What subservicing looks like during a pandemic


As the world continues to navigate the impacts of COVID-19, HousingWire sat down with TMS to learn more about their customer service philosophy, and how it has served them during the pandemic.

HousingWire: So, right off the bat, let’s talk results. How has TMS fared relative to other subservicers during COVID-19?

TMS: In short, we’ve fared well — and it’s all because we saw this coming.

Let’s look back to this time in 2019. Mortgage delinquencies (DQs) in the United States had reached 13-year lows. That was great, of course, but while everyone else was celebrating, we were thinking: We don’t know how or when, but DQs will go up. Operating under that assumption we had staffed up in the default and loss mitigation worlds. Sure enough, a completely disruptive force — COVID-19 — struck, and DQs increased.

For a lot of people, COVID-19 was a total sucker punch, and they had to act in fast, suboptimal ways. But because TMS has always staffed with growth and increasing delinquencies in mind, we weren’t scrambling to keep up. We had already added new staff to help handle an influx of loss mitigation work. We had long been embracing remote work, so our infrastructure was not burdened by a mass shift out of the office. Our online portal made comprehensive information instantly available (as it always had). We had more Careologists trained in our clients’ brand voices, providing expert guidance to more customers than usual. Ultimately, we have been able to keep our DQ rates well below the industry average.

We’ve also been able to keep forbearance rates lower than the industry average. With our proactive and thorough customer education, we kept customers out of forbearance who didn’t absolutely need it. Forbearances can cause problems both for customers — who might have credit issues down the line — and for clients, who are essentially losing money when their loans go into forbearance. Because of our high-tech, high-touch subservicing approach, we were able to work with our customers to determine whether forbearances were absolutely necessary for their situation — and if they weren’t, we presented other options.

HW: Other than planning for a rise in DQs, what would you say has distinguished TMS’s subservicing approach during COVID-19?

TMS: The approaches that have distinguished us during COVID-19 have distinguished us for many years. We love to brag about SIME — Servicing Intelligence Made Easy — our proprietary subservicing platform, which gives full transparency into clients’ loan portfolios in real time, while providing the tools for oversight that subservicers and lenders can rely on. It gives exhaustive, up-to-the-minute information and insight on customers’ borrowing habits. It brings total knowledge to our customers, our clients, and ourselves. Especially during a crisis, that’s hugely important.

More broadly, we distinguish ourselves by thinking of the customer-subservicer relationship as — well, exactly that, a relationship. We pioneered the concept of combining the loan originator and the loan subservicer, so that throughout the entire lives of our loans, our customers are talking to one person. This consistent, single point of contact is the cornerstone of customer loyalty. 

A trusting customer-subservicer relationship pivots on our holy trinity of values: Education, Empathy and Action. We speak in a language that customers can understand, educating them on their entire range of options. We comprehend the more emotional side of homeownership, empathizing with our customers, and assuring them that we’re on their side. Most importantly, we take quick, precise action, so there’s no lag between recommending an approach and taking that approach. This resulted in 98% customer satisfaction — a lot of happy customers, and a lot of happy clients.

We were great before the pandemic, and so we were able to be good during the pandemic. Subservicers who didn’t prioritize their customer relationships in the same way struggled much more. You can’t go from satisfactory to great during a crisis.

HW: What are the biggest challenges TMS has faced during the pandemic?

TMS: Our main challenge has been the same one that everyone has faced: We just don’t know how long this is going to last. COVID-19 has been a jolt of uncertainty for everyone in the world (maybe except for Zoom), and people have had to take it day by day, hour by hour, moment by moment.

We can’t provide the kind of certainty that everyone is after, which would be to say, “We’ll have a vaccine by xx date, and then everything can go back to normal.” But nobody, not even health experts, can provide that. Within uncertainty, we can provide our customers with a lot of other concrete information. We are experts on the different options customers have who might be struggling to keep up with their mortgage payments. We can analyze a customer’s unique situation and work with them to find the appropriate solution for their situation, rather than just blanketly offering forbearance. We can provide peace of mind to our clients, who know that they have knowledgeable, on-brand subservicers working on their behaves.

All of this comes down to bringing order to the chaos ordering the chaos. In a crisis, customers want to know three things: 1. How can you help me? 2. What does that help look like? and 3. What happens next? Being able to effectively answer these questions brings customers from a point of zero knowledge and total panic to a point of total knowledge and zero panic. They know where they stand, they know what we can do, and they know what’s going to happen.

Ultimately, it’s the subservicer’s job to provide as much certainty as possible. If you can bring order to the chaos and help a customer keep their home, that customer is going to be infinitely more loyal to you, and infinitely more likely to come to you for their next loan. That’s the kind of top-tier subservicing we strive for.



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How a pragmatic approach to eClosings helps lenders succeed


Many lenders are thinking about digital closings in a way that’s preventing them from achieving the ROI they want. Many have been solely focused on Remote Online Notarization (RON), since RON is seen as the quickest solution to the immediate challenges that COVID-19 has created. 

