Mortgage Lending 2015

The current state of lending has it such that the threat of automation, the rising cost of compliance, and the competitive nature of pricing and undercutting, which stem from a better informed client, have all left the industry wondering:  how can we grow moving forward?

Technology In Mortgage Lending

Technology is designed to make us more efficient as business people. When we send emails rather than call, scan in docs rather than fax,   and market by  social media rather than mail, we allow  ourselves to make more contacts, become efficient, more accountable, and hence more effective to our prospective clients. What we also do in the process is make us less relevant. Go online and fill out the app: this process of qualification is becoming more readily used by lenders, and decreases the initial contact made between banker and customer, which when the important questions are asked; Where do you live? What do you do for a living? Are you married? How many dependents? Assets? Have you filed for bankruptcy in the last 7 years?  These questions build rapport between you and the customer, and build trust. When someone is willing to let you in their world of personal information, there is a bond that can form where they would be less willing to go through that process again with a new salesperson. Don’t lose sight of that opportunity to build.

Compliance In Mortgage Lending

Compliance. The rising cost of compliance is limiting one’s ability to lend and leverage. As pricing is low, margins and spreads shrink, even as the cost of compliance in originating those loans continue to go up. If you have 6-8 people touching a fie rather than the 3-4 from the past, that is double the expense, hence half the profit margin. It is because of this reason lenders re attempting automate: they want to pay less people for submission and closure.

Competition In Mortgage Lending

Competition. Since most products being offered are conforming, the pricing, rather than the aggressive nature of the niche becomes the rule of the day.  You have to be within 1/2 point of your competition, or you will lose that business.    The exception is with big financial institutions whose clients would rather pay higher and deal with them, because their credibility is more secure, hence pricing can go up. What we found was when products and markets shrink, pricing goes up because the market share of the bigger banks go up too. Since they own the market, they don’t have to prices competitive as if there were more players out there fishing for business. Customers must always resent this change, for their cost of doing business is at stake.  Unlike consumer products, you will not get the big box discount when  it comes to paying interest, or the closing cost associated with it.

About The Author: Ron Granado

Gustan Cho Associates like to offer a special thanks to Mr. Ron Granado of Plymouth Title Guaranty Corporation.  Ron Granado is the author of this article and a guest writer for Gustan Cho AssociatesRon Granado always goes out of his way to help not only the public but also real estate professionals such as attorneys, real estate brokers, mortgage loan officers, and other title companies answer questions they may have. Ron Granado also takes time off his busy schedule to write financial articles such as this blog on Mortgage Lending Today to help professionals in the real estate and mortgage industries as well as the public to hear his opinions and the latest market news.

Ron Granado

Account Executive | Plymouth Title Guaranty Corp

1301 W. 22nd Street | Ste 505 | Oak Brook, IL 60523

630-300-3900 |

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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