Referral Source Protection Mode

Posted by Joel pate in Uncategorized. Tagged: , , , , , , , ,

I want to ask you one simple question: How many referral sources are you losing each year because you have not embraced pre-underwriting homebuyer development as a strategy to build and protect your business?

First, you are probably asking yourself: What pre-underwriting homebuyer development?

Pre-underwriting homebuyer development is a process of preparing not yet mortgage ready consumers to be successful homeowners. It’s simply a process of building your pipeline for tomorrows loan closings. But more than that, it is a strategic decision to protect and grow your referral business.

As you already know, most originators recently lost over 50% of their business due to interest rate increases.

And most of you lost a ton of money on rate locks because you are not yet members of Barry Habib’s MBS Highway program.

Want to know one more thing? Your referral sources are being inundated by calls and visits from those same originators as they get back out on the street doing whatever they can to gain back the referral sources that they neglected during the last refinance boom. These are otherwise known as your referral sources.

But to fully understand the strategic reason to pre-underwriting homebuyer development, let me tell you a story: About a year ago, John and Sally Homebuyer responded to agent Jim’s online marketing to inquire about purchasing a home. Jim, being the welled trained agent that he is, gave them a little information about the home and then asked the question: Have you been prequalified for a mortgage?

Sally said no they had not but would like to. So, agent Jim sent this young couple over to his favorite originator only to find out that their credit was at a 580 and could not purchase at this time. Originator Mary even provided John and Sally Homebuyer with a game plan provided by the tri-merge provider’s what-if simulator. Since agent Jim believed that Mary always did everything she could to get his referrals approved for a loan, he didn’t give it a second thought.

As a typical originator and agent, that was the last time that they thought about John and Sally. Of course these would-be homebuyers were disappointed in the news and for a couple of months attempted to follow the suggestions provided by the what-if simulator. But it proved to be too much for them and they gave up.

But since the desire to purchase a home was burning deep within John and his wife Sally, as it does all Americans, they continued to dream about buying a home. Eventually, they contacted another listing agent from a yard sign. During the interview process, agent Bob asked if they had met with a mortgage company. Of course, they said yes and related the news to the agent of their low credit score.

But, since Bob and his favorite loan originator embraced the concept of pre-underwriting home buyer development, the outcome would be different this time.

As a part of Bob’s team, he used the service of a company that specializes in helping consumers when they are in the “not yet ready” status to purchase. As soon as Bob heard about the problems, he referred them over immediately.

Come to find out, John had gone through a job loss a few years back and had gotten behind on a couple of accounts. Now that was bad enough but one of the accounts had been charged off, sold to a collection company and then resold again. As with many consumers credit file, this one account was now reporting three separate times each with balances and each stating that John was currently late.

Sally on the other hand had gone through a divorce and had to file a Chapter 7 bankruptcy. Through the interview process, it was discovered that the Chapter 7 discharge date was reporting incorrectly. Instead of reporting the discharge as of June 2009, it was reporting as June 2011.

Through the efforts of this company, John and Sally were able to correct these errors and purchase a home for their family. Agent Bob was able to sell a home, the sellers were able to purchase another home; that seller was able to purchase a new home from a local builder and four mortgages were closed.

But that’s not the end of the story. After John moved into their home, he ran into agent Jim. Remember Jim and his favorite originator Mary? Jim was so happy to see his former prospect and made a beeline for him in the produce section. “Hey John, how’s it going? How are the kids? How’s Sally? Great. Been working on those issues that Mary explained to you had to be corrected for she could do a loan?”

I won’t belabor the point. Not only did agent Jim lose that commission from that purchase, he lost a potential positive referral source for future sales and in its place, he had gained a potential negative referral source.

The next day, agent Jim had a call from a would-be homebuyer that he had met in open house the week before. They were ready to move forward. But guess what, Jim didn’t call on former favorite originator Mary. Mary had blown this deal for him and he was upset.

In today’s real estate and mortgage market, building and maintaining quality referral relationships is the key to success. A primary driver of that success is to embrace pre-underwriting homebuyer development as a key strategy.

Joel Pate is a 28-year veteran of the real estate, mortgage and credit industries. For more information about Joel, his companies or pre-underwriting homebuyer development, visit or




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