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20 | M R EP O RT FEATURE quoted terms and closes quickly enough, the borrower will close. The toughest thing last year was that there were so many of these opportunities, it was hard to juggle them. However, they were all pretty much like this. Purchase loans are tougher to do. A purchase loan goes like this: Borrower: "I'm interested in buying a home." LO: "Great! Where are you in the process?" The borrower may not yet have a house in mind, may not have sold their current home, may or may not want to use the pro- ceeds from their current home as a down payment, may not have a real estate agent, and may not have even decided on the neigh- borhood or price range. Regardless of where the borrow- er is in the process, however, the lender has to be there. It's episodic. Rarely can you close a purchase deal on a first call because there is either an influencer who needs to be sold, or there are a host of things the lender can't control that have to be accomplished before the loan officer can sell the mortgage. In a purchase market, instead of having 50 to 100 simple refinance opportunities every month (two to three per day), a good loan officer may only get 25 to 30 purchase opportunities in a month (more like one new opportunity each month). Also, each of these opportunities is much harder to manage. The good LO will also be juggling these opportunities for six months, because that's how long it often takes for a borrower to work their way through the sales cycle and become a buyer. A great loan officer might convert 10 of these opportunities, and that's if they are a top producer. Because loan officers can't handle as many pur- chases as refinances, they'll need to be paid more because they are probably the one who sourced the referral in the first place. The complexity of the purchase loan drives the process. Think of it in project management terms. In project management, projects are ruled by three constraints, often called the "Iron Triangle"— time, features (or scope), and resources (or costs). If any of these elements are fixed, the others must be flexible. On a purchase loan, time is fixed, so a lender's resources must be flexible. Lenders must staff every single function in operations for peak on-time delivery. On re- finances, the lender can spread the transactions out across the month and balance staff accordingly. Not so on a purchase loan. Like a project that has a set end date, all activity must be planned against that date and finished by the due date. Underwriters, processors, closers—all have to finish on time. Barriers Come with Opportunity W hile the purchase market will be harder, there are still opportunities to excel. Even while they feasted on refis, the best mortgage lenders continued to build the skills, products, and people they need to effectively compete on purchase loans. They know that purchase is the market we're always headed toward at some point, and they are well positioned to manage through it. If there's any lesson to be learned here, it's that you have to constantly be thinking about and planning for the next stage in the market—because it's not a matter of if the market will change, but when. . GARTH GRAHAM is Senior Partner with STRATMOR Group, a leading mortgage advisory group. He heads STRATMOR Group's marketing strategy and execution practice, which focuses on lead generation and lead management methods and practices primarily for the consumer direct and retail mortgage origination channels. Graham has more than 25 years' experience in sales and marketing, ranging from Fortune 500 companies to successful startups, including manage- ment of two of the most successful e-commerce platforms. DS News is the only publication in the country solely dedicated to providing default servicing professionals with news and content focused on their industry. SUBSCRIBE TO THE LEADER IN DEFAULT SERVICING NEWS SUBSCRIBE NOW! Call 214.525.6700 or connect with us online at DSNews.com.