Why Not Feel Good?

Saturday, I was invited to pop in to an open house being held at Security Pacific in Walnut Creek.

This wasn't in one of their Listings but an Open House of their Office.  It was Client Appreciation Day!

Past Clients, Future Clients, (and even loan guys like me) were invited to come and spend a little time with our favorite Agents.

Sec Pac provided all the goodies too.

Hamburgers, hot dogs, cotton candy, soda and brownies. 

It worked, the people came and the conversation and smiles flowed!

Not to stop there, they combined this all with

• E-Waste Recycling,
• Cell Phone Recycling,
• Free Shredding Service,
• Eye Glass Donations,
• Massage Therapy (really!  Right there in the front lobby)
• and even a Raffle!

The only thing I didn't see was a recycling bin for my aluminum can - (maybe I didn't look hard enough)

It was a beautiful day and the smiles and friendship made my day even better!

Good for you Security Pacific!

Shift Happens

I wrote about the loss of another Lender the other day.  This happened to be a good lender.  Yes, there are good lenders and bad lenders out there. 

I talk to many mortgage professionals on a regular basis.  It's interesting as I talk to them I have noticed a paradigm shift of sorts. 

What makes a Good Lender?

My original article lamented the loss of what I perceived as a good lender.  But what makes a good Lender?  To me the qualifications are clear. 

• Good Programs - I want a large variety of programs to choose from.  Did you know that with something as simple as a 30 yr. fixed loan, a good lender may have 10 different loan programs?  Each on has it's own guidelines and rules as to what it will do and what it won't do.   
• Good Communication - I want to have the ability to discuss a scenario with a Account Executive.  I want to discuss the conditions with the Underwriter.  I want to know what stage the loan is in at all times.
• Good Track Record - Just like the girl in high school with the bad reputation, Lenders also can earn a bad rep.  I'm not inclined to do business with a Lender that consistently knocks down an appraisal figure or adds last minute conditions.  If I am submitting a clean file I want as few last minute surprises as possible.

Remember this is what I personally have deemed makes up Good Lender.  I also appreciate many other factors.  I like a good website.  I like good technology. 

The Public View

If you ask the public what makes a good lender they'll have a different view.

• "They don't make those bad loans.  You know, those Interest Only, Stated Income, Payment Options kind."
• "They are strong and have plenty of money behind them."
• "Their phone people are so nice..."

That's the overall public opinion today.  While it may be heavily influenced by the media it is what it is.  I argue that both the public and the media don't have a clear picture.  Their view is skewed and incorrect. 

Case in point.  Not to pick on one but let's just look at WAMU.  In the court of public opinion WAMU is a good guy.  They have funny commercials.  They have nice looking banks.  Ask the next person you see on the street about WAMU and they'll give you a thumbs up. 

The bulk of WAMU's business has been in Option ARMs.  Historically that would be around 80%.  Of those loans more than half were also stated income loans.  I haven't seen that on my nightly news have you? 

Interestingly, Wachovia which bought World Savings earlier just had a commercial on my TV pushing a 30 yr. fixed with "flexibility".  Does the Public realize this too is an Option Arm?  Not at all.  My point is that the public is misinformed.  They don't have the complete story.

Shift Happens

Two years ago, if you asked a mortgage originator what made a "good lender" they would reply with  a list that might look like this:

• Programs  - "They have a stated 2/28 that'll go to 100% with no reserves, no sources, no seasoning and I got 2 points on the backside."
• Conditions - "I told them I couldn't get the verification of deposit so they waived it." 
• Speed - "The underwriter pushed it to Docs prior to clearing all the conditions.  We closed in a week." 

Today, in what I think is a deliberate attempt (conscience or not) to distant themselves from what the public and media are saying is a bad lender many loan originators are singing a different tune.  I've heard them touting the same diatribe as the news reports. 

"Good riddance!  They were a lousy lender.  All they did was Stated Income and Option Arms!"

Many of these are the same people who were aggressively pushing those loans.  I can't blame them.  It's marketing, it's salesmanship, it's wanting to look the best in the public eye.  Right or wrong, I find it interesting.

  

Technorati Tags: public opinion, loan originator, mortgage professional

Don't Worry

My good friend and highly ethical mortgage professional, Tony Gallegos shared a video he found on YouTube.

As he writes on his blog The Mortgage Cicerone,

 "Bottom line - It's BOZO's like Richard and friends that hurt our industry. Can you imagine being so proud of these sales tactics that you actually post it on YouTube?"

Personally, I liked the voice in the background, "Hi, I'm calling you on behalf of your current lenders wholesale department..."

