Did you quote and lock loans until 3 a.m., wake up at 7 a.m. to see rates dropped even more, and say: “Aww f**k.” 

Then you’re definitely a loan officer in the heat of this 2020 refi boom. Up is down, locks don’t matter and you just might have the year of your life. 

Julian Hebron,
Columnist

And I’m here to remind you – with some much needed comic relief – that refi booms always play out the same. 

Rates keep falling over a few months, but not without gut-wrenching volatility that blows your client lock advice on the daily, wreaks total EPO havoc and makes you question if customer loyalty is even a thing anymore.

Let’s break each of these down, offer some tips and laughs to all you loan pros out there grinding and share your 12 best quotes of the week.  

1. Customers Are Loyal To The Best Price 

Stop searching your soul on the loyalty question. The answer is, no, customer loyalty isn’t a thing in a market like this.

Running scale production in San Francisco for 16 years, I formed a credo: customers are loyal as long as you have the best price. 

I learned this in a market where loans are large, clients are sophisticated, and they will leave you for an eighth no matter how smart your advice is. 

The same rules apply nationally in a refi frenzy. 

And it’s gotten worse and more pervasive over time because it’s not just Thursday headlines about Freddie Mac’s week-old rates that screw up your quoting and advice. It’s all rates everywhere all the time. 

“Hey, I saw DJ Khaled’s Instagram story saying rates dropped another quarter.” 

Are you kidding me right now? 

There are so many absurd rate sources to contend with and the social era just makes it worse. 

So you must make your consults and quotes ultra-fast and politely present terms in a take-it-or-leave-it way. 

Then if clients leave it and lock with a competitor, just make sure they share their locked rate. 

Then you can snake it back when the market drops below your competitor’s renegotiation threshold. 

Because that client will gladly show loyalty to your best price later.

2. Don’t Waste Time Explaining Rate Rolldowns 

Which brings us to renegotiating locks. 

I did a piece called What If Rates Drop After I Lock My Loan this week to save you time fielding the same old questions on coronavirus market outlook, renegotiation basics, and using no-cost deals to create future refi optionality if the market drops more.

Don’t get brain damage explaining rolldowns to clients who think they know the business and want every detail.

Waste of time. 

If they don’t like the outcome after you teach them how your firm calculates rolldowns, they’re going to leave you anyway. 

This is especially true if you got an appraisal waiver on AUS findings because they have no appraisal fee skin in the game. 

Even if they do, spreads on aging locks vs. market rates are so big right now, leaving you to take a market rate instead of your rolldown still pencils even if a client has to eat an appraisal fee. 

The good news is that this works both ways. For every customer that bails on your locked rate, there’s one you’ll gain who’s leaving another lender for the same reason. 

I’m not cheering ruthlessness, I’m merely stating the reality of working in a market where customers are loyal to the lowest price.

Of course, do everything possible with your lock desk to retain locked clients. 

But speed matters, so how much time do you spend time retaining likely defectors vs. winning new clients at the current market? 

3. Pricing Conspiracies & Telling Clients What You Make 

I sometimes joke that crowd control pricing is in effect when quotes look dull relative to the market. 

Lenders do indeed use pricing to control capacity. They must be able to perform on refi lock periods and must save capacity for purchases as we head into peak homebuying season with record-low rates. 

But don’t construe a joke into pricing conspiracy.  Capital markets teams must keep pricing in line with Fair Lending requirements, and they’re the lifeblood and real profit centers of every lender. They understand competitive demands and are there to help you. 

So treat your lock desk like your best friend. 

They’ll help you retain those squirrely locked customers, and help you quote recently closed customers without getting smacked by early payoff penalties (EPOs).

Oh, you forgot about EPOs?! 

Reminder to all you (mostly nonbank) loan officers subject to EPOs: if recently closed clients refi elsewhere, you’re still on the hook for the clawback. 

I know it’s raining new inquiries, but you must find time to re-quote recently closed deals to avoid the EPO storm later. 

And please don’t tell your customers your sob story about how you get hit if they refi elsewhere. They don’t care, and it makes you look selfish. 

Bonus Section: Refi Boom Quotes Of The Week

That last note on the complexity of refi booms brings us back to our opening line: “Aww f**k” 

But hang tough and dance while the refis are raining. You will indeed have the year of your life. 

I’ve been talking to lots of you this week, so I’ll send you off with your best quotes for inspiration, humor and to know you’re not alone: 

“I’ve worked 100 hours in the last five days. Work ’til 3 a.m., up at 7 a.m.” 

“We’re refinancing loans that went on last month. It’s f**king bananas.”

“Priced out on refis, about to unleash holy hell. But crushing on purchase so that’s cool.”

“I have at least 100 inquiries over the last four days.” 

“I’m playing no offense right now. All defense.” 

“LOs are furious, about to be a pricing mutiny.”

“I’m not worth an eighth to any client anymore, it doesn’t matter.” 

“I’m either going to fall asleep or drop dead.” 

“Do you want the price on the website or the one I can get on exception, which is 50 basis points lower?” 

“My head is f**king spinning. This is f**king insane.”

“People who locked three days ago are asking for rolldowns.”

“Every customer is suddenly a market oracle telling you how it is.”



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