One of the biggest and most unexpected boosts to my business came from a competitor: E-Loan.
Founded in the late 1990s, they were the first major entity to embrace online mortgage lending.
Their main office in Pleasanton, CA was near my office in the early 2000s, and, for reasons I never understood, I became a major go-to resource for borrowers whose loans E-Loan screwed up.
For a while, it was a veritable tidal wave of business, and I could barely handle it. So, I will forever be thankful for the hubris of a bunch of tech guys thinking they could competently close mortgage loans.
32% of Real Estate Agents Are Pursuing Dual Licensing
I thought of my E-Loan experience when I read this article: Doubling Down: Dual Capacity Lenders Leverage the NAR Settlement.
Per the article, 32% of agents surveyed are currently pursuing dual licensing (to act as both agents and loan officers for clients) and another 42% of agents are considering it.
I not only don’t think this is a threat to JVM’s business, but I actually think it will be a boon for the same reasons E-Loan’s foray into mortgages was a boon.
There is simply far too much to know and understand for agents to effectively represent borrowers.
I should add that it goes the other way too. Loan officers can’t effectively pretend to be real estate agents either (I know, as I played that game years ago and got myself into deep trouble numerous times).
I often mention how about 40% of our business now involves unique products, such as no-ratio loans, DSCR loans, very low-rate CRA loans (for low-income areas), bank statement loans, bridge loans, 3% down no-PMI loans, lender-paid 2-1 buydowns, and down payment assistance loans.
These products require the understanding of hundreds of guidelines and the knowledge of which of dozens of investors (that buy those loans) are the best for a particular borrower.
Too many people think mortgage lending simply requires collecting a W-2 and a paystub and quoting a rate, but that is not even close to the case – and it hasn’t been for years.
I attended a loan pipeline meeting yesterday to hear about the issues that came up over the last week, and here are some of the topics that were addressed in detail:
- Condo master insurance policy issues (very frequent nowadays); 2. FHA spot approvals for non-warrantable condos; 3. Which investors (that buy our loans) will finance non-warrantable condos with litigation issues; 4. Which investors are best for fix-and-flip borrowers; 5. How to add asset-based income on top of rental income to make a DSCR transaction work; 6. When to pivot to no-ratio loans; 7. When to pivot to interest-only loans, and which investors have the best terms for which borrowers; 8. Bridge loans and when to use which of our dozens of options for which borrowers; 9. Which investors will not accept Fannie Mae’s DU findings; 10. How to properly vest in an LLC; 11. Hazard insurance requirements for LLC purchases; and 12. Financing options for a borrower with a $700,000 gift, no verifiable income, and a departing residence.
Those are the issues that surfaced over the last week alone – and each one requires an enormous amount of experience and training to understand – with a full-time focus and a need for continuous training.
There is no way someone juggling “dual licensing” could begin to stay on top of all of that knowledge, and both clients and agents will suffer, as clients will often not obtain optimal financing, and deals will be lost altogether.
Again, we feel no threat whatsoever from agents coming into the mortgage realm, as we think it will actually end up getting us more business in the end. But we’re also certain that clients will be underserved.
I might add that this is not a “rah-rah JVM” blog either, as I know many seasoned loan officers who know every bit as much as JVM does, but they are “seasoned” loan officers focused full-time on mortgage lending.
