Washington Mortgage Planner-straight up mortgage advice and commentary

Good morning:  I was listening to a great CD this morning from Brian Buffini that covered how to deal with clients in a challenging market.  For more information about Buffini's programs, log onto www.buffiniandcompany.com.

Brian Buffini talked about the 5 stages of grief or loss.  They are:

1) Denial

2) Anger

3) Bargaining

4) Depression

5) Acceptance

So how does this relate to what we do?  First, a lot of us came from the "perfect storm" where it was easy money in real estate.  Now, it isn't anymore.  Yet I'm sure quite a few of us refused to believe this was actually happening.  This is the denial phase.  In the CD, Brian Buffini talks about how one of his friends had to sell his house for over $60,000 less than he wanted.  And it was fairly priced to begin with.  The market just turned.  So, number one, if you're a seller, it's important to be realistic about what your property is worth these days.  Otherwise, you may want to wait until the market improves.

The second phase of loss or grief is where we get upset or angry because it's tougher to get what we want.  Again, a seller may feel like their home is worth more and start to blame their realtor, etc. for not marketing it properly. It could be as simple as the market has changed.  You need to be realistic and adapt to the new conditions.

Third, bargaining can lead to selling yourself short.  You may want to give away the farm just to get your property sold.  Or you cheapen what you do or who you are just to consummate the deal

Fourth, I believe a lot of us have given up our efforts because it's just too hard.  This is depression.  So many people in the real estate industry I know have scaled back.  I'm not sure they ever experienced hard times.

Fifth, and finally, acceptance is the light at the end of the tunnel.  I have a good friend who is a real estate agent who recently underwent a very trying personal challenge.  She definitely went through all the stages of grief.  What's remarkable is she moved to acceptance within a couple of months.  My hat's off to her.

So the lesson should be that we need to move toward acceptance as quickly as we can.  It doesn't mean this is supposed to be easy.  We're obviously in a very challenging market that is not predicted to improve until sometime next year at the earliest.  But if we realize it's a "normal" market and do what it takes to succeed, we can all win!  Good luck to all of you.  I'm pulling for you!  Have an incredible day.

Paul

Good morning!  I just wanted to send a quick note to all of you and wish you and your families a Happy Thanksgiving.  I've been a member of Active Rain since this past summer and have found it to be a great resource if I need to know something.  Plus, the camaraderie has been fantastic!  Our job is tough and it's nice to know we're all pulling for each other.

So go and eat all the turkey and stuffing you want. And take Friday off and do it again.  Enjoy the Holidays.  It's a magical time.  And keep on plugging; success goes to the folk who persevere.  Have a wonderful day!

Paul

Good afternoon all!  Last week I attended a seminar sponsored by Washinton Mutual and Genworth Financial.  I was heartened by how many loan originators were there to learn.  Who said our industry is dying!

Here are some great statistics they passed on.  Conventional conforming loan volume is up 42%, subprime is off 66%, and FHA originations are up 33% year-to-date. Home Possible and My Community loan programs are up over 200%.  One of the presenters stated mortgages will continue to be originated in healthy numbers as long as the interest rate doesn't climb above 7%.  I agree with him.

More statistics.  36% of purchases are first-time homebuyers.  98% of purchases are financed and 75% of the borrowers put down less than 10%. Further, 45% put no money down.  63% of first-time homebuyers were younger than 34, 86% made less than $100,000 and 27% were female.  78% of purchases were existing homes and 84% used the internet.  84% also used a realtor.  If a homeowner moved, it was within 13 miles. 

So it's fairly clear where we need to target our marketing based on the above numbers. I think sometimes we get stuck, especially now.  I was reading an article in Broker magazine today and they said our natural inclination when things slow down is to cut costs.  Not a bad move, obviously, although the article suggested this is the precise time to increase our marketing efforts. We all should know how to do our jobs. It's just a matter of getting after it!