However, as lenders try to conduct business remotely and keep up with high loan volumes while switching from fully paper closings to completely digital RON closings, they experience firsthand how difficult this is. My goal here is to provide helpful guidance on how lenders can implement a successful digital closing strategy that goes beyond RON and addresses current pain points and long-term goals. You’ll be able to create a plan that works in any environment and scales digital closings quickly.

Lenders need to have a digital closing strategy that’s successful in any environment and in every state, regardless of the speed with which individual states and stakeholders adopt new technology or change their policies. After onboarding dozens of lenders, we’ve learned that there are two concepts that are fundamental to success.

The first is to choose a technology partner that can give you one process for managing all of your closing types, including wet closings. The second is building a foundation of hybrid closings first, on which you can layer eNote, RON, and other digital capabilities as their acceptance grows. By implementing digital closings with this pragmatic approach, you’ll digitize every closing, which drives large-scale operational efficiencies and more value than if you were to close only a portion of your loans with RON. 

Digital mortgage closings should be viewed as a spectrum. It starts with digitizing the process around wet closings and introducing hybrid closings. You give your customers the ability to electronically preview their documents, interact with their closing online, and eSign the majority of their documents before the closing appointment. Once hybrids are running smoothly, it’s a small step to introduce eNote, RON and in-person electronic notarization.

When you engage with a platform that can provide a standardized process for managing all closing types, you can easily add on those capabilities without creating more workflows. The operational inefficiency introduced by trying to maintain separate workflows for wet closings, hybrids, RON, etc. is untenable.

Having one process for all closings is critical because no matter how aggressively you pursue full eClosings, every lender will be working with multiple closing types for years to come. Not only do all stakeholders need to get up to speed, but also consumers have different technical aptitudes and appetites. Instead of trying to close all your loans with RON, it’s more effective to standardize and automate as much of your workflows as you can, while also having the flexibility to close in the most digital way possible based on the participants in each transaction. 

Historically, not all lenders have recognized the value of hybrids, but now, many do. Creating a foundation of hybrids is the most efficient way to adopt digital closings and drive value to all participants quickly. If you talk to lenders who have rolled out hybrid closings at scale, you’ll find that they have hybridized 99% of their closings in as little as four weeks. You’ll also discover that they’re doing more volume with the same amount of people, seeing a significant reduction in errors, and receiving incredibly positive customer feedback. 

RON is an important component of eClosings, and it can be executed more widely right now due to temporary executive orders. However, it needs to be a subset of your digital closing strategy, rather than the center of it. If your digital closing strategy is built around RON, it overlooks the fact that there are other hurdles to eClosing adoption besides state legislation. Also, we don’t know what will happen after these temporary orders expire. 

As lenders work on their digital closing initiatives, remember that there are many approaches to get to eClosings, but not all of them produce the same results.

By taking a pragmatic approach, you’ll be successful with digital closings today and in the future — no matter how fast or slow the industry moves. 

Felicia Chen is a digital closing expert at Snapdocs.



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[PULSE] How to manage rental properties during a global crisis


The key to effectively managing a single-family rental property during any economic cycle hinges on an investor’s ability to maximize their property’s value.

As the current U.S. unemployment rate hovers above Great Depression-Era levels, many property owners are having rent delinquency, leasing and management issues.

Benton Cotter
Guest Author

So, what can an investor do during the current economic situation to protect their asset? What immediate steps can they take to curtail delinquencies, sign new tenants and avoid long-term vacancies? 

The first step is to ensure that the property generates steady monthly rental income in the most efficient manner, even when renters are losing their jobs. Oftentimes, ensuring that a rental produces steady returns, while minimizing vacancies is a full-time responsibility. 

During a crisis like the COVID-19 pandemic when residents face unprecedented unemployment levels and challenges paying rent on time, a nominal investment in a property manager will save an investor money over the long term by keeping the property occupied. A knowledgeable, tech-focused property manager mitigates rental delinquencies, retains existing residents, signs new leases and ultimately protects long-term investments during even the most difficult market cycles. 

Here are six reasons to consider hiring a property manager for asset protection and preservation in the midst of unprecedented economic challenges: 

1. They optimize a rental property’s monthly returns and provide insight on long-term rental growth

A qualified property manager brings critical local market knowledge and applies it to the operations of each individual rental asset they manage. In other words, they understand the economic and supply and demand fundamentals in each submarket in which they operate. A savvy property manager provides investors with average rental rates in their submarket by utilizing rent comps, AI and machine learning to set market-rate rents that get the unit leased quickly. 

An effective manager stays laser-focused on a few real-time metrics impacting their portfolios in order to help real estate owners maximize returns and minimize turnover, including:

  • Rental delinquencies
  • Percentage of new leases signed
  • Pending move-outs
  • Average rents
  • Vacancy rates 

By using technology to predict rental demand, an effective property manager can even help an investor determine where to buy rental property. At the end of the day, a good property management and investment team helps command as much value as possible for a rental unit.

2. They provide great customer service for both owners and residents

Property managers can espouse the great customer service they provide all day long. But is there any truth to what they’re saying? How does an investor know if the management team they’re selecting is actually a trusted service service provider?

