Call To Action - Stop The Home Valuation Code of Conduct (HVCC)
June 10th, 2009 categories: Mortgage Politics
The Home Valuation Code of Conduct (HVCC) is an agreement between New York Attorney General Cuomo, Fannie Mae and Freddie Mac, and their new regulator the Federal Housing Finance Agency that was presented as a means to stop mortgage and appraisal fraud.
At first glance, the intent appears to solve issues where appraised values may be influenced by lending institutions or other parties involved in the mortgage and real estate transaction. However, a deeper look at the details in this agreement reveals language that ultimately hurts the consumer.
An official statement from the National Association of Mortgage Brokers (NAMB) about HVCC -
A revised HVCC released on December 23, 2008, by New York Attorney General Cuomo is a de facto regulatory action, failing to follow necessary regulatory procedure.
The Home Valuation Code of Conduct (HVCC), as written, goes too far. It will impair consumer choice and impede competition, ultimately costing consumers more money and hurting small businesses in a way simpler, more effective, less burdensome solutions would not.
In a response from The Appraisal Press - HVCC: The Cure Is Worse Than The Disease, there are five major aspects which they believe will harm the appraisal industry and the consumer:
- Under the HVCC, any lender using a professional appraiser incurs substantial regulatory risks and additional costs, whereas AVMs, BPOs, and other valuation alternatives are expressly and repeatedly exempted from the same regulations and liabilities.
- The HVCC unduly restricts the appraiser’s ability to operate a business in the same manner as the other parties already in the transaction.
- Lenders must be prohibited from owning or controlling, in whole or in part, any sort of valuation entity or mechanism used in the origination of a loan.
- All valuations, regardless of method employed, must be provided to the borrower in the same manner.
- Any complaints regarding the valuation process should be reported solely to the IVPI, not to the lender overseeing the origination.
What started with a 2007 lawsuit where Attorney General Andrew Cuomo sued an appraisal division of First American Corp. for allegedly inflating home values on an estimated 260,000 Washington Mutual loans between 2006 and 2007 has now been shifted to blaming street level originators and appraisers.
If revealing truth and transparency were the real motives behind this agreement, more stories would have been exposed where appraisers were pressured by developers and Appraisal Management Companies to bring in value.
The lending community is also sharing their disgust towards HVCC and how it is already hurting consumers and industry professionals.
It is vital for all mortgage and real estate professionals to get behind NAMB’s efforts to fight HVCC, regardless of whether you are a member of NAMB or not.
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HVCC Call To Action released by Marc Savitt, President - National Association of Mortgage Brokers:
June 9, 2009
HVCC CALL TO ACTION
To: All Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers
From: Marc Savitt, President- National Association of Mortgage Brokers
After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, Director of FHFA (GSE Regulator) James Lockhart, and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.
In order for this “Call to Action” to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing everyday, until advised to stop by NAMB. This will NOT be a one day action!
We have received hundreds of e-mails through the hvcc@namb.org e-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Center for additional information and documents on the HVCC.
Who will you be contacting?
- NY Attorney General Andrew Cuomo’s Office: (212) 416-8000, Internet Complaint
- Federal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
- Fannie Mae: (202) 752-7000, headquarters@fanniemae.com
- Freddie Mac: (703) 903-2000, Internet Complaint
- Senators, Representatives and Governors: Click here for contact information.
- Also, please contact your local TV and Newspaper outlets.
Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the Home Valuation Code of Conduct (HVCC) is affecting your consumer and your business.
Talking Points:
- NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.
- Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.
- AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.
- HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo’s investigation.
- No Portability! Consumers are “trapped” with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.
Background:
I. Lack of Portability
A. Lenders are not allowing borrowers to transfer appraisals, regardless of the reason.
B. Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender.
C. In a poll conducted by NAMB, 75.8% of respondents said that 0% of their appraisals are portable since the enactment of the HVCC.
II. Lack of Quality
A. AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal.
i. Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence.
B. Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.
III. Increased Cost of Appraisals
A. The minimum increase we have seen in direct consumer cost is $150 per appraisal. That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction.
