Metamorphosis of the Mortgage business

A lot of companies were seen to taking up the sub- prime lending. However, the rise in the defaults of the loans after 2007 saw them reorganise themselves to survive and come up with new rules to keep up the business.
For several years there was immense potential in the mortgage industry as far as growth is concerned. All the people associated with this business like bankers and brokers earned exorbitant amount of profits. As mortgage professionals the originators also got a share of good amount of profit. The mortgage industry shined, became bigger, more respected and well organized.

As the time lapsed, there were a lot of regulations which came into the foray. With too many players in the financial lending sector, the states came up with regulations and legislations to govern them. These were aimed at creating a levelled platform for operations for the lending companies and also laws which could benefit the customers and protect their rights.
Once can understand the level of competition from the fact that the mortgage loans involve huge sums of money and even a marginal difference in the interest rates could mean huge amount of savings for the customers. With too many companies operating in the space, they are trying every bid to see that they get into a healthy competition, maintain transparency in  the deals that they make with the customers and aim towards offering the best of the services to the customers they rope in. However, they must also stick to the guidelines set by the Federal government for the operations and do no harm any of them.

The Old Business Model – Refinance Boom and Subprime Era
The Market –
So the customers of this type of business models were the people who were unable to acquire sum of money with the help of traditional means of financing. There was a need for alternative financing methods in order to help those who were unable to get help using the traditional sources. This new category of buyers were the one’s which could not fulfil the criterion of paying 20% of the total amount as down payment for various reasons like car purchase or home purchase. Borrowers with bad credit history and non verifiable income source also applied for such mortgages.

Business Method –

Finding right customers topped the priority list of the loan originators. They would try and locate the customers from the different sources much of which included the register of the mortgage filings and the data available with the country records. By looking at the same the originators would get the data for the people who were presented with the Notice of default(NOD), foreclosure warning letters and even the sales which happened through the Sherriff’s Office. The subprime lenders would offer loans to the customers in order to fight their default and the foreclosure situation. The loans were offered on a two year Adjustable rate mortgage pattern and the customers had a chance to get them refinanced two- three times through the same loan originator.

Money Sources –

Any of the borrowers who already featured in the list of defaulters or were up for foreclosures could not get loans from any of the lenders. So one of the most valid questions at this juncture was to look for the avenues which could offer sustainable bad credit personal loan options to the customers. A number of companies which included Countrywide B&C lending, Ameriquest and others entered the market and came out with the products like low income -less than perfect credit loans, foreclosure buyout loans all of which required the least in terms of documentation.
It was between the years 2000-07 that the loans in the form of the subprime lending witnessed a surge in the levels. Soon to follow was the recession which saw a lot of people defaulting the loan due to sudden financial emergency situations they were forced into. All these companies were thus forced into taking to new measures to come up with business models which could help them continue with their mortgage business.

New Business Opportunities –

Many loan officers are comfortable with the basics of foreclosure prevention which is traditionally 30-60 or even 90 days of consolidate first and second mortgage when possible. The problems which the officer’s face is lack of lenders or investors in the post sub prime era. No one is ready to invest or lend money to borrowers with delinquent history and declining property values. But now the investors, lenders or originators can formulate new partnerships on loss mitigation and loan modifications as opposed to old fund model. So for this reason the new loan officer should ace in loss mitigation and loan modification. He should be a specialist and an improved version of the older form.
Keep the Business Legitimate

Find all the mortgage companies who provide loans for conducting modification assistance and that too loans should have mortgage facility. Do an extensive research about all the companies which you come across for that same reason. Conduct thorough investigation and homework in order to find the best loan and lender possible. Also go for online tutorials and learn from the feedback given by existing users. Know all the local, state and federal laws which are associated with this king of loans for modification loans as they keep on changing from one area to other. Be very transparent not only to the prospective customers or investors but also to the lenders. Servicers, industry insiders, government regulators etc.

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