While there are so many unknowns that may impact the mortgage interest rates and
Melissa Cohn, regional vice president at William Ravies Mortgage, is one such veteran of home finance. Having run her own shop and worked at the likes of Guaranteed Rate, FM Home Loans and more, she offers some time-tested advice on how lenders can win steady business no matter what lies ahead, by ensuring they're top of mind for their clients and referral customers.
Transcription:
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0:01: Navigating the continually evolving world of residential mortgages can be hard. At SitusAMC we're focused on making it easier. From loan fulfillment to warehouse financing to the secondary market, Situs AMC is your go to partner to simplify the entire mortgage life cycle.
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Heidi Patalano:
0:38: Hello, I'm Heidi Patalano, editor in chief of National Mortgage News.
0:43: Welcome to what originators needed in 2025.
0:47: Today, we're discussing how lenders are reacting in response to the forecast for 2025 and I'm honored to have with me today, Melissa Cohn, regional vice president at William Ravies Mortgage.
0:59: So, thank you so much, Melissa for joining me.
Melissa Cohn:
1:01: Oh, thanks for having me.
Heidi Patalano:
1:03: Yeah. Well, you know, you taught me something that I, I know you didn't claim to be the one who came up with it, but you were the first person who told me about. "Marry the house and date the rate." And I just wanted to start off by saying that I've spread that saying to so many people in the industry who are like, that, that is so smart. So, that wisdom came from you. You've been in this business for quite a long time. You want to just tell us a little bit about yourself?
Melissa Cohn:
1:30: Sure, I started it in mortgages in 1982 when I graduated from college and went to work at Citibank and helped them create the mortgage Center program. From there, went on to work for a developer, helped them create a mortgage company, and I started Manhattan Mortgage Company in 1985, sold it in 2000 12 and I bounced around to a couple of other places and have been at William Ravies Mortgage for the past 4 years.
Heidi Patalano:
1:58: Wow, yeah. So you've seen a lot of cycles, a lot of changes, and as we're looking ahead to 2025, I wanted to ask you about the forecasts that you rely most upon for trying to see what's ahead. I mean, we're always fielding them, of course, from the NBA, Fannie Mae, Freddie Mac, lots of others. So which economic forecast do you find most accurate?
Melissa Cohn:
2:22: I don't find any of them accurate at the moment. I think after the election, it's all bets are off, and the predictions from the Fed in terms of their dot plot and all the various different associations, everyone's going to have to rework where they think rates are going, you know, Mr. Trump has pledged to do a lot and when he gets into office in January and his primary policies on tariffs, immigration, and tax cuts are all inflationary. So as much as he also promised that he was gonna bring mortgage rates back down to the 3% level that we saw during the pandemic, I don't really quite know how he's gonna get that done because The president doesn't have the ability to control rates. The bond market does, and the bond market has sent signals to us loud and clear that right now they feel that we're in the economy is strong, the economy is doing well, that when Mr. Trump gets into office, it's going to be inflationary, and the direction right now is an upward one. If we look back in September, we had all expected that we Have, you know, very low rates, 6% perhaps by the end of this year, maybe going into the fives in 2025 with the four rate cuts that the Fed was looking for and, you know, the weakness that they were brought, you know, forecasting in the economy and and all that is just, it's all bets are off. It's no longer what is going to happen.
3:49: And I think that it'll be very interesting next month to see what changes in the Fed's dot plot. and I think it'll be a reduction in rate cuts because of the ongoing strength in the economy.
Heidi Patalano:
4:01: OK. So knowing what we know now, what do you foresee for interest rates next year, mortgage interest rates?
Melissa Cohn:
4:11: Yeah, I hope that at some point that this high rate environment and especially the Fed is going to stop cutting rates, rates will remain at a higher level than we would like, will help to cool the economy off and that perhaps Trump will not be able to enact all of his policies as quickly or as strongly as he would like, and that we see rates settle down a bit.
4:33: If we look back to where rates were in the middle of September, the average rate of a 30 year fix was at 6%. I even locked a few people in below 6%. Today we're back at 7%.
