In recent years, the Gen X (born 1961-80)) and Gen Y (1980-2000) generations have been closely analyzed for their distinct characteristics.

For example, a recent Time Magazine article reviewed the Gen Y group, also known as the Millennials, who range in age from early teens to early 30s. Obviously, a large percentage of them are in the home purchase prospect category.

The article referred to Millennials as the “me, me, me generation.” They were described as “entitled” and “narcissistic,” as well as “optimistic” and “reserved.” They are also considered the largest age group in American history.

Another article stressed that Millennials are better savers than previous generations. They want to avoid the financial setbacks that many of their parents experienced.

Marketing

Originators have had to adapt their marketing strategies to meet the changing interests of various niches. It’s clear that social media is key to attracting Millennials. A Forrester Research study reported that 91 percent of Millennials are frequent Internet users (2011 stat) and spend a great deal of time online:

*laptops—70% (of Millennials are frequent users)

*smart phones- 59%

*tablets—35%

While they may still respond to direct mail and other print materials, it’s clear that Millennials relate best to Facebook, twitter and LinkedIn messages.

The content is also important. What are the best messages to attract this important group? Based on some of the research, appropriate themes could include:
*A Mandatory Education—They are cautious when making major decisions and would appreciate knowing that you will take the time to guide them regarding the steps involved with a home purchase.

*The Status Factor—Millennials like to feel special, so underscoring the excitement and benefits of being a first-time homeowner could be well received.

*The Financial Side—Based on their penchant for savings and overall good credit record, be sure to explain the GFE and emphasize that you will provide them with the best possible deal.

*Extra Service—As the Time article mentioned, many Millennials feel they are entitled and deserve the best treatment. So it makes sense to promote that you are willing to meet customers at their home or office, provide weekly status updates, and offer a series of “going the extra mile” services.

Obviously, these are generalizations and there is no single approach to reach this audience. However, this brief overview demonstrates the importance of understanding the best options for communicating with them.

Continuing Education

In order to succeed in earning the Millennials’ business, you must conduct some basic research. For example:

*Do an Internet search to find articles and other information about the Millennials.

*Talk to them. Get first-hand insights by asking how they make major purchases and what they look for in a salesperson (originator).

*Consult other professionals. You may work with a Realtor, CPA, builder or other professionals who have Millennial clients. Ask for their suggestions and also discuss the potential of sharing referrals.

*Join groups. Your market may have business or other groups that include a large number of Millennials. Attending meetings and other gatherings will give you another opportunity to learn more.

It may take some time before you’re able to develop a significant Millennial customer base, but the investment should be worthwhile. You could eventually develop a steady stream of referrals from this expanding group of prospects; which is especially important if you plan to continue originating for the foreseeable future.

David Robinson is Associate Editor of Broker Banker.

Is the recent rate hike temporary or is it a trend that will continue? I’m Joel Greene and this is the Broker Banker mortgage insider.

During the past month, mortgage rates have risen sharply, moving from about 3.40 percent to about 3.90 percent, according to Bankrate.

Although average U.S. rates on fixed mortgages jumped to their highest levels in a year, rates remain low by historical standards.

Is this is a short term spike or a trend that we need to concern ourselves with moving forward? Let us know what you think.

Is the refi party over?
It’s certainly winding down, according to the Mortgage Bankers Association, which reported a decline in mortgage applications.

According to MBA’s vice president of research and economics- Mike Fratantoni, “This refinancing boom that has been going since early 2009 has allowed the best credit borrowers to refinance a couple of times. As rates tick above those levels, that group of borrowers is no longer going to have an incentive to refinance.”

But not everyone agrees. Bob Walters, chief economist at Quicken Loans thinks the Fed will hold strong to make sure the economy is on solid footing through 2013, but going beyond that, it starts to get a little fuzzy. The market’s starting to price some of that uncertainty in.
Are you seeing a drop in your refinance applications? How is your production being affected?

Let us know what topics you would like discussed or if you would like to be featured on the Broker Banker mortgage insider show. Email us your questions and make sure to like us on Facebook. http://facebook.com/brokerbanker

I’m Joel Greene and thank you for watching.

