What do real estate buyers and owners want in a lender?
It continues to be a tough time for both borrowers and lenders. The real estate market may be healthy and abundant in transactions, but not as many are borrowing as could be. This could change with new loan programs and easing of underwriting demands, but we’re also facing the potential of new interest rate hikes.
We are seeing a unique aversion to borrowing in America. Data shows many qualified borrowers simply aren’t applying for loans. Of those that do, many may be faster to back out of real estate transactions, or walk away from the closing table at the first sign of trouble. So what is behind this trend? How can mortgage lenders originate more loans and ensure higher application to funding ratios, and better serve the market in the process?
So what is holding borrowers back and creating such harsh knee jerk reactions? Primarily it is a lack of trust, and more fear.
This is largely in part thanks to the mess of 2008. Banks and lenders as a group really lost a lot of credibility. Some made it even worse by further pulling back on services, while increasing costs. The natural instinct is now to not trust lenders. It is an uphill battle to win a glimmer of that old trust back. The media certainly doesn’t help to this end, and can be quick to pounce on any mistakes or hints of a loosening in lending standards. While there can be many benefits and even a strong need to borrow; fear of looking foolish or being taken advantage of can be a much stronger motivator. One which pins buyers and owners to inaction. Even if they apply for loans; the first sign of trouble simply confirms their subconscious mindset that “I knew this wasn’t a good idea.”
How do you overcome that as a lender or loan officer? Setting expectations, trust signals, and service.
There are many unknowns, variables, and fragile components in the lending process. It can be tough to both stand out in advertising, get leads, and sell, while setting modest expectations so that you can under promise and over deliver. Some may need to focus more on referrals, word-of-mouth, and networking to generate new loan applications to accomplish this.
After the application is requires attentiveness, willingness to explain changes and underwriting conditions, and picking up the phone when you really don’t want to. It means understanding what it is like to be in the borrower’s shoes. They have a lot going on, there are many different factors fluctuating for them all at the same time, and you don’t want them locking themselves down in preservation mode to their detriment.
A strong title company can be an incredible asset in these efforts too. They are a partner in coordinating all parties and paperwork, in providing customer service to the borrower, and with a strong closer an ally to both borrower and lender in ensuring a successful completion.