As one of the past leaders at NAMB—The Association of Mortgage Professionals who initiated the lawsuit against the Federal Reserve Board on loan originator (LO) compensation, it is hard to believe that I am actually saying that “I Love Being a Mortgage Broker!” The year 2012 turned out to be one of the best years in my company’s 14-year history, with more than 85 percent of our total production being purchase-based business. FHA accounted for nearly 45 percent of the total volume and there is no doubt whatsoever that the reason for our success was due to the fact that we are a mortgage broker.
I know this is hard to believe but, the secret to our success this year is attributed to the LO comp rule. So far this year, we have issued more than $600,000 in lender credits toward borrower closing costs and pre-paids where our direct lender competitors are not issuing the credits. Our real estate agent partners are selling this to their clients on the benefits of using a mortgage broker. We have actually received loans from a listing agent after a direct lender has asked the seller to pay $5,000 to $7,000 in buyer’s closing costs and after getting a quote from our company, we end up saving the seller if not all, but a large portion of the amount requested resulting in a lower price for the home. We have also set our compensation level at one that allows us to issue large lender credits to our borrowers. We are making more money now than we have in many years by sheer word of mouth. We get calls from friends, family members and co-workers of our customers asking about the credits.
If you are a mortgage broker, be proud of what you have to offer and get the word out on lender credits, especially on government-backed loans. One cannot help but notice that the big banks are boasting record profits this year from loan originations and it’s no wonder when you see a 3.5 percent FHA loan paying 105.500.
So get the word out and let every real estate agent, builder, title company, escrow company and the social media know what you have to offer. One tip is to set your compensation level at a price that is not to greedy and one that allows for you to offer credits in the first place.
Mike Anderson, CRMS, is president of Louisiana-based Essential Mortgage, A Latter & Blum Realtors Company. He may be reached by phone at (225) 297-7704 or e-mail email@example.com.