B. $150.00 - minimum increase per appraisal
$561.95 - average loan amount of $224,778 at .25% for extended lock period
$711.95 - average total increase per transaction
x 3,870,552* - 2007 HMDA report of residential real estate loans originated
$2,755,639,496 - $2.8BILLION in increased fees to consumers!
IV. Articles Illustrating the Effects of the HVCC
A. The Appraisal Bubble - The Center for Public Integrity
B. The Cure is Worse than the Disease - Appraisal Press
C. Appraisals Roil Real Estate Deals - The Wall Street Journal
i. Feel free to forward these articles and/or reference them in your conversations.
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Getting Drunk And The Mortgage Meltdown
June 7th, 2009 categories: Mortgage Politics
The financial crisis explained in simple terms:
Tom is the proprietor of a bar in Las Vegas.
In order to increase sales, he decides to allow his loyal customers - most of whom are unemployed alcoholics - to drink now but pay later.
Tom keeps track of the drinks consumed on a ledger (thereby granting the customers loans).
Word gets around and as a result increasing numbers of customers flood into Tom’s bar.
Taking advantage of his customers’ freedom from immediate payment constraints, Tom increases his prices for wine and beer, the most-consumed beverages.
His sales volume increases massively.
A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Tom’s borrowing limit.
He sees no reason for undue concern since he has the debts of the alcoholics as collateral.
At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS.
These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed.
Nevertheless, as their prices continuously climb, the securities become top-selling items.
One day, although the prices are still climbing, a risk manager (subsequently of course fired due his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Tom’s bar.
However they cannot pay back the debts.
Tom cannot fulfill his loan obligations and claims bankruptcy.
DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %.
The suppliers of Tom’s bar, having granted him generous payment due dates and having invested in the securities are faced with a new situation.
His wine supplier claims bankruptcy, his beer supplier is taken over by a competitor.
The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.
The funds required for this purpose are obtained by a tax levied on the non-drinkers.
Finally an explanation I understand . . .
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I don’t know who the original author of this story is, but I’d love to give the credit to someone. I found this on a friend’s facebook page and he gave me permission to re-post. Thank you DP -
As this financial crisis / mortgage mess thing continues to unfold, we are all looking for unique ways to explain what the heck just happened. If you have another story or something to say, I’d love to post it here.
Thanks
mm
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H.R. 1728 Mortgage Reform and Anti-Predatory Lending Act and Online Gambling
May 21st, 2009 categories: Mortgage Politics
I’ve been writing a series of articles to raise awareness about the new H.R. 1728: Mortgage Reform and Anti-Predatory Lending Act.
The following article is from an email that one of my mortgage friends gave me permission to post on the Mortgage Sales Blog:
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As a busy mortgage originator, it is easy to understand why most lending professionals haven’t created a ton of online noise about the HR 1728: Mortgage Reform and Anti-Predatory Lending Act.
We’re just now dealing with the early ramifications of HVCC, so focusing our attention towards a new bill that has only made it through the House may be a bit much to ask.
However, there are several reasons why all mortgage professionals need to care about the proposed legislation of H.R. 1728.
As a quick overview, the Mortgage Reform and Anti-Predatory Lending Act of 2009 ~HR 1728 would force lenders to consider borrowers’ repayment ability, create a “safe harbor” for prime loans that are fully documented and also carry 30-year fixed rate and allow consumers to sue mortgage securitizers under an “assignee liability” provision.
Mortgage Bankers Association Chairman David Kittle, CMB, warns that language compelling lenders to carry 5 percent of the risk when nontraditional loans are bundled and sold to investors would cause the closure of lending firms, especially those dependent on warehouse lines for funding.
Meanwhile, National Association of Realtors President Charles McMillan is concerned that the safe harbor provision would eliminate other types of mortgages, leaving consumers just the 30 year fixed mortgage as the only financing option.
Rep. Barney Frank (D-Mass.) told CNSNews.com that, if it were up to him, Americans would be completely free to smoke marijuana and gamble on the Internet – but they shouldn’t be allowed “total freedom” in their financial decisions, because those risky decisions might adversely affect others.
“I would let people gamble on the Internet,” Frank said. “I would let adults smoke marijuana; I would let adults do a lot of things, if they choose.”
