Quick Chat: Bill Clemente

I had a chance to sit down with Bill at one of his open houses.

Bill is a real estate agent working out of Security Pacific Real Estate Services in Walnut Creek.

Here's our interview:

Contact Bill:

• (925) 974-7679
• bclemente@securitypacific.com
• http://www.actorbillrealestate.com/

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!

Jumbo Loans are making a comeback

Well, in part, they never left. They were fundable, just exorbitantly priced. That is changing. In case you missed it, here's what has happened.

Around the beginning of August, Investors who normally bought pools of Alt-A loans from lenders decided the risk wasn't worth the reward.

The loans they were buying were not Sub Prime, they were Alt-A which includes Jumbo Loans, Home Equity Loans, as well as higher quality Stated Income Loans. These investors simply stopped buying pools at competitive prices. Instead they offered the lenders drastically lowball offers on their pools.

That in turn threw some Lenders out of business and others scrambling for liquidity. Countrywide borrowed 11.5 Billion from lines of credit and then sold another 2 billion of stock to Bank America.

To simplify the mortgage securitization process think of it this way. Every lender needs to make new loans in order to stay in business. Servicing existing loans doesn't pay enough.

Imagine the Lender and their vault. There is a finite amount of cash in the vault. During the month the Lender lends as much as they can out of their vault. Pretty soon the vault is running empty. So the lender turns to the secondary mortgage market and sells the loans they have done to investors. By selling the loans, in return they fill their vault back up and then make more loans. Simple, eh?

The money the Lender receives from the investor is based on a number of different factors. Some are directly determined by the loans in the pool, others are external. Some outside factors might be the overall economic situation, or what other available investments they could buy instead. Inside the pool factors include how that particular pool is expected to perform, their credit score, their loan to value and so on.

Want to know a secret? Real interest rates for mortgages are not determined by the Feds, they are a direct result of this secondary mortgage market and how much they are willing to pay for these pools.

I received a call this morning from a contact I have at a large lender. She told me they had just arranged for the sale of a pool of Jumbo Loans to the secondary market and in doing so this was the first step in getting Jumbo Loans back on track.

I've been doing some extensive research since that call and created somewhat of a cheat sheet.

I do want to caution that this is current as of today, it could change tomorrow, and is only meant as a general guideline as to what is currently out there and Real. I have to emphasize the REAL aspect.

I cannot tell you how many emails, faxes, and phone calls I have gotten from Pseudo Jumbo Wholesale Reps pitching me everything they can in order to get my business. Many of them are using the same sales tactics a used car salesman would to get my loans into their system. The problem is that I know things they don't. I know people above them that they don't. I know the truth.

So here is, as of today August 29th, 2007, a general guideline as to what you can expect to do today in the world of Jumbo Financing (over $417,000):

FULL DOC

Loan Amount	LTV	Credit Score	Debt Ratio	Reserves Required
$500,000	95%	680	45%	6 months
650,000	90%	680	45%	6 months
750,000	85%	700	45%	6 months
1,000,000	80%	680	45%	6 months

Stated Income / Self Employed

Loan Amount	LTV	Credit Score	Debt Ratio	Reserves Required
$500,000	90%	680	45%	6 months
650,000	85%	720	45%	6 months
750,000	75%	720	45%	6 months
1,000,000	70%	720	45%	6 months

How about Rates? One of my insider newsletters has this to state about rates and locking:

"We still maintained a lock-in stance for all non-conforming and jumbo loans as that market is changing daily. Until Wall Street investors set the market for jumbo loans, we maintain that stance."

I hope this helps you know a little better of what is going on in the dimly lit backrooms of lenders and those that buy their pools. If you have questions, please feel free to contact me at any time.

Mike Mueller (925) 288-9977 Ext 104

Feel The Pain

At first I was just going to let this slide off into obscurity. I can't.

On Friday, I watched Jim Cramer of CNBC have his own personal on camera meltdown. I'm not a big fan of Cramer, but I certainly can feel his pain.

Cramer's was upset by the Fed's not paying attention to what is actually happening in the market. His Pain comes directly from his contacts in the hedge fund business. The fact that "good people" were losing their jobs because of the Fed's position. His Pain was that two of the Feds, Ben and Bill, were not paying attention. They just were not getting it.