One of the best ways to measure the level of customer service a property manager provides is to request two metrics: its Customer Satisfaction (CSAT) Score and its Net Promoter Score (NPS). The CSAT Score gives investors insight into the level of service a firm provides over time. A good property manager will send a CSAT survey after a resident has completed the on-boarding process to see how efficient it is, and if any improvements are necessary. If a property manager does not have their own internal service tracking and reporting, they are likely not committed to identifying issues and constantly improving their service.

Good Customer Service Requires Keeping Tenants Safe

In today’s environment, property managers should be up-to-speed on the best practices for entering a home while shelter-in-place orders are slowly being lifted Wearing PPE, especially masks, practicing social distancing when residents are nearby and following all of the guidelines laid forth by the Centers for Disease Control is a critical step to providing not only the best customer service, but the most considerate, protective service that could ultimately save lives. 

3. They help owners retain tenants and sign new leases

At the moment, there are no federal relief programs available to small, independent residential property owners who have been impacted by the COVID-19 pandemic. However, many banks and lenders are implementing assistance programs for late mortgage payments. In the meantime, leverage a proactive management team that is directly involved with residents to create rental payment assistance programs. 

Some companies are also offering resources to help both owners and residents during the coronavirus pandemic. A high-quality manager also ensures compliance with rent regulations and eviction moratoriums, for instance, that impact the municipalities and states in which they operate.

Another solution to better serve both owners and residents includes providing penalty-free lease breaks. In some cases, it may be better to place a new resident rather than to experience a prolonged vacancy with no rental income.

Adjusting to the Market to Sign New Leases

To prevent negative long-term financial impact, it’s best to adapt to the current COVID-19 situation, which likely means accepting softening rents and higher levels of rental delinquency rates over the short term. Since there is uncertainty as to how long this trend will last, owners should be willing to start taking bold new steps to lease their properties as soon as possible, even if that means renting slightly below market rates. 

For instance, it’s recommended that owners utilize one-time rent concessions and/or allow pets in their rental — anything that will help secure a quality resident in the immediate term.

In the interest of retaining existing tenants while also showing some empathy for their current plight, consider postponing scheduled rent increases in light of COVID-19. Also, consider renewing an existing tenant’s lease at their current rate.

Pre-leasing is also an important component for success in the current environment. It allows property managers to reduce unnecessary foot traffic in the home and reduce overall vacancies.

4. They utilize virtual leasing and proven technology to pre-lease and manage property

Quality property managers have people, technology and systems in place to handle — and optimize — the marketing of an owner’s property. This is crucial in the midst of the pandemic: Operators must find new ways to market their properties that enable leasing from the comfort and safety of a renter’s home. Since many managers have portfolios to optimize, not just one asset, they can leverage their large scale and online tools to enhance marketing efforts with property detail pages containing interior and exterior photos and information, 3D tours, self-showings with smart-home automation and more. 

Self-Showings Protect Renters 
In many states, self-showings are the only way to see properties right now. Renters should have the ability to book self-showings completely online, without interacting with a real estate agent or salesperson and without risking exposure to the coronavirus.

A tech-centric manager provides prospective renters with videos that provide instructions on how to access and secure the unit upon departure. 

A tech-forward property manager also makes self-showing appointments easy. A self-showing works like this: A prospective renter simply signs up, goes through a security check and provides a copy of their ID and credit card, and then selects when they’d like to view the unit. Before the showing, the prospect receives a unique access code to tour the property during a specific window of time. The code remains valid only during the allotted time frame. Prospects don’t have to worry about a property manager showing up late to the appointment or hovering over their shoulder while they tour the unit.

After a prospect decides they would like to rent a unit following a self-showing, the online application process should be simple, straightforward and seamless. A prospect can easily pay their application fee online, get approved, set up an account and start the move-in process. All of these steps to lease a property completely online are completed in a contactless manner, mitigating exposure to any viruses. 

Once a prospect becomes a resident, they should have the ability to interact with their management team virtually. High-tech property managers have native apps for their residents to pay rent online. Through an app or an online portal, residents should have the ability to make repairs and maintenance requests safely and securely, completely online with contactless property techs.

5. They handle the day-to-day operations of a rental property

Handling leasing, collecting rent, overseeing maintenance and repairs and managing tenant relations is a full-time job. Most small residential property owners have full-time jobs, necessitating a professional property manager to take care of their investment, to manage it and to protect it. 

Having an experienced management team becomes even more critical if an investor owns an out-of-state property. A local market expert who can keep their eyes on the property and be available to quickly respond to an emergency situation, especially as new concerns arise from tenants in light of the coronavirus, is needed now more than ever.

6. They provide legal expertise

At the onset of the crisis, new laws on rent freezes and eviction moratoriums were handed down immediately by state and local governments. A property owner may not have even known about the new laws impacting California or Texas municipalities, for instance. That’s one of the reasons it’s imperative to hire a property management expert with local market knowledge: They ensure compliance with local rent laws and regulations, which vary from state to state. 

A good property manager has a legal expert on board who is well-versed in legislation impacting rentals, whether there’s a national health crisis or not. They also have good relationships with attorneys to avoid fees and unnecessary legal battles should they ever materialize.