Heidi Patalano:
4:44: Hm.
Melissa Cohn:
4:45: So, I would think that if we can get ourselves back into the sixes, you know, by end of the first quarter, that would be a great thing. I don't think that rates are gonna come down quickly. I think that there will be a lot of volatility, and that people need to understand that we are in a new normal. That interest rates are not going back to 3%, they're probably not gonna go back to 4% or even 5%.
5:13: You know, I've been in the business for so many years, like when I first started in this business, I was selling 1 year adjustables at 16%. Now, obviously the price is crazy, right? But people were buying and taking mortgages. I mean, guess the prices of homes were a lot less back then.
5:29: But, you know, in a 6 or even in a 7% rate environment, we've always been able to do business, but we're so colored by where rates have been, you know. During the pandemic that we keep saying, well, when are we going to get back there, but we may not, and we probably won't. And we need to understand how we can do business in today's rate environment and that if it gets better, you know, that's a win-win. You know, this huge refinancing wave that we all thought that we were gonna see is probably not gonna come to pass.
Heidi Patalano:
5:59: Yeah. I wonder how far back in the rearview does the pandemic era have to be before consumers kind of readjust their expectations to say like, 0, 6%, that's a good rate, that's not bad.
Melissa Cohn:
6:14: Yeah, I think probably there if as we go into 2025 and realize that we're in a completely different economic environment. And that, you know, the funny thing about mortgages is that good news for the economy is bad news for mortgage rates. Bad news for the economy is good news for mortgage rates. So we should be happy that the economy is doing well.
6:36: We should be happy that the stock market is doing so well. Yet it doesn't help us in our business and it doesn't help, you know, the buyer or the person that wants to refinance their mortgage.
Heidi Patalano:
6:48: Right, right. So with those assumptions,, I wanted to help lenders in terms of determining, you know, where they shift their resources next year, what kinds of products they're going to stay focused on, given those kinds of expectations.
7:03: So in your shop, what are you looking to do to what products are you looking to focus on most?
Melissa Cohn:
7:11: You know, I believe in having sort of the full menu, you know, full Chinese menu to be able to offer everyone, and that, you know, there are those people who will only ever want fixed rates, people who believe that their income could decline, people who are self-employed are not assured of having a good year the, you know, in the coming years.
7:30: That locking into the best fixed rate that you can is a really good insurance policy, but other people that are more secure in their income or believe that they're only going to be in their home for a shorter period of time, that people should seriously consider adjustable rates, especially if you can find pockets of adjustable rate options that are below market.
Heidi Patalano:
7:51: Mhm. Right, right. Yeah, you've gotta have everything, right.
Melissa Cohn:
7:55:It's remember we're we're only dating the mortgage, we're marrying the house.
Heidi Patalano:
8:01: Right, good callback. Well, it's interesting to kind of see how people will be, for example, spending their marketing dollars or lead generation.
8:13: I'm, I'm kind of looking for those, those hints at where to kind of put your attention.
Melissa Cohn:
8:19: So, we were very focused as a company on on a refinancing campaign, which you know, we didn't end the campaign, but definitely it's all about being in touch with your clients, being in touch with your referral sources, trying to set yourself apart.
8:38: You know, it's all about, I've always been in this business saying it's not about keeping up with the curve, it's about creating the curve.
Heidi Patalano:
8:46: Mhm.
Melissa Cohn:
8:47: And what can you do better to get out to your client base, to your referral sources, and keep in touch, you know, it's, it's gonna be a lot of communication.
8:57: I know that we are ramping up our CRM systems and our delivery of information, you know, through Encompass in terms of getting better information to, you know, help with the marketing. Focusing on things like newsletters, trying to set yourself apart with your knowledge, think of doing something a little bit different.
9:20: Videos on social media posts are important, you know, advertising and newspapers and Online, you know, if unless you want to spend a lot of money, it's expensive to do. But if you, you know, it's all about dealing with your, your, your spheres of influence.
