Record numbers of originators continue to exit the mortgage industry. Yet, many originators are experiencing record numbers in their origination volume. What gives? Why are some originators going out of business, while other originators are making record profits?
A big part of this difference in success rates is the attitude and perspective of the originators involved. Depending on your attitude and perspective, this is either the best time or the worst time for you to be in the mortgage industry. There is plenty of truth to these words of Henry Ford who once said, “If you think you can, or if you think you can’t, you are right.” In fact, here are two examples that illustrate why your attitude matters, and how you could transform industry chaos into your opportunity to make record profits in 2010.
#1: Your attitude on negative equity
According to First American Core Logic, approximately 29 percent of all residential properties in the United States are either in or within five percent of a negative equity situation. According to the latest report, which reflected market conditions as of the fourth quarter of 2009, “Negative equity continues to be concentrated in five states: Nevada, which had the highest percentage negative equity with 70 percent of all of its mortgaged properties underwater, followed by Arizona (51 percent), Florida (48 percent), Michigan (39 percent) and California (35 percent).”
On the one hand, this seems like very bad news. On the other hand, what about the other 71 percent of homeowners who are not in a negative equity situation? There are even homeowners with equity in the five hardest hit states! In Nevada, 30 percent of all homeowners with a mortgage have more than five percent equity, followed by Arizona (49 percent), Florida (52 percent), Michigan (61 percent) and California (65 percent).
In fact, this very same report goes on to state that, “More than 23 million, or 49 percent of all homeowners with a mortgage, have at least 25 percent equity in their home and over 12 million have at least 50 percent equity in their home.” This is consistent with the Federal Reserve Board’s Flow of Funds report that shows that American homeowners have $6.2 trillion of home equity remaining even after the record downturn in housing prices over the last few years.
The bottom line here is that you have two choices:
►Choice #1: Take the attitude that negative equity is a problem for you as an originator, and use it as an excuse to have a mediocre year.
►Choice #2: Take the attitude that negative equity may be a problem for your competition, but you are going to take this opportunity to do some brisk business with just a small fraction of the 23 million homeowners who have at least 25 percent equity in their homes.
The choice is yours. The attitude you take about negative equity in your market will spell the difference between success and failure.
You might ask, where can I find the all these homeowners that don’t have a negative equity problem? Well, let’s think this through. If I am a homeowner who has done a really good job of managing my money and building wealth over time, where might I be found? Would I use a CPA? What about a financial advisor or money manager?
Bingo! That’s your sales strategy! Find CPAs and financial advisors and you will find homeowners that don’t have a negative equity problem. I’m not saying that all homeowners who have a CPA or financial advisor don’t have negative equity problems. What I am saying is that all CPAs and financial advisors have homeowners that they know that don’t have negative equity problems. Your mission, should you choose to accept it, is to simply do more business with CPAs and financial advisors, and you will get your share of business from the 23 million homeowners with at least 25 percent equity in their homes. CMPS certification gives you the training, tools, and resources to do just that.
#2: Your attitude on origination opportunities
The Mortgage Bankers Association (MBA) reported that total origination volume in 2009 was in excess of $2.1 trillion. This represented $1.368 trillion in refinance volume and $740 billion in purchase volume. The estimated total origination volume this year is expected to decline to $1.27 trillion. This represents $529 billion in refinance transactions and $745 billion in purchase transactions. In other words, while purchase volume is expected to remain stable, refinance volume is expected to decline by a whopping 61 percent or $839 trillion!
Again, you have two choices here:
►Choice #1: Take the attitude that a 61 percent decline in refinance opportunities is an excuse for you to have a mediocre year.
►Choice #2: Take the attitude that a 61 percent decline in refinance opportunities may be a problem for your competition, but you are going to capture a bigger piece of the pie when it comes to purchase opportunities in your marketplace.
You might ask, how can I capture more purchase business? Again, let’s think this through together. When people (who have money) are looking to buy a home, what do they do? Some people contact their CPAs and financial advisors and ask their advice. In fact, 81 percent of investors said they want advice from their financial advisors on more than just investments. Other people start shopping for a home and contact various Realtors in their market for information. Still, others talk to their family, friends and co-workers.
All of this points to three strategies that would result in you capturing more purchase business:
►Strategy #1: Have a systematic way of reaching CPAs and financial advisors in order to add value to them and their clients who may be in the market to purchase a new home.
►Strategy #2: Have a systematic way of adding value to Realtors in your market by solving their problems that they are facing, reaching the buyers in their prospect list, and motivating fence-sitters to take action.
►Strategy #3: Have a systematic way of adding value to your own client database and transforming your clients into a referral-generating sales force.
Again, Certified Mortgage Planning Specialist (CMPS) certification gives you the training, tools, and resources to implement these three strategies. Let’s face it. Some people get burned out, lose heart, and go personally and financially bankrupt in troubled times. Other people find heroic strength, inspire those around them, and make their personal and financial fortunes.
What kind of person are you?
If you are ready to transform unprecedented chaos into unprecedented opportunity and make 2010 your best year ever, it’s time for you to become a Certified Mortgage Planning Specialist!
Gibran Nicholas is the founder and chairman of the CMPS Institute, which administers the Certified Mortgage Planning Specialist (CMPS) designation. The CMPS Institute has enrolled more than 5,500 members since its founding in 2005. Gibran is also the chairman of Published Daily, a customizable online magazine, newsletter and marketing service that helps professionals transform their clients and prospects into a referral-generating sales force. Visit Gibran’s blog at http://gibrannicholas.com where he shares his insights on economics, real estate and financial issues, including the current mortgage and credit crises.