The Mortgage Porter

Sunday Cheer

I believe this is a clematis (we didn't plant it).  It winds up driving my husband crazy since it takes over our front porch.  I've promised to prune this back AFTER it blooms.   Looks like I'll be busy next weekend...thought I'd share something from the garden to combat our Seattle gray skies.

About the R TEAM Blog

I have another blog that I created to try to help real estate agents get on the blog-wagon.   I have found that many agents have not yet discovered blogging and since I'm fairly new to the blogging world, I thought I would share my experiences along the way in hopes of helping others.   There are many other great resources for real estate professionals who want to learn how to blog.   This is just my thoughts and ideas on real estate blogging. 

R TEAM is a group that I created back in 1992, when I was in title insurance, to help real estate agents in south King County to network together once a month.   We met once a month for breakfast and agents would talk about their buyers needs and listings.  We would also feature a guest speaker who would discuss a topic of current interest.   The synergy was great--I looked forward to our networkings each month.

R TEAM stands for

• Real Estate Agents
• Title Insurance
• Escrow
• And
• Mortgage

At the time, I represented the title and escrow portion.  I would invite various mortgage reps each month to our group...until I became a mortgage rep and I opted to invite a title/escrow person instead!  :)

My R TEAM blog is designed with the same intent in mind.  To help real estate agents with their business with marketing ideas and to provide them insight on what going on with the mortgage industry.   I hope to add a few guest authors as well...just as I had in my former network group (we dissolved last year).

If you are a real estate agent who is just beginning to blog or have considered it...I invite you to check it out:  www.mortgageporter.com/rteam

Mortgage Interest Rates for Friday morning

Currently mortgage interest rates are slightly improved over last Friday.  I'm happy to report this improvement to rates applies to both conforming and jumbo rates.   

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties).  Conforming rate quote below based on owner occupied, "full doc" with minimum credit scores of 680 with an 80% loan to value or lower and a loan amount of $400,000.   Rates quoted are priced based on a 45 day lock with 1 point and there are no prepayment penalties on any of the rates quoted below. 

30 Year Fixed: 6.125% (APR 6.297%).  Payment per $1000 = $6.08.

40 Year Fixed:  6.500% (APR 6.641%).  Payment per $1000 = $5.85.

5/1 ARM (2/2/6 caps):  5.875% (APR 7.168%).  Payment per $1000 = $5.92.

5/1 ARM 10 Year Interest Only Payments:  6.000% (APR 7.244%).  Payment per $1000 = $5.00.

FHA/VA 30 Year Fixed:  6.500% (APR 7.119%).  Payment per $1000 = $6.32 (not including MI for FHA).

JUMBO (Non-Conforming) Rates.   Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down).    

30 Year Fixed: 7.000% (APR 7.146%).  Payment per $1000 = $6.65.

30 Year Fixed with interest only:  7.125% (APR 7.272%).  Payment per $1000 = $5.94.

5/1 ARM:  6.375% (APR 7.356).  Payment per $1000 =  $6.24.

5/1 ARM Interest Only:  6.375% (APR 7.374).  Payment per $1000 = $5.31.

Please do not select your Mortgage Professional by interest rates alone and do not shop rates by APR.    This is just a small sample available of rates and products.  Rates are as of Friday, September 28, 2007 at 8:15 a.m. and may change at any time.  Available programs may change at anytime as well.    This is not a guarantee nor is it a commitment of interest rate.  For your personal rate quote or for loan amounts over $650,000, please contact me.

Larry Cragun needs your help for the Magnificent 7

The voting is for Round 2...the competition is tensely high.   Please visit Real Estate Undressed and cast your vote.   

I'm very fortunate to be in the running...please check them all out and cast your vote and help Larry out.

Don't let the pressure of me wanting a Magnificent 7 t-shirt sway you.  :)

In Response to Cogger from "I Passed"

I received a fairly lengthy comment from someone (aka Cogger) who did not leave their real name or company...he/she appears to be from a bank but I can only assume.   Here are some points from the comment that I would like to address:

"That's great you passed your mandatory test."