An increasing number of loan originators have incorporated social media strategies as part of their comprehensive marketing programs.

Of course, Facebook is the most popular and effective method to expand your database of “friends,” many of whom could eventually become customers.

“If someone is not utilizing the benefits of Facebook to grow their business, then they are missing out on an opportunity to take advantage of a platform that is free and allows one to engage with an unlimited audience of people in their industry,” said Michael Deery, Citywide Financial Corp., San Diego, Calif.

Getting Personal

Facebook is a proven way to strengthen relationships with personal and professional contacts, and can serve as a short- and long-term business builder. Joe Bigelman considers it a valuable piece of his overall marketing strategy. “It is an ideal opportunity to let friends and others know the business you are in,” said Bigelman, John Adams Mortgage in Troy, Mich. “Plus, it gives customers and prospects a chance to see the personal side.”

Louise Thaxton, Fairway Independent Mortgage Corporation, with several offices in central Louisiana, uses her Facebook profile to highlight different aspects of her personal and professional lives. “My Facebook pages show the real me—as a loan originator, mother and grandmother, with pictures of families, as well as my team,” she explained. “It also shows my commitment to our military clients, and that resonates with the military and the Realtors who are involved as well.”

Whenever possible, it is important to interact with your new friends. “When someone adds you to their list of connections, or ‘friends’ you, don’t just accept and ignore – send them a reply!” said Chip Cummings, Northwind International Corp., Grand Rapids Mich.

Cummings sends a personal note or post to every person who connects with him on Facebook and LinkedIn. “I try to reference something in their personal profile (such as employment, location, experience or mutual friend) in order to solidify the connection,” he said. “I make sure to ‘like’ or comment on people’s posts on a regular basis, and add to the conversation in a non-confrontational and enjoyable manner. These posts will be seen by others associated with that contact, resulting in higher personal visibility – and additional requests to connect.”

Sharing Resources

Facebook offers an ideal opportunity to share resources and other information that benefit both potential customers as well as referral partners. For example Beata Bukowski posts articles that may be of interest to her Facebook friends. “I post articles on my Facebook page and LinkedIn, which has been very effective,” said Bukowski, Ultimate Rate Mortgage, Chicago. “The articles are usually about the latest economic news, housing reports and mortgage programs. I’ve found the key is to make them informative and helpful.”

Bukowski realizes that sharing such resources helps her realize a long-term benefit. “People have responded by e-mailing me with their questions. Rather than generate immediate business from this, it has helped create greater visibility for me.”

Highlighting Your Friends

Most people like to be recognized for their achievements and special milestones and one way to do that is displaying their photos.  For example, Thaxton features photos of her customers who recently closed their loan. “We ask if we can take their photo at the closing table and then add them to my Facebook page,” she said. “They love it.”

Tagging is another option. This involves being friends with people on Facebook, clicking on a specific picture taken at a real estate office, borrower’s home, special event or elsewhere, and typing their name in to “tag” them. Once tagged, their photos and a brief description then appear on the person’s own Facebook page, which helps generate more visibility for them and for you. “Part of your success in the world of social media, and especially Facebook, is viral content and tagging,” said Cummings. “This enables others who would not normally see your posts or activity to get involved with what you are doing. I also use tags on names in posts (such as @ChipCummings), which creates a direct post and link to that person’s page. I’ll do the same with photos, and when the posts or photos are shared, then the tags travel with them – giving you additional exposure. If I have a really interesting photo or link, I will use a ‘sponsored’ link to a specific targeted demographic group such as ‘real estate agents in Houston.’”

Cummings explained that sponsoring a link can be done for “just pennies” through the ads section, and allows you to have posts show up on thousands of non-friend pages, thereby creating extra visibility. Located on the left side under “Pages,” the “Create Ad” link allows you to create mini ads, promote specific posts or pages, or even sponsor stories. “This is especially powerful when promoting events or online promos, and you can track specific views and click results for just that post.”

