Project 1: Loan Originator Business Plan RES 164 Residential Finance

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1 Project 1: Loan Originator Business Plan RES 164 Residential Finance Surviving and Thriving in Today s Residential Financial Market Learn the skills and tools to secure your future in the mortgage arena Complete this Loan Originator Business Plan by filling in the blanks that are ** and Submitting your work on an attached paper with your name written on all sheets and Naming/labeling each **section that you re answering on your attachments. You will also generate 2 letters as part of this assignment described below. This is worth 50 points and based on Chapter 18 of your ebook chapter and class lecture. **What are you doing today to secure your future income? Present needs: Identify them in regard to monthly income needed to cover all your monthly living expenses of $ amount. Now figure the amount you ll earn per closed loan request where you will earn/average.5% times the loan amount per closed transaction; $. Lastly, determine the number of closed transactions you need to meet your monthly income goal; number of closed transactions per month. **What action steps are you doing today to assure these needs are met? (Be specific and use a separate piece of paper.) ATTITUDE IS EVERYTHING: **Identify your market Do you see it like this? Purchase very slow for purchase market, realtors are depressed and not motivated, large inventory, builders have large inventories and are discounting products, foreclosures are increasing and more short sales are occurring. Borrowers find it hard to qualify for purchases. Market perception. Refinance rates will increase. Equity borrowing is gone away. Harder for borrowers to qualify for a refinance. Borrowers are mass marketed for refinancing/ radio, mail, TV, phone. Competition. OR Identify your market Like this Purchase Never been better for a buyer to buy. It s a buyers market and they can pick from a large selection of homes and get a bargain. Builders need to dump inventory, and the values are GREAT! 2 to 5 year old developments have multiple homes for sale that a buyer can buy 25% + under market value. Patience is the key. Investors buying rentals / not a better time because the rental market is in big demand because buyers aren t buying. Properties are cash flowing with interest only loans. FHA is back and common sense underwriting is back. Refinance Borrowers needs are always changing. The need for debt consolidation, the need for cash flow, the need to lower interest rates, the need to pull cash to invest, etc. Borrowers change their loans at an

2 average of every 4.1 years. That means out of every 100 clients an average of 26 clients refinance their mortgage each year. HOW WILL YOU BRAND YOURSELF: **Clients are working with you because of you! Provide value and trust. I want to be KNOWN FOR! **Know your products: It s a game changer out there. You need to know the specifics of every product available. Products are like books on a book shelve. We have a shelve full of products and any day of the week, there is a product that consumers need. The trick is to know what product that is. a. Be their professional resource. b. We all get our products from the same place, so what will differentiate you from the masses?. c. Be consistent. Only making it better! NOW, HOW DO YOU GET YOUR CLIENTS? **Budget Every business plan needs a budget. I believe 10% of your gross revenue should be set aside for marketing and growing your business. Every aspect of your plan needs a budgeted amount set aside for its success. You need to spend money to make money. **Measurable results Measurable results start with what income you want to make in 1 year. Then determine how many loans that is by dividing the annual income by the average Gross Revenue you make on a single loan. Now take a calendar for the next 12 months and mark on each month how many loans you will close each month for 12 months to total your loan volume. Remember how seasonal some times of the year are to others and adjust accordingly. Now mark on each month applications needed to accomplish the closings for the following month. Mark 20% more applications to closed loans. We average to close 80% of our applications taken. Now it gets a little trickier. What areas of your business plan do you want these applications to come from? Example: October 6 closed loans - 8 applications - 4 applications from Data Base Management - 2 applications from Court House Records - 1 application from Business to Business development - 1 application from Professional Relationships What action steps each day must you do to generate this amount of applications from each. **Identify your book of business

3 There are 10 major elements to a book of business for a Loan Officer. Your plan will consist of 3 or 4 types of marketing, which will all tie together to one comprehensive plan. 1 Data Base Management 2 Court House records 3 Professional Partnership with Realtors 4 Professional Referral program 5 Business to Business relations 6 Neighborhood Data Base Program 7 Open House program 8 Seminars 9 Network relationships and social media! 10 Hey Scott do I buy leads!!!!? The foundation to your business plan The only thing is, keep doing it The number #1 thing is, managing your DATA BASE. The ultimate goal is to establish a personal database which you will market to on an ongoing bases, and produce an income stream in the 6 digit figures. 1. Put together personal data base/excel spreadsheet. a. **Family, friends, church, social groups, sports teams, past co-workers, classmates, past customers. (target 100+ names) b. **Select 12+ special friends / who want to partner with you. Commit to 2 referrals per year. Put a plan together for each partnering friend. Add 1 name to your data base every day; (from referrals, realtors, friends, neighbors, religious organization, sports, clubs, work, 3 rd party providers, etc.) c. Pass out 5 Business cards every day and don t stop until they are gone from your pocket. d. You want to contact your personal database 3 times in your first month. II. Letter III. Phone IV. Hand written note e. After the first month, you will want to them once a month and have them on the touch program and send post cards to them every quarter. is the fastest, least expensive and most efficient method of staying in front of them. f. The goal here is to add at least on name to your data base daily. In 2 years you should have a goal of having 1000 names on this database. **Put together your personal letter to mail out to your preferred database. (Required letter number 1 for this project.) This is an announcement of you changing companies or starting a new career and the services you offer. It also says you will be contacting them personally to update your information and needs. In addition you will be asking them for referrals, because this is going to be your primary source of business. You will also inform them of your new Touch Program and ask them for their address. In the letter you will also have a self-address referral card to be filled out and put into mail. After the letters have been mailed, you will start contacting them by phone. This is an information gathering call. NOT a sales call. Objective is to inform them what you are doing, update personal information and get addresses plus get referral names. (You want 3 names.)