When assessing the value of a property management firm during an economic crisis, a savvy investor should ensure that their property’s returns are optimized, they are consistently provide great customer service backed by data; they can retain tenants, sign new ones and use virtual leasing and other proven forms of technology to manage resident relations; and they have the on-the-ground-staff and technology to handle the day-to-day operations of a rental property.

If an investor lacks the time to perform any of these essential duties to ensure the optimal operation of their asset, they could be missing out on valuable rental income. Consider hiring a knowledgeable property manager with an established track record of helping owners avoid delinquencies, retain existing residents and sign new leases during the most challenging times. 



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Definitive COVID-19 housing data is still one month away


Monday’s existing home sales report showed a significant decline in the year-over-year metric for May. This May report showed sales were down 26.6%, the lowest sales print since the housing bust years at just over 3.9 million.

JUne's existing home sales

The stay-at-home orders have severely affected demand. These low points don’t truly reflect the real fundamentals of the U.S. housing market. This is why, for many months, I have stressed we need to wait until July 15 to get a real look at the landscape for housing data.

In fact, I have noted that everyone should put an asterisk on the March, April and May data due to stay-at-home orders and that June’s report should be an excellent base to work from for the rest of the year.

Logan Mohtashami
Logan Mohtashami
Columnist

As mortgage rates stay low, I expect a rebound in the existing home sales data line in time. Don’t be surprised if we see a positive year-over-year growth print in the existing home sales report in the upcoming months. Housing data gets softer when mortgage rates get above 4.5% – outside stay-at-home orders, of course. 

The median existing-home price in May was $284,600, up 2.3% from May 2019.

As I mentioned in previous articles, the median sales price before the COVID-19 crisis was getting too hot, and we should be rooting for it to come down. The rate of growth on a month-to-month basis fell, so this is a good thing. In fact, I labeled the median sales price growth above 7% that we saw earlier in the year as an unfortunate aspect for housing.

Inventory data sits at a 4.8-month supply up from 4.0 months in April and up from 4.3-months for May 2019. Monthly supply does grow during the spring and summer months and retracts in fall and winter.

We have enough supply for sales to grow as demand has picked up in the last six weeks.

As we end the month of June, we have a different perspective on U.S. economics compared to how things looked in March and April.

The stay-at-home orders and the negative year-over-year data in the purchase application data brought fear into the housing market. Now, purchase applications are at an 11-year high with double-digit growth on the four-week moving average. Other data lines, like the St. Louis Financial Stress Index, are below zero, which means less stress in the marketplace.

618 STF2 0.0070%

In the coming months, we need to see where the home sales flattened out and where the median home price growth is. We don’t want to see anything above 4.6% growth in home prices this year, 2.3% year-over-year growth, which means real home price growth is negative year over year. That would be an outstanding housing data line that should be cheered.

In the upcoming months, I know a rebound in sales is coming, but context is critical. It’s working from a stay-at-home-virus low, that is it. 



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Silver linings amid the economic shift


Can we all just agree that there can be good and bad happening at the exact same time, caused by the same thing?

Yes, obviously.

Even in the midst of this unprecedented pandemic that we’re all enduring, there are some great things happening; some silver linings to be found amid all the negative, awful crap that we’re watching happen every day.

Dustin-Brohm
Dustin Brohm,
Columnist

For starters, when was the last time you’ve heard a fellow agent or lender fight the need to go paperless and virtual? It’s been a minute!

Right now, just about every single agent in existence is being forced to go virtual and paperless. Even those who fought using Docusign or Skyslope now don’t really have a choice if they want to keep getting business done. In short, the pandemic and the resulting stay at home orders dramatically sped up our entire industry’s adoption of paperless transactions, e-signing, teleconferencing, and even online notaries. 

Awesome, right? It’s about damn time. I mean, isn’t it just bizarre when you’re accepting offers on a listing and some random buyers agent named Harold calls you to ask for your fax number to send an offer to? After all of this, I don’t think Harold will need your fax number.

Next, let’s talk about an agent’s ability to work remotely and virtually. Countless agents have not been able to go work out of their physical office for a month or more. But are they just withering and dying?

Sure, there may be one or two “Harolds” out there, but for the most part, agents are getting by just fine working from home.

That learning curve or the anticipated disruption to an agent’s daily routine prevented a ton of them from working virtually from home. They thought it would just set them back too much.

Well, for the last month or so, they’ve all been forced to rip the bandaid off and figure it out. Guess what? They figured it out!

I’ve talked with dozens of agents lately who are just now realizing that they don’t actually need to be paying rent at an office or desk fees for a cubicle at their brokerage. They’re realizing that they can still be productive at home or working virtually, and can save hundreds sometimes thousands each month by eliminating that overhead. That, my friends, is a great thing that may never have been discovered if they weren’t forced to work from home. 

Lastly, the opportunity for more effective marketing and ads is just enormous. Think about it, there’s still a ton of uncertainty, so many agents have hit the pause button on their Facebook Ads, mailers, etc. They’re sitting on the sidelines until the future becomes more clear. Totally understandable! But for those real estate agents willing to double down on their ads and put their foot on the gas with their marketing, there’s a tremendous amount of market share that’s up for grabs. Or better yet, as my friend and Toronto real estate pro David Greenspan calls it, their “mindshare.” 

