Say you're a new mortgage company in town and you want to form some relationships with local builders. You tour some local residential developments on the weekend.

And you find that other companies have already posted loan originators at each of the sales offices and are making loan approvals on the spot.

So you've learned your first lesson in dealing with builders: It's a tough market for a newcomer to crack. And it requires total focus on the market - plus service, service, service.

At a recent meeting of regional mortgage bankers' associations in Atlantic City, three panelists and a moderator talked about what it takes to prosper in originating mortgages through builder relationships.

Bernard Anderson, a vice president of Westminster Mortgage Corp., Huntington Valley, Pa., introduced the session by addressing the difficulties of cracking the builder market. "Few are successful in establishing builder relationships," he declared. "The product is a commodity. You must offer something that sets you off from the competition."

Patricia W. Hogg, regional sales manager and vice president for originations at Norwest Mortgage Co., King of Prussia, Pa., told how she developed the builder business from the ground up.

"I started by targeting particular builders, those that fit in with the products we already had available," she said. She also worked with builders to show them how to use the FHA program and provided details on how to use buydowns, in which they can procure reduced interest rates for their customers by paying a fee to the lender.

"Also, you have to bond with the site agent," she said. "You have to let them know: 'I have ways to help you sell more.'"

Other techniques she used:

*Keeping in touch with borrowers to make sure the deal closes.

*Attending meetings of site managers.

*Making sure qualified loan officers are on site on weekends.

*Reading trade magazines to keep up with trends in building.

*Keeping builders informed about the loan products available.

She emphasized that contact with borrowers was crucial. "We have people who do four-hour approvals," she said. "Your pipeline can be nonexistent if it's not maintained."

Geoffrey Brown, a branch manager with BankAmerica Mortgage Corp. in Malverne, Pa., said it was important to recognize how specialized the builder business is. "You need to know more, you must gather more information," he said. "And the products that you need may be very different than those required by realtors."

As a result, he said, loan officers should not be mixing realty business with builder business. "And management must understand that the market is not just 30-year fixed," he added. "You have to offer rate locks on ARM products as well."

Some marketing devices he's using:

*Presentations to builders.

*Seminars for homebuyers.

*A quarterly newsletter for builders that includes sales and marketing tips.

He also said his company often obtained photos or line drawings of the homes being marketed by a builder and developed loan programs customized to the needs of the kind of buyers these might suggest. And he recommended visits to local planning commissions to find out what projects are coming due soon.

Peter J. Ponne, a vice president for real estate finance with Crestar Bank, Baltimore, took a slightly different tack in discussing the builder business. He said the mortgage landscape was changing rapidly, that profit margins were thin, and that competition had become fierce.

He emphasized the importance of doing business with quality builders and of offering loan products that not only appeal to borrowers but also make business sense for the lender.

Mr. Ponne warned that developing a product for just one customer may not be worth the effort. "You've got to offer products that are varied and get more than occasional use out of them," he declared.

Delays in completion of a house can be a big problem for lenders, Mr. Ponne said, adding that quality builders have a better track record for on- time completions and are thus better companies to do business with.

Mr. Ponne also emphasized that the needs of loan officers had to be considered. "The loan rep has to have a manager who is accessible to the builder," he said. "And dealing with quality builders helps keep the reps happy as well."

Because it takes six to nine months to build a house, he said, reps are always in danger of losing loans along the way. "Realize that your loan rep does not get the business right away," he asserted. "You must supply them with enough qualified builders that they can meet their needs on a day-to- day basis."

Mr. Anderson said his mortgage company, owned by Toll Brothers, a large builder, does relatively few originations but deals with a large variety of lenders.

"Builder reps qualify people on site," he said, and lender representatives are not allowed on site. He said Toll Brothers bought 15- month commitments on loans at half a point above market to protect against changes in rates while a house was being built. This gives the builder a cushion of six months or more in case the house is not sold before completion.

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