Washington Mortgage Planner-straight up mortgage advice and commentary

Hello all:  I just returned today from vacation and encourage all of you to take one whether you feel you need one or not. I was lucky enough to spend it on the Oregon coast with my family. The weather was fantastic and we spent alot of time outdoors whether it was biking, hiking, or eating fresh caught crab for dinner!

Yes, I did remote in to check emails and answered my phone except for yesterday. The interesting thing is we all worry about whether our business will shut down in our absence. Although it's  tougher to conduct business when we're away, I'm here to tell you that I was busier than ever with inquiries while I was gone. I told my wife I should go on vacation more often!

My goal next year will be to shut down my business even more. If you're reading my blog next year, please remind me. Again, I can't emphasize how important it is for us all to take a break. I'm finding that this summer, by working hard and playing hard, I'm having the time of my life! Have a great day!

Paul

I've read a lot about the subject of who it's better to get a loan through. Bankers or brokers? Here's my take on what makes the most sense. First of all, I'm a broker. Theoretically, a broker can work on the customer's behalf to find that perfect loan by shopping with a number of lenders. Of course these days the playing field has been diminished a bit so there aren't as many choices as before.

Bankers on the other hand claim they can get loans approved that brokers can't and loans can close quicker because everything is done in-house. I had a loan last year where I would have preferred to be a banker. It was an investment property and it closed a couple days late because the underwriting was being done in Minnesota. Now it's not unusual to have underwriting done out of state, even if you're a banker. I just think that if this particular loan had been underwritten closer to home, it would have closed on time.

Last year the Seattle Times did a story on banks and their rates. They found that banks usually had higher rates which countered the lower fees they usually charged. Cutting through all the hyperbole, the most important thing to remember is that bankers and brokers are going to make money. If you see a quote where there are no points, low or no fees and a low rate, be very careful. No one in our business is going to do a loan for free!

Some bankers claim they have the best of both worlds. They can either act as a bank or broker a loan to another lender. This is an attractive alternative for the customer. However, be wary of promises that can't be kept. I met a mortgage banker about a week ago at an event and he claimed that he could get loans done I couldn't because he had direct access to his own underwriter. That sounded great but, in this day and age of tight credit and fewer loan programs, didn't ring true. The other issue that they're working on is licensing everyone. Six states nationwide including mine require a license if you're a mortgage broker. There's also a push to have all bankers licensed as they're not now. Licensing would continue to clear out the undesirables; the ones who often aren't working in the customer's best interest.

The bottom line is you should work with someone you trust and can build a relationship with you. Whether it's banker or broker, take the time to get to know the person. Your home is the single biggest transaction most of you will ever do. All the more reason to choose wisely. Have a great day!

Paul

Good morning all: I came back from vacation on Monday to see that Washington Mutual's stock had dropped 35% in one day. It's now trading in the 3's which is down from over $40/share. Of course they say they're safe but who knows these days. Wa.Mu. has had a rough ride the last year along with several other banks. I read yesterday that federal regulators expect as many as 90 more banks to fail over the next year or so. Every bank claims they're safe because of their customer deposits but here's the rub. The FDIC (federal institution that guarantees your deposits) only insures your money up to $100,000. Granted, most of us don't have that kind of cash hanging around. But if you have above that amount are you going to keep it at the failing institution or put it somewhere else? This is the problem Indymac had as customers sensed it was failing. Customers made a run on the bank and withdrew all their money. Expect other banks to be taken over by the Feds. for this very reason. There are so many smaller to medium-sized banks whose stock is trading in the $1-5 range.

With WaMu. I expect a sale or merger. And there will probably be others as well. The alternative would be total failure. The next couple of years should be interesting for sure. It won't necessarily help our business because credit will probably remain tight until this all gets sorted out. I'm curious as always on your opinions. To me, this has been an interesting ride. Not necessarily one I would have wished for but probably necessary to clean up all the garbage. Have a great day!

Paul

Hello everyone: I thought I'd give you a Northwest Market update. I know everyone is wondering about how everyone else is doing. And the media doesn't help. They only report the failures; not necessarily the success stories. So here goes. Up here, there are signs everywhere of a slower market. I'll start with the bad news first. In my building, a builder and a real estate office (they were owned by the same people) shut their doors. A friend of mine's real estate office shut down so she moved her license. Occasionally, I'll see the half-finished subdivisions when I'm out driving. And in my own office we're down to 6 people originating loans from a high of 16 in 2006.