The mindshare of the consumer is easier to grab now than at any time I can remember in the last 10 years. Not only are our real estate agent colleagues sitting on the sidelines, but consumers have increased their time on social media! I read one article that said that Facebook News Feed consumption had increased by 82% in just one month! Are you kidding me!?

Right now, there are more people using social media more often than ever, and we have fewer agents and advertisers to compete with to put content and ads into those news feeds? Need I say more?

We all have a choice to make. We can either focus on the bad, or focus on the good. I’m choosing the latter, and I’m also making the choice to take full advantage of these opportunities while they still exist. I’d urge you to do the same.

For any of you willing to really double down on marketing, recruiting, content production, learning new skills, building or improving systems, etc, you’ll be able to look back at the first half of 2020 as not just the most insane, surreal, stressful, trying part of your life, but also the time where you made a quantum leap in your business. The time you point back to years from now as the time that truly helped you jump up to a whole new level of life and business. 

Either way, I think we’ll all look back at these times and wish we had done more. Even those who are taking massive action and growing will wish they did more.

But then there will be those, like Harold, who will look back at March and April 2020 and wish they had done something, anything, to grow, but chose not to out of fear. Let’s do our best to not be like Harold. 

 Connect with Dustin on LinkedIn



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Does Unison’s 50% job cut signal doom for housing fintech?


Home equity co-investing pioneer Unison cut almost 50% of its team Friday, and no, this doesn’t mean housing and fintech doom for two reasons. 

First, cost-cutting is crisis leadership 101. 

Julian Hebron,
Columnist

React fast and smart. Job and budget cuts are extremely painful for all souls involved. And fear is the first reaction among team members, investors, boards, counterparties, and customers. But nerves calm down as people digest smart rationale. 

Second, survival is job No. 1 in a crisis. 

We started March 2020 evangelizing industry visions from bright conference rooms and ended it triaging careers and companies from crowded kitchen counters. Vision means nothing if you don’t survive, and the bigger your vision, the faster you must adjust in a crisis. 

Fast adjustments buy you time to weather today’s coronavirus storm. 

Two weeks ago, category-leading iBuyers made hard, fast decisions to win the long game.

Friday, co-investing (aka shared appreciation) category leader Unison cut 89 sales and marketing employees, contractors, and consultants for the same reason.

Is Shared Appreciation Your Coronavirus Home Equity Solution?

Unison created the shared appreciation category in 2004. 

Companies like Unison, Point and Noah (formerly Patch Homes) give a homebuyer about half their down payment in exchange for about a third of the appreciation. 

Homebuyers who give up some future appreciation conserve cash now and don’t take on the extra monthly cost. But the more interesting play right now is shared appreciation for homeowners. 

Let’s say a homeowner with some equity loses their job because of coronavirus. 

A lender can’t do a home equity or cash out deal for them, but they may qualify for a shared appreciation deal. 

Unison and the other players look at debt-to-income ratios, but they’re not making a loan, they’re making a co-investment. 

So they may do a deal like this if the equity profile works long-term (and they may require their cash to pay off other debt at funding).

Here’s Noah CEO Sahil Gupta on helping coronavirus impacted homeowners:

“Today, the coronavirus is shutting down entire industries; we are already seeing more homeowners turning to Noah for help,” Gupta said. “Noah is dedicated to being a long-term partner to homeowners by making our products more accessible during this time so we can put even more money in their pockets.”

Like everything in a crisis market, it’s case by case, but lenders should keep an eye on this for clients who need to tap home equity at zero monthly cost. 

It could be a great niche-y solution in a tough market phase. 

And shared appreciation companies that survive have huge potential later because about 65% of U.S. home equity is owned by folks 55 or older –– these people need a way to tap equity without breaking monthly budgets. 

Can Shared Appreciation Companies Win The Long Game? 

So will shared appreciation companies survive?

Many of you mortgage folks reading this are saying “Nope, the model won’t weather a down cycle.” 

That’s your transactional revenue brain talking.

Unison makes transactional revenue as each deal funds, plus they make recurring revenue by managing a shared equity portfolio for the investors who fund their deals.

But their investors aren’t warehouse lines like mortgage banks use to fund deals. 

Pension plans and other institutional money managers who want housing exposure give Unison money to manage. 

Unison invests that money in people’s homes using these shared appreciation deals and takes an investment management fee for doing so. 

This fee revenue continues even as home buying transaction revenue slows to a trickle. So they trim sales and marketing until transaction revenue comes back.

Survival tactics. 

Who Will Survive The Short Game?

It’s another story if the coronavirus causes massive home price declines over the years. 

And there’s certainly strain right now. Here’s Point CEO Eddlie Lim on stark realities: 

“The growing number of necessary shelter-in-place orders has had a widespread effect on many people and industries,” Lim said. “It affects our ability to order appraisals, notarize documents, and record crucial documents with the county, causing delays throughout our process. The changing economic climate is also dramatically impacting home valuations. We are seeing valuations drop significantly and continuously.”

