Washington Mortgage Planner-straight up mortgage advice and commentary

Good morning:  I was thinking about how we can sustain our business in what certainly have become interesting times.  I think it boils down to good old fashioned hard work.  Yesterday I left my office at 5:45. Most of my fellow co-workers left between 2:30-3:30. I've heard comments such as there's nothing to do, etc. and I don't buy them.

Here's what you can do to sustain your business.  One, work on your database.  How large is it?  There's a direct correlation between how many loans you'll get and how big your database is.  My database I market to is over 500 names and I update it at least once/week. If you have your data in outlook and excel, you can not only compose an e-newsletter but you can send monthly mailings to whomever you choose. You can also call your database.  They may have needs or know of someone who does.  A fellow blogger here recently suggested that if you're not contacting your database, you're effectively losing 10% of it immediately.  We all think we shouldn't contact our base too often.  But how many times have we made that contact and our customer's comment is they haven't heard from us in a while?

Number two, get out of the office and call on people or do some prospecting.  I attended a Brian Buffini seminar recently (www.buffiniandcompany.com) and they suggested all loan officers get out of the office for at least 110 minutes/day. Buffini believes we should be bringing items of value to our clients. Our office has a cookie machine and those are a huge hit.  Plus, getting out of the office forces us to take action. Too many of us go to the office, get on the computer, surf the web, read the negative news, talk to our fellow co-workers who are down about the market etc., etc.  I don't know about you but I'd rather be doing something positive and productive.

So it's the little things.  I just think some of us have forgotten what got us to where we are today. Yes, a couple of years ago everyone was a prospect.  Now, a lot less are.  All the more reason to roll up our shirtsleeves and get back to work.  The loans are out there; we just have to work a little harder to get them and get them done.  Good luck to all of you!  Have a great weekend.

Paul

I write this evening a little perturbed with my borrower who is shopping me.  I understand this is all part of our job but have to admit I'm not crazy about it.  Especially since this particular borrower not only got my business in the first place but also the business of a friend of mine.  I'm a believer in giving first but would prefer reciprocity in return if at all possible. I also did not shop my customer's services.  I just trusted they would do a great job and they did.

With the above being said, borrowers make sure you're comparing apples to apples.  I'm up against a bank on the above mentioned loan and, of course, they quoted no points, fees, etc.  Plus, I needed to charge MI as the loan was at 95%.  The bank indicated their rate would be higher but there would be no MI (mortgage insurance) and the borrower's accountant mentioned it would be better for them to have a higher payment for tax purposes.  I asked the borrower to send the Good Faith Estimate and had a phone conversation with them telling them the realities of no points, fees loans. I also indicated that I would get their loan done to their satisfaction and would keep my word throughout.

I may not be able to salvage this one but sure plan on trying.  I probably won't make a lot of money on this although that's never been the motivation.  Consumers:  Don't fall for what sounds good.  Do your research but be careful.  Everyone can promise the same thing or more but go with someone you trust and can get the job done.  We don't always make a bunch of money on every loan.  But the good hearted people doing your loan don't care.  They are more interested in getting it done to your complete satisfaction. I welcome any and all comments.  Have a great day!

Paul

Hello all: It occurred to me today that I love working with real estate agents on deals.  Here's why.  It allows me to communicate throughout the process in order to get the transaction done.  I like this.  I often hear from realtors that they never hear from the lender until the deal is ready to close.  I don't understand this.  I even call the listing agent and introduce myself.

I think there's a soft spot in my heart for agents.  Granted, I've heard the grumblings from my fellow brethren about how often agents call checking on their deals.  The only time I had an agent call me a lot was when I made a mistake and only locked a loan for 15 days.  Understandably, the agent was worried as it looked like the rate lock might expire and the client might change their mind. This was my fault.

A good friend of mine is a realtor with John L. Scott here in Seattle.  I have observed firsthand how hard he works to make a sale for his clients and admire his dedication.  Maybe I'm lucky knowing the realtors I know.  I try to help them whenever I can and don't mind the time spent assisting them in earning their well deserved paycheck. 

If you're a consumer, I can't stress enough how important it is to work with a competent realtor.  Hopefully, you'll take the time to interview a few and find out how committed they are to the business and what their approach toward helping you would be.  If you choose the right professional, your real estate purchase should be fun, enjoyable, and relatively painless.  Have a great day!

