I am looking for alternative sources for origination of loans. The refinances have died down and my real estate agents are being inundated with loan officers. I am thinking divorce attorneys may be a good source of loans. What do you think?
–Myron from Pittsburgh
I have two positive comments to say about this approach. First, having alternative business sources is a good idea. I define alternative sources as those who are not previous customers or agents/builders. Even if you are assigned to a bank branch or real estate office, it makes sense to diversify in this way. And it is not just about diversification, it is about developing a source of leads you can refer to your referral sources such as real estate agents.
Secondly, divorces provide a steady stream of transactions. They happen regardless of the economic environment. For example, when interest rates are high, this business will not dry up. The one exception was the Great Recession in which couples held off from divorcing because they could not sell their homes. Many became "roommates" with each other to ride out the storm.
Now for the negative side of the equation. Business generated by divorces can be tough. Not only are the transactions often very problematic, the situations can be very tense. It is hard enough to get a tough transaction through, but it is even harder when the two parties are not speaking to each other – or worse, fighting incessantly. For those with the temperament and expertise to navigate these transactions, it results in clients who are very loyal and not rate-sensitive. Often the loan officer is called to deliver more than just mortgage advice, as you will find many divorce attorneys are not trained in delivering financial advice. Thus, while I recommend alternative sources, you need to be very serious about the effort if you are going to serve this sector.
Dave Hershman has been the leading author and a top speaker for the industry for decades with six books authored and hundreds of articles published. His website is www.originationpro.com. If you have a reaction to this commentary or another question you would like answered in this column? Email Dave directly at [email protected].
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