So, yes, things are slow up here. But I think we're near the end. It's going to take awhile to rebound but I've started seeing positive signs lately. One, I've been fielding a lot of calls from buyers recently. I think they're realizing it's a buyers market right now. Two, some lenders are o.k. with financing super-jumbo loans at lower rates or a borrower with more than 4 investment properties, for example. Three, the real estate people who have decided to stick with it are working harder than ever. Whether they're holding more open houses, focusing more on commercial, or spending money on marketing, it's a good sign. I was having lunch with a long-time realtor the other day and he said he would be at 90% of what he normally does at the end of the year. Not bad.

I think the key is to stick with it. Our Pacific Northwest market is always the last to get hit and we're feeling the pinch a bit now. I expect this to continue into next year before things start to improve. But there is always opportunity and I'm sure there is more than one realtor, lender, etc. doing well right now. They just haven't bought in to all the doom and gloom and just keep plugging. Have a great Sunday!

Paul

Good morning: I hope all of you had a fantastic 4th! We ended up down at my brother-in-law's house. He lives on a small lake and had about 75 people there. It was a lot of fun.

I was thinking yesterday about the current real estate market and, although it's still tough, there are signs of life out there. In my world, I'm seeing lenders doing super jumbo loans again that are not at 8%. For example, U.S. Bank will do jumbos to $900,000 (even with cash out) at 5.95%. They are portfolioing these loans. Thus, the better rate. Wells Fargo will still finance up to 10 investment properties whereas most lenders will only do four. And I've been fielding a lot more calls from buyers looking to buy this summer as opposed to last. Part of this could be that I've been in the business another year now. The other part is I think buyers are hearing and realizing that it's a buyers market right now.

So all is not doom and gloom. It's still pretty tough out there. Lenders guidelines, for the most part, are still pretty stringent and there seems to be a disconnect between buyer and seller on what a fair price to offer is. But I'm starting to see signs of life out there. In my world, almost all the mortgage companies, workers, etc. that were going to fail have. We've gone from a high of 16 people originating loans for my branch to 6 and probably to 4 or 5 by the end of the summer.

I still think we're going to be slow through the end of this year and possibly into next. But, again, I'm encouraged. Obviously, some folk are sensing a great opportunity. And if they can spread the word, good times will be right around the corner! I'm curious how you're faring in your neck of the woods. Have a great day!

Paul

Hi all: I opened our local newspaper this morning to the announcement that Starbucks is closing 600 stores and laying off 12,000 employees. This is on top of other news such as Boeing's stock price declining from a high of $110 to $65 and shipments by both FedEx. and UPS being down as much as 20%. And of course we know that our own marketplace has been severly impacted since last summer if not before.

I think it's time for us to wake up if we haven't already! I was reading Colleen Fischesser's blog the other day (thanks Colleen!) about the importance of us deciding how committed we are to this business and I agree. I'm not sure the economic picture will brighten until several months after the presidential election so we have to stay focused on our business until times get better.

I'm curious what you're doing and what's working to keep you motivated, productive, etc. I don't know about you but I'm always trying new things. Just the other day I secured 2 new domain names related to first-time homebuyers. I also continue to mail, send out my e-newsletter and network extensively. In other words, stuff that we all know we should be doing regardless of the market.

The worst thing we can do is sit around and mope. We should be looking for opportunities because they're out there! So good luck to all of you. I know we'll make it through and be stronger for it. Have a great 4th!

Paul

Good morning all: I just wanted to wish you a happy and safe 4th of July! I always look forward to my brother-in-law's bash at his house. He'll usually have 40-50 people show up with all kinds of food and fireworks. What do you do? I tend to like the 4th because it's such a great family event althought last year we went to a high rise condo in downtown Seattle and watched the 2 big fireworks shows with a bunch of adults. That was a memorable experience. So go enjoy some great food, fireworks (if it's your thing) and fellowship on the 4th! Have a great day and I'll talk to you soon.

Paul