Becca Summers, based in Provo, Utah Keller Williams agent, generally does not include Wells Fargo on the list of lender recommendations she gives to clients. However, when mortgage rates started to rise in the spring, Summers encouraged his clients to take advantage of the bank’s mortgage. lock rate product.
“Wells Fargo was doing a program where they would lock the rate indefinitely, so I switched three of my clients from the builder lender to Wells Fargo because they were able to lock in March when the rates were still in the range of 4.0%, versus closing their mortgage now that their homes are finally complete and rates are around 7.0%,” Summers said.
Looking back, Summers is glad she encouraged her buyers to swap lenders. Yes, it saved his clients a good chunk of change, but the move paid off in another unexpected way.
“The builder’s real estate agent switched mid-deal, so things got a bit mixed up and no one updated client records to reflect the change in lender,” she explains. “So, about two weeks before the scheduled close, the builder contacted me and said, ‘The loan officer on your client’s file has been terminated and we’re assigning a new one.’ there, my client’s rate had been locked in for months, but if we hadn’t switched lenders, his monthly mortgage payment would have skyrocketed and who knows what would have happened to the transaction.”
Successful transactions are increasingly difficult to obtain due to reduced demand from buyers caused by rising mortgage rates, inflation and a high level of volatility in the stock market. In turn, real estate agents do everything they can to ensure that they bring their clients to the home of their choice. However, this largely depends on the buyer’s lender.
“This partnership is everything,” said Amy Breach, a Seattle-based Keller Williams agent. “The lender and LO can make or break the transaction.”
But some of those partnerships are in upheaval as the mortgage industry reckon with the slowing housing market. In 2019, before the start of the COVID-19 pandemic, there were 263 494 LOaccording to a mortgage data technology company InGenius. Due to the historic refinance boom and massive uptick in demand from homebuyers, the number of LOs nationwide soared to 353,119 in 2021, but as of July 15 this year, that number had fallen back. at 276,837.
Garth Graham, Senior Partner and Director of M&A Activities for the Stratmor Groupplans for LO headcount to return to 2019 numbers.
“About 80% of the volume in our industry is done by about 40% LOs,” Graham told HousingWire in November. “And so the bottom 20% of the volume [handled by 60% of LOs] this is the part that has not yet appeared in [the layoff] more data.
Problem in partnership heaven
“It’s hard right now to see so many people in our industry losing their jobs,” said Fahad Janvekar, LO at Fairway Independent Mortgagesaid.
Although Janvekar feels safe from chaos due to a 100% commission-based compensation structure, he still has his concerns.
“Operations staff, like processors and underwriters, are completely dependent on sellers to generate their work, so if deals don’t materialize, it’s not good for anyone,” he said. “But my point of view is not that I don’t worry about my role right now. If my numbers are dropping as the market slows or are consistently very low, I should really start to worry.
In 2022 alone, almost all major mortgage lenders have laid off a significant portion of their staff. Mortgage processors, underwriters and other support staff have typically been among the first to be cut. Tens of thousands of people have been laid off in 2022, and with production far from the highs seen in 2020 and 2021, another 150,000 jobs in the industry could be lost next year.
For agents, who often work as hard to cultivate a strong relationship with trusted lenders and LOs as they do with customers in their CRM, the upheaval in the lending space can be incredibly frustrating – and it makes them wary about it. idea of working with unknown LOs. , lenders or startups.
“Anytime it’s my buyers who bring a lender to the table, that I don’t know, I will have questions for that lender,” Breach said. “Ultimately, I’m here to be a guide and advocate for my buyer, so I’m going to make sure I go out and talk to those lenders through an interview process, and then I’m going to provide that feedback to my client and let him make the decision.”
While Summers said she’s always willing to work with any lender the buyer brings to the deal, she feels things always run smoother and more transparently when she gets to work with them. his preferred LO and lender.
“Last month, I closed a deal with a first-time buyer and then asked him what he thought of the process. He said it was a lot easier than he had imagined and the officer in charge said, “Well, you had the ‘Dream Team’ working for you,” Summers said. “When we work together, the process for my clients is beautiful, smooth and easy, but that’s because the lender and I work so well together and have resolved any issues that arose before my client even knew about it. there was a problem.”
