How do we explain the mortgage business to our clients?  What can we do to make the terms, processes, programs and personalities involved with our industry easier to understand? I believe the best way is to relate them to pop culture and celebrity. America has a love affair with pop culture. We are enthralled by any bit of celebrity gossip and delight in making heroes out of fictional characters. If we can find a way to relate our celebrity fascination with the mortgage and housing industry, true enlightenment is bound to occur.

     This relation to celebrity isn't just for our clients. We can use it as well. Sherlock Holmes explained to Dr. Watson that, after examining a crime scene, he then determined the intelligence of the perpetrator. This way, he could think like the criminal, allowing him to more quickly apprehend the evildoer. During the first conversation with our client, we need to determine their intelligence. This will allow us to better serve their needs by eliminating confusion. I've included a chart, utilizing the relation to celebrity theme. This will probably revolutionize the application taking process!

Geena Davis - Superior intelligence. This client understands everything you tell them. She may actually be a step or two ahead of you. Speak with them as you would another mortgage professional. (I could have used Sharon Stone here, as she supposedly has an IQ of 150. However, when I looked for a picture, all I got were crotch shots from Basic Instinct. Ewww.)

Julia Roberts - Average to above average intelligence. This client is fairly sharp. With training, they could do what you do. Simply explain what you're doing and why and this goes smoothly.

Pamela Anderson - Below average intelligence. Speak slowly and don't use big words. Also, refrain from using initials or acronyms. (For example, Pam is lost once you get past DD or STD)

Paris Hilton - Dumber than a bag of rocks. This will be a challenge from beginning to end. This client will be unable to answer questions, unaware of basic terms and completely incapable of following even simple directions. Also, expect them to be distracted by shiny things.                                                           

"I heard Pay Option ARM's were hot. Can you explain them to me?"                                                             

"I don't think I can"                                                                                                                        

"C'mon, that would be totally hot"                                                                                                 

"(Looking for something sharp to slit your wrists) OK but the Taco Bell dog has to go. You have 4 payment options (holding up 4 fingers)"                                                                                                             

"That watch is totally hot"                                                                                                                 

"Focus!  Now, you have 4 payment options. Pay the mortgage off in 15 years, pay it off in 30 years, Basically rent the place or pay a ridiculously low payment for a few years until you have to move your stuff into storage and yourself into a homeless shelter (unless you actually happen to be a skanky blond hotel heiress) What would you like to do?"                                                                                                                            

"My shoes are totally hot...What did you say?"                                                                               

(Mortgage professional has brain hemorrhage and slips happily from this scene into the sweet repose of death)

     One of the key benchmarks of any loan, the ability to repay, was tested this past week. Michael Jackson, who was days away from losing his Neverland Ranch at Public Auction struck a deal to refinance the 25 million he owed on it. Talk about a risky loan! What really is Wacko Jacko's earning potential? He hasn't made decent music in more than a decade. As talented as the man is, he's also crazier than an outhouse rat. I can see that lender getting payment in purple $1000 bills with Michael's picture on them.

     Am I the only human being on Earth who is long sick and tired of reality television? You know what we need more of on television? Sitcoms. Remember sitcoms? I'm just spit balling here but I think a sitcom involving a group of mortgage brokers would be extremely entertaining. Because they are just getting started and times are tough, instead of an office, they all live and work together in a big house with the bosses mom. Also, they would have a monkey. I don't know why and it doesn't matter. Monkeys are entertainment gold! Lastly, we need to get a movie personality to come to TV. That's been popular lately. We could have Christopher Walken play the boss! Ooh, we'll also get Estelle Getty to play his demented mother. She's done that before. A crazy mom, the Walken and a monkey is comic gold. It'll run at least 4 years.

     How can we relate some of the personalities involved in our business to the everyday person? How do we explain Angelo Mozilo and Ben Bernanke?

