Magazine article Mortgage Banking

Winning More Loans and Meeting RESPA's Challenges

Magazine article Mortgage Banking

Winning More Loans and Meeting RESPA's Challenges

Article excerpt

We are all keenly aware that in today's extremely competitive mortgage market, making your company stand out from other lenders has become increasingly difficult. Mortgages have become a commodity in the eyes of most consumers, and price is often the differentiating factor. So the real question is: How can I help my loan originators win more loans?

To stand out in the crowd, lenders either need to have the lowest rates or the lowest closing costs. Given that interest rates fluctuate, offering the lowest closing costs may very well win more loans.

One of the quickest and easiest ways to accomplish this is to reduce the cost of title insurance and settlement services that you list on your Good Faith Estimates (GFEs) and ultimately pass along to your borrowers.

But taking into account the new Real Estate Settlement Procedures Act (RESPA) regulations surrounding the Good Faith Estimate and HUD-1 documents, the situation becomes more complex. Lenders now must take extra steps in order to ensure their mortgage originators and/or the company itself will not be eating costs due to pricing on the GFEs that ends up outside tolerance levels on the HUD-is.

Some lenders have had to make changes to their internal control processes and seek additional or replacement providers in order to remain or become more competitive and deal with the compliance issues they now face.

The GFE can be your best competitive tool

The new GFE does not allow for much wiggle room. Now you must ensure that many of the costs listed stay within either the 10 percent or even zero percent tolerances on the HUD-1 at closing.

This may suggest to some lenders concerned about compliance repercussions that overestimating or padding some or all of the costs for these items is a reasonable defense. But overestimating some or all of the closing costs on your GFEs will likely lead to losing the transactions to competitors offering lower costs on their GFEs.

So, your best bet should be to list the lowest possible closing costs and take the extra step to explain to your borrowers that, as an organization, you have indentified and partnered with low-cost providers for title insurance and settlement services. This will enhance borrowers' perception of your loan originators--and your company--and will certainly help you compete for and ultimately close more loans.

Compliance and competitiveness work hand-in-hand in 2010

Working with a title insurance and settlement provider that enables your company to offer the lowest rates and fees available and guarantees accurate, comprehensive quotes upfront will give your loan originators a significant advantage when preparing GFEs. It can make using the GFE your best competitive tool.

Borrowers are now highly encouraged to shop around for a mortgage. And certainly, many lenders have already reduced their own fees to the extent possible. But there are more reductions to be found if you know where to look.

There is price competition now in almost every state among title insurance providers. Lower-cost title insurance and settlement providers that also consistently offer a high level of customer service and are financially strong can deliver savings in the hundreds--and in some cases, thousands--of dollars on title insurance premiums and settlement fees.

Those significant savings can help your loan originators deliver the lowest closing costs on their GFEs. Your organization will be more competitive and close more loans if you work with a provider that offers lower title insurance premiums and settlement fees, as long as that provider guarantees all its rates and fees upfront.

For example, EnTitle Insurance Co., through its ENTITLE DIRECT channel, provides title insurance and settlement services in 32 states and the District of Columbia, with premiums that are up to 35 percent or more below what's charged by traditional providers. …

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