I mentioned yesterday that the market was operating in uncharted territory right now. The 10 Year Bond Yield and the mortgage rates that have been mirroring the rise and fall of that bond yield have gone their separate ways.

My metaphor of choice was flying a jet through a cloud, no visibility, with no radar. Flying Blind.

I talked to a few Agents today. They've watched the same news I have, they've seen the same articles, some many even read that post. Yet as I was discussing current events with them, discussing the current Mortgage Meltdown, it became crystal clear they were just not getting the gravity of the situation. They just were not getting it.

"Mike, does this mean you can't get my self employed client approved for a 80/20 first time home buyer on a Non Owner Occupied duplex with his 600 credit score?"

Let's put it this way...

"Ladies and gentlemen, This is the Navigation Officer. I regret to inform you that it appears both the Captain and Co-Pilot have used their emergency parachutes and have left the plane. We'll pretend nothing has happened and continue flying on autopilot. Have a Nice Day and thank you for flying Mortgage Airlines!"

"So, how soon can we get them pre-approved and ready to make an offer?"

That right there is My Pain.

Jim, I feel for you.

Here is Jim's Meltdown.

Ben S. Bernanke, Chairman

William Poole, Federal Reserve Bank of St. Louis

Security Pacific Blogs!

Today we are teaching a class on blogging for the Walnut Creek Security Pacific Office.
This is a great office with some really great agents.

In a short hour I plan to show them

• What blogs are and what blogging is.
• Just how easy it is to start blogging.
• Why they want to blog.
• We're going do this class "live", and create two separate blogs right there in front of everyone!
• As a matter of fact this post is part of the class itself!

Two agents in their office; Bill Clemente and Rafael Quintero attended the class we did for the CCRIM group almost a month ago. They both created their first blogs on Active Rain (http://activerain.com)

You can view Bill's blog here: http://activerain.com/blogs/rafaelq









And Rafael's blog here: http://activerain.com/blogs/actorbill


I met with Ken Broz (kbroz@SecurityPacific.com) and he is eager to start blogging.
Ken's been shown the light and can't wait to get into it!

These agent's are going to be a wonderful addition to the real estate blogoshpere!
Their knowledge is second to none!

Please welcome them to the blog community!

Off The Streets (for now)

Good News!

The registered sex offender that had been giving local real estate professionals cause for concern is off the streets.

Daniel Duran was arrested last Wednesday when he visited a Morgan Hill Elementary School.
His bail was set at $6,000 and he is being held in the Santa Clara County Jail.
http://www.foxreno.com/news/11522913/detail.html

While the bail is disturbingly low, at least he is off the streets of now.

I first reported about his questionable tactics here: http://www.patagoniafinance.com/2007/03/be-careful-out-there.html

Remember, the government allows access to the sex offender database via Megan's Law
You can access that sight here: http://www.meganslaw.ca.gov

Close the Window!

You may have heard reference to the "Credit Window".
You haven't? You will soon because it's closing!

Don't worry, it won't close all the way, just part way.

Maybe a little explanation is in order.

The term refers to the availability and ease of granting credit.
You've read the headlines and heard of the Sub Prime meltdown. That is in a large part to having the window too wide open.

Flash back to just last year,

in a land far, far away...

Welcome to Mortgage Land!

In Mortgage Land, if you have a heart beat you are pre-approved for a 100% financing, just sign here!

You could say the Credit Window was wide open.
Well it turns out that may not have been such a good idea.

• Those heart beat buyers tend to default on their loans and then the lenders start going under,

• which drags down the Wall Street money guys,

• which then wakes up Wally, the old man in the back room who's job is to open and shuts the window.

Ok, there is no "Wally" - he's a metaphor for the Free Market Economy and the forces driving it. But it did help paint the picture right?

The moral of the story is this:
The availability of credit (the power to borrow) is changing daily.
What was approved yesterday - may be denied today.

