HUD issues interim rule for ARM eligibility

HUD issues interim rule for ARM eligibility

June 22, 2005

Tracking stats: Performance numbers can add up to successWilliam Alvarobusiness tactics, keys to success, business advice
Keeping up with stats
In springtime, a broker's thoughts should turn to baseball. Not
only are the days perfect for an afternoon at the ballpark, brokers
can also learn a lot about their business from baseball. Most
significantly, like America's pastime, mortgage brokering is a
numbers game.
Diehard baseball fanatics will be the first to say that the game
is all about player statistics. Players' performances at bat, on
the mound and in the field are tracked across their entire career,
and they are evaluated against their own play in previous games and
years, as well as against other players. Stats are the lifeblood of
baseball, and they will also deliver a great return on investment
(ROI) for professional brokers.
Just as players, coaches and fans keep up with the numbers,
high-performing brokers have learned the advantages of tracking
their stats. Clearly, broker statistics have a different purpose
and meaning than Derek Jeter's batting average; however, in the
mortgage lending game, the numbers reveal valuable information that
can drive brokers' businesses and provide a competitive marketing
Benefit from it
Success-oriented brokers understand the benefit of adopting a
long-term business mentality supported by a strategic game plan.
They are not only concerned with current business opportunities;
they also want to focus on the future.
Gathering and leveraging performance data can play a pivotal
role as brokers craft their business plans to reflect and adjust to
seasonal trends or economic indicators. Plans that are built upon
broker performance data map out proactive activities designed to
grow business and adapt to fluctuating workflows.
Numbers have several purposes with regard to borrowers and
building business. After the plan is in place, knowing what to
gather, where each piece fits and why it is important are key to
leveraging the information.
Tracking application or lending volumes by month and tapping
borrower data can be the strategic differentiator that positions
successful brokers above their peers, especially during times of
slowing first mortgages and increasing interest rates. Brokers who
monitor the life events affecting their customers' mortgages and
financial circumstances, as well as periodic fluctuations in the
market that have an impact on lending volume, will discern
patterns. This year's patterns can serve as predictors for next
Understanding borrower priorities and loan history will enable
brokers to better serve their customers, transforming them into
repeat business and a strong referral system. Identifying which
loan types do best during certain seasons will give brokers an
opportunity to develop marketing materials around these times. With
this, brokers can proactively target potential business with
strategic planning.
Track now and grow your business
Creating a database of electronic knowledge about borrowers and
seasonal borrowing trends can build business, turn previous
customers into new ones once again and attract prospects. Brokers
need a system that works as a management tool for storing value
information that can be the backbone of new business
Selecting a data management and tracking system can be the most
formidable barrier to brokers who want to keep performance stats.
Since there are no rules on how to manage systems, brokers have the
flexibility to determine and customize a methodology for collecting
and storing their data. Some brokers will attempt to create a
system from commonly known software. Others will prefer to work
with leading-edge technology tools built specifically for that
purpose. Later in this article, I'll offer some suggestions about
where brokers can access powerful data capture and management
Regardless of the system or software selected, the key to
extracting the value of performance stats is simple: disciplined
use of the data. Once information is captured and managed in a
secure environment, it should be referenced and revisited on a
regular basis. No matter how the data is managed, the goal behind
this strategy is to build and strengthen broker business.
There are several ways information is used to grow business and
maintain customers. Foremost, brokers can define their business
cycles and know when the heaviest (and lightest) volume months are
approaching and anticipate the loan characteristics that accompany
each season (e.g., home equity booms following refinance waves,
spring and summer bring in more business for first and second
mortgages). This helps the broker create marketing pieces specific
to certain seasons and months. Proactive business management can
also help identify resource needs before a broker is drowning in
volume, or avoid misallocated human resource costs.
Comprehensive and centralized data that is easily located for
review enables brokers to develop a strategy that has a positive
impact on business.
Lean on lenders for data systems
Having made a commitment to monitor and capture performance stats,
brokers must invest time in identifying a data management tool that
supports their business model. Again, there are several solutions
available, ranging from manual spreadsheets and filing systems
(popular in the early and mid-20th century) to common off-the-shelf
software packages. However, for the most sophisticated and
streamlined tool, brokers should look to their lenders before
attempting to create a system from the ground up. Their lender
partners can provide tools that enable brokers to gather and manage
data, and revisit past transactions and borrower history. Valuable
lender partners have already taken this into consideration and
implemented systems for brokers to not only manage their loan
pipeline, but also track important data.
Some lenders have invested in unique management systems for both
their internal corporate loan officers and external partners (e.g.,
virtual loan officers and brokers). In the most advanced of these
systems, every borrower's loan application is captured within a
central database that tracks the borrower through to qualifying and
underwriting. In ideal scenarios, a lender's system tracks the loan
during the appraisal, processing and funding stages.
Lenders that are committed to growing and deepening their broker
partnerships will implement loan management systems with strong
broker-facing interfaces.
It is important to note that brokers need to use available
resources (e.g., lenders' management systems) to build their
database of performance stats. When this data is compiled, the
overall information becomes actionable and maximizes broker ROI for
every borrower (past, present and potential) and lending
"Brokers up"
Brokers have the opportunity to hit one out of the ballpark if they
choose to monitor, manage and leverage their performance
statistics. Borrower information is a strategic tool that can keep
business booming despite industry fluctuation. Further, adopting a
disciplined approach to mapping loan volume seasonally will enable
brokers to predict business cycles and target markets ahead of the
competition. This information has the potential to bring a broker
out of the minor league business and into the major league mortgage
William Alvaro is CEO of Melville, N.Y.-based Global Home
Loans and Finance. He may be reached at (631) 393-0214 or e-mail