Farrell says in this challenging market, a loan closing can’t be the finish line
As mortgage rates continue to climb, mortgage brokers and loan originators look to deal with the challenges of the new market conditions.
Freddie Mac reported this afternoon that the average 30-year mortgage rate was now 7.28%, up 25 basis points from last week and reaching its highest point in nearly three years.
Because life events, not the current rate environment, are what is building current mortgage deals, one mortgage executive says the relationship aspect of a broker’s job is now more important than ever.
The originators who hold up best through a stretch like this one tend to be the ones who never fully let go of a client once a loan funds.
New National Association of Mortgage Brokers (NAMB) president Michael Farrell (pictured top left), who took over the role today from former president Kimber White (pictured top right), says the originators still operating the old way are going to struggle, regardless of what rates do next.
"In today's market, you've got to be the originator, and you also have to be the debt manager," Farrell told Mortgage Professional America. "It's not just rubber-stamp rate, and that's a transactional base. It's looking beyond that transaction because a customer is a transaction. A client's for life."
Battling affordability challenges
With so many people talking about the challenges of affordability, both in a mortgage and in everyday life, Farrell said combating those challenges involves building a long-term relationship with a homebuyer.
"Home affordability is not just in the rate. It's in every other aspect that affects it. But a home is required and necessary for family and wealth creation," he said. "After that closing, it's a matter of managing that debt and having an ongoing relationship with that client."
He said that shift in mindset, from closing a loan to managing a relationship, is central to the education NAMB is rolling out this year at its National event in Las Vegas October 16-19. It is meant to give originators somewhere to turn when the market itself isn't cooperating.
"Coming to National and going through our education platform that we're launching gives the ability for folks to pivot," he said. "They can learn a new resource. They can learn a new tactic regarding approach. We've got to find ways to build that stickiness with our professionals to be that go-to after the closing.
“There's going to be ups and downs in this market, and having a conversation and identifying the comfort and capacity for a customer and a short- and long-term goal is really what we need to teach."
That same relationship, according to Farrell, is what keeps a loan officer relevant as more of the data side of the business gets automated.
"AI can bring the data and bring you the information, but it's the professional that's delivering the solution," he said. "That's what we are bringing together. We have listened to our industry partners, and we did an event over a year ago."
White, who was just named chairman of the International Mortgage Brokers Federation (IMBF), said that same shift separates the originators who will hold up in a harder market from those who will not.
"I think the comfortability in teaching the goals and the trade, I think people have taken it as a job, not a profession," White said. "And I think that's where we're going to see the attrition."
Finding a mentor
That philosophy, according to Farrell, is behind a broader retooling of NAMB's education, advocacy and membership benefits, all three of which are being updated over the next six months.
"We are touching every pillar. We are going from education first to advocacy second to membership benefits and rewards third," Farrell said. "All of those key areas are going to be touched over the course of the next six months, just dropping those in and implementing them so that we're constantly delivering a better solution."
One piece of that retooling grew directly out of a problem White identified during his own term, according to Farrell.
"People don't know where to go to find the mentor," Farrell said. "Maybe they're intimidated, maybe they're nervous, maybe they're just not asking the questions. We're bringing all of what we have built from the past forward into one cohesive ability for the members to find those resources at a click."
Farrell said another challenge NAMB is trying to solve is not a shortage of information, but getting members to use what is already available to them.
"We know we have the knowledge, we have the resources, we have the tools," Farrell said. "How do we get the engagement to use them?"
Both leaders teased a specific announcement expected to land before NAMB National even begins.
"What's getting ready to happen is just going to surprise a lot of people," White said. "It's going to enhance NAMB more. It'll come out this week, but it's going to enhance NAMB more, and it's going to help the industry and all of us."
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