He added: “But allowing them total freedom to take on economic obligations that spill over into the broader society, or have a house in a neighborhood — which when they go bankrupt becomes a fire hazard for their neighbors — we’re well beyond, the impact goes well beyond the individual.”
“The individual is not the only one impacted here,” said Frank, “when bad decisions get made in the economic sphere, it causes problems.”
Barney Frank feels that the provisions in HR 1728 would have prevented us from getting in our current economic crisis.
“What the bill will do is make it look like it used to when people went to a bank to get a mortgage, less like the ‘go-go’ days when people would get mortgages without being able to pay it back.”
His plan would discourage anything but 30-year fixed rate loans, eliminate bonuses for brokers who write higher interest loans, and force lenders to keep at least a 5 to 10 percent stake for the life of the loan. Frank states that this will make lenders more responsible in their lending.
Franks also believes that lenders who can’t afford to cover 5-10 percent in reserves shouldn’t be in the business of making loans.
“This is part of the problem. We need people to be able to stand behind what they do.” He adds, “If only local community banks made mortgages, the world would not be in this crisis.”
Why should mortgage originators care about H.R. 1728?
Simple - it may be the last piece of legislation that most originators will have the opportunity to care about.
Either way, it is amazing how Barney Frank has changed his tune in the past few years over the “Housing Bubble” issue.
Barney Frank is trying to rewrite history. The “go-go” days have deep roots in the Community Reinvestment Act, first passed in 1977 under Jimmy Carter with the good intentions of increasing minority home ownership.
It grew out of charges that banks were “redlining: entire inner-city neighborhoods as bad credit risks.
Banks now were forced to perform outreach to these areas. In the 70’s and 80’s banks needed to show that they were trying to do that by advertising in minority newspapers and they were rated on the effort made and not the results achieved.
Creditworthiness still mattered….that is until the Clinton Treasury Department’s 1995 regulations made getting CRA ratings much harder. Creditworthiness and due diligence no longer mattered as new regulations de-emphasized subjective assessment measures in favor of strictly numerical ones.
As a 1999 New York Times editorial observed: “Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Bill Clinton administration to expand mortgage loans among low- and moderate- income people and felt pressure to maintain phenomenal growth in profits.”
On Barney Frank’s and Clinton’s watch, the Community Reinvestment Act was changed to force the issuance of bad loans. Banks would be rated on the number of loans, not on their soundness. Fannie Mae and Freddie Mac were then encouraged to buy them up. It was about increasing home ownership even if the housing was unaffordable.
“From the perspective of many people, including me, this is another thrift industry growing up around us”, Peter Wallison, a resident fellow at the American Enterprise Institute, said back in 1999. “If they fail, the government will have to step in and bail them out the way it stepped up and bailed out the thrift industry.”
We all know how this prediction played out in 2008 and now Barney Frank is looking to enact legislation that will all but eliminate mortgage brokers and lenders..he wants to go back to a world where only community banks will make mortgages.
I listened last month to the news trying to find ground zero for the swine flu virus on a pig farm in Mexico….we know where ground zero was for the mortgage crisis that collapsed our financial markets and it began with FNMA and FHLMC.
If they did not loosen credit standards and buy the income stated, no down payment loans, with low credit score borrowers…all in the name of increasing home ownership…the mortgage meltdown would have never occurred…
Barney Frank can hide behind all the mumbo jumbo about credit default swaps, mortgage derivatives, and finger pointing at Wall Street greed…but no one can deny that as soon as FNMA and FHMLC stopped buying loans with low fico credit borrowers, no income verification, and no down payment…they ceased to exist.
Wall Street stopped offering Sub-Prime and Alt A programs as soon as FNMA stopped buying them, and make no mistake, they were major buyer of sub prime .
Check out the 12/6/07 OFHEO statement below - It is up to us to let the American public know that we (mortgage originators) are being made the scapegoat for FNMA and FHMLC’s failed initiatives to increase home ownership no matter the cost.
The large banks are more than willing to let us take the blame as we are there #1 competition.
Imagine what will happen if banks no longer face competition from mortgage lenders and brokers.
Now is not the time to limit financial choices and increase borrowing costs. We, as an industry, need to stand up and fight back before we are legislated out of existence.