The Business Page

More originators are also developing a business page, in addition to their personal Facebook profile. Jeff Lake considers it an ideal way to expand his social media network, which also helps reinforce his overall brand as a successful business professional and involved community leader. “A business page (compared to a personal page) on Facebook helps present a strong, positive business image and makes a distinction between our more personal information, which may not be as relevant to old customers and prospects,” said Lake, Guaranteed Rate, Chicago.

The business page provides Lake with better control over the content on his Facebook profile. “With personal pages you can’t always control what everyone is posting to your pages or sites. We’ve found that it is best to keep your personal pages private to your friends and family.” Of course, the business page provides a more appropriate forum to highlight interesting mortgage or financial-related information. “I’m able to include posts that wouldn’t necessarily be of as much interest to my friends and family on my personal sites.”

Lake also looks for opportunities to include personal items on his business page. “If I have something ‘brand-worthy’ that’s personal – like a picture of me with one of my children at a ball game or holding a grandchild or something like that – then I can just share it from the personal to the business page. This gives me a way to share any personal news when I think it is part of my brand as a family-oriented individual and would be interesting to my customers and connections.”

Deery has created a business page especially aimed at Realtors called “Free Resources for CA Real Estate Agents.” (https://www.facebook.com/FreeResourcesForRealEstateAgents?filter=1 .) “I share lots of great resources, marketing materials, sales tips and other content that is relevant, unique and helpful to grow a Realtor’s business, which in turn keeps people tuned in,” said Deery.  “Of course, I market myself and my business too.”

Deery stressed that it takes time to develop such a tailored Facebook section.  “I have had this page since November 2010 when I had less than 50 people on there,” he said. “Like most things, it was a struggle to get it off the ground at the beginning, but I saw the potential. Consistency is key, as I like to post on my page at least once or twice a day. I have also started writing articles for the real estate section in our local newspaper, so being able to post these on my page is giving me a lot more credibility.”

Deery and other originators definitely have seen the benefits of Facebook exposure. “I am getting at least three leads a day from agents who I have met through this (Realtors) page and I am closing at least six transactions a month as a result,” noted Deery. “My goal is to get to at least eight leads a day in the next year or so, as my page and my credibility continue to grow.”

If you haven’t yet started a Facebook page, now is an ideal time to test different techniques. Look at what other loan originators are doing and create your own distinctive style.

David Robinson is Associate Editor of Broker Banker.

May 29, 2013

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CONSUMER FINANCIAL PROTECTION BUREAU FINALIZES AMENDMENTS TO ABILITY-TO-REPAY RULE

Rules To Facilitate Lending by Certain Small Creditors and Community Lenders

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) finalized rules to facilitate access to credit by creating specific exemptions and modifications to the CFPB’s Ability-to-Repay rule for small creditors, community development lenders, and housing stabilization programs. The amendments also revised rules on how to calculate loan origination compensation for certain purposes. Today’s final rule amends the CFPB’s Ability-to-Repay rule, which was finalized in January of this year.

“Our Ability-to-Repay rule was crafted to promote responsible lending practices,” said CFPB Director Richard Cordray. “Today’s amendments embody our efforts to make reasonable changes to the rule in order to foster access to responsible credit for consumers.”

The CFPB finalized its Ability-to-Repay rule on January 10, 2013. The Ability-to-Repay rule established that most new mortgages must comply with basic requirements that protect consumers from taking on loans they do not have the financial means to pay back. Lenders are presumed to have complied with the Ability-to-Repay rule if they issue “Qualified Mortgages” (QMs). These loans must meet certain requirements including prohibitions or limitations on the risky features that harmed consumers in the recent mortgage crisis. If a lender makes a Qualified Mortgage, consumers have greater assurance that they can pay back the loan.

The CFPB proposed the amendments finalized today in conjunction with the adoption of the Ability-to-Repay rule. The CFPB solicited public input on the proposal before releasing today’s final rules.

Today’s amendments:

• Exempt certain nonprofit creditors: The final rule exempts from Ability-to-Repay rules certain nonprofit and community-based lenders that work to help low- and moderate-income consumers obtain affordable housing. Among other conditions, the exemptions generally apply to designated categories of community development lenders and to nonprofits that make no more than 200 loans per year and lend only to low- and moderate-income consumers. Similarly, mortgage loans made by or through a housing finance agency or through certain homeownership stabilization and foreclosure prevention programs are exempted from the Ability-to-Repay rules.

