Start With A Win - Transitions in Real Estate and Mortgage Trends

Episode Date: June 24, 2020

Ward Morrison, President of Motto Mortgage, is back on the Start With A Win podcast to discuss recent mortgage trends as a result of COVID-19, as well as his predictions for the next few months. Since the Fed lowered interest rates earlier this spring, there has been an almost overwhelming demand on mortgage loan originators for refinances and home sales, which is suitable for consumers, real estate agents, and loan originators like Motto Mortgage. Communication is more important than ever to ensure applications and transactions keep moving, considering Ward’s prediction that interest rates will drop a little bit more in the next few months.While this real estate climate may be advantageous for many families who are looking to refinance at better terms or buy or sell, many Americans are on the other end of the spectrum trying to figure out how to pay their bills while on unemployment. Ward shares that people can reach out to their loan servicers to discuss forbearance options that would fit their circumstances. Another current unique aspect of the real estate transaction includes the increasing use of virtual and digital tools, sometimes making the entire process completed without any in-person interactions. Relationships and communication are becoming all the more important for loan originators like Motto Mortgage, just as real estate agents are finding with their clients. Motto Mortgage is a franchise mortgage brokerage firm, which means they can shop around for their clients and provide the best options for their particular situations.Connect with Ward:https://www.mottomortgage.com/Connect with Adam:https://www.startwithawin.com/ https://www.facebook.com/REMAXAdamContoshttps://twitter.com/REMAXAdamContos https://www.instagram.com/REMAXadamcontos/ Leave us a voicemail:888-581-4430

Every day is filled with choices. You're here because you're choosing to start with a win. Get ready to be inspired, learn something new, and connect with the win nation. It's Adam Kanto, CEO of Remax here with Start With Win. And looking across the video screen to my buddy, producer Mark. How you doing, buddy? Hey, I am doing so good. I love it. I love it. Did you get a haircut recently?

I did. You know, I broke down and I went in and got a haircut. I was on the fence like, hey, I've gone this far. Like, I've never had my hair this long. Should I keep going? And then I thought, you know, I'm starting to look a little, um, unprofessional and shabby. I better trim it up. I like that word shabby. Are you going for man bun maybe or something? Exactly. My wife was like, man, but I'm like, listen, I'm, I'm not no Thor over here, okay? No man bun for me.

I love it. Hey, really great show today. We have a three-peat guest on today. We have the president of Motto Mortgage, Ward Morrison. How are you doing, Ward? I'm doing excellent, Adam. Thanks for having me again for the third time, man. I can't believe this. It's like a record. You're one of our favorite people, Ward, just for the record here. Thank you. Ward, there's a lot going on in the mortgage industry right now. Things are really starting to heat up. So you mind if we hop in and start digging into that a little bit? Sure. I'm happy to share anything I can bring to you, the best knowledge I can about mortgage. Awesome. So let's start, just as a reminder for everybody, tell us what is Motto Mortgage. Awesome. So let's start just as a reminder for everybody. Tell us what is Motto Mortgage? Yeah. Motto Mortgage is the first ever U.S. national franchise network of independently

owned, operated mortgage brokerage firms. It's a franchise. So we sell to a lot of real estate companies. We sell to different people, but really trying to provide an ancillary source of revenue around mortgage legally and compliantly. That's what we've been doing and growing over the last three and a half years. We sold a little over 170 franchises, one a week basically is what we're averaging. Continuing to grow the network, Entrepreneur continues to recognize us as one of the fastest growing franchises. So we're excited about that. Something is working right, isn't it? Yes, absolutely. Right on. So, okay. So Bottom Mortgage is really an amazing organization. You're doing a great job

running it. I know there's so many great things you do in your communities. Let's talk about the current mortgage environment. Give us a flyover of the current mortgage environment right now. As you know, just like real estate, mortgage has been undergoing dramatic changes during the COVID-19 crisis. But the unusual thing is the Fed stepped in so quickly this time and lowered interest rates in a way for mortgages that we now have some of the lowest rates we've had in years. So it's just creating a huge amount of demand. And this demand is almost overwhelming, to be honest. I mean, with refis, purchase coming back, everything's been very difficult to control. So a lot of the investors, whether it's a retail bank, whether it's a wholesaler, whatever it might be, is having difficulty keeping up with the

