A recent post on Total Experts website has it's CEO Joe Welu talking to Finance of America's CEO Bill Dallas. In their conversation they discuss a new model for loan originators, a model in which a mortgage transaction is just a starting point for a relationship with a new customer. They discuss the evolution of the customer relationship, the importance of building trust and how to keep a customer for life.

Joe Welu: Is it your belief that ... let me just not speculate, what is your belief the future of the loan officer looks like?

Bill Dallas: So the vision is that they sell multiple products at the point of sale. So, I think what you do, is you take your loyalty program, and your rewards program, you say to the customer, "This is a closing, but it's our opening, so we're opening a relationship with you today."

Joe Welu: It's the beginning of the journey.

Bill Dallas: It is!

Joe Welu: Not the destination.

Bill Dallas: And why should they come back to you, right? It can't be product driven. You can't just say, "Hey, I'll give you a personal loan, knock you head over, do a student loan." I mean, we can try all those things. So, I would ask you: if you were looking at the household balance sheet today, and you've got product, mortgage is one, mortgage is a ... we have no idea when they're gonna borrow ever again, right? And we don't know if they can take cash out, and we've sold the servicing, generally speaking, right? People do retain it.

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Bill Dallas: So how do we sell the transaction, keep the customer? So, my view is, you first welcome them, you tell them the servicing being sold, you tell them why you sold it, you ask for a survey on how we did, and you give them a loyalty packet. And if you read my last article on LinkedIn, I think we're trying to make them debt advisors. I took that same piece of just saying if you took private banking at Wells Fargo and you looked at all of those people who are whacking at trying to disintermediate Wells, consumers are lost. I think we want a relationship.

Joe Welu: They want a central partner.

Bill Dallas: So how do I know I get a best price? And the only thing I figured out with the internet, ubiquitous, and all this information that's out there, is: consumers are, when they choose their affinity, or their groups that they love, then they are making a bet on what they trust. And, my view of this is it's all about trust. So, how can we build trust in our loan officer with the consumer portal? It's easy! This is your portal, I'm helping you for the rest of your life, because buying a home, you either sink or swim, right? Most people, over time. So you need to learn to manage the amortization, you need to know how to manage the rest of your debt, and you'll be worth what you owe in good debt in ten years – or not.

Joe Welu: So you're focusing on some of the education piece.

Bill Dallas: Just staying connected and look at them, because they disintermediated banking, they have a car loan over here, they've got a personal loan there, they've got this. Whoa dude, you are impaling yourself on credit! So, what are loan officers good at? Managing credit, and getting them to improve their credit score, and they're also good at DTI Management, right? They get a person on. They grab all this stuff, and they try to say, "Here, underwriter, what do you think?" And I think the challenge in what I've learned about mortgages, it's mostly a conversation with the customer of who they trust.

Bill Dallas: So, we're sort of going Angie's List versus ‘go to the internet and just get your deal,’ right? So, how do we become the Angie's List, where they come to us and say, "We trust this." Because, really, it's going to be for Finance of America, or all of us from a brand perspective, we have to orchestrate this brand through our trusted advisors who are at the point of sale.

Joe Welu: So you believe it's still going to be important to have that human being in the community that can interact with the consumer.

Bill Dallas: I do. And I think trying to get rid of the Realtor and get rid of these people, and all of that stuff, everybody's died trying to do that.

https://youtu.be/WF6KVwu-0fU

For some strange reason most mortgage originators believe they need to be marketing to agents for their business or direct to consumers. But this always has been a very costly and frustrating endeavor and in this market it is even worse.

WHO CAN ORIGINATORS MARKET TO OTHER THAN CONSUMERS AND REALTORS?
Before I even give you the answers I want to remind you that how you get a client or prospect to call you is actually the most important part of the process.

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To have an agent or client call you they must first KNOW- LIKE and TRUST you. This is extremely hard to do with an ad which is why most advertising is wasted and expensive.

A client who is referred to you by someone they already know – like and trust is 10 times more likely to work with you than a cold prospect from an ad.

So who are these 3 groups?

[caption id="attachment_11630" align="alignright" width="185"] Brian Sacks Picture[/caption]

GROUP #1 -PAST CLIENTS
This is a group we totally ignore and I am not sure why since they already know, like and trust us and have done business with us. There are numerous methods for generating referrals from past clients and I cover many of them in the 48 Proven Ways To Immediately Close More Loans Manual ,
But the key is staying in touch with them so they don’t forget who you are. You should be sending out a monthly newsletter to them both by mail and by e-mail. Periodically send them a handwritten note just asking how they are doing in their home and letting them know you appreciate any referrals.

GROUP #2 -REFERRALS FROM OTHER PROFESSIONALS
Many consumers will check with their accountant, financial planner or attorney when they are about to buy or sell a home. These are the professionals they already trust and seek financial guidance from. So when you are referred by them that trust has already transferred to you .
One of the big groups of professionals I market to each month is divorce attorneys. Their clients often have a home involved in the divorce where one spouse needs to refinance and be removed from a mortgage.

