Your business is only as strong as your relationships. Although this statement probably oversimplifies what it takes to succeed as an independent mortgage professional, it is true that successful businesses are built upon solid relationships.
Most mortgage brokers know it is essential to focus on building rapport with their clients and complementary industry partners. Some brokers are so focused on these aspects of their business that they often overlook a crucial piece of the puzzle — their lenders.
The most successful brokers are the individuals who are masters of catering to both their clients and their lenders. Many brokers may view lenders simply as a means to an end when it comes to getting funding for their clients, but brokers who take the time to establish strong relationships with their funding partners are the ones who will have a true advantage over their competition. Why? Because lenders will often go above and beyond for their best brokers, meaning their clients also reap the benefits.
Why would lenders actively try to develop relationships with independent mortgage brokers when they could go to the client directly? Because thriving lenders recognize that mortgage brokers play a critical role in the lending world.
Simply put, lenders don’t just want to work with brokers, they need to work with brokers, because not having access to that deal flow could cripple their business. Once brokers understand that lenders need them just as much as brokers need lenders for their clients, it’s just a matter of developing strategic partnerships with the right lenders in order to take their business to the next level.
So, what are the initial steps an independent mortgage broker should take when trying to find their lending partners? First and foremost, brokers should be looking for multiple lenders that will allow them to diversify their product offerings.
Lenders can help brokers expand their business beyond traditional residential loan products. These offerings may include unique programs such as nonqualified mortgages (non-QM) — loans that don’t meet the standards to be securitized by Fannie Mae and Freddie Mac — and commercial loan products for investors. This will allow brokers to effectively become a one-stop shop for all of their clients, giving them a solution for any lending needs.
Also, there are tremendous opportunities emerging in both the non-QM and commercial lending spaces. Brokers that tap into these opportunities will have flourishing businesses and, most importantly, will be able to capitalize on deals they may have once turned away because they now have a home for these scenarios.
Once a broker has identified the loan products they want to offer, it’s time to develop relationships with reputable lenders that offer these programs. It’s important to keep in mind that while you may be vetting a lender to see if they are an appropriate fit, the lender also is most likely vetting you as an independent mortgage professional.
Lenders are usually looking for basic things from their broker partners to see if the relationship will be mutually beneficial. Lenders like to work with brokers whom they can trust to be an extension of their company. To keep the development of the lender relationship moving along, it’s important to focus on three crucial things.
First, learn the lender’s products and basic loan criteria. Learning these aspects of the lender’s business is crucial. You need to have a clear understanding of what a lender can and can’t do so that you know exactly what you can offer your clients.
Second, figure out what key information a lender is looking for upfront. This will allow you to collect the critical pieces of information from your client so that you can effectively communicate the details of their scenario to the lender. Ultimately, this will speed up the loan process.
Finally, respond quickly to time-sensitive requests to move the deal forward. Just as you expect lenders to respond quickly when time is of the essence, lenders ask the same in return. Once you have these basics down, it becomes a matter of maintaining the relationship, which is just as simple.
Just like any good relationship, maintaining strong lender ties boils down to good communication and transparency. Familiarize yourself with all aspects of your client’s deal before bringing them to your lender. You should be able to effectively provide the details of a scenario when you have that initial conversation with your lender. This will allow the lender to make a quick decision and provide you with accurate terms that you can relay to your client.
Most importantly, don’t try to hide any potential problems with your client’s deal from the lender. Revealing potential concerns early on will give the lender time to figure out solutions. Hiding issues will only prolong the origination process or kill the deal entirely, resulting in an outcome where no one wins. When it comes down to it, lenders are not asking for much, especially considering the benefits they can offer in return.
Plain and simple, strong lender relationships result in great client benefits. Because lenders rely on independent mortgage brokers, they will often work harder to make sure their best brokers and, in turn, their brokers’ clients are happy. Lenders can often give greater flexibility, faster decisions, faster turn times, more accurate pricing and even deal referrals to their best broker partners, which make for a better client experience.
When clients are happy, they are going to be more likely to come back to you time and time again with recurring business. Not only that, but clients who have a positive experience are far more likely to refer additional business your way, boosting your reputation throughout the industry. The bottom line is your business will grow and you will earn more money.
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When it comes to independent mortgage brokers elevating their business and standing out from the competition, lender relationships are the most overlooked piece of the puzzle. For the brokers who take the time to connect the dots, they and their clients are sure to reap the benefits for years to come.