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For Immediate Release
December 06, 2007
STATEMENT OF OFHEO DIRECTOR JAMES B. LOCKHART
“As Director of OFHEO, the regulator of Fannie Mae and Freddie Mac, I believe that the foreclosure prevention initiative announced by President Bush is a major step forward. I thank Secretary Paulson and Jackson and everybody from the private-sector involved. Fannie and Freddie are the largest investors in AAA subprime mortgage backed securities. They hold $160 billion of these securities and they are the major buyers of the refinanced subprime mortgages. This plan is a win-win for homeowners, neighborhoods, investors and the markets.
But more has to be done. Fannie Mae and Freddie Mac have played an extremely important role in supporting the mortgage market as all the problems erupted this summer. Since then, they have been buying and securitizing almost $100 billion a month in mortgages. Their market share of all new mortgages has grown from 38 percent last year to over 60 percent.
We need to make sure that they will continue supporting the mortgage markets. That is why we need now, as President Bush and the Secretaries have just said, GSE reform to strengthen the regulator of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. For the last six years Congress has been considering GSE reform legislation. Given the problems faced by Fannie Mae and Freddie Mac and the current market conditions, it is time to act to ensure that they will be here to support the mortgage market, especially affordable mortgages for lower income families, now and in the future.”
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OFHEO’s mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae and Freddie Mac.
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Written By:
S. John Murray
S. John Murray, CMPS
Sr.Vice President
www.sjohnmortgage.com
Resources / Related Links:
- How Long Will It Take HR 1728 to Reach The Senate?
- HR 1728 Mortgage Reform Act Moves Through The House
- Supporters of H.R. 1728: Mortgage Reform and Anti-Predatory Lending Act believe borrowers were duped into bad loans.
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Mortgage Blogging 101 - Recap
April 11th, 2009 categories: Mortgage Blogs / Social Media
Thank you again to everyone who showed up on Good Friday for our Mortgage Blogging 101 webinar.
While Mark Green is working on converting the recorded event into a video for our blogs, I wanted to briefly outline the major bullets, questions, and answers that were covered.
Quick Re-cap:
Mark Green, Dan Green, and I had an unscripted conversation about how loan officers could benefit from having their own mortgage blog.
Since the three of us are at different levels of experience, and all have very diverse agendas with our mortgage blogs, the main purpose of our discussion was to help real loan officers gain a better understanding of the blogging thing.
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Webinar Agenda: Mortgage Blogging 101
Your Moderator:
Mark Green
President, Top of Mind Networks and Novice “Blogger”
@marksgreen (Twitter)
Your Panelists:
Dan Green
Mortgage Professional at Mobium Mortgage and Expert “Blogger”
@bringtheblog (Twitter)
Mark Madsen
Mortgage Professional at Raintree Mortgage Services and Professional “Blogger”
@mark_madsen (Twitter)
What We’ll Cover Today
1:00 – 1:15pm Why Blogging Is Important
- You need to be “Google-able”
(All) Your clients and referral partners are looking for you on the web to verify that you are the professional you claim to be.
If they’re not finding you, then they are finding another professional. If they are finding you, better hope it is good stuff.
Other potential clients are not looking for you specifically, but rather for an answer to a mortgage question that may impact their buying decision. You should be there online as well.
(Dan) Dan is able to target a specific type of client simply by dominating the real estate around their search phrases.
(Mark M) I go after long-tail phrases that I know will lead me a more targeted type of client. Ex: “Las Vegas FHA Mortgage” vs FHA Mortgage.
- It’s an ideal complement to your existing CRM efforts
(All) Initially attack blogging as a simple way to enhance your current database marketing / client communication activities. It is our responsibility to educate our clients about recent news that may influence their mortgage and real estate decisions. Simply write an article on your blog and then send an email to your database with a link.
1:15 – 1:30pm Defining Your Goals
Search Engine Optimization (SEO)
(Mark Green) Mark was originally interested in blogging so that his clients could find him online when hey typed in Mortgage CRM. After seeing the proof that blogging is about more than just being found on the web, Mark has fully committed to the bigger picture of creating relationships with his viewers, building trust, networking, providing value, and everything else that gets people hooked on the blogging lifestyle.