Rates and terms aside, here's an actual example of how the window is closing.
From an email I received today, 3/30/2007 from a Lender,

Full Doc:
CLTV 90.01 - 95%: minimum FICO is now 660 *

* That translates to if you have a FICO score of at least 660, AND you are able to go FULL DOC we may be able to get you a combo loan of up to 95%, but that means all your ducks better be in a row, all your T's better be crossed, and the sun better be shining on you that particular day. You'll also need to bring 5% of your own bucks to the table or all bets are off.

And now from an email I received a year ago on 3/31/2006, also from a Lender,

Stated Income:
100% LTV with scores as low as 580 *

* Loosely translates to "If you can fog a mirror, you can have a loan!" This is stated income documentation, one loan, and all with the score of someone who doesn't like to pay bills.

Can you see how the window is closing?

Be Careful Out There...

I just read a story in my local paper.

The local police here are warning Realtors about a registered sex offender. They say he hasn't yet done anything wrong but they are concerned. Why?

Because this Bad Guy has been posing as a home buyer and visiting real estate offices and open houses.

But Hey you say, "This is America and all people are free to pursue the American Dream - right?"
That's not so bad right?

Well, let's see...

• He's also been found poking around the back of a real estate office unescorted. He probably came in through a Employee Only door.
• He's asked Realtors to recite scriptures to him.
• He's told Realtors that "God has chosen you to be my Realtor."
• He's asked Realtors to see their personal homes.
• He told an agent that she was beautiful and that beauty is a sin.

How about peeking into a home windows?
Ok, I'll admit I've done that too.
For me it was a vacant house that I was considering, my agent was busy and I thought I'd just peek in the front window.
But I didn't do my peeking at 10 PM at night!

Remember, this guy is a Registered Sex Offender.
Agents are salespeople, they want and need to sell houses.
They are not supposed to be targets.

If you are an agent - not just here but anywhere, take a step back before you run to show a client you don't know an house.
If you are a possible home buyer and an agent you just met doesn't seem too eager to want to put you in her car and drive to deserted house, take a step back as well.


Be Careful Out There!

Jargon - R- Us

I had to laugh as I sent out an email to wholesale reps this morning describing a difficult loan I was working on.

I laugh because of the H.D.C. (High Density Conversations) we use in the business.







Here's my scenario:

• Purchase, SFR, $1.9 Million, 63% LTV,
• SIVA, 1099, or possibly No Ratio,
• Assets sourced not seasoned,
• 615 Middle
• Prior NOD on 10/02.
• 1x60 9/02, 5x30 10/02, 8/02, 2/02, 9/01, and 8/01
• Sold and rented since.
• VOD, VOR, and LOE ready.
• Loan Contingency 3/30
• COE 4/18
• Need 2/28 or 3/27 with 2 or 3 yr PP

How's that for HIGH DENSITY conversation?
Did you get it all?

My Wholesale Reps did.
We should have an approval sometime tomorrow!

Commercial is Different

My main project today is to get to started on a 6 Unit Complex refinance. (Obviously this isn't the property)

This is a new client. We met and discussed ideas last week and very late on Friday she bought in the paperwork I requested.

Since she is a new client, I'm starting from scratch.
I don't know who did her original loan - and that really doesn't matter.
What does matter is she has a loan now that is rapidly painting her in a corner.

She says...
She has a 5 yr ARM.
Her rate started at 9.75% the first year.
Her rate bumped to 11.75% the second year.
Her rate is going to bump again to 13.75% very soon.
She has a Pre-Payment Penalty.
She also has a Second Pre-Payment Penalty.
She is Cash Flow Negative now.
She was barely Cash Flow Even the first year.

I ask you, does that sound anything like a Residential Loan?
Not even in the slimiest loan office - right?

I haven't started looking at her documents but I can take an educated guess at what I'll find.

She has a step loan, or for those that have been around a while a GPM.
I also think she has a Pre-Pay and a Lock Out.

While there is a Sub-Prime in Commercial, features like Step Loans, Pre-Pays, and Lock Outs are not indicators of Sub-Prime. They can be found in A Paper loans as well.

In the end, her original loan officer did a horrible job matching her loan to her goals.
She was sold a bad loan and didn't ask the right questions.

