The changes to the mortgage industry during the last couple of years have created turmoil at all points of the value chain, from the borrower to the secondary investors to the global economy. These changes have included credit tightening and the disappearance of loan programs. Part of that credit tightening has focused on collateral located in real estate markets that have been identified as "Declining Markets". This article provides some suggestions for originating in such markets.
First, focus on stable pockets or neighborhoods within the larger MSA (Metropolitan Statistical Area). Even though the overall area may be considered "declining", your lender may determine that these smaller areas do not fall under "declining market" guidelines and will underwrite the loan accordingly. Data from an appraisal stating that the property is not in a declining area can help you make your case to the lender.
Once you have found stable pockets, target the borrowers located in those mini-markets and create and execute marketing campaigns for them. Possibilities include telemarketing, direct mail, and guerilla marketing. Examples of the latter include operating a lemonade stand at softball or soccer games or in crowded parks. You could provide free lemonade in big cups for people who do a 60-second mortgage analysis with you.
Focus on the right loans. FHA loans are good bets right now, and are available for purchases, refinances, and cash out refinances. Temporary expanded loan limits and FHA high-balance loans make these available for more expensive homes that were once ineligible for FHA loans.
Agency jumbos can also be good choices for more expensive homes. They can go up to 125% of the median housing value, allow a higher debt-to-income ratio than FHA loans, and do not charge the MIP (mortgage insurance premium) found with FHA loans.
You can help your files receive an "Accept" status with your lender by submitting appropriate appraisals. Appraisals that are older than 90 days or have outdated comparables represent a significant risk. Brokers should update appraisals prior to submitting the loan to underwriting. It is best to submit two (2) Comparables dated within 90 days AND two (2) Active listings (pending sales).
Brokers and loan officers who are willing to learn and change are likely to be more successful than those who don't. Hopefully these ideas will contribute to your success.
About the Author:
As a pioneer in online mortgage technology among wholesale mortgage lenders, Direct Mortgage can help you succeed. Check out our fha mortgage loan programs
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