(Dan Green) Dan Started blogging 4 1/2 years ago with a simple agenda of creating a centralized online resource for his clients. As a result of producing valuable content, many other bloggers have linked back to Dan’s site which has given him super powers in the search engines. Dan now has the luxury of choosing his clients and mortgage programs by writing, or not writing about certain things. He is living proof that mortgage blogs work.
(Mark M) I was taught about SEO from a Las Vegas real estate agent who makes 100% of his living from web generated business. However, after meeting Dan in Sep of 2008 at REBlog World, I realized that there was an opportunity for loan officers to control that initial lead flow and break the chain of agent dependence with a strong enough web presence. I immediately launched a group FHA mortgage blog for a network of non-competing loan officers so that we could leverage our combined resources and dominate our local markets in the search engines.
(All) Getting found online takes time, work, and patience. So, start your blog with the intent on helping the people who already know about you, and over time you will eventually be found. SEO strategies to follow in our next webinar.
b) Providing clear counsel/advice to clients and referral sources
(All) Addressed above - Basically, put everything you can on your mortgage blog. Frequently asked questions, mortgage basics, qualifying guidelines, and every other conversation that you would normally have with your clients via phone or email. If you’re answering these questions online, then other people searching Google for the same things will find you as well…
Writing content your mortgage blog will also give people an idea about your ability to articulate and communicate complex mortgage information. If they understand what you’re saying on your blog, then it helps build their confidence in your level of service and commitment to their success.
c) Establishing yourself as a credible & reliable source of information
(All) If anything, just letting your people know that you’re still in the game is important right now.
d) Making sales
(All) The goal is to move the conversation off-line as quickly as possible. Clients spend just enough time on a mortgage blog to determine whether or not they trust you. With regards to SEO - If people are searching for something specific, it is good to be the first loan officer that they find online, trust, and have confidence in. Bottom line - first impressions are vital.
1:30 – 1:50pm Finding Your Voice
a) How often should I write on my blog?
(Mark G) A couple of times a week. Find good things to say and stick with it.
(Dan) Every day, because your clients who are in the process of getting a mortgage are consumed with getting as much info as possible. If you’re not providing constant info, then your clients are listening to a competitor. The less frequent your schedule, the more valuable your posts have to be.
(Mark M) A consumer focused mortgage blog should be updated a few times a week. You need regular content for SEO and daily content for your clients who are in the moment. Either way, it is work - no matter what anyone says.
b) What should I be writing about?
(All) Timely news, events, things that the media is screwing up. Frequently asked questions, the mortgage process, anything that would go out via email, brochure, flyer, direct mail.
c) Google Reader Demonstration by Mark Madsen
(Mark M) Google Reader helps me read a ton of content, organize my online research, stay current on everything within my niche, and share valuable info with my network.
Check out this link for more info: http://www.topofmind.com/blog/index.php/2009/04/how-to-read-50-articles-in-an-hour/
1:50 – 2:00pm Brief Q & A
Questions posted on the Top of Mind blog:
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Related Articles:
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Mark Madsen
Mortgage Blogger
Raintree Mortgage
Las Vegas, NV
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702-496-5626
mark@myfhablog.com
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Mortgage Blogging 101 Webinar - April 10
April 5th, 2009 categories: Mortgage Blogs / Social Media
I actually have a full-time job as a mortgage blogger. As the communications guy for a Las Vegas Mortgage company, my day consists of playing on mortgage blogs, writing content, researching my niche, and building new relationships with clients and referral partners.
While there are a few mortgage professionals with several years of mortgage blogging experience, like mortgage pro Dan Green, social media is still a relatively new territory for most of the industry.
Writing new content, search engine optimization, design, social networking first impressions… these things can easily be distracting and a reason for a failed online marketing agenda.
However, there is hope for the few people who maintain a clearly defined purpose for establishing an online presence.
My friends Mark Green, Dan Green (no, they are not related), and I will be holding a webinar next Friday to discuss the basics of mortgage blogging, search marketing, and developing online business.
The three of us are in all different stages of our blogging careers, with Dan being the most experienced. So, it sh0uld be a nice casual conversation that we can all learn a lot from.