I just hope I can get in there and correct the situation.
We shall see.

Be careful out there.

Concord Blog Class

Another Day - another fabulous opportunity to share the wealth of blogging. Today we'll be meeting with Agents in the Concord, Walnut Creek area.

We'll be meeting at First American's Conference Room, Linda Moss (pictured here) offered to host this and will be bringing breakfast goodies.

This class will ask for a $10 donation to the C.C.A.R . Scholarship Foundation.

Yesterday's class went very well.

We held the class live, as in on the internet, with plenty of graphics. We talked about the 3 reasons why to blog and search engine rankings. We discussed a little about blogging theory. Then got down to the meat. We created two different blogs and then posted to the two. Once they saw how easy it was to create and post - they were hooked!

Questions were highly encouraged. If they had a question, they raised their hand and we answered it right then and there! There were plenty of questions.

In the end we asked for a quick survey to see how we did.
Nothing but highly appreciative comments.

Stealing a line from the government...

No Agent Left Behind

See you in Class!
Here's a Flyer for the class: LINK
And here's a Map to the class: LINK

SAOR Blog Class

I was asked to teach a Beginning Blog Class
for the Solano Association of Realtors today.
I requested that we collect donations for the charity of their choice.
This class will collect $5 per person which will go to the Teachers Wish List Foundation.

This is of course Brad Andersohn from First American Title.
He's also part of the technology committee and was instrumental in bringing this class to his Agents.

A hearty thanks to Brad and his team!


Here's the calendar listing for it:

Blog:101
Date: 03-15-2007
Time: 9:30 am - 11:30 am
Place: SAOR 1302 Springs Road, Vallejo
Come to this class and learn the inside secrets to blogging. In simple terms, Mike Mueller, Sr. Loan Officer for Patagonia Finance, will teach you simple formulas for successful blogging. Please RSVP to 644-5525, space is limited so reserve your seat now. A $5 donation is to the Teachers Wish List Foundation is requested.

Brad joined Active Rain not so long ago and is learning in leaps and bounds. Brad is very smart and certainly a tech kind of guy. Blogging has been around for many years but this new craze has also has some new wrinkles when applied to the Real Estate profession. It's a relatively new application of an older technology.

This class is going to be centered on meeting the needs of the Real Estate Agent who wants to start blogging. We're going to be highly interactive and dynamic. We're going to explain things in down to earth, non technical terms. By the end of the class they'll know Why they want to blog, and How to start blogging.

I realized last night, I have enough material for Blog 102, Blog 103 and Blog 104!
Hey, first things first - graduate from Blog 101, master the details, then look for more.

See you in class!

Oh yeah, here's a Flyer for the class: LINK
And here's a Map to the class: LINK

Think I was kidding?

I recently read a true horror story involving Lending Tree, Quicken Loans, Countrywide and others. It reminded me of the following posts:

• Lead Generation Biz
  
• The Truth About Lending Tree
  

Here's the story I just read: LINK

It's a long post but all the way down at the bottom they list the "Moral of the Story"...

"There are many lessons to learn here

First, in such tumultuous lending times... keeping a financing contingency in your contract might be a good way to keep from losing your earnest money because of your lender.

Second, even when you have excellent credit - and you are dealing with a big lender like Countrywide - you can’t be sure they are going to perform. They can change the rules on you with impunity.

Third, some lenders - like Bear Stearns - will cause you a great deal of discomfort for you… including flat-out lying to you. I will NEVER use Bear Stearns again. My mortgage broker will never use Bear Stearns again. Consider yourself warned.

Fourth, using a lead aggregator like LendingTree can drop your credit score enough to harm you. Although those inquiries shouldn't have made a difference, you see what happened to Jack - and the same thing could happen to you… or worse.

Fifth, as you can see - even when the LendingTree partner gives you the great deal... they can try to screw you before it's all over. Quicken Loans should be ashamed of what they tried to do to Jack - and I sincerely hope that although they promised to give him the deal they originally promised, he will decide against using them."

Remember, these were problems that experienced professionals had - not amateurs!

Price Reductions...

I attended our local Realtor marketing meeting this morning. (CCRIM)

33 homes on the Caravan Tour, split into three different tours. They, the agents, are all viewing the houses now.

