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How a Simple, Targeted Program Can Grow Your Future Mortgage Business

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In 1990, five years into my career in the mortgage business, I learned something from a successful new construction salesman that stuck with me for the last 30 years. The salesman’s name was Ed and he was the highest producing salesperson for a major builder. What was Ed’s secret? He listened to every prospect that came to his model center. If they weren’t ready to purchase a home yet, Ed would find out why and discuss the timeframe before they could purchase. After the prospect left, Ed would write conversation details on a card and file it in a small box that was always with him. It was not uncommon to see Ed pull out the “ready clients” to follow up with. It was also common for the builder to get notes that praised Ed’s follow-up as the reason that the prospect finally purchased a home! Ed simply determined an approximate time a client would be ready to purchase and then faithfully followed up to get their business.

 

Pam Marron, a loan originator at Innovative Mortgage Services Inc.From 2016 through 2019, I was on a U.S. Department of Housing & Urban Development (HUD) committee called the “Housing Counseling Federal Advisory Committee (HCFAC)”. While serving, I learned a great deal about what HUD-approved housing counselors could do to get clients ready for a home purchase. Housing counselors can help clients to correct, build and consolidate credit. Many counselors know about downpayment assistance programs, often more than my mortgage colleagues. And housing counselors educate clients on the proper budgeting needed to own a home. They are aware of the reasons that keep clients from purchasing a home … but work with these clients to get them ready for homeownership.

 

How many of us try ourselves to assist challenged clients … until business picks up and needed attention becomes scarce? What if there was a valid resource to send these clients to for detailed help to get “mortgage ready?” That resource is a HUD-approved housing counselor.

 

So I and others on the HUD HCFAC worked with housing counselors to develop a simple, structured path for loan originators to refer challenged clients to HUD-approved housing counselors. Similar issues that prevent a home purchase were narrowed to three specific areas of greatest need:
 
Credit: Whether negative credit, no credit or too much debt (and NOT credit repair!)
Downpayment assistance: Including wholesaler programs available to independent mortgage professionals!
Budgeting: Saving for a home purchase
 
Utilizing housing counseling agencies (HCAs) is already done by banks who consistently send challenged clients to HCAs and pay for services with Community Reinvestment Act (CRA) funds. But independent mortgage loan originators don’t have CRA funds to pay for services and most are not even aware of what housing counselors can do to assist clients.

 

To make this path possible, a memorandum of understanding (MOU) was created to serve as an agreement between the challenged client and the loan originator and is provided to the HUD housing counseling agency. The MOU states that the (pre-determined) cost for housing counseling services paid upfront by the client will be credited back towards closing costs on a future mortgage by the referring loan originator (the MOU can also be used with real estate agents). The MOU outlines services and credit to be provided and was developed with direction from the HUD Model Funding Agreements and Fee Structures Manual.

 

This provides multiple benefits to mortgage loan originators. The structure allows for:
 
►An MOU for credit towards closing costs on a future mortgage from the referring loan originator if the client returns to that originator for their mortgage.
►A bank loan originator who already uses housing counseling services that are paid for by CRA funds from their institution to continue using housing counseling services with the MOU agreement for credit if they migrate to the independent loan originator side of business.
►A partnership with a HUD housing counselor who is trained to take care of client issues and will notify the loan originator when the client is “mortgage ready.”
►Continued communication between a loan originator and a real estate agent about a referred client who is getting “mortgage ready.”
►Never saying “no” to a client! Provide the option for help with a HUD housing counselor.
 
Consistent communication between the loan originator and the HUD housing counselor provides your “approximate date of follow-up” to update your “future client cards” in your own box. I know, because it’s working for me.

Stay tuned.



This article originally appeared in the January 2020 print edition of National Mortgage Professional Magazine.


 

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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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