us a lot of new things to do; he must have just returned from some conference or convention." At this particular conference there were the typical ideas and techniques that I made note of. There was one concept, however, that overshadowed all of the others, and thus is the focal point of this column. The phrase, which many of us may refer to as a catch phrase, is "quicker, better and cheaper." The term seemed routine the first time I heard it used by one of the speakers. It was not until I heard it used by two other people within the space of a few hours that I began to examine its real meaning. Now this is not to be confused with "cheaper, quicker and better" or any other order of these words. "Quicker" was always first; "better" always came second, and "cheaper" was always last. As far as I could tell, none of these people had heard the others use the same statement. Was it mental telepathy? Changing gears for the time being and moving on to another issue, prior to the conference I had decided to survey a few lenders who make closing-service buying decisions. I sometimes use this technique as a tool for gathering information to take back to the office to use in evaluating and improving the services that my company offers. Since my business is appraisals, I ask three different people what they looked for when purchasing appraisals. The first person I asked immediately responded by asking, "Do you mean now?" I replied, "Yes, now." He proceeded to say, "First is fast turnaround time; second, we look for quality; and third, we look at price." The next two individuals offered very similar answers using almost exactly the same three terms in the same order. Then it hit me: the catch phrase "quicker, better and cheaper," used by three people earlier, was conveying an almost identical message as my survey. Was this an accident? I think not. Needless to say, my level of confidence in my survey was very high. Below its surface, what does the phrase "quicker, better and cheaper" actually mean? Why were so many people sending me the same message? If I hadn't known better, I would have thought it some sort of concerted attempt to throw a monkey wrench into my survey. After giving further thought to the matter, it is my conclusion that it was a very, very, strong message as to the current state of the lending market and for that matter, the appraisal market. While absorbing this information, I had the opportunity to discuss related issues with other lenders. It became abundantly clear that they were feeling a volume-down, costs-up, profits-down squeeze not felt in a number of years. They were feeling a squeeze from their customers demanding a faster, better and cheaper product. Why is this? First, it comes on the heels of a market where sheer volume has stretched the resources of the lending industry so thin that customers wanting to finance or refinance homes at near-historically low rates, were forced to stand in line and wait for loans, contend with less than the best quality service and, in some cases, pay higher-than-normal vendor fees just to achieve a closing. Now that the market has cooled off and mortgage companies are looking for business, customers realize that they are in the drivers seat and are pitting one lender against another for more attractive packages. At a time when a new automobile can be purchased and financed in three or four hours, customers object to waiting 30-45 days to purchase or refinance a home. Furthermore, today's customers expect better quality service. They have gotten used to transactions on the Internet, where shipping occurs the day of purchase and tracking numbers provide a tool to stay on top of the transaction until their package is delivered at their door within two or three days. Finally, they expect their money's worth. The total cost associated with the sale and purchase of a home (selling and buying) including real estate agent fees, lender fees, attorney fees, taxes, appraisals, etc., can exceed nine percent of the sales price in today's market. Said another way, the entire cost associated with acquiring a $300,000 home could exceed $25,000. Internet savvy customers, especially younger ones, are becoming more sophisticated. They should not be underestimated and those of us expecting to be competitive in our market must offer services "quicker, better and cheaper." Charlie W. Elliott Jr., MAI, SRA, is president of Elliott & Company Appraisers, a national real estate appraisal company. He may be reached at (800) 854-5889, by e-mail at charlie@elliottco.com or through the company's Web site at www.appraisalsanywhere.com.
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