I'm back at the office.
(I only do financing, and strongly believe in doing one thing and doing it well)

But I was struck by an equal if not higher amount of price reduction announcements in the meeting. Picture 30+ agents, one after one, stepping up the microphone to announce price reductions. Some were admittedly happy that their sellers "had finally come to their senses", while others were almost pleading for someone to find a buyer before the listing contract expires.

As the general public, you may not realize it but there is a dynamic conflict between the "correct" list pricing and winning the listing agreement. The decision on who you choose to represent your house for sale oftentimes comes down to which Agent promises they can get you the most Dollars.

While shopping for anything is a good thing - there are some things it's very hard to legitimately shop for. Listing Agents and Mortgages are naturally the first two things that come to mind.

List your home blindly with the Agent who says they can get the most money for you and you'll also see your home languish on the market for the most amount of days. There is so much more to listing than your net.

There are two comparable homes near me that went up for sale in the last couple of months.
One listed and sold in a matter of days.
It listed almost $40,000 less than the other one.
It was listed with a long time, seasoned, professional Agent.
The other one was listed by a smaller, newer Agent who promised much more in net proceeds.
3 Price reductions and almost 4 months later, they've now lowered themselves down to the price of the other house, but because it's languished so many days on the market it's hard to generate much interest in other Agents to show the house. It's still not sold. Meanwhile the sold house closed escrow on time and the new occupants are already settled in.

So which pricing model is right?

I'll say the same thing goes for Mortgages.
Try and shop by rates and fees and you will lose every time.

BTW: here are two important links to see homes either on broker tour in the area, or open this weekend in your area.
First is from the Contra Costa Realtors in Motion (CCRIM) site and shows this weeks caravan tour: LINK
The second is a great listing of all the open homes this weekend in your area: LINK

Volatility Kills

Volatility.

In Chem class we learned volatility was about how fast something went from liquid to vapor.
"The higher the volatility the faster our beaker of blue stuff evaporated."
I know that because that's exactly what Susie D. (my lab partner) wrote down for Problem 17 on the big test.
And that's exactly what I wrote too. Ok, so I was a "team" player.
And then that led to Mr. Wisner bringing in my parents for a... shall I use the word, "Volatile" meeting?

So there I was, hopelessly wishing that any of the participants, Mr. Wiz, my parents, or even myself, were a little more volatile.
I for one certainly would have liked to have vaporized at that moment in time.

Flash forward to my wine sommelier moments...
"Next we want to gently swirl the wine in our glasses.
This volatizes the esters of the wine.
This aerates the wine and releases its aroma and bouquet."
You can imagine it was a much more pleasant 'volatile" time in my life.

Equity traders, option traders, and the like speak glowingly of volatility.
To them volatility is a chance to get in or out of the market or stock.
Long or short, call or put, if a stock is flat or sideways it's hard to make money on it.
Volatility, financially speaking, "refers to the standard deviation of the change in value of a financial instrument with a specific time horizon."
Thank you Wikipedia
If you are on the wrong side of a volatile trade you could see your whole portfolio go to vapor.

Now let's talk about Volatility in Mortgages.
This is deadly stuff.
Yes, rates go up and down that doesn't change.
Sometimes the rates go up and down with greater speed and velocity.
There's another V word - Velocity.

But the warning I want to get across is this.
Small moves in rates, combined with the ever tightening credit window, combined with higher and higher debt, combined with flat or minimal appreciation rates will yield a highly charged, highly Volatile marketplace.

There are people I come across each and everyday who have questionable loans for their particular goals.
2/28, 3/27. 3/1 ARMs, POAs, Interest Only's -
Don't get me wrong, they are all good loans for the right person at the right time, but so often I see them with the wrong person at the wrong time.
I see volatility.

I have someone who came to me to refi last week.

• They have minimal credit,
• they have to "state their income",
• credit cards are close or at the limit,
• they have a new boat payment,
• just a little money in the bank,

Oh, and their loan amount now is the same as their home value.
All they want to do is get into a loan that will not adjust. (Theirs is about to start adjusting)

They up the Creek and there is no Fixed Rate Paddle, or any paddle for that matter.