Yes, it is a mandatory test.  I'm glad we have it in place so that it will raise the current bar of entry to be a loan originator for a Mortgage Broker in Washington.  This is a welcomed improvement to our industry.   Is there a mandatory test to prove competence to be a mortgage banker in Washington?

"What continuing mortgage education did you take prior to this requirement."

I earned my CMPS designation last year.   Prior to that, I began working on earning my CFP (that's on the back burner).   I belong to Mortgage Market Guide, Loan Tool Box, Strategic Equity and WAMB.  I am a self motivated student of mortgage.  I continue to attend as many seminars and to self study as much as possible in addition to training that I have received at my company where I have been employed for over seven years.   Prior to being in mortgage, I was in the title and escrow industry for 14 years where I managed a escrow branch...I learned plenty about the mortgage industy sitting across from signing tables from consumers.

"If you have ever had the luxury of working for a bank you would know that compliance, ethics, security, etc... modules are required annually by the bank employees. We don't wear these requirements as badges, rather we separate ourselves from the rest by demonstrating our knowledge. In addition, most of these employees continue to expand their knowledge with such certifications as CMPS. This is done for the sake of education rather than requirement. Of course, there are always employees that engage in education more so than others, but to try to distinguish yourself from the rest of the pack without truly knowing the facts tells me what you really know about the banking industry. I get your point....but really, can you actually believe that there are not well qualified employees with these institutions?"

I have only worked for one mortgage company which is a correspondent lender.  We are a HUD approved lender.  We can provide FHA and VA mortgage loans in addition to all the other programs of lenders we have a correspondent relationship with. Do we have compliance regulations? You better believe it.

I have never worked for a bank.  This is why I've asked in this post and others for mortgage bankers to respond with what their specific requirements are so I can compare them to those of a mortgage broker LO.    I have yet to have someone reply with detailed information.    I am proud and will wear being licensed as a badge.  Many LOs will not pass the exam, I studied and apply myself to my industry.   I'm committed to my clients.   There's nothing wrong with taking pride in what I do for a living.   You are correct, I don't know a lot about the banking industry and I (again) welcome  a response on what mortgage bankers have to do to comply with state and federal regulations to be loan originators.  There is nothing stopping a LO who works for a bank mortgage company from taking the same exam and the same continuing education courses that a LO who works for a mortgage broker is required to. 

There are "bad actors" at the mortgage banks too.   You can't really believe that just because someone works for a bank that they are above bad mortgage practices?  Just last week I received an email from a borrower who just closed a loan from a major bank-mortgage lender.    They had escrow change the final HUD-1 after closing increasing the closing costs by $2600 without telling the client.  They only found out when their proceeds was shorted.   I may be telling their story in a future post...I'm waiting for the clients permission.

"You have not addressed the Banker/Broker scenario. So what's your take on a Banker/Broker? You must realize that working with just a broker has far more limitations for the client vs. working for a Banker/Broker."

I'm assuming this is referring to a Correspondent Lender?  I'm really not sure.  Cogger, if you're reading this post, please let me know and I'll respond.   I am a Correspondent Lender which, in my book, is the best of both worlds.   We work from our own credit line and broker loans.   It is similar to being a banker and a broker.  What if you work for a bank who's products are pulling away and you cannot broker to another lender?    A broker or correspondent lender has the ability to quickly move to another lender if needed.

"We all know that there are bad LO's just as there are bad attorneys, cops, doctors, CPA's, etc...Reading through your website I see a lot of attacks towards the bad one's in the industry....However, in my opinion to continue to harp on the bad to prove a point that you work differently is a balancing act that is razor sharp. To continue to point out the flaws in the industry you feed into the stereotype of mortgage brokers. Try illustrating your skills without the examples of what others have done wrong. People can figure that out for themselves that you are good at what you do without perpetuating our industries stereotypes." 

