The End of Interest Rate Selling
DECEMBER 2015 n National Mortgage Professional Magazine n
Since the market crashed, we’ve been stuck in a world of rate reduction refinances. For a long time, no one had equity and consumers were afraid of the term “Adjustable-Rate Mortgage.” So the only refinancing to be done is lowering interest rates. Now everything is different, home prices are steadily rising with another strong year-over-year jump in home prices. What are we going to do when rates go back up? The time has come to change our sales approach from only having rates reduction conversations back to the method of finding out a borrower’s situation and then presenting them with as many options as possible. They will choose the one that best suits their needs. This will increase your close ratios and bring you more loans and more income each month. The highest close ratios come from the mortgage professionals who do not have rate conversations with their borrowers. But rather, the conversations about the borrower’s financial needs and then move to their mortgage, and eventually to what they quality for. Home values are rising, thus allowing borrowers to qualify for lower monthly payments, cash-out refinances, etc. Borrowers have options besides rate reduction now and it’s important to talk to them about all the products they may qualify for. Some people would rather have a short-term loan and have no problem with higher payments to get it. If you were trying to pay off all your debt so you can retire, buy a second home, or put your kids through college, the interest rate doesn’t matter as much because you are paying off the loan early anyway. Loan officers have become accustomed to asking for the rate first and telling the borrowers how much they can save if they lower it. Now that those same loan officers are trying to sell mortgage insurance premium (MIP) removal, they are having a hard time conveying the benefits to the borrowers. The conversations still revolve around interest rates because loan officers are still asking what their current rate is. This is putting rates first in the borrower’s mind. When you know what is motivating someone to make a major financial change, it’s a lot easier to explain the benefits in terms they will understand. TagQuest customer spotlight Zack M., Nevada—Direct Mail Campaign Each month, we talk with our clients to see how their campaigns are going. Here’s some feedback we received from Zack M. l What volume they do per month or per drop or per order: Five thousand pieces every two weeks. l Some kind of measurable result: “Closed loans, response rates, number of applications taken. The more details here the better.” l Response rate: 0.85 percent, apps about 30 percent of the calls, close 2.5 loans per week from the mail. l Highlights of the campaign that appeal to your client: “Ease of the process. Everything from ordering to taking calls takes little effort on my part. Even the free tracking helps ease the time tracking down information. It’s been that way for two years now. Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm developed throughout the ever-changing mortgage industry. Utilizing industry knowledge, marketing expertise, and technology we implement any or all aspects of your marketing and/or advertising campaigns. With a proven track record, more than 10 years in business, and decades of experience TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment. For more information, call (888) 7178980 or visit www.tagquest.com.
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near-monopoly on the secondary market and relying on FICO solely reinforces this dominance. “The GSEs' use of a single credit score is an unfair practice that stifles competition and innovation in credit scoring,” said Rep. Royce. “Breaking up the credit score monopoly at Fannie and Freddie will also assist them in managing their credit risk and decreases the potential for another taxpayer bailout.” “Fannie Mae and Freddie Mac are the largest mortgage purchasers in the nation, but they rely on credit score models that don’t necessarily take into account something as simple as whether borrowers have paid their rent on time,” added Sewell. “Homeownership is an integral part of the American Dream that shouldn’t be out of the reach for low-income, rural, and minority borrowers who lack access to traditional forms of credit. This legislation takes an important step towards addressing this issue and helps make homeownership a reality for more Americans across the country.”
HUD: Homelessness Nationwide Continues to Decline U.S. Department of Housing & Urban Development ( H U D ) Secretary Julián Castro has announced HUD’s latest national onenight estimate of homelessness, highlighting a continuing decline across the nation. The results are based on HUD’s ‘point-in-time’ estimates, which seek to measure the scope of homelessness on a single night in January each year. HUD’s 2015 Annual Homeless Assessment Report to Congress found that there has been an overall 11 percent decrease and 26 percent drop in the unsheltered homeless population since 2010, when President Obama launched Opening Doors, the nation’s first-ever comprehensive strategy to prevent and end homelessness. Between 2010 and January 2015, veteran homelessness declined 36 percent, family homelessness declined 19 percent, and chronic homelessness declined 22 percent. The report shows that certain communities are making significant positive progress, while others are struggling in light of the widespread housing affordability crisis, budget shortages, or slow adoption of best practices. In remarks last week at a Veterans Day ceremony in Richmond, Va., Secretary Castro congratulated the Commonwealth for becoming the first state to effectively end veteran homelessness, as well as other communities across the nation from Syracuse, New York to Las Vegas, Nevada. The decline in veteran homelessness is largely attributed to significant investments
made by the U.S. Congress and the close collaboration between HUD and the U.S. Department of Veterans Affairs on a joint program called HUD-VA Supportive Housing (HUD-VASH), which provides a rental subsidy along with support services for those veterans who need them. Since 2008, nearly 80,000 rental vouchers have been awarded and more than 101,000 veterans have been served through the program. Last week, HUD and VA announced an additional $12 million to expand the program. “The Obama Administration has made an historic commitment to effectively end homelessness in this nation," said Castro. "Together with our partners across the federal government and communities from coast to coast, we have made tremendous progress toward our ambitious goals. But our work is far from finished. We have to continue making smart investments in the strategies that work so that everyone has a place to call home." Since the passage of the McKinneyVento Homeless Assistance Act in 1987, HUD has worked with communities to build the capacity of homeless programs across the country. By targeting investments to individuals and families who need assistance most—those on the street the longest, or with the greatest barriers to housing—HUD is ensuring that its limited resources are used as effectively and efficiently as possible. Despite increased requests in the President’s Budget each year, HUD homeless assistance funding from Congress has not kept pace with need. This has resulted in only a small decrease in the number of persons experiencing chronic homelessness between 2014 and 2015. In the meantime, HUD continues to incentivize communities to target resources, prioritize assistance, and invest in programs with proven track records. The data being reported by HUD on youth experiencing homelessness is a work in progress because communities are still learning how to collect this data accurately. Because of this, HUD cautions its partners and stakeholders from drawing conclusions regarding the state of youth homelessness based solely on this data. In order to continue to improve data on youth, HUD revised its data collection requirements, which may result in future increased point-intime counts as communities improve their methodologies. HUD is also working with communities to improve collection to better understand the size and scope of homelessness, including efforts like youth engagement and collaboration with schools and other youth-serving systems. In addition, HUD is in the process of improving and updating its year-long data collection on youth, and now also continued on page 26