Part III. When rates went down after the Brexit vote, many of my pipeline were asking me about renegotiating their rate as they were already locked. This created a lot of tension and extra work. I understand that it is typical for this job, but I really did not know what to say to my clients. Any advice in this regard?
--Many loan officers asked this or similar questions
Last week we mentioned the term "whiplash," and if a loan officer is not familiar with the process of secondary marketing, then they may not be familiar with the term. The term is loosely applied when rates drop rapidly, but bounce right back up. A company would be caught in a whiplash situation if they renegotiated the rate to benefit a consumer, but rates moved back so quickly, the company did not have time to hedge the position at the lower rate. You can see how this situation might subject the company to potential losses.
There is another important term which is germane in the case. This is the word "renegotiation." While the loan officer may be negotiating the new rate with their secondary department or their investor, they are also negotiating with the consumer as well. The key to successful negotiations is to understand everyone's position and then work a solution that helps everyone meet their goals. For example, the company may need the consumer to move a settlement date at day or two if the rate is changed at the end of the process. How will that sit with the consumer? Certainly, if the consumer went to another company, they would have to change their settlement date more than just a day or two.
Sometimes consumers will accept a slightly "higher than market" renegotiated rate, so they don't have to face the hassle of reapplying and setting a new settlement date. Negotiating skills are important for any loan officer and this is certainly not the only situation in which strong negotiating skills will serve them well. A loan officer might negotiate with customers, vendors, real estate agents, underwriters and more.
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].