There is one way to excel in an uncertain market
Providing niche loan products can give brokers the edge to excel in the purchase market – a growing focus given the dried-up refinancing wave and an inflation-induced slowdown in mortgage originations. A trio of seasoned mortgage industry officials recently imparted tips on how to expand into specialty loans amid a changing housing landscape.
A specialty loans workshop of sorts that covered the topic was presented during the recent Hall of AIME (Association of Independent Mortgage Experts) conference that took place in Naples, Fla., Jan. 26-28. Moderated by AIME’s vice president of outreach Jamie Cavanaugh, the panel consisted of Isabel Williams, CEO of By My Neighbor Mortgage; Kris Radermacher, broker-owner and loan officer at K2K Mortgage; and Tano Kapedani, CEO/broker of EZ Fundings Home Loans.
Broker hated non-QM before loving non-QM
“In the last three or four years, non-QM has been about 20% to 25% of my business – in some months more,” Kapedani said to the crowd of AIME members. “In the beginning, I didn’t like it at all – I hated it because I didn’t understand it. I learned that understanding the non-QM market can be a great, great benefit to you as a loan officer. You can differentiate yourself from 90% of the people out there – and I can say that from experience.”
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The broker-owner noted the space allows for a robust level of referrals – a particularly prized dynamic in his home base of California, where price points are higher. He said it was not uncommon for clients to refer relatives to him for additional business. “The beautiful part about these types of borrowers is they tend to refer one another, Kapedani said. “You take care of them, you do right, and they’ll refer you more business.”
Finding a niche with a foreign twist
Radermacher agreed with Kapedani’s assessment of robust referrals from such borrowers, conveying her own experience as evidence but with an intriguing, foreign twist. “I got really lucky,” she began. “A guy found me online – so branding is important, people – and he was a mortgage broker out of Canada. I closed a loan for his family down here because they are leaving Canada in droves now, and since then he introduced me to a very large mortgage company in Canada. So those LOs are now feeding me. He also got me into three Canadian Facebook pages that you have to be invited into, so I’ve been cleaning up out of those as well.”
Yet continued business for both Kapedani and Radermacher did not happen by chance alone, Cavanaugh noted. “It really is about building trust though, isn’t it?” she asked rhetorically. “You proved you can do something correctly, and other people began to see you as the local experts in that thing, that niche.”
VA loan approval requires attention to detail
Specializing in loans for veterans, Williams—a military veteran herself – helped to demystify the niche. Moreover, she stressed the need for mastery of a subject as paramount to success.
“With VA [Veterans Affairs], guidelines are literally online,” she told the gathering. “I Google everything. You don’t have to know it, you just need to know where to find it. So Google is your best friend. You literally type in ‘VA guidelines’ and the question more than likely will pop up. In our industry, we’re not taught to do our research. We’re taught to sell. Most of us are really good at building relationships and finding business. We’re not so great at structuring loans. Sometimes, we just throw it in and pray the underwriter agrees with you and the deal closes.”
Given such circumstances, an acute attention to detail has yielded something of a niche within a niche for Williams: “It is our job to know whether a deal will actually close,” she said. “So I do end up picking up a lot of transactions that get denied by other lenders. I literally tell all my realtor partners, builders: If you’ve got a client that’s been denied, don’t step away from that commission check – call me. Let me make sure that it can actually get done. That’s about 80% of my business, all second-look mortgages.”
After all, Williams suggested, these are often families on a quest for homeownership: “It’s not just a transaction,” she said. “A lot of times we get caught up, so busy dealing with clients we get into this almost robotic mindset. We need to be very aware that this is a family that’s trusting you to actually help them get into a house.”
Which goes back to the importance of knowing every guideline: “If you don’t know your guidelines, Google them or get a really good account executive that knows a little bit more than you do,” Williams said. “Or befriend an underwriter. Whatever. Find the source of the information that you need.”
She cited an example, illustrating how the difference between acceptance or rejection could be a single missed eligibility measure. “The biggest one that I always come across is the minimum credit score,” she said. “VA literally says as long as they’ve been on time for the last 12 months, they’ll do the loan. Find a wholesale lender that will take a low credit score, close the transaction – that’s it.”
Cavanaugh concurred: “I’ve experienced many times situations where we’ve had a ‘no’ or ‘maybe’ and we’ve been able to get on the phone with the underwriter and talk through it. Often, it’s the way we approach the situation – it’s not a battle, it’s a conversation about how to make something work for a homeowner who wants to realize the dream of homeownership. Most underwriters do want to make it work if you help them find the way to do so.”
Knowing one’s guidelines, she said, is half the battle.