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Our main goal will be to help you answer one critical question
that is surrounding all of this mortgage blogging buzz:
Please join
MyFHAMortgageBlog.com’s Mark Madsen &
Bring the Blog’s Dan Green as they tackle:
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- How consumers shop for mortgage information online…
- How blogging will lead potential clients directly to your doorstep…
- How to convert web traffic into closed loans.
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Friday April 10, 2009
1pm EST (10am PST)
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The Dangers of Twitter
April 5th, 2009 categories: Mortgage Blogs / Social Media
I found this Twitter video on Sellsius Real Estate Marketing blog.
The message - Don’t give up your life for Twitter
Mark Madsen | MyFHAblog.com
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Trust, Transparency and Mortgage Sales
March 28th, 2009 categories: Mortgage Sales / Marketing
Hiding risks, misleading clients about mortgage guidelines, marketing to the wrong audience, bait-n-switch teaser rates, and lying is bad…… mmmkay.
Since this economic crisis is being blamed on the sales tactics of mortgage brokers, the concept of having a Mortgage Blog dedicated to sales and marketing may not seem very popular at the moment.
Truth is, loan officers didn’t need sales experience to make a living over the past few years since it was easy to just give away free money to anyone with or without a pulse.
Survival is a little more challenging today.
We’re having to join online mortgage networks, continuously educate ourselves about the changing mortgage landscape, learn how to build and manage databases, and develop an ethical sales model in a non-transparent industry.
What principles should govern mortgage sales and marketing?
Trust is earned through transparency, communication, service, commitment, education, presentation, social proof, and authority.
Transparency, in regards to the mortgage sales process, can be as simple as full disclosure about the risks and rewards of a particular program or transaction.
The only confusing part of complete transparency in real estate is when fiduciary responsibilities aren’t clearly defined or understood by all parties involved.
Improving your mortgage sales skills doesn’t necessarily have to be viewed as a dirty thing, as long as trust and transparency are part of the equation.
Here are a few great examples and ideas of positive mortgage sales strategies:
- Having a great database management system that allows you to be aware of every potential mortgage sales opportunity at any given moment. Whether you want to call it servicing your clients, helping people with their needs, or just being available, it is still considered sales. When rates drop and you can offer a past client a no cost refi which saves them $140 a month, that is good for everyone.
- Overcoming mortgage rate objections - When borrowers hear that the government is going to drop rates to 4.5%, they wonder why your rates are higher than what the news anchor told them they should be getting. Listening to your client’s concerns, understanding their needs, and communicating on their level is basic mortgage sales.
- Using social media to set up expectations with clients - This really boils down to communication. Connecting with your mortgage clients and referral partners on their terms, as much as possible, relieves stress and anxiety.
- Move through failure quickly, or hire a coach.
- Deliver valuable information to your clients for the purpose of establishing yourself as an educator.
I think one of main reasons for the public’s negative image of the mortgage industry is that most loan officers who jumped in during the boom didn’t really consider this a job or their future.
Things weren’t about sales, service and relationships….. it was about closing volume to satisfy the hunger of a monster.
Fortunately, there are people willing to make a difference, and I believe that there is good news ahead.
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Mark Madsen
Mortgage Blogger
Raintree Mortgage
Las Vegas, NV
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702-496-5626
mark@myfhablog.com
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$2.7 Trillion in Mortgage Sales Anticipated for 2009
March 25th, 2009 categories: Mortgage Sales / Marketing
The Mortgage Bankers Association announced on 3/24/09 that they anticipate mortgage originations to reach $2.7 Trillion for the year of 2009.
“The previous record origination years of 2002, 2003 and 2005 had large amounts of subprime loans and jumbo loans. In contrast, the 2009 originations will be almost entirely Fannie Mae and Freddie Mac-eligible loans, or eligible for FHA insurance.
…………Read full article: mbaa.org
How does this news relate to mortgage sales and marketing for 2009?
1. This is the last big round of refinances that we’re going to see for a while. Homeowners will be taking advantage of the current low rates on FHA Streamlines, Making Home Affordable, VA Streamlines, or conventional loans (if they have any equity left).
Once everyone has a 30 year rates in the 4%-5% range, they’re not refinancing again for a very long time. Keep in mind, rates have been about this low for the past few years.
