Mortgage Loan Officers don’t have nearly the options they once did to do cash out refinances and debt consolidation loans for their borrowers. Sub-prime lending is completely gone. Conventional financing through Fannie Mae and Freddie Mac may as well be gone because of the HVCC guidelines. So are homeowners’ only options consumer credit counseling and debt management?
Well, the answer is no. There is still plenty of opportunity to take advantage of debt consolidation leads. There are still refinance options available, and even more important to remember, a debt consolidation loan lead is a client that is trying anything to lower their overall monthly payment. So, even if cash out isn’t an option, they may still be potential clients if you can at least show them a substantial monthly savings on their mortgage.
But, keep in mind that even though everyone is decrying the death of the FHA program, it is actually still a very powerful refinance program and a great option for servicing debt consolidation leads. And, while most people only complain about the fact that cash out FHA refinances had the LTV limit cut by 10 percent, they forget that 85 percent LTV cash out refinance with a fixed rate in the 5 percent range is still a very powerful program. When you throw in the fact that can utilize this program to pay off a chapter 13 bankruptcies or even consumer credit counseling, it suddenly becomes a very powerful program indeed.
Another misconception is that a lot of loan officers will assume that a debt consolidation lead is no good if the borrower is requesting $20,000 but there is only $5,000 available for cash out. In a lot of these scenarios, that $5,000 is still a huge help to the borrower. That, coupled with a fixed rate at, say 5%, will almost always be enough to sway a borrower into the refinance. And, it’s very likely that you’re going to be putting them into a stronger financial position in the long run.
To make these leads even stronger, consider the fact that you are not alone. Most other loan officers are shying away from them as well. This means less competition for every qualified borrower that you sift out of the leads.
Overall, despite the lack of available programs, a debt consolidation refinance lead is still the best bang for your buck. They are cheap, readily available, less prone to competition, and are people who really do need your help.
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