But it’s still early to accurately predict home price impacts and when home transactions resume a normal pace. Which brings us back to where we started. 

It’s tempting for some to predict doom for fintech models like shared appreciation and iBuyer when they see stark adjustments to stark reality. 

But cost-cutting is crisis leadership 101, and survival is job No. 1 in a crisis.

Mortgage lenders learned how to fight this kind of fight in August 2007. Now it’s the fintechs’ turn.  And I predict we’ll see some true warriors emerge. 

Good luck out there.



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Why Facebook retargeting ads are a digital land grab for agents right now


It’s amazing how fast the business landscape can change. We’re seeing it right now, with the vindictive coronavirus wreaking havoc on our economy, our health and our real estate businesses. 

Many of us are scrambling just to maintain our business, let alone grow it while the market falls apart around us.

But as with any crisis, opportunities always emerge. In all the uncertainty, some will end up thriving and growing while most do not.

Dustin-Brohm
Dustin Brohm, Columnist

So which opportunities can the average real estate agent take advantage of in the middle of the coronavirus outbreak and economic collapse?

Making every $1 spent on real estate marketing and advertising goes much, much further than it would have even a month ago. 

Think about it. So many competitors are now sitting on the sidelines and playing defense! You literally have less competition for the attention of the consumer, at a time when those consumers are scrolling their news feeds much more than usual. Those real estate agents who decide to play offense, and do the right things, can really end up winning big and growing while most are moving backward or playing it safe.

So what exactly should you be spending your precious marketing dollars on right now? Facebook video ads retargeted to people who already know you.

Of course, you could always do what 98% of other Facebook advertisers do, and go right for the conversion or the sale. Almost all of your competitors use Facebook ads for nothing more than trying to capture leads from an audience who has never seen them before. They focus on capturing leads from a cold audience of people who don’t know anything about them. But that’s the hardest way to get leads and to get people to hire you!

It’s much easier to get someone to click a button, watch a video or do a certain thing when they already know who you are. When you are already familiar to them. The best way to stay in front of this “warm audience,” those who already know you, is through a tactic called retargeting. 

Every major online retailer does it. You’ve been retargeted before. Why do you think it is that when you look at a particular product on Amazon that it all of a sudden starts showing up in your news feed? Or when you visit a companies website and then start seeing ads for them everywhere? That is called retargeting, and we, as real estate agents, can use the same strategy to stay in front of our network.

Retargeting is when you show an ad, or a series of ads, to a group of people who have taken a certain action. For example, you show a video ad to only people on your email list. You could show ads to only people who have visited your website, engaged with one of your Facebook posts, or watched one of your previous videos. 

By spending money marketing to those who have already seen you before somehow, every dollar you spend will go so much further. That’s smart even in the best of times, but in this new world of coronavirus-led disruption, it’s absolutely imperative. Spending your money intelligently can mean the difference between maintaining your average level of business over the next six months, or being completely out of business in 6 months.  

You do retargeting Facebook ad campaigns through whats called “custom audiences,” which is like a box of people who have taken a certain action or meet some criteria that you specify, and then running an ad campaign targeted to just that custom audience (aka only the people in the box). There are countless videos out there, like this one, that can teach you how to do it. You just have to take the initiative to seek out the information, and then do it. 

I challenge you to figure out how you can spend more money on marketing right now, while your competition is less than it’s been in years. Make the investment of time and money to learn how to do these ad campaigns the right way.

Facebook ads are a tool, which can be used correctly and effectively, or when used ineffectively, can be completely useless. Hire a coach, take a course, but ultimately you need to have control over your ads. If you just outsource it to some other company, you have no control over the content of the ads, nor their effectiveness, not to mention you are paying much more than if you learned how to do them yourself.

I’m a firm believer that any real estate agent right now who invests some time and some money to master their own ability to generate leads and build awareness of their brand will look back six to 12 months from now – their businesses thriving and enduring – and they’ll only wish they had spent even more.

Think of this time right now as a digital land grab, so you can start dominating the precious news feed real estate of everyone in your sphere of influence. 



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3 refi boom pro tips and 12 best loan officer quotes


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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How is the coronavirus impacting real estate agents?


By now, you have undoubtedly heard about this thing going around called the coronavirus.

According to the Center for Disease Control, the virus has been identified as the cause of an outbreak of respiratory illness first detected in Wuhan, China.

As of today, the virus has been confirmed in over 95,000 people across the world and is being directly tied to the deaths of more than 3,000 people.

Mary Frances Coleman
Mary Frances Coleman, Columnist

Depending on who you are listening to, the fear of a pandemic is either very real or being blown out of proportion and causing unnecessary panic. 

No matter which side you’re on, there are some very real discussions going on amongst real estate industry professionals on social media platforms and at ongoing conferences about what effect the virus may have on the industry.

As you may know, real estate agents have very strong opinions on just about everything, and this topic seems to be top of mind.

This is leading to talks on the effect of the stock market drop on purchases and sales of houses. When the market dips, people tend to become more conservative and hold on to their money. 

