Tell me a storyLisa Kellysub-prime loans, non-prime loans
When I started in the sub-prime lending industry, deals were
called "story loans." The reason? Most borrowers had a story that
brought them over to the sub-prime side of lending. Part of the
underwriting process involved reading and evaluating the story.
Some were sad; others were unbelievable and creative; some made you
shake your head in wonder. Most, however, contained one or more of
the following plot lines:
*Major illness.
*Unexpected layoff.
*Disastrous divorce.
*Death of a spouse.
*Failure of a business.
Nowadays, sub-prime lending has transitioned into non-prime
lending. The storybook is growing. Plotlines expand and the stories
don't always tell of a life or love gone wrong. The most common, of
course, involves the stated income borrower. This includes the
self-employed businessperson whose business tax deductions reduce
gross income. Others operate in the no-doc arena simply because
they don't want to disclose any information about themselves. Some
have perfect credit, but high debt ratios. Others want to stay away
from mortgage insurance requirements. Clearly, these are closer to
being success stories rather than the traditional story loans.
What does this mean to the mortgage broker? How can you capture
a greater share of the non-prime business? First, evaluate your
approach toward the borrower. If you are a broker who only goes
after straight-A conventional borrowers, you will need to change
your mind-set because now a whole other world has opened up to you.
Decide which story loan borrowers you want to include in your pool
of business. If you decide you want it all, then you must expand
your marketing efforts.
To find the traditional story loan borrower, you must find
people with problems or better yet, find someone who knows several
people with problems. To find the new story loan borrower, you may
find yourself at the same source, but with a different approach.
Here are some ways you can find borrowers with a story:
*Advertise in non-traditional publications, such as The
Greensheet or Pennysaver.
*Market to family law and bankruptcy attorneys.
*Check out your local Bar Association and find out if you can
attend meetings as an affiliate member.
*Advertise in neighborhood association publications. If it's an
active association, ask if you can make a presentation at one of
their meetings.
*Join, attend and speak at financial planning association
meetings.
*Target medium-sized employers in your area and offer your services
to its employees. Your goal is to make presentations to groups of
employees. If you collaborate with a financial planner, your
presentation will be much more valuable to the organization.
*Advertise in local business publications and write articles for
them.
*Join, attend and be an active member of a business-networking
group.
*Get involved in your local Chamber of Commerce or business
association.
It takes more than just advertising or joining a group to make
your efforts work for you. If you join a couple of groups and
advertise in a few publications and not much happens right away,
don't despair. It takes many months of consistent activity for
results to materialize. You will need to advertise month after
month or attend and participate in meetings for a long time before
you see results in the form of increased business, but it's worth
it. You're cultivating long-term referral sources for your
business.
Decide on the story you will tell. Will it be a tale of
persistence and tenacity? Or, will you decide that story loan
borrowers are much too time consuming? If it's the former, you can
be sure that your story will be a successful one.
Lisa Kelly is senior vice president of Upland Mortgage, a
nationwide division of American Business Financial Services Inc.
She can be reached at (800) 765-3140 or e-mail
[email protected].