We, the true mortgage professionals, know these people exist.  We fight their mis-information and unethical practices each and every day.  Does the poor homeowner know who they are talking to?  Not a chance. 

These people exist and they are numerous.  I had an office right next door to me, now thankfully out of business.  But there's still plenty of scum out there.  I had a client just yesterday come to me who had been dealing with these guys.

Remember, this is only a small snippet of what they do.  Don't work with telemarketers.  Don't work with people you don't know.  Don't work with someone hundreds of miles away.  Only work with a True Mortgage Professional!  If you don't know one - ask me! 

I referred a Wells Fargo Mortgage Loan Officer to two highly ethical people I trust in Florida this week.  Imagine that, a loan officer calling me, to do a refinance on her home, because she didn't want to work with anyone in her company or with someone like Robert.  Smart move if you ask me.

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Keeping You In

I read an article in the WSJ that was about how banks are working to keep you.

Customer Retention's the name of the game.

For some reason I cannot link to it so here's a cut and paste.

Best part is at the bottom (isn't it always), LendingTree is promoting a $500 price guarantee.

That sounds great. Then you read the fine print...

• It's only for fixed rate mortgages
• It's only for Conforming Loans ($417,000 max)
• Oh yeah and you as a borrower have to document that you received a better offer from another source on the same day as the application was submitted to LendingTree.
• And you have to close on that offer.

This is such great fodder for another day but...
You have to understand Lending Tree's business model.

They are a referral generating lead source.
They advertise, advertise, advertise.
Then if they did a good enough job on their commercials,
they'll get a stream of applications coming in.

But "Oh - Oh" you say, "Lending Tree doesn't do loans".
That's part right! They are in the Lead Selling business.
They will then sell your good name to no fewer than 4 brokers or lenders.
Typically they'll sell you for around $500 to each one.

The other part, the part that's wrong, is that they do indeed do loans.
See: : LINK

Now let's see here...
If I just spent $500 to get your name, address, and credit scores, how accurate do you think my Good Faith Estimate is going to be to you?

Not sure? - Shame on you!

Go back and read "What is a GFE and why should I care?"

Go on, we can wait...

This is important stuff.

Got it yet?

Good!

So if I'm buying leads from Lending Tree, and I'm quoting rates that are "not so realistic" just to get you to bite on my hook, how in the world is anyone going to beat my offer?
How can LT lose?

That's right, they can't.
And even if they did, it's such a good marketing gimmick that they just don't care.

They mention that one guy did submit a claim.
His loan was only for $100,000 - which is pretty petty,
meaning chances are none of the Lending Tree lead buyers really cared too much about winning that one.

Oh, and anytime LT wants to crank up the profits, all they have to do is start selling your name to 5 or 6 lenders instead of the 4.

Of course they'll paint that as a positive, "Now you'll get up to 6 offers from banks, because when banks compete, you win!" - NOT!

Just remember, in anything you do...
Know who's selling you what, and where they're coming from.
You have to know their angle.

Note to self: You now have 3 or more days of topics here, LT, Ditech and E-Loan, oh and Listing Agents too.

Ok, Off the soapbox!
Here's the article:


Get a mortgage from another lender and we will pay you $250.

That is the latest marketing twist from Bank of America Corp. With competition for home loans increasing, the Charlotte, N.C., lender is encouraging its customers to apply for a mortgage with the bank and then shop around. If they decide to get their home loan elsewhere, Bank of America will write a $250 check to cover a portion of their closing costs.

The Bank of America offering is the latest sign some lenders are beginning to emphasize price, service and stronger customer relationships in the face of slowing loan volume. Mortgage originations fell 29% in the third quarter compared with the same period last year, according to the Mortgage Bankers Association, as the housing market cooled and rising interest rates made it less attractive for borrowers to refinance.

Last week, Charles Schwab Corp. said it would give most of its bank and brokerage customers a 0.25 percentage point discount on the rate for a new adjustable-rate mortgage or home-equity loan and a 0.125 percentage point discount on the rate for a fixed-rate mortgage. Until now, the discounts were available only to clients who had combined bank and brokerage account balances of more than $250,000.

In August, E*Trade Financial Corp.'s mortgage unit began offering $500 off mortgage closing costs to the company's banking and brokerage customers who have less than $100,000 in total assets at E*Trade. E*Trade customers with assets of $100,000 or more get a 0.125 percentage point mortgage-rate discount.