The presenters at the seminar concluded with the question "which target market are you going to go after?" Here's a great website they suggested.  www.mybestsegments.com.  The seminar hosters believe we're in the midst of a 15-18 month correction that should start reversing itself the start of 2009. The question is, what are we doing now?  Have a great weekend!

Paul 

I was reading an article in one of my favorite ezines the other day, www.earlytorise.com, and one of their financial gurus suggested that mortgage rates may rise in the next few months.  His argument was because inflation is a threat the Federal Reserve will feel compelled to keep lowering rates. Usually when inflation is a threat, investors seek security in bonds.  And it's well known that when the bond market improves mortgage rates go up as well.

Right now I'm finding a lot of borrowers are sitting on the fence unsure of what to do.  This should be your call to action.  If you're hoping for better rates, it might not happen.  Currently, the 30 year fixed rate is at or near 6%.  I'm not sure it will go much lower. I also don't think underwriting standards will get any easier.  If anything, they may continue to tighten for the next few months.

If you have the ability to borrow money or buy real estate, do it now.  There's another article on MSNBC's website, www.msnbc.com,  that suggests the same thing.  You're welcome to contact me for further information and, as always, I welcome your comments.  Have a great day!

Paul 

Good morning:  The latest on House Bill 3915 is this.  It appears YSP (Yield Spread Premium) may be capped at 1% on all conforming loans. If the loan is non-conforming, they're talking about no YSP. Also, they're talking about requiring all loan originators (including bank loan officers) be licensed.

Here are my thoughts.  One, capping YSP is obviously a threat to our income but how much money do we really need to make on a loan? I always charge 1% origination and if I make money on the back, great!  The most I've ever made is 1.25%.  Our goal as originators should be to put people in a loan that makes sense for them.  Not something where we make a pot of money.  If we make good money on a loan, we should feel blessed. On the topic of licensing everyone, that's a requirement now in Washington State.  It's weeded out the criminals and the people who were in this business for the wrong reasons. Plus, we're always complaining about the banks' unfair advantage.  If they're licensed, it levels the playing field quite a bit. 

At a seminar last week, I asked a banker from WAMU. about banks not having to disclose their YSP. He said we make a bigger deal of this than we should.  He indicated there are times they actually lose money on a loan.  Plus, most retail banks charge higher rates in order to compensate for their overhead, etc.

In sum, I know a lot of us are wondering about our livelihood in the face of all the turmoil in our industry. I posted in a previous blog about how it's important we adapt.  It may have been Darwin who stated "adapt or die". Now is the time.  Good luck to all of you!

Paul 

Hello all:  Last Wednesday I attended a seminar sponsored by WaMu. (Washington Mutual) and Genworth.  It was packed with loan originators which heartened me.  Here are some statistics that were thrown out.

Conventional/conforming loan volume is up 42%. Subprime is off 66%.  If you're a subprime LO, you better adapt!  How?  FHA loan originations are up 33%.  Yeah, I know they're more work but it may mean you keep your job and actually make some money.  If your shop doesn't offer FHA loans, find a place that does and co-broker it.

The seminar speaker stated that as long as mortgage interest rates stay below 7%, purchases should be o.k.  The trend seems to be indicating this.  The presenter also said that we are in a hangover that could last for the next 15-18 months.  He suggested targeting the following niches.  First time homebuyers and, specifically, females.  Currently, 63% of first time homebuyers are under the age of 34 and 27% are female. Also, 78% of the homes purchased were existing homes and 84% used the internet in their initial search.

What comes out of the above is our need to adjust and target a growing market if we haven't already done so.  Obviously, the opportunity to upgrade our website and approach borrowers about home equity loans after they've purchased their home is huge. Here's another statistic.  Home Possible and My Community loan programs (first time homebuyer programs) are up over 200%.

I was reading recently about how successful people are always making small adaptations. With our market changing, I think it's important we do the same.  There were a number of great tips in this seminar.  There are still loans to be had out there.  I remember a conversation I had with a guy at a golf tournament a couple months ago.  He said people are always buying and selling real estate.  That is so true!  Have a great day!

Paul