Coffee for Closers | Leads360 Sales & Marketing Blog 

Well maybe not a savior, but definitely a helping hand at least. Six major banks have banded together and put a moratorium on forclosure proceedings for 30 days to allow borrowers to work out alternative payment options with lenders. Contrary to what one would think, this is not just for ARM loan borrowers, but all kinds.

It’s an interesting concept. This also may open up some opportunity for mortgage companies to capture good business. Read more about it here.

I am going to keep this post very, very short and simple. I can only write about Hillary for about 30 seconds before I start getting political and this is not the right forum.

So with that said, I would like you all to take a look at a very intriguing blog post I just read over on the Blown Mortgage blog. Take a look, what do you think?

Has anyone else noticed a general calm lately? Perhaps an uneasy ‘uhh, what’s next?’ kind of feeling in the industry? Not to say that things are looking peachy and that people aren’t wondering if their company will be around tomorrow…I think we’re still a couple years, or at least several quarters away from that. But a more positive outlook on the future of the mortgage industry? Anyone else, or am I alone here?

I talk to industry people daily, and I’ve noticed that people are a little more relaxed. This could be due to humans innate ability to simply deal with pressure by becoming used to it afterwhile, or maybe people are just throwing up blinders left and right and plugging their ears and screaming “LALALALALALALALALALA!” any time someting makes them think about the state of the industry. Maybe the general calm is the eye of the storm? However, we’ve all seen some pretty promising things happening lately. Bank of America’s usurping of Countrywide is inherantly good for the situation, the economic stimulus package that the Feds are looking to send out ain’t too shabby, and the discussion on raising the conforming loan limit into the $7XX,XXX’s is great.

So, with that said, we’re not out of the storm just yet, and I don’t think we will be for a while, but stay positive, and don’t lose hope, because every cloud has it’s silver lining…

<SHAMELESS PLUG> Besides, if you’re working right, you are probably still growing right now like most of our clients. </SHAMELESS PLUG>

I don’t know if this surprises me or not. Like so many other hot topics in the news today, Americans are split pretty much down the middle. No pun intended. Read all about it here.

“Americans are nearly equally divided on whether those facing defaults on their mortgages should get special help, with most believing the borrowers are to blame for their own problems.”

Special treatment for those ‘caught’ in bad loans and facing foreclosure. A novel idea. To whose expense will this fall though? Personal opinion of the specific matter aside, moving forward there is a need for accountability on all levels. Can you place blame on the lenders, the brokers, the loan officers, the appraisers, the account executives, the processors, and…umm, don’t forget the borrowers? Sure you can. To what degree can you assign blame to each? It’s questionable and I am sure we would all come up with different looking pie charts. At the end of the day, accountability will keep us from cycling back through this again in the future, that is for sure. To whom do we need to be held accountable? Another one I don’t want to touch, but the fact remains that the lack of oversight and accountability is about to cost someone, somewhere, a whole lot of money.

The New York Times reported today that the Fed Board of Governors has voted unanimously to implement lending regulations to avoid predatory lending practices (and a second sub-prime fiasco). I think this regulation is actually aimed at the banks (to eliminate the riskiest tranches of future mortgage securities) but just framed in the name of protecting the consumer. This proposed regulation has the potential to impact borrowers, lenders, and lead generators to a significant degree.

The proposal includes four key protections for “higher-priced mortgage loans” secured by a consumer’s principal dwelling:

• Creditors would be prohibited from engaging in a pattern or practice of extending credit without considering borrowers’ ability to repay the loan.
• Creditors would be required to verify the income and assets they rely upon in making a loan.
• Prepayment penalties would only be permitted if certain conditions are met, including the condition that no penalty will apply for at least sixty days before any possible payment increase.
• Creditors would have to establish escrow accounts for taxes and insurance.

