Looking to boost your deals over the next few months? Or maybe you just need a good icebreaker to touch base with your client base. The A&D Mortgage team has identified a potential borrower need that could position you to help some homeowners while collecting some nice commissions in the process.
The issue at hand concerns borrowers that have Home Equity Lines of Credit (HELOCs). As Anthony Bird of Riverbank Finance in Michigan points out, “Many homeowners locked in 5-year ARMs or interest only HELOCs during the low-rate window of 2020–2022. As those loans begin to adjust, borrowers may be in for a payment shock. Now is the time for loan officers to reach out to past clients to guide them through their options.”
Some Borrowers Facing Tough Decisions
The potential shock Bird mentions shouldn’t be taken lightly either. In addition to some rates moving from around 2-3% to 6-9%, borrowers in many regions have faced increased property and insurance taxes that have pushed some to the limit of their budgets. The combined costs might overwhelm them.
A&D Mortgage Senior VP of Business Development Michael Pearson recognized the situation early on. “HELOC lending started growing significantly in late 2021 and into 2022. Millions of these will be adjusting to fully amortized payments in the next year or two causing sharp payment increases for borrowers. In 2022, 1.4M HELOCS were originated with 962k in 2021.”
Prepare and Find Solutions
Of course, not all HELOCs will adjust after 5-years, and the data doesn’t distinguish how many are 10-year. Many borrowers are going to need options and loan officers should be preparing solutions and strategies now to meet those needs.
“Loan officers should position themselves as ongoing resources. Let clients know you’re tracking the market and will reach out when the timing is right,” Anthony Bird suggested.
A full range of programs suitable to assist borrowers are at your disposal with A&D Mortgage. Finding solutions to complex scenarios is a trademark of A&D and the staffing and support expertise are matched by the excellent turn times on loan processes.
Using the A&D Mortgage Scenario Request Form, loan officers can get solutions as fast as 30 minutes.
Expert Strategies from Mortgage Marketing Animals
However, preparation and positioning are one thing, but what strategies should be employed to find these potential borrowers in need. How do we identify and engage them? To answer these questions, we reached out to Carl White of Mortgage Marketing Animals. White’s podcasts and videos are some of the most popular and useful in the mortgage sphere and for good reason.
You can watch the recorded segment on our Insights by A&D video or on the Mortgage Marketing Animals channel. We provided some of the highlights from our conversation below for the TLDW (too long, didn’t watch) crowd.
Challenges and Solutions
Our conversation with Carl White began with him adroitly putting the situation into perspective, “So, we want to contact them because they may not be aware of the upcoming payment shock. So, this creates a natural need for awesome, proactive mortgage advisors to step in.”
Stepping in is the challenge and White suggested following some of his tried-and-true methods for identifying borrowers that may fall into the dilemma during our conversation. His suggestion is that loan officers should be contacting their database at least once a quarter to check in on them.
If they are following this strategy, then they will already have an ‘ear to the ground’, but they will also learn about any needs from friends and family of their client base. For those that aren’t already making these quarterly calls, he suggests that now is a great time to start.
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Building and Expanding Relationships Along the Way
We also decided that reaching out to realtors that we have relationships with would be a good step in identifying people in need. This also ‘plants the seed’ with the realtors so they have you in mind if a situation does emerge with someone in their circle.
Helping people deal with their HELOC issue was the priority of the discussion. However, White brought up another issue that his team had identified recently.
“Also, we can help them see if there are other opportunities. And not just necessarily their payment shock that they are getting ready to see with the HELOC. One thing that we found is that many people, because of the increase in equity over the last couple of years, are paying PMI when they don’t need to be. Most people are living their lives, and they could save hundreds of dollars, and they don’t know,” White shared.
He suggests using the outreach to check on the borrowers’ complete situation and seeing how help them out. This illustrates that you’re looking out for their best interests while building your relationship with them going forward.
Quick Tips
- Be prepared with a variety of solutions to meet borrowers’ needs
- Reach out to your database about the potential issues
- Use Carl’s ‘2 letters of the alphabet a day’ approach
- Reach out to other people in your network about the issue (realtors, LinkedIn community, your softball team, etc.)
- Continue to monitor programs and rates
Conclusion
The HELOC issue and other ARM products that are being reset provide an opportunity for us to demonstrate that we have our customers’ backs. We can build our relationships by reaching out, educating borrowers on possible pitfalls, and assisting them with a solution that meets their needs.
We hope you find this all helpful. Join our network on LinkedIn and share some of your success stories or additional strategies.