That could certainly translate into fewer home purchases, people staying put instead of moving up and also the slowdown on remodeling and improvements due to lack of disposable income. Cash buyers also do not want to sell stocks at a potential loss to cover a close of escrow, and some are even canceling transactions and forfeiting earnest money as a result.

The weaker financial markets do cause less stability in the real estate markets, but some will look at the positive and discuss the opportunity for investors with money to scoop up properties that may not appreciate as quickly as when the financial markets are strong. Some would-be investors may finally pull the trigger on purchasing an investment property. 

Impact on the rental market

The interesting component that wasn’t necessarily part of the discussion during the last financial market downturn is the presence of investment properties used solely as short term rentals. The Airbnb craze has led to a number of investors purchasing for the short term rental market, especially in areas that are heavily traveled and vacation destinations. 

As we see warnings about the spread of COVID-19 and airport advisories being issued regarding travel, could vacationers stop vacationing?

I have a trip planned for Europe this summer with my grown children, but all of that is under review right now as Italy has become third behind China and South Korea in terms of known cases of the virus being reported. 

With the potential for summer vacation plans being canceled, owners of Airbnb, VRBO and other short term rental platforms facing cancellations could be in a quandary.

Much of the income derived to pay off debt on investment property comes during the summer, and if those plans do not manifest into actual stays, what happens to the mortgage payment?

Impact on how agents represent clients

This is another issue I am seeing first hand.

 I live in Scottsdale, Arizona where the month of March is filled with winter visitors enjoying 80 degree days without a cloud in the sky. The population nearly doubles over the winter months, as this is a second home destination. This is also a very good time to be in real estate. Many of the first time visitors are loving the weather and talking about coming here every year.

That’s great for the long term rental market, the short term rental market, as people come year after year and eventually decide to buy their own place here instead of renting. 

This entire scenario brings me to my next question, and one that has been floating around in social media posts by agents: “Has fear of the Coronavirus changed how you are representing your clients?”

I am a member of a number of private Facebook groups for real estate agents and I have seen this question posted across almost every one of them. The answers have been interesting and have elicited even larger responses about how the industry operates as a whole today.

Although most agents have indicated they are not altering their representation of clients, they have been commenting on the changes they have made to the manner in which they represent clients, specifically regarding open houses. 

Many agents have stated they are handing out mini bottles of hand sanitizer at open houses, and explaining as people enter that they are not shaking hands as usual.

There must be a huge run on Clorox disinfectant wipes at the store, as many agents are also suggesting wiping down surfaces after patrons leave the open house. Some have commented that they are taking disinfectant wipes into properties they are showing buyers and using them on doorknobs and other direct to hand surfaces.

There have been suggestions to require those entering an open house to put on a mask, booties and gloves, but those are few and far between. 

The dilemma of whether to hand out business cards, or worse, to require people to sign in using the same pen everyone else does, is real.

It’s fascinating to read the comments that seem to be more set on furthering hysteria instead of having an actual discussion. My favorite comment so far has been an agent who advised in one of the forums that “agents should all stay home” and that she will be “happy to take care of your clients during the crisis!”

As agents contemplate putting distance between themselves and their clients out of health concerns, the situation brings up a larger question: How personal is real estate at this point?

Enter: Technology

Throughout this article, I have been articulating personal experiences, and the question of how personal real estate really is is no exception. 

Last week, I closed on a house in Boise, Idaho without ever having seen it in person. Now I’ve been in this business for almost 30 years and have more knowledge about what to look for and the questions to ask than most, but as I went through the process I started wondering how much personal interaction is really necessary nowadays.

I used a very good agent in Boise whom I have known for years, and she did an excellent job doing all of the things a typical buyer would need and never once did the fact that I was not present effect her representation or fiduciary duties. 

The house is for my son who attends Boise State University, and he was there for the whole process and sent me videos of the neighborhood…etc. My agent and I poured over the home inspection, I watched the videos she sent of every aspect of the property and it was actually a very simple process. 

So, if I can get everything I need information wise online and through the participation of my agent, do I ever really have to meet her in person and expose myself to things like COVID-19?

I remembered back to when I was actively representing clients in the mid-’90s. There was no Zillow, no instant information about sex offender registries and other due diligence items, no e-signature platforms and also, no iPhones. While working in Scottsdale, I represented a variety of second-home buyers from the midwest. I would frequently make videos – yes, with an actual video camera – and send VHS tapes through the mail to my clients back in Chicago to see the homes they were interested in before they bought.

I really don’t see any difference today, other than it’s much easier now. My agent in Boise Facetimed me whenever she was at the property and even from her office when we needed to discuss certain ways to proceed.

Could COVID-19 lead to a change in the real estate industry and create a new process for purchase and sale that does not involve such up close and personal interaction? 

The technology landscape has made it feasible to instantly communicate, watch 3D videos of properties and the surrounding areas, perform lifestyle searches and even place your existing furniture in a property online. 

Maybe we don’t really need to see it in person before we buy it! We do that now when we book Airbnbs, or even hotels, for that matter. 

However, most of us understand that real estate will always require personal contact and experience.

If you don’t physically interact with the property, how can you tell if there are smells in the house, barking dogs next door or if the neighbors have the flag flying outside of a rival football team?

