Trevor Curran

Referrals, referrals, referrals. That’s where business is at.

I get much of my business from referrals, either from previous clients, or from attorneys, accountants, and Realtors.

Every time a new client is referred to me, I feel that someone has trusted me with something special, her word and her reputation.
The time this person took to refer a friend, family member or client to me indicates a level of trust you just can’t get by advertising any other way. I take each referral as a vote of confidence in my experience, talent, forthrightness, and product.

I refer my clients to other professionals, too.

A new client asked me recently, “How does an attorney get on your list?” I confess my reply was lengthier than I thought it would be. I ran down some experiences I’d had with different attorneys on my list; how I came to know them, the quality of their work, ethics and communication. I realized at the end of a rambling monologue the bottom line for me was the fact that I could put my personal reputation on the line and refer my client to these attorneys with complete confidence in their professional abilities.

Listen, if I want a bad reputation, I can do that myself, I don’t need help from anyone else! When I refer my client to any other person for any reason, I do so with the knowledge that my good name will remain intact. Indeed, very likely my reputation will be enhanced through such a referral experience. I love when a client calls me later and says, “Wow, thank you so much for referring me to that accountant/attorney/engineer, etc!” That client’s good experience reflects handsomely on my good name.

I decided to write this week’s article on this topic because of some recent experiences with clients referred to me.

In one case, the client and her daughter are purchasing their first home. They were approved for a mortgage through a mortgage broker. The loan they were approved for was a Sub-Prime loan. Unfortunately, the Sub-Prime bank that approved their loan fell victim to the recent disaster in the marketplace and went out of business. The mortgage broker could not find any other way to approve their loan.

This First Time Buyer was left not only without a loan approval, not only with her dream of homeownership about to be smashed to smithereens, but also with her contract deposit of $22,000 at jeopardy.

I found a way to approve her loan and we’ll be closing in about two weeks. The client had an attorney referred to her by the original mortgage broker. I called this attorney, left detailed messages, and never heard from him until almost a week later.

Now, in any real estate transaction, you hire an attorney to protect your interests, and, in this particular instance, your downpayment of $22,000. To my mind, any atorney who doesn’t respond to a message from a mortgage professional in the way of, “I’ve preapproved your client’s loan, she wont’ lose the house, please call me immediately,” with his client’s dreams and downpayment at stake is an attorney who doesn’t deserve the referrals he’s receiving. He doesn’t seem to really care about his client. Needless to say, that attorney will never be on my referral list.

(The client is now working with a brand new attorney from my list who spoke with the Seller’s attorney within minutes of the client retaining her, then updated me via email and telephone)

The second client recently referred to me is a young woman whose mother passed away recently with no will. This woman lives in the house with her children, but the deed and the mortgage are both in her mother’s name. Her first words to me were, “I’ve been getting a lot of advice and I don’t know who to trust. I just want to work with someone who will guide me correctly.”

I immediately referred this woman to an attorney whose practice includes estates. I also managed to get a preapproval for a mortgage for the client, even though her credit score is quite low.

These two situations inspired me to write about referrals because I feel that my referral “team” is one of the best any finance professional could have. At the best of times, it’s good to be referred to a competent professional for whatever service it is you need. And now, in these very uncertain real estate and mortgage “times” it is more important than ever to get the right referral to a team of professionals who work in the best of all ways: competently and with confidence their work mutually supports their own reputation and the good name of the source of the referral.

When you have a foundation of good moral objectives, clear moral fundamentals, then your business sense of how, when, where, why and the “what” of doing the right thing for your clients falls easily into place.

A good moral compass guides you everyday in how you conduct yourself personally and professionally. In the area of finance—whether it’s mortgage financing, accounting, stock investing, or any other financial endeavor one might undertake—that compass needs it’s own financial indicators, or “points” of North, South, East and West.

I’m proud of the way I work with my clients. I strive to find the best path towards the best loan approval for them. My advice to my clients is always seasoned with that moral sensibility so that I can objectively guide them through one of the most difficult processes of their lives, that of buying a home.