Other lenders are using rewards programs to try to boost customer loyalty. National City Corp. (my old company, - mm) gives customers enrolled in its rewards program 50,000 bonus points when they take out a mortgage with the bank. Customers also earn bonus points for tapping a new home-equity line of credit. Citigroup Inc. offers special reward points to customers with a Citibank mortgage or home-equity loan, provided they also have a Citibank checking account and debit card. The points can be redeemed for a variety of rewards, from gift cards to plane tickets.

The offers represent a new tactic for lenders, which for years vied for customers by rolling out mortgage products that allowed borrowers to lower their monthly payments. These include interest-only mortgages that allow borrowers to pay interest and no principal in the loan's early years, option adjustable-rate mortgages that let borrowers make a minimum payment but can lead to a rising loan balance, and mortgages with 40-year terms. But the flow of new products has slowed and bank regulators have raised questions about the risks some nontraditional mortgages may pose to borrowers and lenders.

Some lenders are wooing customers with pricing guarantees. LendingTree.com, a unit of IAC/InterActiveCorp, is offering a $500 price guarantee to certain borrowers who use its loan network to shop for a home mortgage. The offer, which runs through year end, applies only to borrowers taking out standard fixed-rate mortgages for $417,000 or less. To qualify, borrowers must document they received a better offer from another source on the same day an application was submitted to LendingTree, an online service that matches borrowers with lenders. LendingTree will pay the $500 if it can't get one of its partners to meet or beat the offer. So far, only one customer has put in a request for the $500 payment, but the request was declined because the loan was for less than $100,000, the company said.

Bank of America's "Best Value Guarantee" program is designed to attract borrowers who think they would get a better deal from a mortgage broker or another competitor. To qualify for the payment, customers must have a checking, savings or other account with the bank, apply for a mortgage and then provide proof they obtained the home loan elsewhere. During the pilot tests, only a handful of bank customers claimed the payment, said Senior Vice President Eric Telljohann. The offer is being rolled out in a number of East and West Coast markets and should be available nationwide by January, the bank said.

Note from Mike: Report after report from the Mortgage Brokers and the mortgage bankers groups have repeatedly shown that the borrower will generally save more money by going through a broker than by going directly to the source. While BofA's "Best Value" is once again a wonderful marketing slogan, it doesn't hold water to the facts.

Sign of the Times

I came in to the office yesterday to find a gaggle of movers in my elevator.

They were accompanied by my favorite security guard, Don. I asked him, "Who's moving in?"

He replied, "It's not moving in - it's moving out. Suite 880 is out of business."

"Suite 880? Hey, that's right next to me! They just moved in a couple of months ago, what happened?"

Don, "I don't know, they just went out of business. they were one of those mortgage brokers you know... The building management is not too happy about it."

The truth is - they were not really one of "those" mortgage brokers - they were a closing office for mass mailed loan offers - the kind you and I get everyday in our mail box, as well as the Phone Dialers and Spam Mailers.

They did it all!

Their biggest product seller was the Payment Option ARM (they closed 20+ a month) and you can guess they were selling them all to unsuspecting borrowers.

They had just switched to selling the Money Merge Loans but then I guess the Sub Prime collapse took a bite out of their pipeline.

Well, I can't say I'm sorry to see them go. Easy come - easy go!

Moral of the Story:
Times are indeed changing. More and more of these guys are dying out. As they go, I'm remind you to be extra careful out there. Just as you are never supposed to approach a wounded animal, stay clear of these "animals" as well.

As they approach the end, let's just say it this way...

Their ethics tend to disappear first.

Monday's are for Chili Cook Offs?

This isn't Texas, and this isn't Emeril. This is about thinking outside the box.

I just got back from a Chili Cook-Off.
Yes I know, it's Monday.

It was put on by a local title company (First American Title).

It couldn't have been simpler.
They had a number of office workers prepare their favorite chili recipes.
They then invited all their clients to judge.

Let's see...
Free Chili, Free Drinks, Free Lunch - You bet I'm there!

Once there, I spent little time chit chatting about Chili and instead spent a couple of hours discussing the market, meeting new people, and networking with Agents.Mike Mueller

The surprising part?
I had more quality conversations around the Chili, than I typically have at the local Realtor Marketing Meetings (and that's what those meetings are for)

As just one example I sat next to and started talking to a commercial broker, we started talking about the finer points of spices, and the conversation turned to the marketplace, marketing, and loans. The next thing I know - he invited me to speak in front of his entire office!

That must have been some great Chili.

Many thanks to Jorgelina and First American Title for inviting me.
It might have been an otherwise normal Monday, but instead it was a great out of the box kind of day!