Paul

I was thinking today about Pay Option ARM's and wondering if they made sense for you, the borrower.  I think I came to the conclusion that, most of the time, they really don't. The one exception might be if you're an investor who doesn't plan on holding your property that long or you're unsure about if your property will always cash flow. Flexibility in payments may work for you.

With that in mind, I believe Pay option ARM's were created to make us, the mortgage salespeople of the world, a whole bunch of money.  In my office, it seems as if a lot of my co-workers were interested in putting their clients into Pay Option ARM's because they could or did earn big rebates from the lender.  Furthermore, it appears that part of our current mortgage crisis in the United States is due to borrowers being put in "exotic" loans such as option ARM's.  When the loan fully amortized (typically after 3 years or so), the borrower was often upside down in their house and faced with foreclosure.

I'm one who is actually glad that most lenders have severely restricted or eliminated their Pay option ARM programs.  Yes, I've tried to sell them to investors with no takers.  But I'm not sure that they're always in the best interests of our clients.  And that's why we should be in business; not to make a potload of money but to get our clients what makes sense for them. If we do our job, the money will naturally follow.  What do you think?

Hello all:  I had the question posed to me twice today by consumers such as yourself.  The question was are you going to survive?  I said yes and here's why.  Number one, Exact Financial Group is a mortgage broker and, therefore, has the ability to shop your loan to over 75 lenders in order to find the best fit for you. Two, we're on the retail side of the equation.  The big trouble is on the wholesale side (American Home Morgage which failed recently was a wholesale lender).

As we go forward, here are my predictions.  The mortgage market will continue to tighten.  There are a lot of bad loans out there and the secondary market who repurchases these loans that are sold is dead.  Plus, there are more loans set to adjust through next year and I don't believe people will be able to afford the new payment.  With that being said, I believe that the retail side of the lending world will suffer if it hasn't started already.  We're already seeing loan programs go away and I would expect it to continue.  There may be quite a bit of attrition on our side of the aisle as well. 

In sum, it's rapidly becoming a game of survival of the fittest.  The companies and individuals who can afford to persevere will still be in business.  These are the ones you should choose to do business with anyway.  Good luck to all of you!  As always, I welcome your comments.  Have a blessed day.

Paul

Hello all:  In Washington State all loan originators were requred to be licensed as of the first of the year. We also have to pass a test by the end of the year in order to keep our license.  I think this is a good thing.  First and foremost, the conversations I had with the professionals I work with (mostly reators) indicated they thought it was a good thing.

Secondly, I believe it will help you.  Theoretically, a person who has to get a license is more committed to the business.  What goes with this is a focus on you, our customer, as this is the only way to make it in the long run. A mortgage person who isn't licensed is not subject to any regulations and could operate their business any way they choose.  We should be an ethical lot; I believe licensing helps.  That's not to say  there aren't unscrupulous operators in our business.  I find that unfortunate and hope it doesn't happen to you. If you're interested in avoiding this, I just posted a blog about shopping around for the best loan officer here on Active Rain.  This might help.

Finally, I'm always curious about how many of my mortgage cohorts who are members of ActiveRain are licensed.  Also, if you think it's important.  Have a great day!

Paul

Good morning! I wanted to share with you some great information about how you can choose the best lender for your situation.  Here goes.

1) It's important to work with a professional who knows what they're doing.  They should be up-to-date on market conditions and ask the right questions in order to put you in the best loan you're comfortable with.  Too many people in my industry are interested in just making a buck.  Thank God a lot of the lenders have curtailed their exotic loan programs (option ARM's, etc) as it forces us to not necessarily focus on the biggest payout but on you, our customer. A professional will know about the latest economic reports and what they mean.  A pro will be as much a couselor and trusted advociate as he is your salesperson.

2) If it seems too good to be true, it probably is.  The conversations I've had with my customers recently indicate that they know the story.  All the advertising in the world can't escape the fact that the sole purpose is to get people to call.  Be careful what you hear.

3) You get what you pay for. If you're looking for the absolute cheapest deal out there, realize that there will be little or no service with your loan.  I refer to it as the Costco approach.  This is not necessarily a bad thing; some people are fine with doing it themselves.  Just keep in mind that a mortage is a big, complicated transaction for most of you. I think you'd agree with me that it might be worth it to pay a little more to see that your loan is handled smoothly and on time.