COVID-19 has already affected the stock market, travel, the food industry, the real estate industry and, in some regards, how we maneuver through everyday tasks and life itself. Whether it will permanently cause a change in how we do business is yet to be seen.



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Instant mortgages: marketing tagline or reality?


Instant mortgage approvals are one front of a three-front war for housing dominance I laid out to start 2020.

Now let’s go a level deeper.

Instant mortgages are the endgame of directly-connected consumer data, but who controls consumer data in the end: lenders or consumers? And how do we even define and market instant mortgages today? 

Most Digital Mortgage Definitions Are Wrong 

Before we define instant mortgage, we must correctly define digital mortgage. 

Julian Hebron,
Columnist

The digital mortgage vision finally got on a modern path in 2012 when today’s point of sale (POS) leaders first got started. Lender tech vision up to that point was flawed because it mostly ignored customer experience.

For the next four years, endless bank/lender strategic planning (and media/conference chatter) focused on “Apply On The Phone!” customer experience.

Accordingly, most digital mortgage definitions emphasized modernizing loan applications with directly-connected consumer data but left out the rest of the loan process. 

This limited definition persists today because there are POS functionality or adoption gaps after the initial loan application. Some POS providers don’t power the post-application process – needs lists/conditions management, disclosures, e-signing, etc. And the ones that do struggle with lender adoption of this full-process functionality. 

So now, once and for all, let’s properly define the full vision of a digital mortgage: A digital mortgage enables customers and loan officers to run loans together from application to close from any device or location.

We all know how complicated it is to deliver this vision, but still, we all must push to articulate this vision in this single sentence I’m offering. 

This clarity of vision is critical to driving the adoption of functionality downstream from the loan application.

What Is An Instant Mortgage? 

So if our digital mortgage vision is for customers and loan officers to run loans together from application to closing from any device, then an instant mortgage just speeds up this vision.  

It all comes back to the data connections: an instant mortgage is the endgame of directly-connected consumer data.

Fannie Mae paved the way for this endgame when it launched Day One Certainty (D1C) in December 2016. This removed most lender risk previously associated with direct-connected customer income, employment and asset data. 

In the beginning, FormFree was the only D1C approved data-connection provider, but now the D1C approved vendor list is way longer.

While D1C lender risk relief focuses on direct-connected borrower income, employment, and asset data, lenders also need borrower identity, credit, and debts to approve loans – and data connections can also provide these instantly. 

So the concept – and certainly the marketing – of instant mortgages is already well underway. 

Instant Mortgage Marketing To Consumers & Lenders

On the consumer side, Quicken Loans launched Rocket Mortgage in November 2015 and took it mainstream with it’s “Push Button, Get Mortgage” campaign in February 2016.

“Push Button, Get Mortgage” is how the instant mortgage vision looks to consumers, and marketing matters because this consumer push launched Quicken Loans to the top of the industry. 

In 2019, Quicken Loans was America’s No. 1 retail mortgage originator with $142.8 billion funded loan volume in 2019, per Inside Mortgage Finance. Wells Fargo is number two with $94.25 billion in 2019 retail volume. 

On the lender/banker side, POS provider Blend launched One Tap Mortgage Pre-Approval in September 2019.

One Tap Mortgage Pre-Approval is the closest thing to how the instant mortgage vision looks to lenders today, and the instant mortgage vision will accelerate whether or not lenders agree with a certain POS provider’s marketing. 

Why? Because Quicken Loans and other companies with nine-figure consumer marketing budgets will continue training consumers to expect instant mortgages. 

Instant Mortgage Marketing vs. Reality

Now, it’s February 2020 and Apply On The Phone is a commodity because most lender or third-party software does a great job delivering this. 

Instant loan approvals are the next frontier, and an instant mortgage needs two things: 

  1. Six Direct Connections to all required borrower approval items: identity, credit, employment, income, assets, and debts. Even though we already have most of this today, it’s not yet “one tap” or “push button” seamless for the majority of customers. But lenders shouldn’t sleep on instant mortgage marketing while waiting for the functionality to get better and faster. You must market to the vision, because it’s happening with or without you. 
  1. Longer Duration of Connections: most data connections last 60 days, which is enough time to manage the app-to-close cycle for refis and certain purchases. When refis or purchases take longer, these connections can be refreshed. More below on permanent connections, which are one of the most exciting things about instant mortgages. 

Instant Mortgage Endgame: Consumers In Control  

If instant mortgages are the endgame of directly-connected consumer data, then what is the endgame of instant mortgages?

The answer lies in the duration of the data connections. If the connections were permanent instead of 60 days, then a borrower can be approved all the time. 

Banks and lenders salivate at the idea of having permanent real-time data feeds on customers so they can make offers on an ongoing basis. But consumers either already do or will eventually feel uneasy about a single institution having all their data connections. 

Today banks and lenders “own” income, asset, credit data on customers, but it’s finite. 

Will these direct-connections go from finite to permanent? Or will consumers own their data connections and only provide them to lenders with the best offers? 

I’ll go to the next level and answer these questions shortly. And I’ll also cover the property approval part of instant mortgages shortly. Stay tuned.  



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