I believe this is referring to my posts on the subprime lender.   This was not about saying "I'm better than him".    This LO contacted me looking for help on how to become a better LO and how to develop a relationship based business.   I'm flattered he would contact me and I was sickened by his story.  Not by him.   Someone younger (I don't know his age) and impressionable could easily fall into his trap with his employer and "drink the kool aid".   The purpose of those post were two fold:

1. To tell a different side of the subprime/predatory lender story.   This LO was fed a bunch of bull and he believed it.  Now he's dealing with guilt and trying to clean up his life.
2. To warn consumers that there are LOs out there who are great at selling but do not know what they're doing to you financially and may not care.

Posting his story had nothing to do about elevating my status as a mortgage professional.   

It's just recently that I've covered "the bad ones" in this industry.  The other post I did about LOs who irk me is about two of my past clients who have been damaged by other LOs.   I will not apologize for exposing what others have done and I only hope it will help other consumers.   I have been receiving a deluge of emails from consumers who are in trouble from the loans they received from their mortgage broker OR their mortgage banker.   I have not posted all of them.   They have stories they want to tell.    

"A more cohesive industry is a healthier one for all of us."

Amen.  How about we all abide by the same laws and guidelines?   It would not only benefit the mortgage industry as a whole (bankers and brokers) but most importantly, it would benefit consumers as well.   Isn't that what it's all about?  Where do consumers go if they have a legitimate complaint about their LO?  They have to determine if they're a mortgage broker, banker and then who regulates them...it's a mess.   

I agree with you.  A cohesive mortgage industry would benefit all.  We don't have that right now.

I Passed!

Early this morning I went to Promissor to take my Loan Originator test.  Passing the LO exam is required by all loan originators who are employed by Mortgage Brokers prior to January 1, 2008.    I've passed my background check from the DFI and FBI and I've attended my two clock hour courses (ethics--which is required for the first year of licensing and reverse mortgages)...the test was the last step in retaining my license to be a Loan Originator.  I passed!

If Loan Originators (we go by many names:  mortgage consultant, mortgage planner, loan officer, mortgage specialist...etc) who work for a Mortgage Broker have not passed the 100 question exam by the January deadline, they will not be allowed to practice as a LO for a Mortgage Broker.   I'm betting we'll see the LOs who do not want to take the exam or who did not pass the exam become employees at mortgage companies who are exempt from having licensed loan originators (mortgage company banks like WaMu, Chase, Wells Fargo, Countrywide; credit unions; consumer loan companies). 

As a Licensed Loan Originator, I am required to continue taking two classes per year approved by DFI in order to maintain my license. 

I would love to hear from a local bank Loan Originator/Loan Officer to hear in detail what they are required to do in order to maintain employment at Wells Fargo, Countrywide, Chase or Washington Mutual...I'm all ears!   

Nothing irks me more than a bad LO

I'm currently working with two of my returning clients who opted to use another LO for their last refinance.   I know that in spite of my marketing and efforts to keep in touch with the families I provide mortgage advice to, not all will stick with me.   I can live with that.  What gets me pissed (sorry...no other word for it) is when I hear that they were taken advantage of.  '

Client A recently divorced and needed to refinance in order to remove his ex from the mortgage.  He met a LO who suggested he do an option ARM and make just the minimum payments while investing the difference into an insurance annuity.   She was kind enough to provide this advice along with a copy of Doug Andrews book, Missed Fortune.   While this strategy may work for some people, it's certainly not a one size fits all.   Client A has perfect credit yet this LO managed to tack on a 3 year prepayment penalty which Client A only learned of when he was signing his loan papers at the escrow company.   Watching his equity evaporate by the negative amortization made Client A very nervous.   Many don't have have the risk tolerance to use their home as an investment vehicle--I wouldn't do this loan for me.  Nor do I recommend it for my clients.   Client A is now refinancing back into a long term fixed rate.  I estimate the other LO cost Client A more than $20,000 in lost equity, prepayment penalties and refi closing costs...all in less than a year.

Client B is a similar story.  I helped her with her financing for the purchase of her home.  She's a single Mom who's ARM would be adjusting next summer.   She began dating a LO who wanted to help her out with lower mortgage payments and convinced her to refinance with an Option ARM promoting the low payments.   He failed to explain what would happen to her equity if she opted for the low payments.   With the deferred interest (negative amortization) and a second mortgage, she has little to no equity to refinance at this time.  Oh yeah, this LO was kind enough to give her a parting gift of a prepayment penalty as well.   

