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].
