Is Your Competition Out of Business? Market To Their Referral Sources

I am probably not the only licensing lawyer who has had some of her clients go out of business. In probably every state, the number of licensed mortgage brokers and lenders is down. Many of them have gone out of business or placed their license in “inactive” status until the market turns around.

This is your opportunity to find those referral sources – realtors, builders, buyers, and sellers who no longer have a mortgage professional to whom they will automatically turn if they know of someone who needs a mortgage. This is your chance to contact everyone who you heard was referring business to your competitors and try to get a relationship started.

And of course, stay in contact with everyone who already is a referral source to you. They need to know you are still in business, ready to serve their needs. Don’t forget the borrowers you already have done business with. Although there is little loyalty between mortgage brokers and their customers, you can increase your retention rate if you keep your name in front of people that you have already helped and liked you.

There are business opportunities even in a recession. I hope you take advantage of them and keep yourself in business.

New Pennsylvania Regulations

Pennsylvania has some new regulations that are about to come into effect.

The first regulation requires that you submit to the PA Banking Department a copy of your internal procedure regarding how you will perform an analysis of how the borrower will repay the mortgage loan at the fully-indexed rate. The procedure must state, at the minimum, that you will verify and document the borrowers' income and fixed expenses, that you will not rely on the sale or refinance of the house to repay the loan, and that you will not ignore facts or circumstances that raise a red flag that the borrowers may not be able to repay the loan. Your procedure can also use other factors to determine whether the borrowers can repay the loan. If the loan is FHA or VA, there is a presumption that the borrowers can repay. All records, worksheets and supporting documentation used in the ability to repay analysis must be kept in the borrowers' loan file. A copy of your internal procedure must be emailed to the PA Banking Department by March 20, 2009.

Also taking effect on March 20, 2009, is a regulation that requires that, within 3 days after you take an application, you need to send the borrowers a new disclosure. The disclosure must state:

1. whether the lender will be escrowing for taxes and homeowners' insurance;
2. that you cannot lock-in the interest rate;
3. whether the loan contains an adjustable rate, negative am, prepayment penalty, or a balloon payment.

If the terms of the loan change so that the initial disclosure is incorrect, you must re-disclose as soon as you know of the change. If the lender is providing the borrower with this disclosure, then you do not need to provide it. The borrower is supposed to sign it within 10 days after you send the disclosure. You must keep a copy in the borrowers' file.