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QUESTION: Hi Rob, I really enjoy your emails and your ideas. I have a question for you. We do almost 100% piggyback loans (70/30, 80/10, 70/20, 80/20, etc.) I have found that the Good Faith Estimates generated for these loans can be extremely time consuming... Do you have any solutions? Pat Cray Gold Coast Lending ANSWER: Hi Pat, Generating Good Faith Estimates (GFE’s) can be extremely time consuming, especially if done the wrong way. I remember when I was first starting out in the industry, it seemed like all I was doing all day was filling out GFE’s, and getting no where. When talking to a customer, it’s easy to say, “Hey, I’ll just send you a GFE, and you can look it over and tell me what you think”. But, this is the wrong way to approach things. Let me explain…here are a few tips to help you. 1. On the sales call, don’t ever offer to send a customer a Good Faith Estimate unless they specifically ask for one. What they will do is take your estimate and nit-pick with you over ever line item. Then they will compare you to everyone else’s GFE and you will LOSE. Yes. Lose. Because with all the sharks and charlatans out there, there will always be someone who will magically “beat your closing costs”. And, as we all know that much of the closing costs are not known at the initial time of the loan origination. 2. Instead, what you want to do is send out a “loan proposal”, which is something that they can review and includes all the payments, selling points, etc. about the loan. Are they consolidating debt? Taking cash out? Or have been previously renting? These are all things which you will want to cover and are motivating “hot buttons” that you can use to help them decide. In my business, I use excel templates that simply pop all my numbers in (also included in my system). Other loan proposal packages in the industry are The Mortgage Coach, and Loan Magic. These are the big expensive guys. I offer a simplified one in my system which does the same job without all the bells and whistles. 3. Of course, once the sale is made and you are proceeding ahead, go ahead and send the GFE. You’re legally obligated to (within 3 days of taking the 1003 application). If you are just chatting with the customer and have just done some initial pre-qualification work, you don’t have to. My loan closing system will help you get a pretty good idea of someone’s situation before taking a full 1003. In this business, time is money, so if you can save yourself from time-wasters, you’ve actually made yourself more profitable in the long run. You can learn more about my system at http://www.loanclosingsystem.com 4. If you do send a GFE to a customer before the loan has been completely SOLD, expect them not to call back…be shocked…confused…irate…or a whole host of other responses. Many of them, and even ones who have bought property before, have forgotten what a GFE looks like and all the fees that are included. 5. Along with every GFE, I send a pre-written template letter that has an explanation of many of the fees listed, and emphasizes that we “disclose all known fees upfront”, and have “no broker fee, no origination fee, no rate-lock fee, no application fee, etc. I include one of these templates in my Sink or Swim Loan Closing System you can easily modify and use as your own. 6. Always remember to follow-up immediately after sending the GFE. Make sure they have received it. It’s also a good excuse to give them a call back. Any reason to “hit” the customer again is a good one. For example, “Mr. Prospect, I know you asked for a GFE in order to help you decide on a mortgage. I just wanted to let you know that I emailed/faxed that over to you and was calling to make sure you have received it. Again we have no junk fees like others have, and I wanted you to see upfront that we are being honest in our assessment of the total fees on the loan. Of course as you know third-party fees may fluctuate slightly, but our fees will remain the same. Would you like to go over the Good Faith Estimate, line by line?” 7. Don’t include junk fees. Customers hate being charged for application fees, rate-lock fees, broker’s fees, doc prep fees, and unnecessary other fees. They will call you to the mat for these. Sometimes it’s good to put a little bit of padding in the fees, so you can take some of them off and be the “hero” to the customer. It all depends on the personality type of the customer. If you know they are a penny-pincher, throw in a few small fees, then agree to take them off as a gesture of good will. They will love you for it. :-) But hold your ground too and tell them that this is a special case and you expect that they will continue on in the process with you until closing. Sometimes, I tell them that I have to eat those fees taken off (this really gets them going). 8. Have GFE templates set up in Calyx Point, Genesis or whatever loan origination software you use. I simply click on the loan type (refinance or purchase), then loan terms and state, and all the information is input. I just have to tweak the variable fees by hand, such as title insurance and stamp taxes (if any). It takes me about 30 seconds to get a GFE out the door. I advise you to do the same. Refer to your product manual about how to do this or call technical support. Setting up templates is a powerful yet simple way to dramatically impact your business. 9. For combo loans, such as 80/20 etc. you will have to send two GFE’s, one for each loan (remember it is really two loans under one transaction). Most of the GFE fees will be absorbed by the first loan and the smaller second loan will just have a few smaller fees on it. Nothing much to worry about though, because it won’t send your closing costs skyrocketing. (Now, trying to sell an 80/20 combo loan to a customer is a whole other article!!! Lol!!!) Again, having ready-made templates will speed this process. In conclusion, don’t waste your time sending Good Faith Estimates to people who won’t buy. Spend an extra minute or two upfront to gather the correct information and see if the deal is even a decent go-ahead or not. Develop your own method of determining this, or use my already built system at http://www.loanclosingsystem.com The choice is yours, but the most important thing is to take action and modify what you are currently doing. Only by doing this will you become the top producer you deserve to be. Click here to see a printout from a recent commissions report with my biggest month ever! Download the entire system now and start earning more money immediately. Click here...
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