Recent rate movements are prompting an uptick in early payoffs, creating new risks for mortgage brokers.
Mortgage rates have dropped rapidly over the last few months. In December, alone, they stood at three-month lows and were an entire point below November’s rates.
Attractive new loans will be coming online, and competitors are eyeing your customers, ready to pounce with a refinancing offer.
The risk is real for brokers.
After all, you rely on services such as refinancing and home equity loans to boost your profits after an initial transaction has been completed. If your borrower pays off their loan early, these additional services also evaporate, leading to reduced profit margins over time if multiple borrowers follow suit.
But there’s more. Mortgage servicers who purchase your loans on the secondary market aren’t looking to lose money, either. To protect their investment, they’ll institute Early Pay Off (EPO) penalties, which guarantee a minimum return if that loan is paid off in under 4-6 months. These EPO fees can easily surpass $10,000, wiping out any commission accrued and setting a broker back big time.
Our services help to keep you engaged with customers who are seeking to refinance. You will be notified within 24 hours of a credit inquiry, allowing you to intervene before early payoffs occur. A retention letter will even be dispatched on your behalf.
We can monitor all closed loans up to the previous month, providing clarity and actionable data that will ultimately protect you from shelling out for early payoff penalties.
Not only that, but early intervention may be critical to saving a customer from hidden fees that they are blissfully unaware of, simply because they were sold a line from a competitor.
As always, it’s important to keep in mind that happy customers who feel financially secure are ultimately beneficial to your business and bottom line. Remember: the likelihood of selling to an existing customer in the future is far greater than selling to prospects. Striking that happy medium and making business decisions that are mutually beneficial to all parties is the key. And Camber Marketing Group can help.
Reach out to our team today, protect your earnings, and never lose another loan.