Early Payoff Penalties Pose a Real Risk for Brokers

January 19, 2023

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.

Fortunately, Camber Marketing Group is here to help. Our team protects brokers using portfolio monitoring solutions that issue alerts whenever recent clients go shopping for a new mortgage.

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.

3 Questions to Ask Yourself as a Loan Officer in 2021

May 6, 2021
Want to have a great year and become a successful loan officer? Start with asking yourself these 3 questions:

  1. How warm are my leads?

A prospect reaching out to your business seeking information is the warmest lead you can receive. Inbound lead calls give you a competitive edge because your ideal customer is already on the phone!  Now, it is up to you, the Loan Officer, to Read more

Millennials are dominating home loan refinance

February 22, 2021

2020 brought a lot of new realities into our lives – one of them being ultra-low mortgage rates.

With national mortgage refinancing rates hovering at record lows, many millennials have been taking action to lower their monthly payments and see significant savings long-term. According to the latest *Ellie Mae Millennial Tracker, refinance activity climbed to 45% of all loans closed by millennial borrowers Read more

17.8 Million homeowners RICH with equity

February 11, 2021

According to Attom Data Solutions 17.8 million residential properties were considered equity-rich in Q4 of 2020.

To put this into perspective, that is one in three of the 59 million mortgaged homes nationwide now considered equity-rich. Equity-rich means that the combined estimated amount of loans secured by these properties was 50% or less of their estimated market value. A continuous rise up from 28.3% the previous quarter and 26.7% the year before. Read more

Refinance Activity up 105% over last year

December 21, 2020

The Mortgage Bankers Association has reported that after two weeks of decreases in mortgage applications, applications just increased 1.1% during the week of December 6-11, 105% higher than this same week one year ago. Mortgage rates have now set a 15th record low for 2020. Read more

Record Originations in Q2

September 23, 2020

There has been a record $1.1 trillion in first lien originations in the second quarter of 2020 alone. These record breaking numbers have tested mortgage professional’s capacities in ways they haven’t seen before, but Read more

Customer Retention in a Refi-Ready Atmosphere

March 9, 2020

With mortgage rates plummeting so quickly, millions of homeowners could benefit from refinancing their home. The average rate on the 30-year fixed mortgage fell to a record low of 3.29%, Freddie Mac reported this week. That’s down from the previous low of 3.31% in November 2012, in the wake of the financial crisis.

Read more