volume right now. But that's a good thing for all of us. That means loans are being done, refinances are being done, and people are saving money for a rainy day or maybe buying a second home or investment property. So that's great stuff. So what's going on right now? Tell me if my perspective is correct on here. We have a great deal of mortgage activity because it's good for the consumer right now. It is absolutely good with low mortgage rates, both for refis as well as purchase money. But it's also great for owning a model mortgage because you're a franchise. So it's stimulating the economy in localized markets. As a franchisee, I think it's just, it's fantastic what's going on. Is that all the way around? Is that right?

Yeah. I mean, when it comes to getting a lot of franchisees, making ancillary revenue and mortgage, it's been a great thing. I mean, the biggest thing is, is, you know, this new normal always puts people in a different bind. I know real estate on your side, Adam has been changing dramatically. You know, we're having people have to be doing showings in a different manner, et cetera. And very similar on the motto side. I think what people have to do now with mortgages more than ever is make sure they're in communication with their consumers because expectations have to be changed. The positive thing is for your realtors out there is that purchase will always take priority over refinance.

And that's what's happening now. The refinances were booming. Purchase is moving up. So if you have a customer that you recommend for a refinance, they're slowing those down a little bit. That's okay because purchase takes priority. You know, it's who we can get into a home. So that is the key that we want to see. But the key would be communicating with the bar, communicating with LO. As an agent, you want to be that go-between and make sure you're opening up the lines of communication

for sure and setting those expectations, much like our realtors always do. So Ward, things are going well, but we have a lot of people that are also unemployed now. We've had a lot of issues in the marketplace, obviously, with COVID. A lot of people have become unemployed in the process. And those people have mortgages right now. So something that came about is something called forbearance. And a lot of people don't quite know what that is. Can you tell us what it means and what it means for buyers and sellers? Sure. I mean, obviously, when you're a homeowner and you lose your job, what you want to do is

potentially go into forbearance. You want to go to your service or whoever you're making your mortgage payments to and say, hey, I have an inability currently to pay my mortgage. Can I get forbearance? The Fed had stepped in, the CFPB, everybody, I have an inability currently to pay my mortgage. Can I get forbearance? The Fed had stepped in, the CFPB, everybody, the government service entities like Fannie and Freddie stepped in and said, hey, we're willing to give you up to six months of forbearance so that you can not have to pay your mortgage. The whole mortgage community is banded together and figured that out. But you do have to go to your servicer and request that. I would also say when you're talking to your servicer, find out what type of forbearance they're going to offer you. Do you have to pay it back right at the end of the six months?

Or can you modify your loan at that time and actually put those payments across the entire remainder of your term? Or in the best case, can you say, hey, can you just tax six months onto my loan? My 30-year loan that I had 22 years left on, can I now have 22 in six months? Because I did forbearance for six months. So really, as a realtor, it's coaching your person that they have an option not to pay

their mortgage if they've lost their job. Forbearance is allowed. And make sure you're following the steps. Because what we don't want to do is if you don't do forbearance and you just decided not to pay your mortgage, it's going to impact your credit, whereas true forbearance should not, at least according to the government. So as somebody who wants to maybe upgrade in the future or downsize in the future, if you've not done forbearance correctly, it could impact you. A seller, it really won't impact too much. They just want to make sure whoever they're talking to hasn't had forbearance

or is currently in forbearance because they're going to be a very difficult person to get a loan for to buy my house if I'm a seller. So is being in forbearance going to affect their credit? Yeah, it should not. Yeah, it's unknown. But the way that all the legislation was written by the Senate and the House was that it should not impact your credit, that the unions, the three credit unions should not be looking at the forbearance period as a negative, that they should be passing on that. It should not impact your credit. At least that's what we've been told is supposed to happen. Good to know. Forbearance is something that obviously has happened recently. Something else that has happened recently is more of a digitization, more digital experience in the mortgage environment. Can you kind of take us through the then and now as far as any of the digital changes that have occurred in the mortgage