GROUP #3 -SMALL BANKS AND CREDIT UNIONS OR OTHER ORIGIANTORS

This is probably the most overlooked group of all. There are many consumers who try to get a loan from their credit union or a small local bank. Often, these institutions have stricter guidelines and a much more limited offering of programs. But if you are able to fill in the programs they don’t offer or the deals they can’t approve, then you will have constant stream of new business.

The other overlooked group is your peers. It’s foolish to look at them as competitors and instead you should view them as sources of new business. For example, my company specializes in renovation loans, yet since we are not a bank, we don’t offer many of the grant programs like FHLB grant.

I am able to refer these deals to my peers locally and they are able to refer their clients who need a renovation loan to me.

Think about these three groups and immediately integrate them into your marketing efforts.

Brian Sacks is an originator with Homebridge Financial in Baltimore Maryland with over 35 years of experience closing over One Billion in loans. He is also the author of
The Originator Success Manual 48 Proven Ways To Immediately Close More Loans
and founder of the Top Originator Secrets Blog

In the just released First American Real House Price Index (RHPI), real house prices decreased 0.4% between January and February. Year over year real house prices increased 2.9%.

The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.

[caption id="attachment_12094" align="alignright" width="300"] Mark FLemming, Chief Economist for First American Financial Corp.[/caption]

“Throughout 2018, consistent growth among three driving forces – mortgage rates, household income and unadjusted house prices – defined the housing market. These three factors are also the core elements of the Real House Price Index” said Mark Fleming, chief economist at First American. “While household income rose steadily in 2018, rising mortgage rates offset any affordability benefit for home buyers, as illustrated by 11.1 percent year-over-year growth in the RHPI. However, the first quarter of 2019 has been friendly to potential home buyers, as declining mortgage rates, ongoing household income growth and moderating unadjusted home prices has boosted affordability.”

“In February, mortgage rates fell 0.9 percentage points compared with the previous month and were only 0.04 percentage points higher than one year ago. Flat mortgage rates are a welcome change for home buyers following 2018 and the 2.8 percent year-over-year growth in household income helped boost affordability,” said Fleming. “The result? House-buying power increased 2.4 percent in February compared with one year ago, and 1 percent compared with last month.

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“Additionally, while unadjusted house price appreciation in February persisted, the pace of appreciation slowed to 5.4 percent, compared with the 7.1 percent year-over-year growth in February 2018. As a result, real house price appreciation fell to 2.9 percent, the slowest year-over-year pace since December 2017,” said Fleming.

Six Cities Where Affordability Increased

“While we know that rising household income and a decline in mortgage rates caused real house price appreciation to slow nationally, real house prices declined in a few markets,” said Fleming. “Compared with a year ago, six cities saw year-over-year declines in the RHPI, signaling an improvement in affordability.”

1. San Jose, Calif. (-5.5 percent)
2. Seattle (-4.5 percent)
3. San Francisco (-2.1 percent)
4. Los Angeles (-1.6 percent)
5. Portland, Ore. (-1.1 percent)
6. San Diego (-0.3 percent)

Supply Surge

“These coastal markets all have something in common: they were the tightest and hottest markets of 2018. In the first half of 2018, rising millennial demand amid a backdrop of limited inventory and increasing mortgage rates put pressure on affordability, causing buyers to take a step back,” said Fleming. “But now, affordability is on the rise and the main reason is rising inventory.

“According to First American calculations of Realtor.com February 2019 data, the number of listings in San Jose, Seattle and San Francisco increased 124 percent, 89 percent and 52 percent respectively compared with one year ago,” said Fleming. “As inventory enters the market, buyers have more options, bidding wars are less likely, and sellers are more likely to reduce list prices. In fact, these three markets experienced the greatest yearly growth in the number of listings with price reductions.”

Softening Sellers’ Markets

“These six markets may signal a broader shift in the housing market. Across the nation, home buyers are benefiting from lower-than-anticipated mortgage rates, rising wages and a slowdown in unadjusted house price appreciation,” said Fleming. “Only the six markets above showed a year-over year decline in the RHPI, but 37 out the 44 top markets that we track showed month-over-month declines in the RHPI in February.

“However, while these trends help home buyers, it’s too soon to call it a buyers’ market. Unadjusted house prices are still rising and it’s clear that demand continues to outstrip supply in most markets,” said Fleming. “Data on the movement of unadjusted house prices during the early spring home-buying season won’t be available for a few more months, but it’s quite likely that price appreciation will accelerate again.”

Among the Core Based Statistical Areas (CBSAs) tracked by First American, the five markets with the greatest year-over-year increase in the RHPI are:

1. Columbus, Ohio (+8.6 percent)
2. Providence, R.I. (+8.4 percent)
3. Milwaukee (+7.8 percent)
4. Atlanta (+7.4 percent)
5. Cincinnati (+7.1 percent).