• Facilitate lending by certain small creditors: This amendment makes several adjustments to the Ability-to-Repay rule in order to facilitate lending by small creditors, including community banks and credit unions that have less than $2 billion in assets and each year make 500 or fewer first-lien mortgages, as defined in the rule. First, the rule generally extends Qualified Mortgage status to certain loans that these creditors hold in their own portfolios even if the consumers’ debt-to-income ratio exceeds 43 percent. Second, the final rule provides a two-year transition period during which small lenders can make balloon loans under certain conditions and those loans will meet the definition of Qualified Mortgages. The Bureau expects to continue to study issues concerning access to credit and balloon lending by small creditors. Third, the final rule allows small creditors to charge a higher annual percentage rate for certain first-lien Qualified Mortgages while maintaining a safe harbor for the Ability-to-Repay requirements.

• Establish how to calculate loan origination compensation: The Dodd-Frank Act mandates that Qualified Mortgages have limited points and fees, and that compensation paid to loan originators, such as loan officers and brokers, is included in points and fees.  This cap ensures that lenders offering Qualified Mortgages do not charge excessive points and fees. Today’s amendment provides certain exceptions to this Dodd-Frank requirement that loan originator compensation be included in the total permissible points and fees for both Qualified Mortgages and high-cost loans. Under the revised rule, the compensation paid by a mortgage broker to a loan originator employee or paid by a lender to a loan originator employee does not count towards the points and fees threshold. This amendment does not change the January 2013 final rule under which compensation paid by a creditor to a mortgage broker must be included in points and fees, in addition to any origination charges paid by a consumer to a creditor.

The amendments will take effect with the Ability-to-Repay rule on January 10, 2014.

The CFPB also separately issued a rule today delaying the effective date of a provision in a rule issued in January 2013. That rule implemented a Dodd-Frank Act amendment prohibiting creditors from financing certain credit insurance premiums in connection with certain mortgage loans. The rule provision would have taken effect on June 1, but on May 10, 2013, the CFPB issued a proposal to suspend the June 1 effective date while it sought comment on clarifications to how the Dodd-Frank Act prohibition applies to credit insurance products with certain periodic payment features. Under the rule issued today, the prohibition will take effect on January 10, 2014, along with other regulations implementing other Dodd-Frank Act mortgage provisions. However, the CFPB plans to seek comment on the appropriate effective date when it issues the proposed credit insurance clarifications for public comment.

The CFPB will continue to work with industry and consumers for a smooth transition to the new rules.

A copy of the amendments to the Ability-to-Repay rule is available at: http://files.consumerfinance.gov/f/201305_cfpb_final-rule_atr-concurrent-final-rule.pdf

A copy of the rule issued on credit insurance premiums is available at: http://files.consumerfinance.gov/f/201305_cfpb_final-rule_credit-insurance-effective-date-delay-final-rule-for-ofr-submission.pdf

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov.

]]> http://brokerbanker.com/consumer-financial-protection-bureau-finalizes-amendments-to-ability-to-repay-rule/feed 0 http://brokerbanker.com/connecting-with-realtors http://brokerbanker.com/connecting-with-realtors#comments Thu, 30 May 2013 07:34:00 +0000 brokerbanker http://brokerbanker.com/?p=1189 (One in an ongoing series of articles highlighting strategies used to develop niche markets.)

Realtors are one of the most obvious niches for loan originators. While some would prefer to work with other professionals, many originators have established a strong network with both veteran and newer real estate agents.

Loan originators provide agents with educational materials, share marketing strategies and look for other ways to develop long-term, business building relationships.

Simple, Yet Effective

There are basic marketing elements that most originators have either tried or at least added to their “to do” list. It may mean just implementing a “common sense” strategy that you have somehow overlooked or making a slight variation on a proven action.