Note:  a 3 year prepayment penalty equals approx. a point in your LO's pocket if you have an option ARM.  Plus, with an option ARM, the higher the margin is, the more money the LO is raking in.  This compensation is in addition to any points or fees that are being charged. 

I am thankful for new business and my clients...it does sicken me to see how damaging a bad LO can be to a person's finances.   Every once in a while at RCG, Jillayne Schlicke and I will go around and around about how bad LOs are (she calls us Mortgage Retail Sales People and I prefer, Mortgage Professional)...I feel like I'm constantly fighting to bring up the caliber of my industry.  Yes, there's some bad actors out there.   I'm ever hopeful that with our current market and licensing, many are flushed out for good.

This is a respectable business.  I'm proud to be a Mortgage Professional and I don't relate or associate myself with MRSP's.   I know plenty of other Mortgage Professionals in my industry...and I just wish that my clients, if they're not working with me, would have wound up with a professional instead of a predator.

I'm happy to adopt your ARM...no refi required!

One of the Realtors I work with sent a Seller to me since they were having second thoughts about the lender they were working with for the property they were buying in Arizona.  I reviewed their estimate and discovered their proposed loan had a prepayment penalty that they were not aware of.   Long story short, they decided not to buy (not just because of the lender...I believe their house did not sell in time and they were "bumped").    I've told their story in a previous post.

They recently contacted me wanting to know if they should refinance.   They have 5 years left on their 7 year ARM which is currently at 5.5%.     Since their mortgage is not set to adjust until the summer of 2012 and they still hope to move from their current residence, I recommended that they do not refinance at this time.   Even though I'm not her original loan originator, she asked me if I would mind watching her rate and keeping tabs on her ARM.    Managing mortgages is part of my standard business practice for my clients.   I added her information to my database and told her I will gladly add her to the mortgages that I care for...even though I did not originate her current mortgage.

It got me thinking... if you or someone you know have an adjustable rate (or actually mortgage) and you don't have a Mortgage Professional who is helping you manage that debt (watching current mortgage interest rates and trends, keeping tabs on when your mortgage payment may adjust), and you're in the beautiful Washington state, I'm glad to include include your existing mortgage to my database.   No refinance required.    If you're satisfied with your Loan Originator, then ask them to manage your mortgage for you.   I'm sure they'll be happy to do so (again, no refinance is required).

Now if I could only figure out a way to be paid for all the times I've talked people OUT of refinancing!   Seriously, if you have an adjustable rate mortgage, please contact a Mortgage Professional to review the terms. 

Safeco Title Reunion

Last night a group people who once worked at Safeco Title Insurance at 4th and Vine reunited at the SeaTac Marriott.    My career began on May 1, 1986 as a doc puller at Safeco.   Andrea Budnick was my first "professional" boss in the PIC department and once again when I became a title rep in the SMART (Standard Mortgagees Assurance of Record Title) home equity loan department. 

I was barely 19 years old when I first worked for Andrea.  I thought I knew everything (what teen doesn't).    I was a doc puller for a whole month and I tried to quit 3 times.   Each time I'd meet with Andrea to let her know that I did not want to be a doc puller and that was quitting, she would send me back to my desk and tell me that I could not quit that day!  Thanks to her, I wound up having a rewarding title career for 14 years.

Mary (Sweeney) Forrey and Adoline Brown were a few of my old friends from Safeco.   When I was in Property Information -Customer Service, I always looked up to Mary who was a Safeco Title Sales Rep.   I thought she was sooo cool...I wanted to be just like her and eventually, I did become a rep at Chicago Title (CTI bought Safeco).  It's such a small world--now our kids go to high school together!

Adoline Brown, aka Addy or Ma Brown...I think the world of as well.   I was a Title Technician (prepared recordings, typed supps, wrote title policies...etc.) in Unit 5 for Adoline who was the Title Officer of our group.   She was so patient and taught me everything I needed to know about title insurance.   Safeco was known in the industry as "Safeco U" because we were paid very little (compared to other title companies) and we had excellent training.   People would go to Safeco U to learn and then be hired away by a competitor.