Although Summers has her favorite LO, she tries to make recommendations based on which suits the client best.
“I have an LO who does portfolio loans that only his company does and he’s a great first-time home buyer, no lending money,” Summers said. “And then for my buyers who may have credit issues, I have another lender that I work with because he’s really good at helping the buyer through more difficult situations to get them to their goal. ultimate to buy a house and then I have another LO who is great with really technical transactions and making sure every little detail is in line.
Raleigh-based Andrew Wilson eXp Real Estate agent who just started practicing real estate two months ago, was lucky enough to have access to a list of preferred lenders pre-approved by his team leader, but after coming to terms with an LO no not listed, he took a chance and recommended her to some of his clients. For Wilson, LO seemed to fit the clients, not because of the type of lending it specializes in, but because of its personality.
“I was working with a personal friend who was a first-time home buyer,” Wilson explained. “I had really enjoyed talking with the LO on the phone, and I just thought she and my clients were going to click and I was right.”
Stand out from the crowd
But what sets an LO or lender apart from an agent and what motivates them to add it to their list of recommendations?
“Number one is communication for sure,” Racine, Wisconsin-based Marcia Ricchio RE/MAX agent, said. “Whether it’s good, bad or ugly, keeping me informed is essential.”
For Anne-Marie Wurzel, a Mainframe real estate agent based in Orlando, Florida, the ideal standard of communication with his lender is weekly check-in calls to discuss all ongoing transactions.
“I should never have to wonder what’s going on with my transactions, and with my preferred lenders, I never have to because we communicate about them at least once a week,” Wurzel said.
“Some of these lenders only work Monday to Friday 8am to 5pm and then they’re done,” Mandy Nichols, a DFW based BrixStone Real Estate agent, said. “If you work with one of these lenders and need someone on nights or weekends, you might as well say goodbye to a lot of offers, especially earlier this year when the market was crazy.”
Nichols said one of her favorite LOs to work with even got calls from her while on vacation in Cancun.
“Even if it’s 9 o’clock at night, he’ll find a way to send me a pre-approval letter,” she said.
In addition to the lack of communication, agents said they are wary of lenders who offer far lower rates than the competition, as some lenders struggle to generate business through lower purchase volume and lower volume of refinancing essentially non-existent. Officers said these lenders may try to buy business in order to keep their business going.
“If you see big differences in rates between lenders, sometimes it’s a lender trying to buy business because they’re losing money and struggling to stay afloat, so that’s another big red flag for me,” Wurzel said. “If the rate looks too good to be true, it probably is. I mean you could close, or the lender could go bankrupt before your client hits the closing table and that’s just not worth no risk for me.
As an agent with only two years in the real estate industryJenny Vergos, who is based in Memphis at Marx-Bensdorfsaid there had been trial and error in finding OL which she was sure to recommend to customers.
“Most of the buyers who come to me asking for a lender referral are first-time homebuyers,” she said. “I had an LO that had done a good job with some personal transactions a few years ago, and I recommended her to my niece, who was a first-time buyer. My niece is very detail oriented and wanted to know everything that was going on with the transaction and I think the lender assumed my niece knew more than she did so towards the end of the process my niece wasn’t very satisfied and frustrated with how things had gone. So that was a bit of a learning curve for me and now I have an LO who does educational seminars for our local organization of real estate agents, which I met through another client I helped buy his sixth property. This LO walks customers through every step, so I generally recommend it to my first-time buyers. »
As the housing market slows, Vergos says she is happy to have found experienced and stable LOs and lenders to work with, but is wary of the impact changing market conditions could have on lenders and lenders. OL working on its trades.
“I was definitely a little worried,” Vergos said. “I’ve noticed a lot more activity with lenders reaching out to me and seeing if I have any deals they could help me with. These are mostly lenders I don’t know, and they really seem to be trying to bringing in customers. So while none of my deals were affected by layoffs or lender closures, it all made me think things must be really bad on that side of the business.