These same clients often rely on me for guidance in other areas of finance and the finances of homeownership. I use my financial “moral” compass to steer them on the correct passage, too. When I know how to advise based on my personal or professional experience, I use that to help them. When I don’t know the proper counsel, I direct my clients to professionals who know better than I, such as attorneys and accountants.

Ben Stein is not only one of my heroes, I consider him to be one of the “points” on my personal financial “moral” compass. Ben gives great advice; his observations on all things financial are clearly rooted in a strength of character that only comes from having a powerful moral direction to do the right thing.

In this week’s NYTimes.com’s “Your Money” section, Ben quotes Martin Luther King in an article about backdated stock options.

Ben’s quote of MLK: “Somewhere somebody must have a little sense, and that’s the strong person.”

While you may have no interest in stock options, or insider trading or the quirks of the S.E.C.’s dealings with corporate America, you will definitely discover in Ben Stein’s writing a compelling moral message.

I count on just such messages from Ben to help define how I conduct my business, advise and work for my clients. I recommend reading this article and more of Ben’s work: it will help you, too, with your own financial moral compass.

Lo and behold, in today’s NYTimes.com there is an article about how sophisticated software sped up the subprime mortgage boom.

Below is the link to the article, but here’s the paragraph that caught my eye:
“The old way of processing mortgages involved a loan officer or broker collecting reams of income statements and ordering credit histories, typically over several weeks. But by retrieving real-time credit reports online, then using algorithms to gauge the risks of default, Mr. Jones’s software allowed subprime lenders like First Franklin to grow at warp speed.”

Here’s the link: Subprime Loan Machine

Now more than ever, Homeowners will need to work with experienced Loan Officers to find the best solutions to their refinancing needs.

An experienced professional does his homework so the client doesn’t waste time on the wrong loan. A Loan Officer with experience behaves like a trusted advisor, using experience to properly qualify the loan scenario, including checking value and credit. The advisor then looks not for the program he wishes to “sell” to his client. Instead, the experienced Loan Officer recommends the loan program that best helps the client accomplish his goals.

In this way, the Loan Officer is looking far ahead, beyond the loan closing with this client. The Pro is thinking about reputation.

When you do the right thing for your client, you enhance your reputation as that trusted advisor.

Doing the right thing means doing your homework without wasting the client’s time or money (on appraisals and application fees for loans that just won’t work). Doing the right thing means listening to the concerns and goals of your client. You then advise the client on the best loan product for his needs.

You DON’T push some ridiculous loan on an unsuspecting client. You don’t give them a loan that’s going to put them in a worse position further down the line. Instead, you counsel, you advise and you prepare your client for the best possible refinance at this time. You don’t abuse that trust: you earn and maintain the client’s trust.

The client always remembers, whether the experience was good or bad. And when the Loan Officer does the right thing, the experience is always good. The client remembers. And tells friends and family about the excellent Loan Officer who worked on his behalf to find the right financing.

This evening I saw a credit report for a retired homeowner on a fixed income. This client wants to refinance his first mortgage and second Home Equity Line of Credit into one loan. He also wants to take some cash out to put some new siding on his house.

Obviously he has spoken to quite a few mortgage people in the past three months. How did we know this? Because there were 59 mortgage inquiries on his credit report!

Now, it didn’t take long for us to determine this client had a particularly difficult financing situation. So we took the sober, professional approach of experienced Loan Officers.

First, we consulted with our appraisal staff to determine what would be a reasonable value for the client’s house. Next we spoke with the client about the type of financing he’s most comfortable with.

He really seemed to appreciate our professional approach.

Obviously the 59 other numbskulls who had spoken to him (and run his credit) before us, couldn’t find their way to providing the proper counseling. They didn’t know their Underwriting guidelines well enough to consider a wide variety of financing options, then discard those that made no sense for this borrower.