9:38: So just making sure that you are connecting with those people who are most likely to be able to send you business and stay. In contact, like, I, for example, write a newsletter once a month, religiously. And, I write an article that talks about where rates are headed and, you know, what's going on.
9:56: And, and in my article, I just published it this morning, actually, you know, I talked about the fact that the election has been a game changer, and that we have to sort of get used to being in a, in a different rate environment.
10:09: But I also showcased some of the articles that I've been quoted in, we do a book nook, so like what book have we read in the past month. One of my team members does like a, a monthly mortgage cocktail, you know, just trying to be something that's different, a quick read, get it out of the, you know, a time during the week when most people are gonna open it.
Heidi Patalano:
10:29: Mhm.
Melissa Cohn:
10:30: Yeah, cause that's a great, it's like an adopt a highway sign. Yeah, you never, you never, you never know when someone's gonna want a mortgage, but if they're out there and they see your name and they think of you, well then you're gonna be the first phone call.
Heidi Patalano:
10:42: Yeah, yeah. Well, you know, what about internally in the mortgage industry? You know, I noticed that on LinkedIn, there's tons of people in the mortgage space who kind of are, are, you know, kind of cultivating a community around themselves within the mortgage industry itself.
11:02: So, what do you think of that and what, how do you think that helps them or have you also noticed this as well?
Melissa Cohn:
11:10: I mean, I think that, you know, we should do anything and everything we can in order to make sure that we're the first phone call, right, but it's also people kind of wanting to be influential within the industry itself rather than consumer facing, right, or within the real estate industry too.
11:28: Yeah, right, so I know that I do a ton of marketing to real estate brokers, right. Now, my newsletter is comprised, you know, Of all past clients, but every real estate broker's name, and like every real estate attorney, every CPA I ever encountered, they go on my mailing list immediately.
Heidi Patalano:
11:47: Right.
Melissa Cohn:
11:47: You know, when I, when I meet people, I go on to LinkedIn or I go onto Facebook and I, you know, I connect with them.
Heidi Patalano:
11:53: Yeah, yeah.
Melissa Cohn:
11:55: So you just want to constantly grow it and you wanna, you wanna be someone who's respected in the industry.
Heidi Patalano:
11:59: Absolutely. You know, I think it's, it's, it's great to talk to you about these things and getting kind of the view of,, how things have changed over time. I wanted to get a sense from you what interest you're seeing in HELOCs.
12:15: I noticed, you know, a couple lenders last week, for example, we're talking in mid November, but last week a couple Lenders announced expanded HELOC programs. So what is the interest you're seeing from consumers and what do you think the outlook is for that type of product going forward?
Melissa Cohn:
12:32: Well, I think home equity loans have always been an important product to offer, and I think that the enhancements, especially in the types of income verification that they will allow in order to qualify for home equity, are incredible.
12:46: I mean, home equity loans until very recently, all had to be full income verification. So we finally have home equity lenders that will allow you to qualify in sort of the non-QM space, be it with the bank statement program or asset depletion.
13:02: And that opens the door to so many self-employed people who would like to have a home equity loan in order to preserve their lower rate. But only up until just recently had the option only just to refinance their first mortgage because they wouldn't qualify for a home equity loan.
13:19: You know, and the rates on home equity loans are much better. 7 and 3/4 of prime sounds so much better than 8.5%, right? So, and with the Fed will cut rates again in the next throughout the next couple of years and The home equity rates will drop and they can help people preserve their 3 or 4% mortgage rates.
13:39: You know, what people need to think about though is, you know, if you owe $300 on your first mortgage and you want a $500,000 home equity loan, at some point you'll end up wanting to refinance because the cost of the home equity loan can outweigh the balance of the benefit of keeping that low rate first mortgage.
13:55: But I think, you know, we can do a home equity loan as a renovation loan now. We have a couple of home equity lenders who don't require condo questionnaires, you know, freeing up equity and, you know, all these non-warrantable condos.
