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NAMB Membership Committee mission 2007

May 23, 2007

A snapshot of the successful broker in 2007Joe Amorosorealignment, diverse product portfolio, marketing dollars on refis, well-trained and motivated staff I don't have to tell you that there's a significant amount of realignment going on in our business, this year. Home prices are softening in several metro areas. Many brokers are throwing in the towel, while wholesalers are scaling back their operations. Meanwhile, for those brokers still in the game, they are themselves navigating all sorts of learning curves: new, more stringent industry regulations, an ever-growing portfolio of product options and sophisticated online technology applications. Despite challenging conditions and moving targets in the marketplace, there are great opportunities, as well. Based on my 18-plus years in the business, here's what I believe a successful broker will look like in 2007. A successful broker will have a diverse product portfolio I've said it before, and I'll say it again: If you specialize in one particular product, whether it be A-paper, sub-prime, or alt-A, consider pursuing new product offerings to broaden your base. This is especially relevant in 2007, as another $1 trillion in adjustable-rate loans are anticipated to reset. Since it looks like 2007 is shaping up to be a big refi market, examine where you can supplement your existing portfolio with the kinds of fixed-rate products your potential refi customers will be seeking. Borrowers faced with upward payment resets are likely to take two distinct approaches. They'll either be flocking to the security of fixed-rate products or opting to refinance with another ARM to keep their payment as low as possible. Fixed-rate affordability loans, like 40-year fixed loans; longer-term, fixed-rate, interest-only loans and 80/20 loans, are continuing to gain steam in the marketplace. These loans will probably make up a larger segment of overall mortgages in 2007 as more and more borrowers become familiar with them as viable alternatives. And now, tax laws have changed to make mortgage insurance deductible. It may be time to go back and relearn a few mortgage insurance features for those borrowers with less than 20 percent equity who want to avoid the hassle and expense of closing on two loans. I also anticipate that the demand for refi loans will be strong among sub-prime customers, who will face the largest adjustments from their initial floor rate. These sub-prime borrowers may now fall into the alt-A or conforming category, so examine each one carefully for the right fit. Overall, I'm seeing less sub-prime paper being written now and considerably more alt-A. This is another reason why it makes good business sense to branch out in your product offerings. A successful broker will focus his marketing dollars on refis As outlined above, refi originations will likely be a main source of revenue for many brokers in the coming year. Therefore, successful brokers will ensure that their marketing and sales materials reflect the needs of these borrowers. The most successful brokers I know now make it part of their daily routine to call past customers whose adjustable-rate mortgages are about to reset. Highlight the kinds of products that can address refi concerns and look for opportunities, where feasible, to move sub-prime customers into conforming loans. Additionally, don't turn your back on the purchase market, particularly as spring rolls around. Feature products that specifically address this market and get out in front of the proper audience. A successful broker will have a well-trained and motivated staff Competition for top producers in the coming year will no doubt be fierce. Take a close look at your team and your top sales producers to determine where you need to beef up or selectively trim your organization. Borrowers today are more educated about their loan options than ever before. Different customers respond differently to various sales tactics and personalities, so try to create a balanced team with a variety of approaches and talents. Whenever I recruit talent, I always look for tenacity, integrity, discipline and common sense. I've found that these core characteristics go a long way when combined with a customer service attitude and hard work. Loan officers expect you to examine their track records carefully. Expect the best loan officers to scrutinize your product offerings and service programs just as thoroughly. In addition, cultivating an ethnically diverse, multilingual staff now can enhance your business in the long run. The explosive growth in Hispanic homeownership, for example, is just one indicator of how valuable this approach can be in reaching out to new customers and demographic groups. Remember, too, that borrowers respond positively to educated, savvy brokers. From your rookie loan officers to your seasoned veterans, ongoing training is the key. Lenders are constantly rolling out new products, and it's imperative that your sales team can understand which customers it can accommodate and how to best position these new loans. While we're on the topic of training, don't overlook your operations staff, either. Even small companies should make every effort to properly train their originators and back-office staff not only on their immediate job responsibilities, but also on what the current industry trends and issues are. In summary To be successful this year, focus on where you think the market is going, and then develop your strategy accordingly. Getting back to the basics - diverse products and effective marketing - will serve to strengthen your sales efforts, as well. Lastly, remember that building and maintaining a thriving business in 2007 is largely dependent on people. Hire the best you can recruit to represent your company. And never forget that we're in business because of our customers. Make them the priority and have a solid plan, and you'll be best positioned to sail through any rough waters ahead. Joe Amoroso is senior vice president of Opteum Financial Services. He may be reached by e-mail at [email protected].
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