Providing Leads–One of the most essential, often ignored ways to add to your network is to provide agents with a lead, rather than only asking for referrals. “I’ve found that one of the most effective things you can do is to give an agent a good lead of a borrower who needs help finding or selling their home,” said Sam Rosenblatt, Academy Mortgage, Baltimore, Md. “I’m surprised that more originators don’t do this.”

Rosenblatt looks for opportunities to share leads with agents he would like to work with as well as those with whom he’s already done business. “Of course, when a client asks me for a referral, I’ll give them the name of an agent in their area and then let the agent know I’ve done so,” he said. “In other instances, I’ll ask the borrower if they’re happy with their current agent and if they express dissatisfaction, I’ll offer them a few referrals. This has worked very well for me.”

While that seems overly simplistic, the point is that Rosenblatt is proactive about sharing referrals. He makes a concerted effort to find leads that will be appropriate for specific real estate agents.

Personal Contact— Sending personal e-mails, rather than mass broadcast notices is a technique that has helped Laura Sosa-Rocha generate a loyal Realtor following. “I send agents a regular e-mail update that I call ‘Touching Base,’ which is a brief notice about rates, the market, or an update on a lead they gave me,” said Sosa-Rocha, the Truth and Lending Mortgage Team at Heritage Bank of the South, Atlanta, Ga. “In addition, I’ll often mention that I’m working that weekend if they need to pre-approve someone.  The key is that it seems more personal because I am not using an automatic program. I also know that having a subject line such as ‘Touching Base’ is more likely to be read and not get caught in a spam filter than if it was called ‘Interest Rates,’ ‘Market News’ or something similar.”

Sosa-Rocha noted that this type of personal communication takes more time but is usually more productive. “I may send out 20 notices one week and 25 the next. Adding the personal touch takes longer, but I get a great response. It’s simple, free and it works.”

Providing Value-Added Support

Sharing Resources—One of the best methods to enhance your Realtor relationships is offering special resources that will help them be more successful.  For example, in addition to having regular lunches with Realtors to discuss mutual areas of interest, John Weller, Megastar Financial in Denver, Colo., has shared the concepts featured in the 7 Minute Difference and the accompanying planner. “I realized that many of my real estate partners could benefit from the specific business planning and priority management,” he said. “At my business planning lunches, I explain how the planner helped me and how it might help them. I even share copies of the book.”

A Different Open House–Amanda Sessa, SWBC Mortgage, Boulder, Colo., developed a variation on the traditional open house caravan. “We rented a bus with couches and saddles for chairs, provided refreshments and taken tours of condo units and homes,” she said. “It has given us a chance to highlight several different projects and to emphasize what we can do for the agents.”

She noted that the caravans (conducted with another SWBC originator) have been effective and worth the expense, which they share with the Realtors. “They have helped strengthen relationships with new and existing agents, and we always got a couple of deals after each one.”

Teaching Classes– David Kuiper, First Place Bank, Holland, Mich., expanded his “lunch and learn” sessions for real estate agents to include more extensive on-site training. “In addition to teaching new member orientation at the Realtor association level, I’ve found it effective take it to the individual office level,” he explained. “I’m currently teaching a monthly class with one office, including such topics as Mortgage Financing 101, Business Planning and Measurement Tools, Engaging Clients and Database Management.”

Still More Ideas

Loan originators have incorporated a variety of other strategies in their marketing programs. For example:

*Amanda Sessa also has offered movie nights for Realtors. She, another originator in her office and an insurance agent rented the theater and provided their guests with refreshments prior to the show.

*Brooks Grasso, Fulton Mortgage Company, Lutherville, Md., developed the First time Homebuyer Programs Cheat sheet that is laminated and distributed to his Realtor partners. The guide details specific loan programs, amounts allowed, use of funds, income limits and how to apply.

*Larry Montani’s (First Interstate Financial Corp., Shrewsbury, N.J.) open house spreadsheet strategy has helped him foster stronger ties with key Realtors and generate solid business. Montani has prepared spreadsheets detailing various loan program options, along with fliers and sign-in sheets for agents holding open houses.

Realtors will continue to be a major source of referrals for many originators. By mixing the basic with more creative marketing strategies, you should have an even better chance of distinguishing yourself from the competition.