14:09: I think home equity loans are important. They'll stay that way. It's a good way to tap into the equity if you haven't sold your home and you want, you need money for a down payment. Yeah, and to, you know, finance just about anything else, a home equity loan is a lot cheaper than any credit card rate you're ever gonna find,
Heidi Patalano:
14:30: Right, right, yeah, here to stay. What about reverse loans?
Melissa Cohn:
14:32: I think reverse loans are important for the right people. I can tell you that here, you know, I have two primary marketplaces, one is Florida, one is New York that Doing reverse mortgages on condominiums is very difficult because the building itself has to apply for the FHA approval.
14:53: You can't do a spot reverse loan in a condominium, and there are so many senior citizens that live in condominiums who are just unable to because the building is unwilling to.
15:04: Do the work in order to be able to get a reverse mortgage. But if someone has tons of equity in their home and they're a bit older and they want to stay in their home, you know, a reverse mortgage is is a great way to keep yourself there.
Heidi Patalano:
15:18: Hm. Mhm. And just kind of pulling back, looking at the mortgage industry, do you think there will be consolidation in the next year, and also, what do you expect in terms of competition to bring on board those loan originators, the StarLOs?
Melissa Cohn:
15:41: Well, you know, I think there is always consolidation,, you know, we haven't had a couple of great years, and I think everyone was banking on 2025 to be a stellar year for us, and that is probably not going to be the case again.
15:56: So I think certain companies hire people in anticipation of a much better marketplace who we are now rethinking that.
16:06: You know, it's gonna be an interesting year.
Heidi Patalano:
16:08: Yeah.
Melissa Cohn:
16:08: Yeah, we're all due for a great year, but unfortunately, 2025 is probably not going to be it for us. But, but when the marketplace settles into the fact that we're in a different rate environment and people with those 3 and 4% mortgages have outgrown their homes or get relocated or are moving, yeah, that's what we need.
16:30: Mortgages are not just rate dependent, they're also dependent on life cycles, and we need to focus on the people. Who will be purchasing or refinancing based on life cycle events as opposed to just, you know, chasing a rate.
16:43: It's always it's, it's gotta be more than just about the rate. We need to focus on why people take a mortgage, what product is right for them, and, and make them feel comfortable and taking getting financing today. Without just leading, dangling a rated over something.
16:59: We don't have rates to dangle anymore. We have to be smart and we have to make people comfortable and understand what they're getting into. And, and then also looking at the features, you know, if you have products with banks that have post closing rate modifications, obviously we don't want people to do that.
17:16: We want them to refinance, but it's an enhancement that sometimes will get you the deal over another bank that may have a slightly higher rate.
Heidi Patalano:
17:23: Mhm.
Melissa Cohn:
17:25: You know, look at features, we just, we need to find a way to make ourselves.
17:30: Better, smarter than the next guy, you know, in order to stay in business, you know, we were all just sort of ready to cruise in 2025, and unfortunately, we're still in low gear.
Heidi Patalano:
17:41: Yeah. Well said. All right.
17:45: Well, I want to thank you so much for your time, Melissa. it's great to speak with you.
17:50: I wanted to ask before I let you go, any other parting words of wisdom to the loan officer out there who's trying to make it in 25?
Melissa Cohn:
18:00: Be busy on the phone and on email. Keep in touch. Don't be afraid to reach out.
18:05: We can't afford to be shy, especially right now, and learn to sell yourself and your products and not just rates.
Heidi Patalano:
18:11: Yeah. Great. All right. Well, Melissa, thank you so much. It's been a pleasure speaking with you and thanks in our audience. Thanks for joining us today.
Melissa Cohn:
18:22: Thank you.
SitusAMC Advertisement:
18:31: Navigating the continually evolving world of residential mortgages can be hard. At SitusAMC we're focused on making it easier. From loan fulfillment to warehouse financing to the secondary market, SitusAMC is your go to partner to simplify the entire mortgage life cycle.
18:48: Visit SitusAMC.com/easymortgage to learn how mortgage lending and investing can be easy. Easy as SitusAMC.