TEAM EMPOWERMENT MORTGAGE CHATTER: April 7; News & Headlines; Real Estate & Financing Are Personal; Another Day, Another Call for Real Estate Reform; Revamped Foreclosure Procedures; Plug In TO Gen X, Gen Y Buyers’ Preferences; A Rush To Secure Loans





“The secret to productive goal setting is in establishing clearly defined goals,writing them down and then focusing on them several times a day with words,pictures and emotions as if we’ve already achieved them. ” – Denis Waitley


As if the mortgage biz doesn’t have enough other things to worry about, how about a US government shut down? There are dozens of HUD programs that may be impacted, but focusing on FHA loans, there are two important steps in the origination process where FHA lenders have a dependency on FHA: obtaining a case number for a new FHA loan and after it closes being endorsed by FHA so that a mortgage insurance certificate can be issued. The case number for an FHA loan is obtained via FHA Connection. It is possible that FHA Connection may continue to operate even if there is a government shutdown. If that is the case, obtaining case numbers would not be a problem. (During the November 1995 shutdown, case numbers could not be obtained.) The last I checked most believe that it is very likely that loans will not be endorsed and “mortgage insurance certificates will not be issued in the event of a shutdown. Lenders could continue to originate FHA eligible loans but they will need to wait to obtain an endorsement and an MI certificate. It should be noted that lenders with DE authority can potentially obtain MI certificates if FHA Connection continues to operate.” The shutdown in 1995 mainly caused a delay rather than drop in FHA loan origination, but if lenders decide to stop accepting FHA applications, it could be a problem. I have heard nothing about Fannie or Freddie’s operations.

With the comp issue settled, but in no way forgotten, our business turns its attention to the release recently of the set of Proposed Risk Retention Rules, with a comment period ending on June 10, 2011. These rules encompass more than residential mortgages – they also impact ABS & CMBS (asset-backed, like credit card debt, and commercial mortgage) instruments. Industry followers believe that the portions that seem to be generating the most discussions will include the exemption of Fannie Mae and Freddie Mac from risk retention; the narrow definitions of qualified residential mortgage (QRM), commercial real estate (CRE) loan, commercial loan, and auto loan; the creation of a premium capture cash reserve account; and the limited exemption for re-securitizations. If you’d like to comment on the risk retention proposals, go to RiskRetentionComments.

Wednesday was another not-so-good day for rates, with MBS sales volumes picking up a little bit but current-coupon prices losing about .125. Ten year Treasury notes were worse by about .5, closing with a yield of 3.54% given the inflation fears picking up again (oil is nearing $110 per barrel) along with some weakness in the US dollar ahead of an expected interest rate hike from the ECB (which did indeed happen). “REITs, banks and money managers” were better buyers at these rates.

Weekly Jobless Claims dropped from a revised 392k down to 382k, another little bit of good news for our job market (as opposed to going the other way), but more importantly the ECB (European Community Bank) raised their rates. The Jobless Claims number was about as expected, but the ECB move tends to put a little pressure on our own Fed. Regardless, the 10-yr is up to 3.57% and MBS prices are worse by .125-.250.


Every day we are bombarded with statistics and data. Housing starts are up, housing starts are down; more job losses, unemployment is improving; foreclosures, short sales, housing inventory, interest rate movements and much more. It’s enough to make your head spin.

There’s an old saying that claims: “All real estate is local”. It infers that national numbers are good reference points, but that individual communities (or even pockets within communities) can have strikingly different realities. When prices are falling nationally, there are some places where prices are holding steady or rising as an example.

I believe that even that old saying is too broad. Buying a home or structuring the financing of a home isn’t a local phenomenon….it is a personal one. It’s the same as the economy. Even though we have been suffering through a national downturn, many are having their best years ever. Unemployment, foreclosure, even homelessness are tragic statistics and things to be aware of. But, for those not in those situations, you need to make decisions that will best serve your PERSONAL goals.