David Robinson is Associate Editor of Broker Banker.

Success is largely determined by people’s hard work, but it is also equally based on their choices. I know many people who work hard but make bad choices. It’s amazing how many of them think they “deserve” to be more successful because they feel like they’ve worked so hard. And conversely, I don’t know very many, if any, successful people who have made good choices but didn’t work hard.

Working hard is only the first part of success. Making good choices is the second part. It truly takes both to achieve success at whatever you do.

I knew someone who was constantly lamenting her “bad luck.” Her personal life was a shambles. She was almost 30 and hadn’t completed college, so she wasn’t happy with the various jobs that she had over the years and, as a result, constantly had money problems. She often blamed situations or other people for the various predicaments that she was in. However, the glaringly obvious truth was that although she worked fairly hard, she continually made horrible choices. One day she would complain about money, and the next day she’d buy something totally extravagant and completely unnecessary. The next week she’d complain about not being able to get a good job, while showing up to work an hour late for personal reasons (which happened regularly).

From time to time, she’d talk to me about her issues, and I’d point out the choices she made that led to the current problem at hand. Each time she’d pay lip service to acknowledging the connection, but the truth is, she never took ownership for the real problem: her bad choices. She once lamented, “Why me, why me? I deserve better!”

She wasn’t really interested in my opinion so I kept quiet, but what I wanted to tell her was this: “Everyone feels like they ‘deserve better’ at some point in their life. Get over it, stop complaining, and start really doing something about it. Work hard and make better choices!”

I’ve had the opportunity during my career to work with thousands of people who have experienced varying degrees of success in their lives. One of the recurring themes I see with these people is that they plan their work and work their plan. That is, they think through their choices, make the best ones they can with the information they have, and then work hard to carry those choices out.

As the Founder of an international business, I know that the choices I make are sometimes pretty important to the business. The decisions I make can impact hundreds of employees, franchise owners, and associates as well as tens of thousands of clients around the world. Years ago, I was talking to a friend about some tough decisions I had to make and my concerns about them. He gave me some great advice. He said: “Not every decision you make has to be a good one. Just make sure that you make more good ones than bad ones, and when you make a bad one, minimize the impact by fixing it quickly.”

Wow! This was great advice. It’s advice that squarely hits the point about working hard and making good choices. Not every choice you make has to be on the mark. However, enough of them do in order for you to get the kind of results you want. Some of my biggest lessons in business have come from my losses, not my successes. Generally, neither had much to do with luck, but instead, with the choices I made or the commitment I gave to the project.

Not long ago, I was talking to someone I’ve known for years about the growth of my business and some other personal goals I’ve recently met, and he said: “Man, you’re lucky. It must be nice.”

I responded to him by saying, “Yes, I’m lucky; let me tell you the secret to my luck…

“First, I went to college for 10 years. During that time, I started my own business and worked really long hours for almost three decades. Along the way, I mortgaged my house a couple times for the business, and I wrote 17 books. You, too, can have this kind of luck. All you need to do is apply this kind of effort to whatever you do, and you can be just as lucky.”

He laughed and said, “Okay, I get it!” Did he really get it though? I don’t think so, because he hasn’t changed his behavior or started making different choices. If being successful was easy, everyone would have the success they think they deserve.

For the first 20 years of my journey, I didn’t feel very lucky or incredibly successful. It took time, effort, hard work and fairly decent choices before I felt any modicum of success. The problem is that many people want to go from point A to point Z and bypass all the challenges in between. They work hard; therefore, they “deserve” the success they want.

Success is not an entitlement; it’s not a “right.” We all have the right to pursue success, but that’s it. Success is most often earned, not handed over because we feel entitled.

By Ivan Misner

Called the “father of modern networking” by CNN, Dr. Ivan Misner is a New York Times bestselling author.  He is the Founder and Chairman of BNI (www.BNI.com), the world’s largest business networking organization.  His book, Networking Like a Pro, can be viewed at www.IvanMisner.com.  Dr. Misner is also the Sr. Partner for the Referral Institute (www.ReferralInstitue.com), an international referral training company.