I hope everyone had a very Merry Christmas, and a Happy New Year! We are on the cusp of 2015, which is the year predicted that the national market would recover from the 2006-07 crash. And recover it did! With business booming across the country, there are many reasons to expand into nationwide business, and no reason not to:
- If you are a state licensed non-depository mortgage company, and you operate in only 1 state, this means you only have access to 1/51 of the market. Strictly speaking, that means your entire business is dependent upon operating in only 2% of the national market. Expansion will open the rest of the market, so you can get a bigger piece of the pie.
- Other industries are booming now as well as mortgage. The Keystone XL Pipeline expansion is a hopeful set to begin this year in MT, KS, WY, TX, SD, ND, NE, and OK, and the US economy has started 2015 in the best position it has been in the past 10 years. Better economic growth means more jobs (the unemployment rate is only 6.1%), more jobs means more people looking for a new home. Now is the time to market to as many of these people as possible!
- The interest rates are lower now than they have been since 2008. Lower interest rates mean current homeowners are shopping for a new deal. Don’t you want to be the company homeowners turn to for their refi?
- Since the crash, and with the new regulations, banks are pulling back their efforts to originate mortgage loans to everyone except those with pristine credit, which in this day and age, is almost no one. This has recently created an opportunity for the non-depository institutions to seize the market share. Joe Light with the Wall Street Journal reported: “One man’s trash is another man’s treasure. If the banks were not going to fill this requirement in our economy…we wanted our market share to go up as those opportunities in origination arise,” said Freedom Mortgage Chief Stanley Middleman. For example, Freedom Mortgage overall lending declined 3.1% in the first half of 2014, due to sharp drop in refinance activity. But its originations of mortgages for home purchases tripled to $5.1 billion, according to the company.” Now, the sharp drop in refinance activity was more than likely due to the rise in rates from their 30 year low in late 2012 and early 2013, so the focus of this, for me, is that Freedom tripled their home purchase originations.
- Expansion does not necessarily need to be geographical. Expanding the packages you can offer can open up greater avenues in an area you are already established. In 2015, Fannie and Freddie are offering only 3% down!
Those are just a few reasons for expansion. Where can you expand? Based on market research, we recommend the following states for 2015: AZ, CA, CO, FL, TX, OK, MT, SD, and NE. Arizona and California are always booming, and according to Scotsman Guide, will experience another upward trend in 2015. The Colorado housing market is also on FIRE, as is Florida. Texas is always a good state to do business in, and it’s also one of the sites of the huge Keystone pipeline expansion with Oklahoma, Montana, South Dakota, and Nebraska as well, not to mention their attractive business market, which is why Toyota moved their U.S. headquarters to the Lone Star State.
There are many other states that are doing incredible business, but all states have different requirements for mortgage lenders and brokers. To find out what state you can expand into, contact me.
760-295-4040 Ext. 321