You could say they are on the extreme side.
But I see many, many other borrowers just a couple steps away from them.
Borrowers who over the last 2 or 3 years have grown very comfortable with a Minimum Payment, or an Interest Only payment.
When it's time for them to get into something fixed - even with good credit, good income, there may no longer be a fixed paddle available.
It's not all about rates, the credit window has volatility too.
Right now with the sub prime issues the volatility of the credit window is high. And that window is closing!

When it comes to mortgages:

• Volatility in appreciation,
• Volatility in interest rates,
• Volatility in the underwriting guidelines,
• Volatility in the credit window,
• Volatility in pretty much anything can kill.

Be careful out there.

Existing vs. New Home Sale

Each month we get two reports back to back.

The Existing Home Sales Report and the New Home Sales Report.
While they sound like they are pretty much the same they are indeed drastically different.

The Existing Home Sales Report derives it's figures and data from The National Association of Realtors. It's based on exactly what you might think it is, the number of existing homes sold over a given period of time.
Existing home sales account for roughly 85% of all home sales.

The New Home Sales Report doesn't come from N.A.R. - it comes from the builders themselves.
It's what we call a fuzzy number.
It's actually the number of initial sales contracts signed over a period of time.
A contract is fine, but here's where the fuzzy comes in.
When will those houses be completed?
When will the buyers move in?
How many of those contracts go to completion (as in a funded loan)?
Would you believe 30 to 40 % of those contracts will drop out?
True story!
That's Financial Fuzzy-ness.

How many in the Existing Home Sales report will drop out?
Zero. They are real and hard numbers. They are actual completed sales.
See the difference?

Then there are the incentives.
Builders have a cashflow problem. They need to keep selling in order to keep building.
In the normal world if you have too much inventory you drop the price and the item sells.
Builders cannot do that. They have to offer incentives instead.
(Here's a whole post about the issue of builder incentives: LINK)

As the builder's inventory is presently very high, they are offering some unrealistic items.
Material upgrades like granite counters are the norm.
You may have heard about them throwing in new cars?
I've even seen copious amounts of cash back at closing (Fraud Alert!).
I have an offer from a builder on my desk right now for a 700,000 home where the builder is offering 100,000 in incentives!
Back to the report, guess what? The numbers the builders report DO NOT include these incentives.
More Fuzzy-ness.

While the existing market may also include seller incentives (cash to close, repair concessions) this is so minor and often times reflects in the sales figures.

If 85% of all sales are existing, that means the New Homes account for only 15% of the market - right?

So new homes don't matter as much?
Not true, they do indeed.
But in a very different way.

New Homes and the building of new homes is an industry unto itself.
Building a new home requires labor and materials.
More new homes means more labor being put to work.
It means more demand for the building materials.
More new homes means building material suppliers are going to have better earnings, better revenue. Sell more New Homes and Home Depot makes more money.
The New Home Sales Report might be thought of as more of a gross economic sector report.

Sell an Existing Home and Home Depot makes nothing.
Existing Home Sales are more of an indicator of the housing market as it is now.
They put a value on the market conditions as they actually were last month.
Cut and Dry.

So as you see these two reports hit the headlines each month, keep in mind where they come from and just how different the two really are.

"Paging Dr. Mueller to the White Courtesy Phone..."

"Hi, my name is Mike Mueller
I'm not a real Doctor but I play one on TV...

I have a problem, it's a serious problem,
and guess what?
I know you have it too!
It effects each and every one of us every day."

Actually the realization is closer than you may think.

Disclaimer: The following is an analogy, a metaphor if you will. While using myself as an example, I am not equating the level of training as a mortgage professional is equivalent to a medical doctor. The analogy is in the dispersement of the treatment to treat the ailment.

I am a highly trained, highly skilled, Mortgage Professional.
While the real doctors are also highly trained, skilled professionals we both use much of the same systems and tools.

We both rely heavily on new and complicated technology.
This technology allows us to make better decisions in our recommendations.
Yet nothing replaces a human smile, a warm handshake, and a knowing voice assuring the patient that, "Everything's going to be alright."