To that end, it is a great time to buy a home, for the reasons touted in this space regularly:

  • Low interest rates make more house more affordable
  • Tremendous available inventory
  • Home prices are in line with income levels once again

It is also a terrific time to sell. I heard an agent say just last week that there is NO INVENTORY available. He further explained that properly priced homes are selling almost immediately and the only homes on the market more than 30 days are ones that won’t sell because of unreasonable seller expectations (and agents who aren’t strong enough to deliver the truth to those sellers). A strong statement, yes- but one worth taking into consideration as you ponder your PERSONAL situation. And remember, sellers become buyers. They get the advantages buyers are enjoying as well.

My advice is don’t be a sheep following media hype which analyzes data that reflects the past (and not the present or future) or looks at national numbers or assumes that your job, credit standing or savings are in jeopardy. YOU need to look at your individual life and decide for yourself.


Written By A Real Estate Agent To Share With Another

I doubt if a day goes by that I don’t read about how the real estate industry needs reform, how it needs to change, and how real estate agents are incompetent, or dishonest, or both. I am tired of reading it, and bored with it, too. I am open to specific criticisms and suggestions for improvement, but I am not finding any.

People who write about industry reform write in vague generalities, and they seem to miss the fact that our industry is highly regulated on the state level. Legislation is the only answer. It is state law that determines who is eligible for a real estate license and what type of training is required. The bar will be raised when laws are changed.

As an agent, I rarely encounter another agent who is dishonest or incompetent. I have met agents who I did not like, and agents who made the transaction more difficult than it had to be, but that doesn’t make them incompetent or dishonest.

I have met many agents over the years who I have nothing but respect for. They do an amazing job every day but they never make the evening news or the local paper the way the incompetent and dishonest agents do.

When I go to a closing I often thank the other agent — in front of their clients and mine — for doing a great job. I keep thinking that maybe word will get out that real estate agents are amazing people, not to mention hardworking and honest. Does anyone ever mention hardworking and honest?

Those of us who are in the field every day are feeling a backlash because of the mortgage and foreclosure crisis, but both had far more to do with government deregulation than with dishonest or incompetent agents.

I recently read an article about how the real estate industry needs to be scrapped and rebuilt. I had a good laugh because no specific suggestions were made on how to improve anything.

People like to read about real estate reform as long as it is hypothetical, theoretical, is written with drama, and is entertaining. Some of the industry thought leaders offer more entertainment than practical advice.

Trashing real estate salespeople and the industry in general is fashionable, but anyone who wants to make a difference is going to have to start talking specifics and probably start talking to their state legislators.

Real estate salespeople are market-driven. If we make a profit we stay the course. If something stops working for us we stop doing it.

From my world view I think we are doing a fine job. It is the rest of the economy and the housing market that are messed up, and experts need someone to blame.


The country’s top mortgage servicers have reportedly reached an agreement on changes to their foreclosure procedures.

The consent agreement has not yet been made public, but The New York Times was able to get a preview of what the agreement contains from individuals who spoke on the condition of anonymity.

Among the proposed changes include:

Greater oversight of foreclosures. The oversight will happen from third party groups that include law firms, who mostly will be charged with doing the actual work of eviction, The New York Times reports.

Improved training of foreclosure staff.

A single point of contact for every defaulting home owner with the servicers. Mortgage servicers will no longer be able to foreclose while borrowers are pursuing loan modifications.

Servicers will hire independent consultants to review foreclosures that have been completed in the past two years. Mortgage servicers have agreed to compensate any owner who is found to have been improperly foreclosed on or made to pay excessive fees.

Analysts say that in order for mortgage servicers to meet these revamped rules they’ll need to hire more employees so they can be thoroughly review the cases of home owners in default or servicers will need to slow the pace of foreclosures even more (The average household in foreclosure has been delinquent for more than 500 days/)


Are you still marketing your business with personal brochures, glamour shots of yourself taken more than a decade ago, and other agent-centric approaches? If so, it’s time to shift gears to fit the demands of the next generation of buyers and sellers.

