It's one of the most pressing issues in the market…
For mortgage lenders operating in 2024, one of the most pressing issues in the market is dealing with ‘trigger leads’. Speaking to MPA, Brent Green (pictured), mortgage sales manager at Lake Michigan Credit Union, said this damaging process not only invades privacy but also bombards customers with an overwhelming number of calls from competing lenders.
“When you pull somebody’s credit, it triggers other lenders that have subscribed to the credit bureaus,” he said. “The customer then gets bombarded for several days. I’ve had customers with 200 calls in a day from other lenders trying to get the deal.”
This relentless pursuit by lenders has escalated as the volume of available deals has dwindled, turning the market into a free-for-all where rules seem to have flown out the window.
“There’s even stories of customers receiving calls from other lenders impersonating the lender that pulled their credit,” he said. “It’s just a bad practice. Nobody likes it. Nobody wants it.”
Efforts to rid the mortgage industry of trigger leads
However, efforts are currently underway to rid the industry of this bad practice, with proposed bills in both the House and Senate aiming to regulate the use of trigger leads more strictly. And Green is optimistic about these developments.
“It looks like we’re going to see some improvement there too, like we’re going to make some headway,” he said. “The regulatory situation is not going to get easier. Compliance is hard. It’s all the technology that we employ – to be compliant and meet the regulatory requirements. It’s a significant cost for every lender.”
That financial strain isn’t trivial either. According to Green, lender production expenses averaged $12,485 per loan in the fourth quarter of 2023.
“That’s what it costs the lender to do the loan,” he said. “Of course, the lenders are trying to make money so profit is also included in their pricing. However, that’s the average on the national level – and it’s a significant burden.” And Green’s seen this trend since he began in 1993. Brent works for a bank that specializes in construction loans – leading to a lot of builder relationships.
“The thing with construction is it’s the most complex process of any of loan,” he told MPA. “Can any loan officer do it? Yes – but it can get ugly quickly. You’ve got a lot of moving parts.”
Challenges of construction lending
One of the critical challenges in construction lending is ensuring that all project aspects are accounted for and aligned with lending requirements. Green emphasized the importance of spotting potential issues early on to avoid disruptions during underwriting or closing.
“You’ve got to be able to spot when things needed for the home’s Certificate of Occupancy are missing from a construction contract’s budget,” he said.
Timing is another crucial factor in construction lending, according to Green. The time required to obtain permits, for example, can vary widely and impact the overall project timeline.
“Sometimes permits are two weeks, some are four months,” added Green. “It can be very difficult, depending on where they’re building and what’s going on with the property.”
Doctor loans
Shifting focus from construction loans, Green is also an expert in the realm of rehab loans and the specialized world of doctor loans.
“Doctor loans, they used to be a really rare product,” he explained. “Now pretty much everybody offers them today in some fashion. Doctor loans are a nice investment [with] potential for future business, since they create a dynamic where doctors are enabled through solutions to issues that are typical of the profession. Generally, most of them have student loans that are significant [enough] to prevent them from qualifying. With the doctor portfolio, you can ignore those debts because they’re in deferment for a good period of time for residents and fellows.”
The provision of these doctor loans have strengthened the relationship between financial institutions and medical professionals. However, Green is quick to note that while these loans are attractive for their favorable terms, they may not always be the best fit for everyone.
“Sometimes it’s going to be priced [differently] or they’ll get a different product that fits their situation better outside of that program,” he said. “However, if they’re looking for low down then [it’s] a dynamic product.”
And this, again, harkens back to Green’s inherently client-led approach – mixed in with a love of flexibility.
“There’s a lot of miracles that happen every day,” he told MPA. “You’ve always got a problem, there’s always an issue somewhere, but with that flexibility we’re able to [find a solution].”