I anticipate this happening within the next 8 months. So, what is your 3 - 5 year plan?
2. FHA Mortgage Lenders will have a significant advantage for all of the purchase business coming as soon as borrowers decide that either rates or values have hit the bottom.
3. FHA Short Refinances may come into play if we can get banks to realize that granting principle reductions for current homeowners makes more sense than sitting on a foreclosed property for an additional 12 months while it deteriorates.
4. There is no competition left. I could find the numbers of registered mortgage brokers, but I don’t think those stats give an honest reflection of who is really still in the business.
How are you letting people know that you are still in the game?
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This news from the Mortgage Bankers Association doesn’t necessarily mean that it is going to be an easy 2009. Massive unemployment, rapidly declining house prices, and lender guidelines aren’t really helping our cause.
If anything, this news about the huge refinance boom we’re sitting on should scare anyone who doesn’t have a plan for future purchase business, developing referral partner relationships, or some sort of equity in an online presence.
Either way, I wish you the best of luck. As a Las Vegas loan officer, I feel your pain, and I’m right here in the thick of this fight with everyone else.
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Mark Madsen
Mortgage Blogger
Raintree Mortgage
Las Vegas, NV
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702-496-5626
mark@myfhablog.com
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Who Is Eligible For a Loan Modification?
March 9th, 2009 categories: Mortgage Sales / Marketing
On March 4, 2009, the United States Treasury announced their partnership with financial institutions to reduce monthly mortgage payments for borrowers.
The New Home Affordable Modification Guidelines makes over 9,000,000 homeowners eligible to modify the terms of their existing mortgage, even if they are current on their payments.
Homeowners with verifiable income and mortgage payments that exceed 31% of their gross income are probably eligible.
To get borrower payments to the 31% threshold lenders will take the following steps:
- Lower interest payment to 2% (fixed for 5 years). If that fails…
- Extend term to up to 40 years at 2%. If that fails…
- Forbear principle at 0% interest, with balance of loan amortized at 2% for 40 years.
Principle forbearance is being offered in lieu of principle reductions. It means that the lender will charge interest on only a portion of the loan and charge 0% interest on the forbearance amount.
Here is an example:
A borrower owes $300,000, but to get to 31% of the monthly gross income the lender must offer a 2% loan for 40 years on 200,000. The $100,000 is the amount of principle forbearance. The borrower still owes the $100,000 to the lender; they are just not paying any interest on that portion of the loan.
Mort Information:
If you want to learn more, go to www.guranteedLM.com or call my friends at Guaranteed Loan Modification at 877-496-5393. Upfront fees are not required for borrowers, they are legal in all 50 states, and they have a great affiliate program.
Written By: David Bartels, Founder of Selling Smarter. Email: david(at)selling-smarter.com.
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Mortgage Networking With Linkedin and Meetup
March 5th, 2009 categories: Mortgage Blogs / Social Media
Mortgage Networking with Linkedin and Meetup.com - Friday, March 6 @ 1 - 1:45 EST.
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My friends Mark Green and Brian Brady are hosting another webinar about mortgage social networking tomorrow.
Brian has mastered the art of mining social networking sites such as Facebook and Linkedin for the purpose of meeting new mortgage clients and referral partners.
I just wanted to quickly update everyone who reads the Mortgage Sales blog.
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Here is the info from their invite:
Session One of our “Social Networking” webinar series focused on Facebook. Thanks to the 190 of you who attended - we loved the feedback. If you missed it, you can view the replay here:
http://www.topofmind.com/blog/index.php/2009/02/webinar-replay-brian-brady-on-facebook-and-social-networking/
You’ve asked for more, so please join Top of Mind Networks President Mark Green and “America’s #1 Mortgage Broker” and social networking expert Brian Brady for another exclusive webinar.
During this 45-minute session Brian Brady will explain how he uses Linked In and Meet Up to
1) Position himself as an authority figure with clients and referral sources
2) Stimulate conversations that drive selling opportunities
3) Create warm introductions instead of cold calling
PLEASE register early, mark your calendar, and be on time. We’ll begin at exactly 1pm EST (10am PST).
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