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Das named CEO of CitiMortgage

National Mortgage Professional
Jul 01, 2008

Make mortgage modification your nicheJoe Cornoforeclosure, negotiate, refinancing, sub-prime, pre-payment penalties Years ago, when people had slow equity and high rates of interest, I would communicate with the lending sources that purchased the loans that I originated. Rather than simply watch clients lose their homes to foreclosure, I would negotiate with the lenders to work with the borrowers. Due to my clients losing jobs, or becoming ill or divorced, I started contacting lenders and did so easier than the borrowers could have. I had phone numbers that reached actual humans, and it saved time that the customer would spend on the lender merry-go-round of communication disservice. I became my customers' negotiator with their lenders. The term "mortgage modification" is new for lenders to save oneself from foreclosure. The reasons for people being on the verge of losing their homes are the same today--loss of job, sickness and divorce--but we now need to add not being able to afford the increased payments. The concept of mortgage modification is a fantastic way to work your database and assist lenders is realizing that they are better off working with you and the borrowers. Refinancing the borrower will stop approximately 60 percent of the expected foreclosures. This equates to one out of every five sub-prime loans originated over the past two years alone. Approximately 70 percent of these sub-prime loans carry pre-payment penalties. By explaining that if the lender would waive the pre-payment penalty the borrower could refinance out of foreclosure, you have presented strong reasoning. I would assure the lender that I would resubmit the refinance back to it first. Now, the lender would have a stronger loan due to a lower rate of interest, and the potential foreclosure is alleviated. Rather than leaving your previous borrowers on their own to save their home, why not be their liaison to the lenders? This is truly your fiduciary responsibility. Take a minimum commission or standard fee for the time spent to work out a plan to save your client's home. Just waiving a pre-payment penalty can sometimes make the deal work for the borrowers. Lenders make themselves difficult to reach on the consumer side of the loan. As a broker, you can make contact, get to the point quickly and unemotionally, and work with the lenders to salvage their bottom line. Your borrowers would see your increased worth in working with you, and you can get paid by refinancing them. Your relationship with your client base just increased, your image and service with your lending sources just surged, and you feel pretty good that you are doing something about the industry woes of dumb lending practices. However, you may increase business with the new service that you are providing. With a planned marketing/sales campaign, receiving testimonials from those who you save from foreclosure and having your customers tell others of your services, you can create a business in itself. There are approximately two million U.S. households headed for foreclosure. You can become the "loan workout" or "mortgage modifier" businessperson and attract a segment of the industry yet to be tapped. Changing times always create opportunity for another service to be developed. The relaxed lending standards of the past have opened up an opportunity for you to present the lenders with a solution. As the lenders are scrutinized and reviewed by shareholders, government agencies and themselves, they may see your resolve as a positive and proactive way to illustrate that they are doing something to fix their mistakes. Of course, lenders basically make themselves hard to reach and need to be sold on the concept. I can see many insurers and the companies that administer the loan servicing being very interested in your plan to reduce foreclosures by 60 percent. Approach consumer advocate organizations and watchdog groups to support your service as well. Various responsible lending groups would back your efforts and probably supply you with direct lender contact information. They would also refer customers who need your services. You could work with state government agencies as well. You can contact me for ideas on reaching this nationwide market. The cost to foreclose on a decreased-valued property is very high to a lender. Your concept of home salvaging will make sense to most in our industry. You may ask, "Why would the borrower want to do this?" Borrowers do not typically look at their homes purely as debt. They need a place to live, and they do not mind cycling through a depressed cycle to remain in their homes. This is the reason that foreclosure is so emotional. In California, when Silicon Valley dried up for approximately five years, 45 percent of Northern California properties were upside-down on their values versus loan balances. Less than five percent went late on their payments or went into default. People have attachments to their homes. Family is usually nearby, their children are enrolled in local school districts, and they have established relationships. This is your key marketing approach when working with property owners. They are more than borrowers or consumers. They are people with lives and wish to maintain their existence within their communities. It is true that there is life after foreclosure, but most people want to continue living as well as avoid foreclosure, if possible. There will be some that will not be able to avoid the inevitable. By working with potential secondary first-time homebuyers, one can open up other opportunities to locate someone else to purchase the homes in risk of foreclosure. However, going into depth on this subject would require an article of its own. As you read this article, you can see many potential positive sources to do business with. This is why atypical marketing is so important. When everyone else is sending out monthly newsletters, attempting to secure commercial lending deals and marketing reverse mortgages, you can be doing something unique and beneficial. Rather than going along with everyone else, initiate something unique that differentiates you from the rest. Please e-mail me any ideas that may come from this article. I have supporting data and articles that can assist your uniqueness. Do not send me excuses. That is what everyone else is practicing at this time. Joe Corno is president of Utah-based We Be Consulting and Seminars. He may be reached at (801) 836-2077 or e-mail [email protected]
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