A few years back, a client called to tell me that BigBlueBank (BBB) could not process their re-fi due to BFS income challenges.

The first step?

We mapped out a strategy, which they returned to BBB with. Now, if BBB accepted it, the client’s problem would be solved. If not, we’d eliminated* BBB from coming back in the 11th hr and losing the client so close to the end of the file.  Better 15 minutes of work and a client lost, than 15hrs.

We gave the client and BBB a shot at working with one another again all with a plan built at no charge. Ultimately this approach actually eliminated BBB as an option when they advised that they could not meet the proposal. However the proposal was one that a Credit Union we worked with could meet.

• Competition eliminated*
• Mystery around BBB coming back in the 11th hour – eliminated*
• Likelihood of client returning to BBB in the 11th hr if they did return – eliminated*

*eliminated 99% of the time – because people are in fact ‘loyal’ to you when you demonstrate loyalty to their best interests unexpectedly without an ask.

The client returned asking if the transaction needed to be completed now or could it wait for another six months. The money was going towards a down payment on a pre-completion purchase the following January, and they didn’t immediately need the money.

This is where understanding IRD trigger points is crucial.

This client was in a five-year fixed product, and thus facing a massive IRD penalty from BBB, and a blend would hav avoided the penalty. So we tried to do the best thing for the client. But ultimately their current lender would not approve the refinance, despite the fact a Credit Union would (you should know why these differences exist).

Experience has teaches us the correct questions to ask.

In this case, the question is not when is the anniversary of the mortgage exactly, it’s what’s the date of the six-month mark between the anniversaries. And where does the target completion date fall in relation to this date?

Depending upon the lender, the IRD penalty can change radically at the six-month mark. And the client situation can then become volatile.

We advised the client to call to confirm the penalty as if paying out in ten days, as opposed to the target date. Having already confirmed that the anniversary mid-point date was just a few weeks away we knew there would be two different penalty figures.

Key Point; Alway have the client contact the lender themselves to get the penalty figures in writing.

There should never be a concern about the branch swiping the client (back), not if you follow the first step of sending them back with a plan, as outlined above.

The response:

“Hi Dustan, I just spoke with BBB. The penalty today would be $5,429. on the first component, and $1,850 on the second. The banker also provided some additional numbers. If I wait until after August 3 (just three weeks from today) the numbers increase to $12,900 and $4,165. How do we take action immediately???”

In the face of a $9,780 penalty difference in 3 weeks, what matters?

Speed.

Not rate.

Expertise mattered upfront, to determine this landmine existed.

Now speed matters.

How many Brokers recognize and understand that mortgage penalties (sometimes) fluctuate at the six-month mark, and not the anniversary date?

6 months to maturity is a critical date

As Brokers, we understand the impact of anniversary dates on every refinance file we work.

Had we waited, this client’s penalty would have risen by $9,786.00.

Know the nuances of the business.

Understand how to protect your clients’ best interests.

This business is far more than ‘low rates’.