     I'll try Mozilo first, using an awards show as the basis for comparison. Who should win the award for making the most money while doing the least for it? Better put, who made the most money while doing the greatest harm? The nominees are:

 Angelo Mozilo - CEO of Countrywide and wearer of ugly bow-ties.

 Heather Mills - Ex-wife of former Beatle Paul McCartney and renowned gold-digger.

 Nickelback - Possibly the worst rock band of all time.

      Wow, this is a tough call. Nickelback truly is a terrible band. The sound of Chad Kroger's voice makes me insane with rage. On the flip side, according to record sales, they must be bringing joy to some people. My personal dislike aside, they only come in third.

     Heather Mills, the Yoko Ono of her generation, is absolutely an excellent choice for this award. The mere sight of her makes me insane with rage. Nobody likes her and she took Paul for about 50 million. Again, the flip side says Paul can afford it and she didn't cost anyone else any money so she comes in second. Which means, the award goes to:

     Angelo Mozilo. He touted the strength and stability of Countrywide even as he was selling his shares as fast as possible. Most of his sell-off occurred while CWD was above $40 per share. It's now hovering around $5. He's consistently been one of the highest paid CEO's in America. Finally, when the plane he piloted was out of gas and going to crash, he strapped on his golden parachute and jumped to safety. What a scumbag. His very existence makes me insane with rage.

     Ben Bernanke. Now, that's more difficult. It's probably too early to determine his effectiveness as Chairman of the Fed or what his legacy will be. I only have two general problems with him. First, his name - Bernanke. It sounds like a Venereal disease.                                                                                                            

"Doc, I've got this rash and an itching like you couldn't imagine"                                                            

"Well let me see....No wonder! That has to be the worst case of Bernanke I've ever seen. Put this ointment on three times a day and wear a condom next time!"                                                                                     

My second problem with the man is his total lack of humility. I understand someone had to follow Greenspan but I think the person following a legend should be more humble. When that guy replaced Slash in Guns and Roses, he at least had the good sense to wear a bucket on his head. If Bernanke gives his next press conference with a KFC bucket on his head, he'll have gone a long way toward earning my confidence and respect.    

     Enough of these villains and non-bucket wearing posers! Where have all the heroes gone? We need someone who is brave in the face of adversity, gets the job done and runs a tight ship. We need Captain James T. Kirk. I'm not even a Trekkie, but Kirk is the man. Sitting in the big chair, shooting at stuff, beating the hell out of people, fornicating with green chicks.                                                                                                  

Kirk: We need to get this man a mortgage!                                                                                        

Spock: Captain, he has a 506 mid score and we need to go stated. It simply is not logical.                        

Kirk: Don't ..tell..me..about..logic..Spock. Bones, we need a mortgage......for this man!                           

McCoy: Dammit Jim! I'm a doctor, not a New Century rep!    

Maybe Kirk isn't the man for the job. What about Indiana Jones? 

     The problem with the market now is mostly perception vs. reality.

All the Chicken Little's that like to proclaim the sky is falling will tell you the market is like Britney Spears. A total mess. There have been too many huge mistakes that will take years to recover from, if at all. She's too up and down. There is no consistency in anything she does and there is simply no way to figure out what's coming next. When a glimmer of rationality shines through, it's quickly swallowed by an even deeper gloom. In this scenario, I'm not sure whether the current market condition is the K-Fed phase, the shaving her head phase or the completely neglecting her children phase. The point is that, whichever phase we're in, it's only going to continue to be a mess. If the Chicken Little's are right, we're all getting out of the car without any underwear on.  

Now I think the market is like Angelina Jolie. There are absolutely highs and lows. Billy Bob Thornton, making out with her brother and wearing a vial of blood around her neck have been offset by Brad Pitt, her work as a goodwill ambassador and her motherhood. The contrasts in her personal life are staggering. Underneath all of that, however, is her steady, impressive body of work as an actress. That's the housing and mortgage market. There are highs and lows but, at the core, there's a solid base. People are always going to buy houses, real estate is still the best investment for the majority of folks and, if you have credit, a job and manage your debt, there will always be a mortgage for you at the best rate available.