The rule would define “higher-priced mortgage loan” to capture loans in the subprime market but generally exclude loans in the prime market. A loan would be covered if it is a first-lien mortgage and has an annual percentage rate (APR) that is three percentage points or more above the yield on comparable Treasury notes, or if it is a subordinate-lien mortgage with an APR exceeding the comparable Treasury rate by five points or more.

The following protections would apply to all loans secured by a consumer’s principal dwelling, regardless of the loan’s APR:

• Lenders would be prohibited from compensating mortgage brokers by making payments known as “yield-spread premiums” unless the broker previously entered into a written agreement with the consumer disclosing the broker’s total compensation and other facts. A yield spread premium is the fee paid by a lender to a broker for higher-rate loans. The consumer’s written agreement with the broker must occur before the consumer applies for the loan or pays any fees.
• Creditors and mortgage brokers would be prohibited from coercing a real estate appraiser to misstate a home’s value.
• Companies that service mortgage loans would be prohibited from engaging in certain practices. For example, servicers would be required to credit consumers’ loan payments as of the date of receipt and would have to provide a schedule of fees to a consumer upon request.

The proposed revisions to TILA’s advertising rules require additional information about rates, monthly payments, and other loan features. The amendments also would ban seven deceptive or misleading advertising practices, including representing that a rate or payment is “fixed” when it can change.

Under the proposal, creditors would have to provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer’s principal dwelling, such as a home improvement loan or a loan to refinance an existing loan. Currently, early cost estimates are only required for home-purchase loans. In addition, consumers could not be charged any fee until after they receive the early disclosures, except a reasonable fee for obtaining the consumer’s credit history.

The Federal Reserve has engaged in extensive outreach efforts with consumer groups, the financial services industry, lawmakers, and others to ensure that the proposed rules are likely to achieve the goal of protecting consumers from unfair practices without shutting off access to responsible credit. The proposal takes into consideration testimony given at four public hearings the Board held in the summer of 2006, and a hearing held in June 2007, as well as public comment letters received in connection with those hearings. The Board also consulted with other federal and state agencies and its own Consumer Advisory Council.

The Federal Register notice is attached. The comment period ends ninety days after publication of the proposal in the Federal Register, which is expected shortly. Read all of it here.

So what does this mean for you the borrower, lender, broker, or lead generator?

The devil is surely in the details.

- How will the standards be enforced?

- What will be considered “evidence” of ability to repay? Will qualified consumers be willing and able to meet these standards? Will unqualified consumers be able to meet these standards?

- What will be considered sufficient “verification of assets”? Who will do the verification? Who will be the first major lender to get caught looking the other way?

- Will reduction of prepayment penalties significantly change product offerings?

- Will the forced establishment of escrow accounts for taxes and insurance significantly change the product offerings? Is this even legal? What will the threshold be?

- If yield-spread premiums are eliminated who will benefit and who will be hurt under a flat compensation plan? Will this regulation be easily avoided by burying disclosure in the fine print?

You sell to live, but you also live to sell. You are the kind of person who plans to stay in the mortgage industry even though things right now are…well…challenging. While your former co-workers have elected to take the easy way out, you have decided to be steadfast and continue doing what you love.

Now before we go any further, let’s take a step back and come to a realization: Your title is Senior Mortgage Consultant, Real Estate Lending Professional, Home Loan Consultant, etc. When you wake up in the morning, you’re a Sales Professional. When you go to sleep at night, you’re a Sales Professional. When someone asks you what you do for a living, you should feel proud, and tell them that you are a Sales Professional. It seems like sales $@%# is a four letter word, and right now, it seems like ‘mortgage anything’ is even worse. Before you can take control over your present and future, you need to be comfortable with the fact that you are a salesman, or saleswoman. There’s nothing wrong with that.

So with that in mind, you need to understand how certain traits of a good salesperson will help you sell, and live in a down market. There are many key traits to a typical Type-A sales professional. If you do not currently possess them, you need to align yourself with a mentor who does, and pick them up. Some of them are as follows:

- Dogged persistence: so you’ve called a good lead or referral three or four times with no response…so what, they have a life too, don’t stop calling them until you have identified that there is no opportunity for business, and this does not mean that you called three times in one day, and never got a hold of the prospect.

