The case of the increasingly savvy mortgage brokerMitch FreifeldMortgage broker continuing education
A more professional mortgage broker is emerging from today's
market. These days, brokers simply have to be savvier, given the
current market, as interest rates continue to rise, refinancings
slow down and marketing becomes more difficult. Indeed, the
situation for the broker has become more competitive all around.
Part of the most recent Mortgage Bankers Association of America
economic forecast noted that there are inflationary pressures, and
the expectation is that the Federal Reserve will be more aggressive
in raising interest rates going forward. Specifically, the MBA
expects the yield on 30-year fixed-rate mortgages to average about
6.1 percent in the fourth quarter—20 basis points higher than
the September forecast. This means a core competitive market is
coming in the months ahead. In addition, newly proposed legislation
will make it harder to enter the market. Title V of HR 1295 of the
Responsible Lending Act of 2005 would give states three years to
pass uniform statutes for the licensing of mortgage brokers, create
federal mortgage broker requirements for those states that do not
pass compliance legislation and establish a national database of
licensed mortgage brokers.
So what is a broker to do with interest rates increasing, volume
decreasing as a result and licensing becoming more arduous? The
answer is to become savvier, and brokers are doing just that. In
order to stay afloat, the modern broker is becoming more aware of
the business, learning to efficiently tap emerging markets and
using new technologies to gain efficiency.
Knowledge is power
The new broker wants to know more. Compared to years past when
courses to become a mortgage broker focused simply on the core
subject, today's mortgage broker wants to learn how to deal with
the borrower and how to maximize the sales process. As I teach my
new branches, I see a real thirst for this knowledge. Mortgage
brokers also seem more in touch with their communities than before.
They are reaching out to prospective borrowers in ways that simply
weren't possible in the past. The power of television, for example,
is huge. In fact, the big lenders are trying to play catch up by
launching big television campaigns designed to target the borrower.
What's behind these ads? The reason they're doing this is because
they want to be where the broker is today. According to a recent
study conducted by Wholesale Access, almost 70 percent of loans
originated in this country were originated by mortgage brokers.
Dabbling in emerging markets
A lot of mortgage brokers are also starting to dabble in emerging
markets and other parts of the mortgage process that they used to
walk away from. Today, everybody is getting a mortgage, and brokers
realize the trend. It used to be about credit scores, but not
anymore. The Hispanic population is a huge business generator.
Previously, you couldn't get a mortgage if you didn't have a green
card, but now lenders are looking for these people. The reason this
group is in demand is because they're good borrowers. For one,
their cultural background instills in them a need to pay their
bills. They want to live the American dream, and owning a house is
a big part of that. Also, it's an untouched market segment, which
means a lot of potential for new business.
Technology as an enabler
Mortgage brokers are also increasingly turning to cutting-edge
technology to help them increase profitability and close more
loans. Instead of relying on old-fashioned loan origination systems
from years past, they are switching to software solutions that
enable brokers to better manage the loan origination process from
marketing all the way through closing. Thanks to software programs
such as Encompass, even huge net branch organizations like Global
Branch Solutions can ensure compliance, equip each of their brokers
with the tools they need to market loans and have complete
visibility and control over each of their branches. These are all
tools that historically were not available to the broker and are
now incorporated as part of the core operating system. The result
is a well-equipped broker that can easily increase production and
run a highly efficient brokerage operation.
Putting it all together
The bottom line is that today's broker is very different from the
broker of just five years ago. Many see the coming market as one
filled with a lot of gloom and doom, but the contemporary brokers
who learn more about the business as a whole, tap emerging markets
and use the latest technology will not only survive—they will
thrive.
Mitch Freifeld is founder and president of Clearwater,
Fla.-based Global Branch Solutions, a national net branch
organization. He may be reached at (727) 324-1000 or e-mail
[email protected] or
visit www.netbranch101.com.