Last night we sat with Doug Pittman, Dan Duffus, Stephanie, Mike and Sam.   It almost felt like a high school reunion!  We did have some people missing.   I would have loved to have seen Bill Massey, Linda Yoo and Phil Jenkins (and others).   It was very nice for the group at Stewart Title to organize this event.   Many thanks to Teresa Dopps, Mark Perez and the rest...and to Sherry Gill (of Pacific NW Title) who told me about the event!   I had a great time. 

More confessions from the Subprime Lender

I sent an email to the Loan Officer who contacted me last week wanting advice on how to create a referral business with a link to the post about him.   His reply is worthy of a new post...   

"Well I can’t say that I disagree with the message being sent by the post and I agree that people need to be made aware of the dangers that exist out there for potential borrowers. I appreciate you not using my name; I truly am an ethical mortgage originator. I always work in my client’s best interest and I will never give anyone a bad loan again. I was a novice then with regard to the lending industry. Now I constantly study and keep myself updated on market trends; I know exactly what is going on in the mortgage industry and I make a point of educating my borrowers properly so that they are never taken advantage of. I work from 9am to 7pm everyday then I go home and study mortgage publications (Scottsmans Guide/Orginator Times/The Mortgage Daily ..etc.).

I am well versed now when it comes to ethical lending practices, providing the utmost quality of service, and mortgage loan products. I am no longer “brainwashed” by my former employer, but everyone should know that there are still lenders out there preying on innocent people on both sides. When I began in this industry at the aforementioned company I was so excited to be a part of something so “great”. Something that people need to be aware of is that there is so much involved in our business. When I began my senses were overloaded every day of training; they piled so much information on me about how superior “we” were, how much faster we are than everybody else, how great our rates are, and how low our fees were. When people told me another company was offering them a better deal I did not believe that it was possible. I told them things like “we do over $100,000,000.00 per month in volume which affords us volume wholesale discount pricing” which was true. What I didn’t know was that the rates that I was selling based on macro enriched excel spreadsheets were not real. I didn’t know that once it hit processing everything would change; by then I was already on the next file (aside from “chasing stips”). Another thing that the company did was keep people burned out so that they couldn’t decipher what the hell was going on. They insisted that the magic number of OFA’s (internal reference meaning “out for appraisal”) was 10 per month in order to get 4 closings. That means that in a good month their entire staff of LO’s are chasing stips down for 10 files (at a minimum) while only closing 4 loans; That’s a lot of “busy” work.

Now in the last week I have really reached out to people in my community and across the nation for marketing advice and for advice on building strong referral partnerships. I do not need advice on how to operate ethically because as I said I operate with the highest level of integrity and I always have … That is why I lost sleep when I found out the truth about what was going on with my former employer and that is also why I left the company. Now I am well educated and I am truly “in the business that I am in”. I wanted to write you this update to clarify where I stand in this business. Now I will never be taken advantage of again and I work hard to educate my clients so that they will never be taken advantage of."

I'm sure this person has learned a lot from their past.  Kind of reminds me of when an ex-burglar becomes a security expert.  I do believe that this LO fell into the wrong company and is not a bad person. 

This is the difference between working with someone who is transactional vs relationship based.   If a LO is just looking at the client as a transaction, trying to make 10 files a month to satisfy production goals, they're not focusing on long term relationships with a borrower.   Odds are, they do not provide the level of service that would encourage anyone ever returning to them. 

When someone is providing mortgage advice with the expectations of maintaining a relationship with the borrower beyond closing, it's a much higher level of service.  If I bump into one of my clients at the grocery store, I want them to be happy to see me--not aiming a tomato at my head!   Mortgage Professionals who have a business practice based on retaining relationships will provide "long term" advice and will provide a level of service that they hope will not only encourage the borrower to return, but also to recommend their friends and family to them. 

This LO seems to have made a mental shift in his business practice after realizing that the company he was previously employed at was potentially harming borrowers.   I welcome more "good guys" to our industry anytime!