And that’s what it’s all about in today’s market when considering refinancing: working with an experienced professional Loan Officer who takes the time to listen, the time to care about both your financial comfort and the Loan Officer’s professional reputation.

These last couple of years have been really insane in the mortgage business.

Zillions of newbie loan officers jumped on the mortgage bandwagon hoping to make their first million dollars before they turned 21. A Sub-Prime industry out of control with lax underwriting, insanely cheap loan products (armed with timed fuses to explode in the near future), and more of those newbie loan reps eager to create business streams from experienced (and sober) loan officers like me.

Worst of all: consumers seeking to be guided not by the voice of experience, but instead hellbent on finding the LOWEST PRICE regardless of the consequences accepted negatively amortizing adjustable rate loans sure to bring trouble for that homeowner later on.

Whoa. Stop the carousel. I’m dizzy and I want to get off.

Wait a minute. I never got ON the carousel in the first place. But, man, it was difficult to do, avoiding that freak show ride! Think of all the money I could have made!

I kept on quoting 30year fixed rates for regularly amortizing mortgage loans.

You know, the kind that gets you a great rate for your circumstances (credit, income, equity), but doesn’t put you into a potential nuclear meltdown 12 months after closing. The kind of loan that helps you achieve your goals of homeownership or refinancing at a rate that doesn’t change and a payment that actually works over time to reduce your loan balance. The kind of loan that most consumers searching for the BEST QUALITY AT THE LOWEST PRICE should have. The kind of loan that doesn’t put you in jeopardy of losing your home in foreclosure. That kind.

But now, to quote Dylan, “Times, they are a changing.”

Think of the worst car wreck you have ever seen on the highway. You’re in the southbound lane, you’re stuck in bumper to bumper traffic backed up three miles, and then you come upon the scene of the accident after forty five minutes of cursing and steering-wheel-pounding. You see it: the accident in the NORTHBOUND lanes. That car wreck.

And boy, when you see it, it’s a grisly, twisted-metal, rubber-skidmark mess of something that used to resemble a couple of motor vehicles.

Well, that’s what the Sub-Prime mortgage industry looks like right now. These guys are in such a wreck, the programs are literally changing or disappearing every couple of hours. Not to mention the Lenders, themselves.

They have finally stopped counting the commission money and actually started checking the foreclosure statistics. After the fact. Yeah, that’s what I’d call excellent “due diligence” for Bankers!

The owner  made a joke in our sales meeting this morning.

A loan product was outlined. Our Operations Manager said, “Those are the guidelines for XYZ Sub-Prime Bank for that product.”

“Until this afternoon,” said the owner, himself.

We laughed heartily. Jocularity rebounded around the table.

Why were we so mirthful? Because we’re still standing, originating good loans for our customers while all the fledgling-fast-talkers are running away! Because we tend to take a more sober approach to mortgage lending. We actually try to watch out for our customers. We don’t put them into loan products that are timed to explode sometime in the near future.

And when all those newbies are long gone, we’ll still be here, doing the right thing and closing mortgage loans.

Right, that having been said, let me say this: LOWEST PRICE IS NOT THE BEST PRODUCT!

(I came across that blurb yesterday when browsing through a circular from a computer superstore.)

Let’s jump back up top where I talked about how much money I could have made. Yes, I could have quoted low and written a whole lot more loans than I did.

Instead, I banged my head against that (concrete) wall telling prospective clients: “I won’t put you in a loan product like that. It’s not good for you. Let’s talk 30 year fixed rate, that’s the best loan for you!”

And I lost a lot of those prospects. And I didn’t make the money. Boohoo.

But I couldn’t do it. I couldn’t quote low just to write the loan. I couldn’t in any good conscience put my customers into a loan that would increase the loan balance every time they made a payment. Or a loan that would adjust to some ridiculous rate after only one year (Oh, the LIBOR Index is evil incarnate! What, all of a sudden my client’s income is going to increase 150% in twelve months? I think NOT!).

No, I could not do that.

