Private Lenders: How to Immediately Reduce Mortgage Losses

If you want to immediately reduce your mortgage losses you need to make immediate changes to how you underwrite your deals. As a private lender you face unique challenges because often you are competing with bigger players in the mortgage industry such as B financial institutions with less resources.

Often a mortgage broker or agent will submit a deal to you, you will then leverage the tools that you have to perform due diligence and then rely on an appraisal to ensure that there is sufficient equity in the property being financed to secure your deal. All of this is time and money.

The best way to ensure that you well equipped to close a deal is to empower yourself by knowing as much as possible about the property you are financing and the area that it is located in. Does your application even merit going as far as an appraisal? Is a particular area even of interest to you? This is step one in terms of making the changes necessary to immediately reduce mortgage losses.

Sticking to short term mortgage loans is your next line of defence. As a private mortgage lender, the shorter the mortgage term, the more opportunity you have to get out of a deal where the client may be paying enough to maintain the mortgage out of power of sale, but is too much of a collection issue to be worth keeping on the books.

Next is keeping on top of your portfolio, the areas where your mortgages are financed, and identifying when a property is no longer a good risk for you. This means keeping on top of trends and identifying when a negative shift in the market in a particular area may be in the cards.

Many publications go far to report on overall housing numbers, but you know as well as we do that the housing market can shift from area to area and also as it relates to particular housing types. Condos are a great example; condos are a type of property that, when there is a negative shift in the market in a particular area, are the first to take hit.

Your best line of defence to immediately reduce mortgage losses is to begin to deploy the use of AVMs (Automated Valuation Model) & Property Reports. AVMs enable you to look at a particular property or area to identify if value could be an issue. Looking at an AVM and property report at the application stage and coming up to your client’s annual mortgage renewal will help you see if a property is worth what you think it is. Where existing mortgages are concerned it may reveal an issue that could shift your decision to renew, thus immediately reducing your mortgage losses by mitigating the probability that you have mortgages in your portfolio that have shifted to a higher loan to value than what existed when you initially granted funding.

An AVM may reveal that a particular property or property type in a particular area may not be of interest, before requesting an appraisal and potentially funding something that could represent challenges in the future.

Reducing mortgage losses boils down to knowing more, and in the age of technology knowing more is easy and inexpensive. As the old adage goes, knowledge is power, so now may be a better time than ever to invoke the power of the AVM.

For more about immediately reducing mortgage losses using an AVM and Property Report please contact Purview For Lenders today by calling 1.855.787.8439.

Who Owns the Client Relationship – Broker or Lender?

In the mortgage industry it is a common and contentious issue as far as who owns the client relationship. Brokers work very hard to generate business, absorbing the cost of acquisition and such, but once the deal is done, who owns that client relationship? While some lenders have checks and balances in place to cultivate broker relationships and support their ownership of the client, others don’t and see the client as fair game after the initial deal is funded. Is there a definitive answer to this question? We put that to you. 

In the absence of a broker and lender coming to an agreement regarding who owns the client, the best way for you ensure that your client remains your client after the initial deal is to invest in that relationship. Here is a short list of things that you can do to increase the likelihood that you will retain your client as a lifelong relationship. 

1.      Seek client feedback. After completing a deal with a client consider asking them for feedback on their experience with you. Online tools like Survey Monkey make this far easier and more comfortable for the client. An important question to always ask clients is, on a scale of 1-10, how likely would they be to recommend you to a friend or family member? 1-6 being unlikely, 7 and 8 somewhat likely, 9 and 10 extremely likely. The more 9s and 10s you have, the more likely your client is to not just be a customer but to actually be a promoter of your service. Also, if a client provides negative feedback, ask them what you could have done differently to learn what may have worked better for them.

2.      Listen to your client. When we say listen to your client, really listen to them – not just their words but also their tone and manner. This is huge. When listening to them, repeat back to them what they asked you as part of your answer to ensure that you really understand what they are asking you.

3.      Action feedback. You may not be able to action all feedback, since, as a broker, you are largely dependent on 3^rd parties and the levels of service they provide (like lawyers, appraisers and lenders), but actioning the feedback that you are able to action goes a really long way and shows your customers that you care what they think.

4.      Leverage new ways to communicate and stay connected. While it is a long standing tool to remember things like your clients’ birthdays and anniversaries – the old snail mail isn’t really as effective in today’s fast moving world of technology. Leveraging social sites like Facebook is a great way to be connected to your client and have a constant portal to reach out to them.

5.      Be consistent. The only way to establish recognition is consistency. Come up with something that you can release consistently: a monthly newsletter, monthly tips or even ramp up the frequency to weekly if you have the resources to do so. This will ensure that your client always remembers you are there.

6.      Give and take. Relationships are a two-way street. Do not use the privilege of being connected to them to spam them with sales materials and current rates. Remember that you want to be viewed as a trusted advisor, not a rate shopper. This means striking the balance between being a solutionist and providing content that solves problems and also promoting new products and services. 

Owning the customer relationship means building loyalty and trust. Once loyalty is established ownership becomes much less of an issue because your clients will prefer you as opposed to being forced to deal with you.

For more information about how you can build loyalty and trust to effectively obtain ownership of your clients please visit www.purview.ca/brokers or call 1-855-787-8439.