4) Interest rates can change daily, even hourly.  There's a tremendous amount of turbulence in our market right now.  Find a professional to work with and they'll make sure you're updated about rates, fees, etc.  Again, I recommend you talk to 3 face-to-face if at all possible.  Pick the one you're the most comfortable with.  Ideally, you'd like to work with this person long-term if they do a good job for you.

In closing, I hope this helps.  Take the time to do your due diligence and you'll be rewarded with a long-term relationship with your mortgage professional.  Good luck!

Paul

Wow!  What an interesting week last week.  On Thursday, the buzz in my office was palpable.  I'm newer to the business so have decided not to be affected by what's going on.  But the more experienced loan officers in my office were scratching their heads.  They were watching deals fall through on exotic (option ARM's for example) loans and having to place them with other lenders, locking and hoping that it would go through.  I personally think the market got spooked by American Home Mortgage's failure.

So what should be done?  Number one, realize this may not be a quick fix.  For probably the next 30 days or so, the lenders will remain skittish and I wouldn't be surprised if there are more failures.  If you have an opportunity to do conventional, conforming loans do them.  We're entering a period where we need to be trusted advisors to our clients.  We need to tell our clients that they need a good credit score and preferably money in the bank. 

If you're looking to borrow money, make sure your financial house is in order.  Know your credit score or check it free once/year at www.annualcreditreport.com. Save your money so you can bring it to the table.  Lenders now want you to take some of the risk.  Yes, 100% financing on purchases can still be had (for example, My Community is an excellent program) but expect to pay a higher rate and provide full documentation.  I think FHA loans may come back in vogue. Yes, the paperwork can be cumbersome but you might be able to get a loan.

If you're a loan originator, don't despair.  Get out of the office and contact your professional people (realtors, lawyers, CPA's, etc).  The loans are out there.  I believe we just need to source them.  In conclusion, I don't think the market will turn in the near future.  It's important to adjust accordingly and realize that all situations are usually temporary.  Perhaps the Federal Reserve will step in this year and lower interest rates.  Wouldn't that be nice?  Have a great weekend!

Paul

I've been getting several emails today about how topsy-turvy the market is today. There have been several lenders who have either worsened their pricing or stopped lending altogether.  I even read an email from Washington Mutual that stated they will survive but several others probably won't.  And I'm not sure it will improve for the foreseeable future.  So what's to be done? 

I think it's more important than ever to communicate with your lender and make sure they can do what they say they can.  Also, have a backup plan in case your first scenario doesn't work.  It's suggested that all loans be locked for now.  Be patient with the loan process and communicate that to your borrowers.  It could take longer to get things done.

What do we as a group need to do?  Don't despair.  Yes, times are challenging but that can all be solved with a little gumption.  If you aren't getting out of the office to network, start doing it. I attended a Brian Buffini seminar in February and they suggested all LO's should get out of the office for 2 hours/day to press the flesh.  The loans are out there; it's up to you to source them!  If there's fallout within our ranks due to market conditions, that's even better news for you. 

So I encourage everyone to stay positive any way you can.  We all know the market will improve; we just don't know when.  Does anyone have a crystal ball, anyway?  Have a great day!

Paul 

Hello all:  The mortgage market here has definitely tightened.  Currently, there is as much as a 9 month inventory of houses for sale in most areas.  Anything above a 6 month supply can be considered a buyer's market.  A lot of my real estate agent friends are struggling right now.  And I feel for them.  Two years ago, almost any homebuyer could get a loan.  Now, it's only the people with great credit and money in the bank that are guaranteed.

It's an interesting paradox here.  The economy is still strong up here with several companies hiring and thousands moving to the state every year.  However, housing was so strong here for years, I believe that a slowdown was bound to happen.  So what's the message to our customers?  Make sure you have your financial house in order if you plan on buying or refinancing your home.  Know your credit score (you can check this free once/year through www.annualcreditreport.com) and have some money in the bank.  The days of 100% financing are pretty much gone for now. 

I believe the market will continue to tighten here and there may be more foreclosures on the horizon.  The trend on foreclosures in this area is definitely up.  I'm not sure that the market will improve until 2009 or beyond.  It doesn't mean that it's all doom and gloom, though.  My business is strong and I believe that the mortgage lenders who take care of their clients and present themselves as knowledgable professionals will do just fine.  Have a great day and I'll talk to you soon!

Paul