The M.D. works in conjunction with others very well.
He refers tasks better done by specialists like lab tests & X-rays.
If the doctor is a general practitioner, they may bring in the opinion of other specialists in specific fields.

As a professional, I do the same.
I order work (lab tests) from my title company, my processor, appraisers and so on.
As for specialists, I have plenty. Not everyone who comes to see me is in good mortgage health.
As a mortgage broker I need to know who might be able to help my patient.
With the plethora of lenders available, sometimes it's in the patients’ best interest to call in a specialist.

Bringing in the expertise of others is critical to the patient's health.
Having a general practice doesn't mean the MD can, will, or should do most everything involved in the treatment.
The same goes for my chosen field of practice.

While I do have a State of California, Department of Real Estate License which would allow me to represent the seller or the buyer in a transaction, as a true professional I fully understand the implications and serious ramifications that may be possible if I did.
Working in the best interest of my client is my Fiduciary Responsibility as decreed by law.
Doing anything more would be Real Estate Malpractice in my professional opinion.

In the course of treatment the M.D. may recommend certain drugs.
Some times these may be considered "over the counter" and available to the patient with little guidance from the Doctor.

Other times the best drug for treatment may be by "Prescription Only".
Prescription drugs may have serious side effects if used by the wrong person, or in the wrong conditions, and may interact with other drugs a negative ways. While a particular drug may work medical miracles on one person, it may be deadly for another.

When dispensing any drug it's imperative for the patient to be aware of possible side effects and precautions. The Doctor upon writing the prescription will make these issues and concerns perfectly clear to the patient.
For this reason the F.D.A. determines the drugs that may pose serious problems be dispensed only by trained professionals.

As a mortgage professional, I dispense or prescribe loans.
Just like there are no bad drugs, there are also no bad loans.
Every loan program has the potential to be a good program if applied to the right condition with the right patient at the right time.

When the patient comes for an office visit,
(And yes, sometimes I do house calls) it is my job to accurately diagnose the ailments of that patient.
Once diagnosed, we can discuss possible treatment options.

Sometimes the best remedy may be something simple, akin to putting ice on a swollen joint.
Example: "Mr. Johnson, I suggest you live with the adjustable loan another 6 months until your prepayment period is up."

Sometimes the best remedy may be something generic, something "over the counter" but offered with a little guidance.
Example: "Mrs. Smith, I suggest you go down to your bank and get a $50,000 HELOC, but make sure there are no costs at all."

And then sometimes the best remedy is something very specific, but something with serious warnings and contraindications, something that if used improperly could result in devastating complications to the patient.
Example: "Mr. and Mrs. Newlywed, this combo loan will allow you to buy your first home but remember the interest rate is going to be fixed for only a short period of time. After 7 years this loan will become adjustable and you may want to move, sell or refinance before that time."

Any and all of the above also have possible side effects and complications that as a professional it is my duty to warn about.

I am a professional. I am very confident in the work I do and the patients I treat.
But I have a problem.

The industry allows non trained, non skilled, non professionals to prescribe the same drugs I can.
These pseudo professionals appear to the unknowing patient as professionals.

• Do they do the same diagnosis I do?
• Do they ask insightful, probing questions, like I do?
• Do they fully understand the needs and goals of the patient, like I do?
• Do they accurately and precisely articulate both the risks and rewards of all possible solutions, like I do?

And maybe the most important question of all...

• Do they act with the same Fiduciary Responsibility, like I do?

Anything less is mortgage malpractice and that, in nutshell, is my problem.

Boxes, Part 2

In part 1 we discussed the advantages and disadvantages of being a direct lender.

In essence, if it doesn't fit in their box it doesn't fit and they have to decline the loan.

From a borrower's point of view...

Let's say our Borrower walks into Bank A, applies for a loan, a week or two later they find out they were turned down.

That's OK, they didn't really like that bank anyway.
So they go to Bank B.
Same application, same documentation, and unfortunately with the same results.

Undaunted, they go to Bank C.
Applied, Documented, and turned down!
3 strikes and your out!
"That's it, We are un-financable!"

End of story - right?

