As published in Scotsman Guide's Residential Edition, September 2012.
Imagine having an ache in your foot and visiting your general practitioner, only to learn that your doctor is unfamiliar with podiatry and unable to help you. The doctor then thanks you for visiting and directs you to pay at the front desk. Something is missing here, right? Typically, you’d expect your doctor to give you a referral — in this case, to a podiatrist. Doctors are not only obliged to be familiar with a variety of ailments; they’re obliged to know when and where to offer referrals, as well.
The same should apply to the mortgage industry. First and foremost, brokers and originators should know all the programs available to the market, as well as the purpose each one serves. After that, they should devote some time to researching products that their companies don’t offer.
This may seem like a waste of time, but learning about the products your company doesn’t offer can build business down the road. Once you understand these products, solicit and collaborate with a mortgage professional who originates one or more of the programs. By doing so, when you’re approached by customers whose needs are best served by a product you don’t offer, instead of turning those customers away or mishandling their situations, refer those clients to your specialist partner.
Of course, this business relationship should go both ways: When clients approach your partner about more traditional mortgage products, you would receive that referral. The question, then, is what kind of specialist should you partner with? You may want to seek out professionals who have experience in any or all of four particular loan products: reverse mortgages, e.g., the Federal Housing Administration’s (FHA) section 255 program; rural-housing mortgages, e.g., the Guaranteed Rural Housing Loan Program’s section 502 program; rehabilitation loans, e.g., FHA’s 203(k) program; and, finally, U.S. Department of Veteran Affairs (VA) loans.
Let’s take a closer look at each of these programs, as well as the kind of scenarios that may lend themselves to utilizing a specialist partner.
These loans are available to individuals who are at least 62 years old and allow clients to tap into their equity without having to be too concerned about qualifying. Aside from borrowers demonstrating that they can afford the given property taxes and insurance, there are no other qualifying considerations. The loan recipients also do not have to make principal or interest payments in the life of the loan.
Imagine having an older client who’s struggling financially and may soon be forced into selling. Let’s also say that, in your professional opinion, there’s no way that this person could qualify for a standard cash-out refinance or even a home-equity line of credit.
Even if your company doesn’t offer reverse mortgages, if you’re familiar with them and know of someone who does offer these products, then with one simple referral you can help a client with a serious problem — and provide a commission for your strategic partner. Of course, the Real Estate Settlement and Procedures Act prohibits you from receiving compensation for referring this client, but you’ll benefit from this transaction because of the inroads you’ve made with your reverse-mortgage specialist.
Let’s say that you meet with a client who’s always dreamed of buying a small home in the countryside and has recently learned of an ideal property for sale. This person has little money to allocate, however, so the client is hoping that you may be able to find a way to make the purchase work.
If you’ve taken the time to learn about the Guaranteed Rural Housing Loan Program’s zero-down, no private mortgage insurance rural housing loan, you can refer this client to a colleague of yours who specializes in that product. The client meets with your partner and, before long, has realized a lifelong dream — and laid the groundwork for you to receive a referral in the future.
Let’s say that you complete a cash-out refinance application for a customer who needs $50,000 for home improvement. Two weeks into the refinance, however, the appraisal comes back reflecting a $50,000 cost-to-cure because the homeowner has already started the work. Now you have to explain to the customer that, unless the work can be finished on its own and paid for with proceeds from the loan, the mortgage most likely will not be closed.
Wouldn’t it be better to refer that customer to a colleague who originates rehabilitation loans than simply expressing regret for the situation? In addition, how damaging could it be to your professional credibility if you didn’t have a viable solution for a homeowner? The FHA 203(k) program could provide such a solution, as could partnering with someone who originates that product.
Finally, let’s say that a client and her husband are interested in purchasing their first single-family home. Although they have a decent amount of income, they have little money for a downpayment.
In discussing their situation, however, you learn that the client is an honorably discharged veteran with full entitlement to VA financing. VA loans may not be something that your company works with, but one quick phone call to a strategic partner can set these customers on their way to homeownership.
In short, whatever the situation may be, familiarizing yourself with a range of products — and a range of specialist partners — can go a long way in helping you build business. The mortgage industry is a small world, one in which strategic partnerships among professionals can help grow everyone’s business, as well as the industry itself.
Rich Leffler is an award-winning mortgage expert, business coach and speaker who excels in customer service, research, origination, training and consulting.
Through his consultancy he instructs courses and assists businesses train their employees to prosper. Leffler regularly lectures on compliance, sales and winning customer-service strategies, and he is available for in-house training, speaking engagements, tutoring, personal coaching and seminars. Reach him at firstname.lastname@example.org.