4 Court House Records: Choose a type of client you want to market to and become an expert in that type of conversion. (i.e. FHA to USDA, HFC to Sub Prime or 80/20 programs to Conforming 80/15) 1.5 hours per day each day of the week Research and mail 5 letters per day Call and talk to 3 clients per day Send out 2 nd notice on 4 clients per day Call 3 clients with second notice Set (3) appointments per week Take (1) application per week Professional Partnership with Realtors: Learn how to do purchase transactions. Research and target a select group of realtors who you would want to partner with and set a plan to court them. This will take marketing skills and referrals. a. Being in this business, you will come across several clients who will want to sell and buy, and you need to have a referral relationship with a realtor that will work with you. b. **Provide a letter of the services Each Client will receive by working with you. c. **#1 thing imperative to the relationship!!!!!! d. Provide value: How = The Secret Open House Strategy. Professional Relationships: Establish a Preferred 4 professional relationships that will refer clients to you. a. **How do you get these names of professionals? YOU ASK THIS QUESTION TO YOUR CLIENTS: Call and meet with each professional once a month Make clear expectations and communications - Accountants - Financial Planners - Bankers - Attorneys - Insurances Agents b. **Send each professional (Realtors, Accountants, attorneys, etc.) a letter on each Closing with HUD-1: Critical Step to recruit and maintain your professional relationships!!!!!! (Required letter 2 for this assignment.) Business to Business Development Call and set up (1) appointment per week with owner Meet with (1) owner per week Meet with (1) group of employees of company per week Add (2) names to your data base per week Neighborhood Data Base Program Steps and procedures a. You want to contact your neighborhood database 2 times in your first month. 1. **First create and then mail a postcard of introduction with your picture. Explain what your goals are with marketing to them. You want them to think of you as their personal mortgage consultant, and that you want to meet them. Ask for addresses and that they can go to your web site. **(Attach your prototype/sample postcard for this assignment.)

5 2. Phone or doorbell or both. Doorbell, you will want to have something to leave with them, or leave at the door. This could be a market analysis on their home or just your business card type magnet, or an item of some kind. 3. Put together a personal letter and market analysis for 5 to 10 clients a day and mail them out. Put your business card inside, and a personal discount if they call you this month. Don t be lazy Handwrite them. 4. Mail post card to the group every quarter. Promote one simple program. Your plan with this database is to make sure this group knows who you are over time. You will need to stay on track mailing and calling them. It will need a commitment of a year, with a plan of mailing to them at least once a month. A 1,000 name list will cost you $500 per month. The results will be, it will pay for itself in the first 3 months with 2 loans, and in a course of a full year, you should have done 8 to 12 loans with the average loan amount of $2500 and gross revenue of $25,000. Cost will be $6000 which will net you $19,000. Count on this being 30% to 40% of your income the first year. It will grow upwards of over 50%. At the time you contact a potential client from the neighborhood and you learn their personal profile, you are to transfer this person to your personal preferred data base. The goal here is to add a name a day your data base from this list. Open House Program See Attached Open House Strategy Seminars a. First Time Home Buyer seminars. b. Brown bag seminars c. Investment seminars d. Debt consolidation seminars / retirement Network Relationships Social Media Age: Social Branding and marketing: a. Immediately create a Facebook Fan page. i. THE KEY: Provide value rich content. 25% business the rest industry related personal experience. Keep it SOCIAL. b. Link from your FB fan page Twitter and LinkedIn. c. Video is Viral: Use videos to discuss products and services. d. Manual search and friend all past clients. Build fan page with all past clients and create immediate Friend of all prospects. Everyone you meet immediately invite and make a connection e. List all this network sites as part of your signature. Never make it hard for a client to reach you. Developed by Scott Fletcher, Co-owner and Branch Manager NMLS of Hometown Lending, a Division of Bay Equity LLC, a DBA of TMBG, Inc; [email protected]. Adapted for RES 164 Real Estate Finance: Residential by Nancy Adelson, Real Estate Program Coordinator and Tenured Professor of North Seattle Community College; [email protected].