48 Year Low for Homeownership But We Are Looking Good?
Don't TRID On Me!

Change is Hard

As you all know real estate and real estate finance is an OLD business. The average age on both sides is deep in the 50’s. We fight hard against any change the older we get, preserving antiquated models but hoping for the impossible to bail us out. We all live in fear of someone actually executing the things we know we should do; Someone taking to decide that this model we work in is broken and then take the time and risk to attempt a fix. New ideas and energy has been spent the last 20 years to find those solutions and for the most part they have flamed out like roman candles.

There are no Apples or Googles that are category killers and don’t think there can be in our industry. It is so personal and so local that only chunks of the country can be converted to a model.  What also makes many companies attractive at one stage or locale would not carry over into the next size or state.  It will be interesting to see how some of the new roll ups due as new venture money tries to slap together regional companies and diverse models into national franchises for cost savings and multiples. Spinning technology and peer to peer personal loans as deserving of 15x multiples will be a hard sell and the short sellers will be waiting in the wings. As we can see from Loan Depot’s pulled IPO, the spin can only go so far. It’s not too hard to find someone from outside the industry to invest unknowingly but it takes a lot of luck and timing to get enough to make it successful or to get the public to bail you out stock wise.

For the culmination of old meets new we have the TRID zone. The people have spoken to the feds –the un-happy people that is (as we can see from the complaint portal). They regret the whole process of getting a loan and want a very complicated process made simple. Knowing what they know now they would read the documents more completely if presented better to them and ask a lot more questions. But they felt very rushed at the end and want clarity earlier. Geez what else in our lives could we “fix” with those revisionist views and no input from both sides?

Here is what the borrower forgets. They were in the nervous euphoria of buying a home. They were going 100 directions and weren’t thinking straight. They said one thing, then changed their mind. They forget to get the docs in on time. They asked an uncle mid process who wanted them to take a different program. What they said they had in the bank wasn’t what showed on the statements and they forget about the money paid back from a friend.

Fortunately some of the best loan officers and their realtor partners out there have anticipated their client’s state of minds and have taken control of their customer at first meeting. They have instilled confidence in the borrower that if they do what their team tells them this process will work. They actually fear/respect and don’t want to disappoint their guides in this process. Sadly this is not the norm in mortgage banking and why we have the reputation we do. We know better and should interact with our clients that way. You can listen and adapt your advice for their situation; but be perfectly clear, you are now in charge because you have done a lot more mortgage transactions and will be more right than they will be if you have truly listened to them and asked all the right questions then plugged them into your vast database of experiences.

It is made very clear to the borrower of the documents needed –and yes they will ask for things they may not need but better now than later. They realize if they don’t get it to them on time then the dates are off and the deposit is at risk. The realtor tees the borrower up for the loan officer’s tough love approach, so that they are prepared to listen and understand they will lose the house if they don’t do everything the LO says, and early!

I have seen this approach work with the highest and lowest of income classes, levels of sophistication and of age/experience. So every “that won’t work with my clientele or market” has been disproven many times over.  

Some of our biggest pain right now comes from the title/attorney side. Many of these folks are no spring chickens either. Change is hard. Many of them are boiled frogs still working independently because they don’t want to have to change by listening to partners. They haven’t adjusted their flows or technology to meet the new needs of the process. We have just moved the closing date a few days up and instead of scrambling the day before closing we are scrambling four days before without a net. This won’t end well in too many cases and it doesn’t have to be like that.  

So the only thing we have changed is given the borrowers the docs 4-10 days earlier after a cluster rush of confusion and told them you can make changes now if you dare to read all this but if you change anything your closing is off like a bad hostage case—with the brokers and seller breathing down their neck and deposit at risk.

Changing the scripts from the beginning for all parties involved and reminding the borrowers of what their obligation is per CFPB is essential to make this new flow work. The longer periods to close in the end will only reside with those doing it the old way. But if you adopt the new flow and only work with customers who do as well; you will have a competitive advantage.  Because loans like surgeries can be done faster, but should they.

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