Mortgage Protection Insurance Leads - The Great Secret to Annuity Sales

I have used this for years to find annuity prospects. For just a moment think about annuity sales and what comes to mind is the financial planner/estate planner/ certified senior advisor/ it just keeps going.

All those charts and new ways to explain how indexed annuities work and how much we all need to buy them. After awhile it becomes such a chore to compete with them and soon you will be looking for a simpler method to sell annuities. It seems to me the simpler method the better and I think most prospects feel the way I do…just show me the benefits and if it makes sense to me then I will buy the annuity.

I have a very simple method for making things simpler and to provide myself with virtually unlimited people to see….That method is the back door approach and here it is.

Mortgage protection insurance leads! You heard me right; they are a wonderful way to back door into an annuity sale. Just think about it for a minute. A new mortgage should be protected for the family in the event of death or disability. If the man is the bread winner and the stay at home spouse needs to be there for the sake of the family then what would happen if he died? How would she exist and keep the family together? Maybe she could return to work and maybe she couldn’t. Either way it is a perceived need and almost everyone wants to be protected. Mortgage protection insurance is a simple sale and if you are smart…can lead to an annuity sale.

Here is how I do it. After my needs presentation I always ask a few questions such as:
• How long have you been at your current job? (potential 401 k rollover)

• Do you own life insurance? (potential conversion or possible combination with the mortgage protection policy)

• Do you own an IRA? (possible annuity sale)

• Do you own an annuity? (possible rollover, 1035)

• Do you own mutual funds? (possible annuity sales)

The list can go on and on. There is a secret about mortgage protection insurance and it is this….most people do not think of it as life insurance!. It is considered a need for family survival because we all need a house that is ours and nothing feels better than not having a mortgage….it is the basic safe harbor instinct.

Use direct mail and cover an area for leads. A return of 1-2% is successful, make the appointment and do the mortgage protection pitch and then turn the process into a fact finder and a two call close. No other mortgage protection insurance salespeople are doing it and it makes you stand out. Plus you will be accumulating clients instead of policies. It is how you build a business and a profession instead of always needing the next sale.

Be a professional and not an amateur by doing something everyone else will not do. Plus regardless of how you are currently selling nothing makes you sharper or helps you think on your feet more than 5-6 appointments a day.

It is a very easy sale and it is one that no one is doing.

Bill Broich is thirty year annuity salesman who helps agents generate leads and sales. To discover more visit his website: Annuity Leads

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Private Mortgage Insurance (PMI) - the Mortgage Industry's Dirty Little Secret

Private Mortgage Insurance (PMI) has long been touted as a benefit that allows borrowers to purchase property with less than a 20% down. But who is the real beneficiary of PMI? We are told that PMI insurance pays the lender if we default on our mortgage. While true, it doesn't tell the whole story. There's a lot more you should know.

This is all the lender must disclose:

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  As part of a "good faith" estimate of closing costs, the lender must provide an estimate of the PMI premium.
  
  
  
  
  


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  At closing and annually thereafter, the lender must notify the borrower of available cancellation options. In most cases, PMI may be cancelled when the mortgage is paid down to 80% of the lower of the selling price or the original appraised value. It will usually be cancelled automatically when the amortization of the loan takes the mortgage balance down to 78%.
  
  
  
  

What you don't know and they don't tell you: 

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  The borrower is not a party to the mortgage insurance policy. The lender does not have to disclose either the name of the insurer or the amount of the insurance purchased. Yet the buyer typically is responsible for the premiums.
  
  
  
  
  


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  Lenders can purchase protection for up to 40% or more of the mortgage amount without disclosing to the buyer any more than the premium amount. For example, you buy a $200,000 home with a 10% down payment of $20,000, financing the balance with an $180,000 mortgage. The lender might protect 40%, or a total of $72,000, with mortgage insurance with you paying the premium.
  
  
  
  
  


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  Proceeds received by the lender from a PMI policy do not offset any deficiency judgment against you, the borrower. They can collect on the policy and still come after you.
  
  
  
  
  


• The PMI insurer can pay anyone along the transaction line for services rendered that either reduce the risk of the loan or reduce the insurance company's expenses. This implies that they can pay commissions to the lender. Understand that it comes out of your pocket.
  
  
  
  


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  The monthly premium for most PMI is fixed. In other words, as the balance of the mortgage declines, presumably along with the risk to the lender, the borrower continues to pay the same premium based on the risk assessment at the time the loan was originated.
  
  
  
  
  


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  While many lenders will consider allowing the buyer to cancel PMI when the value of the property rises so that the 80% loan to value ratio is achieved, they are under no obligation to do so. In my experience, the lender required that I pay for an appraisal done by an appraisal company selected by the them. Also, the borrower must usually provide proof there is no second mortgage on the property.
  
  
  
  
  


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  The lender can purchase PMI, for which they pay the premiums, without notifying the borrower. Funds for these premiums may come indirectly from the borrower through points paid at closing or from higher interest rates.
  
  
  
  

PMI premiums are not insignificant. I looked at a loan statement for one of my recent investment properties. On a loan of approximately $200,000, the monthly principal and interest payment was $1,124.93. The monthly PMI was $163.53, or 15% of the P&I. Yet I never knew how much insurance was purchased or from whom. Had I carried this property the 10 or so years requried to reduce the mortgage balance to 78% of the purchase price, I would have paid over $19,000 in PMI premiums (nearly 10% of the original loan amount).

In the many recent articles on foreclosures, borrowers are urged to contact their lenders immediately when they run into financial trouble or feel they will be unable to keep their mortgage payments current. They stress that working out an arrangement with your lender is far better than going through foreclosure. Even if foreclosure is inevitable, industry sages recommend working with the lender to facilitate a "short sale," where the selling price is less than the mortgage amount, thus avoiding the stigma of a foreclosure.

Wake up!!  If the lender is protected with a PMI policy, will they be more or less willing to work with the you? Why would they offer you extended or more favorable terms or allow a short sale when they need only to foreclose to collect their insurance? Isn't it ironic? You could pay thousands for coverage that helps pit your lender against your best interests. "A banker is someone who will loan you an umbrella, but who wants it back when it rains," said my father.

Toby Tobin is a real estate commentator and the Publisher of GoToby.com LLC, an on-line news source for the fast growing Palm Coast, FL residential and commercial real estate markets. GoToby.com http://www.GoToby.com is packed with news, incisive commentary, newsletters, articles, interesting rumors and property listings.

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