As brokers, all of us sell the same stuff and whoever can make the borrower comfortable wins. Basically, it is all about how you open a loan, not how you close one several times over because the borrower happens to read the Sunday paper and spots a lower rated loan on offer.
My philosophy is simple, yet unique in its approach. The mortgage broker who can get the deal done at a competitive rate usually gets the deal and the commission. Anyone can get any conforming rate anyone else can get. Conforming loan success is a matter of how little you are willing to work for to undercut your competition.
Doing sub prime loans will be easier for you, but you will have to work more to qualify your borrower. But is it worth it? You bet it is!
In the sub prime band, much of that same strategy can work. There is a very important twist though. Each sub prime loan has its own unique problems that must be addressed. I teach all of my brokers to find sub prime lenders that offer you a truly unique advantage over your competition. Sub prime borrowers are far more grateful than conforming ones, in my humble opinion. If you have 10 sub prime lenders offering the same rate on a 2/28 ARM, making 1 YSP, chances are your competition has the same lenders? So what sets you apart? What if you could find a lender that would do the loan for 1/2% less AND still pay you 1 YSP IF you submit a full package to the lender? Now you have a solid advantage.
If you want to have an unbeatable bag of tricks, do your homework first and find lenders that fill very difficult niches that most brokers do not want to do or simply don’t think can be done. Advertise those programs and you will get deals.
Such as a lender that offers a free point at par for simply submitting an appraisal with the package. Or a lender that offers a 1/4% reduction in rate for purchases over 75% LTV! Yes - over 75% LTV. Or a lender who will treat an s/e borrower with less than 2 years of s/e as a full doc. borrower! Or a lender who offers a 107% purchase/refinance at rates under 8%, 30-year fixed, no MI, no escrows and at scores down to 660!
Don’t worry about what your competition can do - be worried about what you can’t do because you do not seek out new lenders with programs to do what you have been told or thought couldn’t be done.
Just some thoughts that have kept many brokers one step ahead of the competition. Many mortgage brokers turn away new lender reps because they do not want to hear the same stuff. I have never been so busy that I could not listen for 10 minutes to information that I could profit from.
