It's inevitable that rates will drop, but preparation in advance is key
The law of gravity dictates that what goes up must come down, and the same applies to mortgage rates – if only in an intangible, economically driven sort of way. It’s one thing to expect this to happen, but another thing entirely for loan originators to be ready and equipped for the eventual descent.
Joanne Russell (pictured), of The Mortgage Place Inc., in New York, is ready for it.
“We’re seeing more wholesale lenders opening their doors for us,” she told Mortgage Professional America during an interview. “Instead of having to have a minimum amount of volume, they’re like, “come on in; we want to do business with you’ which is great. And, of course, AI has been a game changer for us this year. It’s helped us with our marketing.”
Russell spoke to MPA during the annual FUSE conference staged by the Association of Independent Mortgage Experts (AIME) that took place in Las Vegas earlier this month. The three-day event featuring panel discussions and motivational speeches took on the spirit of an athletic competition – what with challenges that have emerged in the form of high rates, inflation, low inventory and soaring property values – in urging loan originators and brokers to stay nimble amid a mercurial climate.
Taking controllable action amid uncontrollable developments
Yet for all the volatility Russell said there are a number of controllable actions that can be taken during the mortgage slowdown in preparation for when rates finally drop again.
“Rates are going to change,” she asserted. “We can’t control the interest rates, but what we can do is control what we do in this type of market when it’s not been as busy as 2021, 2022. We’re protecting our processes,” she said. “We’re taking advantage of this time to really increase the ‘wow factor’ for our customers so when rates do come down, we’re going to be completely ready.”
What a contrast to the last couple of years, when mortgage rates dipped to historic levels of 2% and 3% to promote homeownership during the COVID-19 spread. “Rates are artificially low at 3% and artificially high in the 7s,” Russell said, contrasting then and now. “So we’re going to get to a happy medium and we have to be ready for that – and we are.”
Almost as if setting up the new turf for a better playing field, an ongoing exodus of loan originators clears the path for additional market share for those who have survived.
“Just like any cycle where you see lower interest rates and people are refinancing, a lot of people got into the business because they said ‘this is pretty easy’. A lot of those loan originators, unfortunately, never learned the skills of what it takes to actually consult with the borrower and find out the best program for them. Unfortunately, some of those originators will probably exit the business because they just didn’t learn their craft.”
Those making the leap from retail to wholesale also will be beneficial to a new, lower-interest-rate environment: “A lot of people are being pushed out of their branches, and that’s a great opportunity for brokers to grab those originators who have some experience and show them how we do things.”
Heaping praise on AIME
She praised AIME for its ability to lure members with a sense of teamwork and a willingness to work together for the benefit of the broker channel. “I’ve been an active member only for a few years, but have made some great connections,” she said. “Even just this week, I’ve met people I can share information with or who can show me how they do business and certainly refer business to other states where I’m not and gain their trust to earn their referrals too.”
A seasoned industry veteran, Russell ticked off the many tectonic shifts she’s weathered over the years – the stock market crash of 1987, the dot-com bubble burst of the 90s, the Great Recession of 2008 among them.
“Having seen all that, it’s really important – especially to new loan officers – to know that the market is going to change; it’s not going to be the same from year to year,” she said. “So you really have to develop your craft, educate yourself and be an asset to your community in order to succeed.”
Russell is the self-described “mortgage boss” on TikTok, where she is a prolific presence in offering educational videos to borrowers. Having survived market turmoil, it’s safe to say she’s earned the monicker.
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