There’s always something to howl about

Mortgages Under Management

“Managing loans” is the tail that wags the dog today.  When I was a rookie stockbroker, the good folks at Mother Merrill taught us to “gather assets”.  Essentially, the firm encouraged us to pitch clients to have their assets transferred to a Merrill Lynch account.  The strategy was that assets “in-house” would result in a commission when they had to be sold.

Is it any wonder that the mortgage sales gurus who brought that strategy to the mortgage business were former stockbrokers?  Rich Katz, former President of Loan Toolbox, spent his early career with both Merrill Lynch and Smith Barney.  Dave Savage of Mortgage Coach perfected that strategy with his software offering.  Todd Ballenger developed a business model that partnered with financial planners; it’s cornerstone was actively managing mortgages for customers.

Simply put, a new mortgage originator could track current homeowners’ mortgages, by rate (and/or term).  The lowest-tech system would be in file folders, indexed by note rate.  Vendors like Mortgage Coach, Top of Mind, and offer automated solutions to managing mortgages.  Whether you spend the money for automation or not, “managing mortgages” can be fruitful, especially in a low mortgage rate environment like today.

Greg Frost of LoanToolbox tells us that “first in wins”.  When a dramatic move in rates occurs, the first originator to call the homeowner with an attractive loan solution usually has the best chance of earning the new loan business.  Regardless of rate movements, approximately 9% of all loans outstanding are refinanced each year.  Another 11% of all loans outstanding are paid off due to sales.  This means that one out of five loans will be retired (and new loans will replace them) annually.  A mortgage originator who wants to close 100 loans each year would do well to “gather” data for at least 500 homeowners then.

The strategy works whether you use a computer or a drawer-full of files. Here are some real life examples from practicing originators:

Dan Green talking to Dave Savage about how he used this strategy to excel in a down market.

Khai McBride discusses his quarterly credit review for clients

Jim Sahnger talks about how to properly manage your database.

We’re all pretty busy with the refinance boom due to the sub-5% mortgage rates available.  Soon, that will be over.  Will you take the time to “gather more mortgages” to position yourself for the one out of five who will need a new loan next year?

Related posts:
  • Free Mortgages? Nope – but a free book about mortgages!
  • BofA is back in the foreclosure business…
  • Obama’s “plan” for Fannie and Freddie? It’s FHA, as it turns out.


    6 Comments so far

    1. Mark Madsen January 6th, 2009 10:47 pm

      Excellent article, Brian.

      As you pointed out in your recent webinar with Jim Cronin, building relationships are a vital part of the sales process.

      Whether we’re leveraging social media to connect, or a CRM machine to keep our clients informed, it all revolves around giving our clients more value and better service than the competition.

      What I gained from this article and the people you mentioned is to always be searching for opportunities to serve. Rate alerts, market trends, financial education…..

    2. Thomas Johnson January 7th, 2009 8:59 am

      Brian- Thank You! I now understand why Zestifarming has made sense to me. Mother Merrill implanted it in my subconscious. As a Realtor, I need to “gather houses”.

    3. Jonathan Blackwell January 8th, 2009 2:01 pm

      Great article with a lot of good points along with a number of good vendors who I use to help me manage my database.

      Also advice I wished I had heeded years ago and been more diligent in gathering a database. The fact that I have very few refis in the pipeline is a testament to that.

    4. Jayson January 8th, 2009 6:25 pm

      Nice! I’ve always wondered what percentage of all loans were “redone” each year. This lesson holds true in any industry…the numbers just change.

      How long do you think this refinance boom will last? I hope that when it does fade, it’s replaced by some purchase loans (just not too many).

      Are lending standards where they should be yet or are banks getting back into their bad habits?

    5. Wayne Long January 9th, 2009 6:22 am

      Interesting industry statistics. Real Estate is very much the same. If you diligently maintain your database and keep in touch with your sphere then a certain percentage will come to you to buy or sell.

    6. Esko Kiuru January 10th, 2009 9:10 pm


      Your blog certainly gives mortgage consultants new strategies to implement knowing what the stats tell us. Keeping in touch with your database is one thing, doing it at the right time is another.