Something to talk aboutDave Hershmansecondary market, real estate boom, exotic loan products, foreclosures, interest rates
No, this is not a review of the Julia Roberts classic move.
Okay, it was not a classic, but the title still fits. For those of
you who have not been in the industry for 30 years as I have, you
are probably experiencing your first severe downturn. We have had
these downturns off and on for the past 30 years. Talk about
industry collapses ... how about the Savings and Loan crisis of the
late 1980s? The effects of this crisis actually put into motion
what is happening right now as the explosion of the secondary
market was a result of this period of time. This explosion helped
cause the real estate boom through the availability of new exotic
loan products. And the foreclosures that resulted after the boom
ended have hastened the collapse of this free-wheeling secondary
Bottom line? This industry is very cyclical. We have interest
rate cycles, economic cycles, product cycles, underwriting cycles,
seasonal cycles and even monthly cycles. Twenty years ago, when the
industry was a close-knit group, we knew how to retrench and make
it through the tougher times. It was painful, and many left the
industry. But it wasn't as devastating as it is today.
Today, we have an industry that was invaded by masses of bodies
calling themselves loan officers and real estate agents. Many made
a living doing one transaction per month--even in the boom times.
It was a true gold rush. Of course, it is hard to support these
masses when this business is down by 30 percent or more. Top
producers will still make a living, but top producers represent
just 20 percent of the sales personnel overall. There are many,
many others who are struggling big time.
But what if every loan officer had something else to talk about?
In a good year, only a small percentage of Americans are purchasing
and refinancing. What about the majority of the population who are
happy with their mortgages and houses? Their response is, "I have a
5.5 percent fixed rate and I am not moving in the next five years."
How do you serve them? Many trainers will advance the concept of
delivering value. I myself have always written and distributed a
newsletter system that now goes under the name of NewsletterPro,
which you can try for 30 days for $1 at www.originationpro.com. I
wrote the newsletters as a loan officer 30 years ago, provided them
to my loan officers as a manager and now sell them to the industry.
The goal is to deliver quality information and demonstrate that you
are an expert.
Others push annual checkups or rate alerts. But truly, if they
have a 5.5 percent fixed rate and are not moving, you can't serve
them. Perhaps you can keep the value coming for when the time comes
or try to position yourself for referrals--but that is all. I
should add, this is a strategy that is all important, especially
with big banks going after your previous customers. You must keep
yourself in position with regard to your sphere.
But you could also find something else to talk about. This
country is a country that has too much debt. Mortgage planners have
been teaching negative amortization and leverage, leverage,
leverage for years. The reason we are in this crisis is because we
did not teach and consumers did not practice sound financing
techniques. I have always taught a more balanced view of the
economics of real estate ownership through my advanced school.
Unfortunately, not many have learned these lessons and as an
industry, we have contributed to the very crisis we are complaining
about. We have the lowest savings rate of any industrialized
country in the world. Recently, I heard someone say it so well when
he was quoting his grandfather, who said, "We want to spend money
we don't have on stuff we don't need to impress those we don't even
So what do we talk about? How about helping people in the long
run without having them just purchase more real estate? How about
helping them retire their mortgage more quickly without refinancing
and changing their monthly payment? How about putting yourself in a
position to earn a commission in a positive way for those you want
to serve in the long run? If your clients build up equity more
quickly, perhaps they will leverage this equity by purchasing a
vacation home or investment property later on. In other words, in
the long run, you will get more real estate and finance
transactions, but in a responsible way and not by spending money
they dont have.
And, in the long run, you will get more referrals because you
will be helping your clients do extraordinary things. People
appreciate it when you give them real value. If you helped someone
save $300,000 in interest, why would they not refer you to someone
else in their family? This goes without saying. Providing value
always complements your business.
Does this sound too good to be true? I can assure you, it is
not. New technology applied to basic financial concepts that I have
been teaching forever have made the no refinance/equity building
strategy a reality. And you can make a steady income serving your
clients--even in a down market. How? That is another story for
Dave Hershman is a top speaker and leading author in the
mortgage industry with eight books--including two best sellers for
the Mortgage Bankers
Association of America. His mortgage school is the only
comprehensive advanced curriculum in the industry. For a schedule
of classes, free marketing samples, speaking information and
articles by Dave call (800) 581-5678, e-mail [email protected]