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Secured Funding relocates wholesale division

Jun 27, 2006

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
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