process? Yeah, I think mortgage had always been sort of the cutting edge of the digital transaction, much like real estate. But this particular pandemic definitely put that to the forefront. So whether it was using a point of sale system to communicate and take an application with a consumer, so they could just go on sort of like a QuickBooks wizard and actually type in the application, whether it's uploading of documents became extremely digitized, working with title, working with documentation, like signing, you know, DocuSign, all that kind of stuff has moved to the forefront. And it's just a big push now to do that even more so. LOs were just like your realtors were using Zoom, right? They were trying to talk to their consumer. These are the documents I'm going to need. This is the process that's going

to happen. I think that's all a great thing. If we can get some of the counties to participate in allowing e-documents and things like that, you got over 3,000 counties, you got to get to agree on stuff. So if we can get them on board, I think we can take the transaction almost completely digital, but we're going to get there faster now because of this than I think we were before. It always seems like it's the government entities or regulators, whatever, that want to keep things a little bit traditional and, you know, wet ink and things like that in this space. But it's nice to see that the digitization environment is working. And I've seen over this period so many, you've got virtual closings where people show up

and they sign the documents at the curb in front of the house and take possession right then and there. I mean, so it's fascinating. I know Mono Mortgage has done such a great job of adapting to the environment and making sure the communication is there. Because I think the majority of the overwhelm that happens in this process is because communication hasn't caught up to the unknown for people. I know you guys are doing a great job of getting on video and keeping that communication moving really well. And I talk about you guys, I talk about the LO and the mortgage broker. Why use a mortgage broker? I mean, a lot of people

want to know, instead of going to a big bank or something like that, why is model mortgage and what your team does so beneficial to the consumer? Yeah, I think the broker channel is something I've been in a long time. It provides choice above all. So when you walk into a retail bank, and I'm not saying they do this every day, but they may have a product du jour, the product of the day that they're trying to push because it makes them a certain amount of money that day. With a mortgage broker, we have a plethora of wholesalers or investors who are actually lending money. And so when you come in, I can look at your particular situation, your particular credit, your particular down payment, and shop it across a number of different wholesalers to see who can get the best product for you. And not only with a variety of wholesalers, but I can also say,

hey, within this one wholesaler, I can offer you a 15 year, a 20 year, maybe a 3% down, maybe a 15% down, whatever it might be. That's the broker channel. It's about convenience and choice. And I think sometimes you go to the other ones, it's very difficult to get anything but their products. They want to sell you their product that day. And that may be, unfortunately, may be square peg round hole, whereas we're trying to find the right peg to go in the right hole at every time. So at the time we're recording this, it's early June. And it looks like the housing market and the finance, refinance market are coming out pretty strong this summer. I know you're part of several organizations that have economists, things like that. What do you

see going on for the rest of 2020 when it comes to mortgages? Is there anything you can throw the crystal ball at here? Yeah, I think this is only one man's opinion, so I always have to preface that. But typically, the 10-year treasury, that is what mortgage rates follow. We don't really follow that Fed funds rate that they deal with. But if the 10 year treasury right now is so low that if you added on what is the typical difference between that and a 30 year mortgage, I think interest rates should actually be lower than they are today. I think they're artificially high right now to control the volume. So I think to some extent, throughout the going of this year, as things calm down, interest rates will tick down a little bit. Not enough where I would tell somebody, you know, not to buy a home today,

because right now rates are still at all time lows. Could they go a little bit lower? Yes. So look for that. The other thing that's happened is because of all that's been going on, there's been a lot more credit tightening to some extent, like particularly around verifying that you have a job already today. We're already seeing some of those things loosen again back to, hey, particularly around verifying that you have a job. Already today, we're already seeing some of those things loosen again back to, hey, three days in advance, we'll find out instead of three minutes that you still have your job. It'll go back to the normal 10 days, I think, coming up. So I think credit will loosen for everybody. And I think people are going to have opportunities to refinance and particularly cash out refinance where they could, if you're a

