Steve Tytler

Some people may think I jumped the gun a couple of months ago when I said the refi party may be over … I updated that post a few weeks later … but I still think you are crazy if you are not working on building up your PURCHASE loan business. If you live by refis alone, you will die when the refis dry up (and they always do).

Another mortgage “fad” that may be running out of gas is the Loan Modification business.

This was all the rage last year about this time because mortgage rates were at 6% and business was slow for a lot of loan officers.

We briefly considered getting into the business ourselves, but after talking to a few “loan modifcation companies” we decided to work with somebody we knew because too many of them sounded shady.

I got some info on how to do loan mods and gave it to an attorney who owns the escrow company that we use for most of our business. He checked it out and did a handful of loan mods. We never did any, but we both decided it was a big pain in the butt and not worth our time.

Besides, mortgage rates dropped and we were hit with a refi boom in November and December of last year.

Now, the Federal Trade Commission is reportedly considering banning foreclosure rescue and loan modification companies from collecting fees in advance, and new restrictions on how those companies can advertise their services as part of a crackdown on fraud.

The FTC also announced civil charges against two California-based companies accused of advertising that they could obtain mortgage modifications in virtually all cases, and allegedly doing little or nothing to help consumers who paid large upfront fees.

You can read more in this article on Inman News:

http://www.inman.com/news/2009/09/17/feds-may-restrict-mortgage-rescue-fees

I think this is good news.

In my experience, most of the Loan Modification companies were run by guys who were in the subprime mortgage business before that went belly up.

You know what the subprime guys did to the mortgage industry, so I can’t say I’m sorry to see the Loan Mod guys reined in.

So if you’ve been pushing Loan Mods and refis … get out there and talk to some Realtors and build up some PURCHASE money referral business before it’s too late.

I’m telling you … once the housing market turns loan officers will be begging Realtors for business … now is the time to beat the competition to the punch, while the housing market is slow and Realtors are still hurting. Give them some marketing assistance and help them out, and build a long-term source of referral business for yourself.

A lot of mortgage loan originators are breathing a huge sigh of relief since mortgage rates have come back down after the big spike up last month.

But don’t get complacent!

In the stock market, this is known as a “sucker rally” … it lures you into thinking the worst is over when in reality the market is getting ready to dive again.

How long will this refi boom reprieve last?

I don’t know and I don’t care.

I’m still pushing the loan originators at our small mortgage company to focus on building Realtor relationships by helping them generate home buyer leads using our free marketing systems.

In the Seattle area, and many other housing markets around the country, there is starting to be a lot of sales activity in the low-end starter homes.

If you wait until the housing market bounces back and the Realtors don’t need your help any more to generate business you will have missed a GOLDEN OPPORTUNITY!

Let the competition fall back into “refi boom” mode …

The smart loan originators who plan to be in business for long haul are focusing on the PURCHASE loan market now more than ever.

If you are a mortgage loan originator, the rapid spike in mortgage interest rates over the past month should be a wake-up call.

Take a look at this chart showing BankRate.com’s 30-year-fixed mortgage index over the past month:

Yikes!

Sure, mortgage rates have come back down over the past couple of days but keep this in perspective.

Look at the BankRate.com 30-year-fixed mortgage index over the past year:

We are now basically back to where we were in December, before the second leg of the big mortgage rate drop kicked in.

How long will it take for the 30-year-fixed mortgage index to get back into the 6′s where we were Last October and November before the first leg of the rate drop around thanksgiving?

Who knows?

The mortgage market has been anything but stable this decade.

Here’s the BankRate.com 30-year-fixed mortgage index over the past 5 years:

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