Real estate has evolved over the last several decades from being broker-centric to being agent centric, and then to being client-centric. In the client-centric model, the agent was seen as a “trusted adviser” who guided clients through the buying or selling process. The question is: What model is best suited for today’s clients?

Different generations require different approaches

Today, agents must modify their marketing and negotiation strategies to adapt to four different generations. For those born before 1965 (boomers and their ilk), the trusted adviser model is still important since they value expertise.

They expect their Realtor to know more than they do. This includes having a strong knowledge of the inventory, strong negotiation skills, and a mastery of the best technology.

In contrast, those in Gen X and Gen Y (born after 1964), don’t value expertise in the same way. A major source of friction between older agents and younger clients has to do with how older agents approach this important issue.

The older agents understand the value of their knowledge and how it can help younger clients achieve their real estate goals, and it can be particularly frustrating for them when younger clients seem to ignore what they have to say.

The model for 2011: The Trusted Resource Model

The new model for 2011 is what I call “The Trusted Resource Model.” Most agents would agree that the deals that go the most smoothly are those in which everyone works together. This team approach creates a win-win environment for virtually everyone involved. This model is neither agent-centric nor client-centric.

In the more traditional Trusted Adviser Model, the agent often tells the client what to do. The challenge is that most people want to be in charge of their own decision-making.

The Trusted Resource Model establishes the agent as a conduit of information. The agent’s role is to provide the best information possible so that the buyer or seller can make the best decision possible.

To illustrate, it’s common for agents to recommend list prices on a listing appointment. The strongest agents will also outline a 90-day marketing plan that they will use to sell the property. This approach falls into the The rusted adviser model.

In the Trusted Resource Model, the agent outlines a 90-day marketing plan and then asks the seller for input about which services the seller would like to use in marketing the property. The agent also provides the comparable sales information. The key point of differentiation here, however, is how this is handled.

In the Trusted Resource Model, instead of telling the seller, “You should list your property at $244,500,” the agent would say the following: “As you can see from comparable sales, the properties in this area are selling from $120 to $150 per square foot. The properties that have sold for $140 to $150 per square foot were all built in the last five years.

“Properties with amenities similar to yours that were built in the 1960s, are well-maintained, and have not been updated, have been selling for $120 to $135 per square foot. Based upon these numbers, where would you like to position your house in the marketplace?”

The power of this trusted resource approach is that it works with all generations. While the boomers may appreciate the fact that an agent has searched out and compiled the information they need, Gen Xers may appreciate being directed to where they can find the information. Those from Gen Y may prefer to do their own research, but they tend to check with their friends rather than searching exclusively on their own.

The Trusted Resource Model puts the agent in the position to provide access to the information and knowledge needed to close the deal. The client determines what and how to use that information.

In fact, the most important thing for real estate agents to keep in mind in almost any aspect of the real estate transaction is: “It’s not your house, it’s not your mortgage, and it’s not your decision.”

The script that illustrates this and that is a great way to end almost any close is this:

“It’s your house. It’s your decision. What would you like to do?”

If you’re looking for a way to work with all generations that really works, make yourself into your clients’ most trusted resource.


Purchase applications for mortgages increased 6.7 percent last week, reaching its highest level of the year, according to the Mortgage Bankers Association.

The MBA reports that government loan applications reached their highest level since May 2010, increasing 10.3 percent last week compared to the week prior.

Michael Fratantoni, MBA vice president of research and economics, attributes the surge to borrowers who were likely motivated to apply for government loans before a scheduled increase in FHA insurance premiums, which became effective last Friday.

Despite the sharp rise, however, purchase volume in mortgage applications still remains relatively low by historical standards, at levels last seen in 1997, Fratantoni adds.

Also, while purchase applications soared last week, applications for refinancing declined 6.2 percent last week, the lowest level since February.

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