- Hunter mentality: you see an opportunity, and you capitalize on that opportunity. You cannot rely on someone else to do all of the gruntwork for you and deliver the picture perfect prospect. Find your business, it is out there, but you need to open your eyes and absorb.

- Cannot be backed into a corner: know your products, and know what kind of questions, comments, and concerns are typical with each kind of borrower. The last thing that your prospect who is preparing to make the largest financial committment in their life wants to hear is “Ummm, hrm…uhhhh….well lemme…..hold on…………ummmm……I don’t know.” One trait of a good salesperson is being able to admit that you do not know the answer, but you will make every effort to get that information to the prospect as expeditiously as possible. So, know your information…and if you don’t know it, don’t pretend you do. Be honest.

- You are refined and organized: these are vital. Disorganization promotes lost opportunity. Of course, the first thing that you want to do is call us and talk to us about a Lead Management System. Cut the fat. Get a process in place and stick to it. Don’t clutter your workspace, make a schedule to check and return emails and phone calls, and only set appointments and meetings that you have to be at. Everything is good in moderation, but don’t overwhelm yourself.

- Understand your value proposition: and communicate it accordingly. Why will Mr. and Mrs. Smith have the best and easiest transaction with you and your organization? What will you do to make their situation better? Make them understand that.

- Know your competition: this goes with the previous. But don’t ever trash them. And if you cannot do anything for your prospect, refer them over. I know, this sounds crazy, but your prospects will respect you, and will think of you in the future. Here at Leads360, we do our best to qualify a prospect before we sell them a Lead Management System. If the prospect is qualified, bring it on! If they are not qualified, we will refer them off to our competition if we think that there may be a synergy there. Of course we want everyone’s business, but we are not greedy and find it to be more advantageous to the prospect and ourself if we keep their best interest in mind. On the flipside, our knowledge of the competition allows us to steer fence sitters in our direction more often than not. See where I am going here?

- Network!: www.linkedin.com, www.facebook.com, www.myspace.com, www.wannanetwork.com, these are all great places to network if you do it correctly. Carry your business cards with you when you go to a bar, a restaurant, the mechanic, Disneyland, etc. But don’t be pushy. Be suave, and make friends and acquaintences. The referrals will start coming in. Go on Realtor caravan’s, go to local NAR meetings, bring Realtors cookies, print up flyers for them to use on open houses, offer to sit their open houses for them, etc.

These are just a few traits of an effective salesperson who will see success in this and every market. We’ve all got to live with the fact that it isn’t as easy to close a loan as it was a couple of years back. But we all have to eat, right? The above are some ingredients that need to go into the meal to make it delicious. Sure you may be able to make it without them, but you know what happens when you sway from the recipe…you never know what you’re going to end up with, and when it comes to getting a paycheck…predictability can be a nice thing.

More to come. Stay tuned to the blog and tell your friends.

- Morelli

In every expensive housing market in the US there are houses that have sat unsold because sellers are unwilling to drop prices from the stratospheric highs which they had been accustomed to. It’s natural psychology but if your house was valued at $3 million two years ago and is now probably worth 2/3rds what it was worth, you might be a little hesitant to take that deal (even if you are still making a good chunk in appreciation). Yet, because of the affluence of these home owners they have not been under drastic preasure to sell and have thus kept prices high, preferring to hold the property until the market rebounds. But if the downturn lasts long enough, the current market will become psychologically normalized in the minds of sellers and more houses may be listed at market prices.

A second issue is that some affluent buyers may not be able to wait. This SeekingAlpha article about e-trade raises the specter of significant defaults for large loans (expensive houses). If people with expensive homes start defaulting the property values will continue to depreciate. The question remains: will the denial continue?