realtor, work with somebody who does a cash out refinance, where they could, if you're a realtor, work with somebody who does a cash out refinance because they want to go buy another property as an investment property, or they want to go buy another home as a second home in a market because now they realize they have that equity and they can use it or tap into it. And with the rates being as low as I think they're going to be, it can be beneficial to both the realtor and the consumer at the time. I love that. And you talk a lot about real estate agents. Obviously, REMAX is a real estate franchise company and Model Mortgage is owned by REMAX. But ultimately, the value of this whole thing is a relationship that your LOs and mortgage brokers

have with the agents. I mean, it's so good for the consumer because you have this direct channel. So can you talk about just briefly the value of that close relationship? Because I know most of the mottos are in real estate offices. How is that beneficial to the agent, the consumer, and the whole process? Yeah, Adam. I mean, over 80% of our mottos currently are in a real estate office of some kind. And I can tell you, when I was a loan originator, reaching to the agent, if I didn't have good news was sometimes tough. Now, if you told me I was going to be sitting inside the real estate company and they could walk down the hall and ask me, hey, what's going

on with the Smith file? And I have to be ready, willing, and able to answer that. I think it opens up the lines of communication first and foremost. I think the other thing is that if you own a mortgage company and you own a real estate company, imagine that you get to control two parts of the consumer experience. So whatever great service your agents are offering to the consumer today, if you can offer that same great service through the mortgage process, you've got a twofer, I call it. You've got a one-two punch that you can offer to the consumer and you get to control how that LO operates now. The loan originator that you didn't have control over now, you now do.

If you add in ancillary revenue like title or insurance additionally, just as an example, now you sort of have the whole transaction that you can control the experience. So I'm always telling people, particularly real estate broker owners, is if you can get across the transaction, obviously there's more revenue to be had. But in addition, you get to control that consumer experience. And that CX, I know you've talked about it a lot, is how am I going to make the millennial and even Gen Z happy with the process, whether it's digital, whether it's not digital, they're looking for an experience now. And you've got to be able to control the different parts. We've been so diverse up until

now, but if you can start to bring those ancillary services back in and control it, I think you're going to succeed over other people. Awesome. So I talked about the benefit to the consumer, the agent, the intrinsic benefit in the brokerage, but as an ancillary business model, an additional revenue stream, you can't beat that. I mean, you look at the different opportunities out there to add to your business model and certainly something that should be looked at by people in the real estate space. Yeah, absolutely. Because you can add value to your agents, right? Because when you have it in-house, they can walk down the hall and run a scenario. And they may not even use your motto LO or your LO in general, your loan originator, but they may run a scenario by today

and they get an answer that they might bring to their other person initially. But eventually, if they start being able to walk down the hall and talk to your LOs, they're going to use them. Proximity does win. It's an added value that you could offer as a real estate broker owner to your agents. I think adding value is always key, particularly in this time. I love it. Ward, a question I ask everybody on the show, and I know I've asked you this before. Ward, how do you start with a win? The biggest thing right now is during this phase has been forcing myself to get up early like I used to and get going, start the day off right. I know a lot of people are sleeping in because you have the option. You don't have your commute. Even if you don't have your

commute, use those 30 minutes, which you used to have in a commute before. Start to use them more productively. Maybe it's getting a workout in. Maybe it's talking to a friend. Maybe it's communicating to somebody via email, whatever it might be. Use that extra 30 minutes, really now an hour. If you look at it on both sides of the day, I would do that every day is just keep getting up and using that extra time you have because you gain that commute minute. I love it. I love it. And Ward, where can we find you and Model Mortgage? How can people get in touch with you? Yeah, you can always go out there to modelmortgage.com right there on the web and you can connect to an office very quickly there. If you want to fill out an application or anything like that. And if you want more information about franchise

sales, we're down there as well. So we'd love to help you out in any form or fashion and keep you updated on what's going on in mortgage. Awesome. Ward Morrison, president of Motto Mortgage, brought us into the current loop of what's going on in the mortgage space as well as mortgage franchising. Make sure you take a look at that. Really exciting environment out there. Ward, thanks for being on Start With A Win. Thank you. Thank you so much for listening to Start With A Win. If you'd like to ask Adam a question or potentially be on our next episode, give us a call and leave us a message at 888-581-4430. Don't forget to go onto iTunes and subscribe, write a review, and rate the show. For more great content, head over to startwithawin.com.

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