The changes to the mortgage industry during the last couple of years have created turmoil at all points of the value chain, from the borrower to the secondary investors to the global economy. These changes have included credit tightening and the disappearance of loan programs. Part of that credit tightening has focused on collateral located in real estate markets that have been identified as "Declining Markets". This article provides some suggestions for originating in such markets.
First, focus on stable pockets or neighborhoods within the larger MSA (Metropolitan Statistical Area). Even though the overall area may be considered "declining", your lender may determine that these smaller areas do not fall under "declining market" guidelines and will underwrite the loan accordingly. Data from an appraisal stating that the property is not in a declining area can help you make your case to the lender.
Once you have found stable pockets, target the borrowers located in those mini-markets and create and execute marketing campaigns for them. Possibilities include telemarketing, direct mail, and guerilla marketing. Examples of the latter include operating a lemonade stand at softball or soccer games or in crowded parks. You could provide free lemonade in big cups for people who do a 60-second mortgage analysis with you.
Third, make sure you can provide government loans. FHA loans have been popular, and with the temporarily expanded loan limits and high-balance limits, more homes than ever are eligible for FHA loans. Become approved takes time, so it's best to get started immediately.
Another good choice for more expensive homes is agency jumbo loans. These loans do not charge the mortgage insurance premium (MIP) found with FHA loans, can go up to 125% of the median housing value and allow a higher debt-to-income ratio than FHA loans.
You can help your files receive an "Accept" status with your lender by submitting appropriate appraisals. Appraisals that are older than 90 days or have outdated comparables represent a significant risk. Brokers should update appraisals prior to submitting the loan to underwriting. It is best to submit two (2) Comparables dated within 90 days AND two (2) Active listings (pending sales).
Brokers and loan officers who are willing to learn and change are likely to be more successful than those who don't. Hopefully these ideas will contribute to your success.
First, focus on stable pockets or neighborhoods within the larger MSA (Metropolitan Statistical Area). Even though the overall area may be considered "declining", your lender may determine that these smaller areas do not fall under "declining market" guidelines and will underwrite the loan accordingly. Data from an appraisal stating that the property is not in a declining area can help you make your case to the lender.
Once you have found stable pockets, target the borrowers located in those mini-markets and create and execute marketing campaigns for them. Possibilities include telemarketing, direct mail, and guerilla marketing. Examples of the latter include operating a lemonade stand at softball or soccer games or in crowded parks. You could provide free lemonade in big cups for people who do a 60-second mortgage analysis with you.
Third, make sure you can provide government loans. FHA loans have been popular, and with the temporarily expanded loan limits and high-balance limits, more homes than ever are eligible for FHA loans. Become approved takes time, so it's best to get started immediately.
Another good choice for more expensive homes is agency jumbo loans. These loans do not charge the mortgage insurance premium (MIP) found with FHA loans, can go up to 125% of the median housing value and allow a higher debt-to-income ratio than FHA loans.
You can help your files receive an "Accept" status with your lender by submitting appropriate appraisals. Appraisals that are older than 90 days or have outdated comparables represent a significant risk. Brokers should update appraisals prior to submitting the loan to underwriting. It is best to submit two (2) Comparables dated within 90 days AND two (2) Active listings (pending sales).
Brokers and loan officers who are willing to learn and change are likely to be more successful than those who don't. Hopefully these ideas will contribute to your success.