But the folks refinancing their homes wanted to obtain the LOWEST PRICE FOR THE BEST PRODUCT. So they ran off to that 8pm telemarketer, fresh out of the fast-food-franchise-fryer-patrol, who promised a payment substantially lower than the one I had just quoted.

No matter which of a dozen ways I tried to explain how bad those loans were, all the prospective refinancers wanted to hear was: LOWEST PRICE.

Which brings us full circle to the crashing Sub-Prime industry, competition, and joyful, experienced, mortgage professionals in March, 2007.

The industry is a car-wreck. Aggressive loan programs are disappearing faster than Bruce Willis in “Armageddon” when the atomic bomb explodes. Lenders are waking up to analyses of their originations and finally using the term, “Common Sense Underwriting.”

Those youthful Millionaire Wannabee “Loan Officers?” Gonzo! All of a sudden the fast food restaurants ‘round Long Island seem incredibly well-staffed!

What was never real competition for we experienced professionals, only the commission-seeking enemy of consumers is now gone, gone, gone.

That leaves us, the happy, experienced, mortgage folks.

Lowest Prices? Yes, we’ll get that for you if it’s the right loan for you.

Experience is what we bring to the table and we’ll use it by the truckload to provide our clients with valuable loan services that get them where they want to go without any gimmicks, ticking time-bombs, or potential car wrecks.

Bank on our experience to get what’s BEST for you at the LOWEST price that makes sense. Because when the smoke clears from that northbound-lane car wreck, we’ll be standing there waiting to help you navigate the highway with patience, confidence, and a loan product that serves you instead of explodes on you.

NY Metro blog Curbed presented an interesting article and subsequent discussion about brand new condominium apartments selling in Brooklyn for $355,000. The Buyer needs only $10,000 for downpayment; the builder is paying all the closing costs.

This certainly is a wonderful opportunity for anyone to buy a first home with minimum investment: one of the defining philosophies of my entire career.

I was very intrigued by the subsequent discussion. And more than a little bit concerned once again at people’s lack of tolerance, rudeness, and downright nastiness when posting to internet discussions.

I posted some observations to the Curbed thread. Here they are:

“This article points to a truth I learned when I started in the mortgage biz eighteen years ago: people want to own their own home, but, living in NY Metro area, it’s difficult to come up with large downpayments and closing cost monies.

Say what you will about the location, the opportunity to own a “piece of the rock” for $10,000 is fantastic. And, as someone pointed out, the cc’s on new construction are substantial, usually 8% of the mortgage amount ($27,000 in this case). So, having the builder pay that is not only unique, but enhances an already great opportunity.

I wanted to make an observation on the whole location argument. From my reading of this thread, it appears there are those who believe the location of this condo is horrible, others who think it’s fine, and others who don’t care about the location, they just want to own something at a reasonable price.

I started out lending mortgage money in 1989. That’s long before NY was such an attractive place to live (in fact I escaped to the suburbs just three years later; couldn’t wait to get out of the city I grew up in). Back then, graffiti, filth, dog-poop everywhere, crime, poor subway service, were all the norm for life in the Big Apple.

New York was not then the shining star it is today.

You all might find it difficult to believe, but even then, people bought homes and apartments in New York City. And they did it in huge numbers. People weren’t thinking about the dismal state of things around the city, instead, they wanted to make a dream come true, own a home, and improve their financial (and ultimately personal) situation.

Homeownership does that. No matter your opinion on renting versus buying, bubble versus crash, or where your money really goes (landlord or bank): owning a home is one of the single most beneficial experiences any one person or family can undertake.

Finally, I wanted to address the observation about high foreclosures with a low downpayment. Forget it. I’ve been putting people in homes with very little money down for nearly twenty years. And folks pay their mortgage.

The notion that low down is more likely to lead to foreclosure is a myth. I know it from real world experience. Foreclosure is more likely to result from a financial cataclysm like job loss, illness, or divorce, not from putting low downpayments.”