I can't tell you how many times I've come across people who were resigned to the fact that there was nothing they could do about their situation.
"We've already applied at Bank ____ and they turned us down too."

The problem is that the loan did not fit neatly into the lenders box.
It wasn't that it was a bad loan.
There was just something that kept it from fitting in.
It may have been something small.
It may have been something big.
The Bank isn't going to tell them the exact reason why?
They'll just turn it down and move on to the next one.

A broker doesn't have a box.
A broker does the math, understands the loans weakness as well as it's strengths and then applies that loan only to those banks (lenders) he knows want that particular loan.

So a Mortgage Broker has many boxes.
I have 7,000 different programs to choose from.
Which box a particular loan fits best into is the "ART" of what I do.

I like to say that if I do my job correctly, I will get the borrower the very best loan that fits their goals and needs at that time.

Broker's used to be at a disadvantage to lenders in underwriting.
Technology has changed that.
The playing field is even now.

As a Mortgage Broker, I can now pull credit in seconds.
I can then apply that credit record and supporting documents to an Automated Underwriter, something only available to lenders not so long ago.
I can get an approval in seconds if not minutes.
Submit the loan to a human underwriter via simple uploading of documents and in 24 hrs have a real approval!
That's pretty powerful stuff!

The one thing I still have to give to the lender side is the knowledge of products.
A direct lender should have better understanding of the quirks and features of their products.
Don't get me wrong, I'm not talking about your pimply faced bank employee, but the true mortgage professional (generally they don't work in a retail bank location).

Don't you love technology?

Real Estate Blogs

It seems everywhere you turn around these days there is a new blog.
It's become one of our favorite buzzwords.

The corporate world has recently gotten into blogs.
Sports Blogs, Food Blogs, Infomercial Blogs...
The Today Show even has a blog!
Here's a thought: If Matt Lauer has something to say, why doesn't he just say it on TV? Why does he need a blog?

It seems everyone blogs these days. The blog is mainstream. It's all around us.
But what exactly is a blog?

A blog in simple terms is a software interface.
It allows normal people who do not know html or code to create pages on the internet.
That's a very powerful thing.

I could explain blogging and the dominate underlying technology of .php to normal people like this: "You type what you want to say here, and it shows up over there".
It really is as simple as that.

The blog editors today are primarily "WYSIWYG".
That's pronounced as "wizzy-wig".
It's an acronym for "What You See Is What You Get"
That means that what you type, and how you place it, and what you do to it, is how it'll turn out.

And all this adds up to is that it's easy for normal people to create pages on websites with blogging, or the server side scripting that runs blogging (php).
By the way, php goes back to 1994 - it's nothing new.

What is new, is how this technology is being used and to what end.

Many many years ago I used to design Realtor websites as a sideline.
Many were and still are static sites.
They don't change much.

Using .php I designed the usual website but on the front page I included a section where the agent could blog into.
By using an interface I gave the agent a way to change their webpage on a daily basis!

"I'll be holding an open house at 123 Easy St today. come on by!"

I know, this doesn't seem like much today, but think back just 10 years ago.
What did your website do?

So technology and php may have changed the world.
That's a good thing.
But here's my bitch.

If you are going to blog that's great.
If you are going to blog about real estate because that's your job, your profession, your skill, or your marketing plan. That's even better!
Then just do it, and do it on a consistent basis!
(WOW, I just used two major marketing catch phrases in the space of a couple of sentences!)

BUT
And this is a big BUT
Do not cheapen what you do by trying to make money on the side.
I'm talking about putting ads on your blog.

A blog is a great way to send out information to a mass audience.
It's a great way to send a message.
But I'll ask you this?
What kind of a message are you sending when you also include a revenue generating list of ads?

If you need help on blogging, setting up a blog, blogs as part of a marketing plan, feel free to contact me.
If you want to sell ad space on my blog, you've got the wrong man!

Bay Area Housing Market

As promised, here's a better look at the existing home sales numbers with an eye towards the bay area.

If you were watching the headlines yesterday, you saw the world coming to an end!
It's the natural sensationalistic thing to do.
Is that a word?
It should be!







Headlines like:

"Existing Home Sales