     Lastly, to the ActiveRain judges who will be looking at this, I went out and got some opinions from some other well known judges just to see where I stood. Don't let there opinions sway yours. Thank you.

Well! What did you guys think?

Randy: I gotta be honest. It just didn't do it for me dawg.

Paula: First I have to say that you look great. I just didn't think you connected to your audience.

Simon: Absolutely Terrible! I didn't understand anything you were trying to say and, quite frankly, I was bored to tears. A completely forgettable post.

***All opinions of the celebrities and personalities in this post is purely mine and for entertainment purposes only. I have no actual firsthand knowledge of any of them and so could be completely off base. Although, because my ears work, I am certain that Nickelback is terrible. I'm also reasonably sure that Paris Hilton is a moron.

     My wife brought up in conversation last night that she had recently heard about the retreating glaciers on Mt. Kilimanjaro in Tanzania, Africa. She went on to say that the glaciers had already lost 80% of their mass. I had read about this problem several times previously and added that most climate experts expect the glaciers to be gone in as little as another 10 years. Although this is a worldwide problem, the disappearance of the glaciers on this African mountain holds a special significance to those of us who have read Hemingway's Snows of Kilimanjaro.

     Ernest Hemingway is considered by many to be America's greatest novelist. (Although I prefer the "adventure" writers like Twain, London and Melville) Despite being a homophobic narcissist who suffered from severe depression, Papa did alright. The story in question, like all his stories, was incredibly visual and terribly sad. Probably because of the aforementioned depression, the man was seemingly incapable of writing a happy ending. However, the main character's vision of the snow capped mountain is very powerful, which makes the disappearance of that snow all the more criminal. There are several culprits in this crime but the ringleader is global warming.

     Global warming. It all seems to come back to that. My wife asked what we, meaning the world, were doing or could be doing about it and what we, meaning her and I, could or should be doing about it. The world is another blog by someone far wiser than me. Personally, though, we found we're doing very little. The home we own now is the last one we'll ever heat with fossil fuels and that will be great...someday. We traded our gas guzzler for something far more economic...but that decision was made with our bank account, not the environment, in mind.

     Recycling! That's the answer! Just separate glass, plastic and paper and put them out on the curb or take them to your local drop-off point. I'm smarter than a 5th grader. I remember photosynthesis. Recycle paper and save a tree so that tree can turn CO2, the Godfather of global warming, into oxygen. Almost no inconvenience to our everyday lives. It's easy! Oh yeah, we don't do it. I'm not even aware of a recycling program in effect in our town. An impromptu poll within the office found only about half of us have a recycling program where we live and take advantage of it.

     I feel like a jackass...and I should. There is really no good excuse for not doing my part. However, with the thought of "better late than never", Jill and I have thrown our last recyclable into the garbage. Everybody has to start somewhere. It's a shame that all of us haven't started in time to save the snows of Kilimanjaro. From all I've read, even if we turned a total 180 today in our efforts to be green, it will get far worse before it gets better. I doubt even Hemingway could have written a sadder story.

     Countrywide in trouble? Not anymore! Credit lines shut off? They will soon be opened again as Wall Street rushes to invest in mortgage backed securities. Lenders still going out of business and people still losing their homes? Yes, but it won't halt investors anymore! Why? Because the Oracle of Omaha, Warren Buffett is considering buying a stake in Countrywide Financial. Is it set in stone? Not having Mr. Buffett's cell number to call and confirm, I could only speculate like everyone else, but it certainly is intriguing!

     Can Warren Buffett single-handedly cure the problems in the industry right now? Of course not, but he could certainly halt the overreaction and end the fear. If Warren Buffett invests in something, everyone else will, and should, too. This has been the case for decades. A lot of what's happening now is based on uncertainty. There is nothing more certain in the financial world than Warren Buffett and his company, Berkshire Hathaway.

     Lending has suffered from a lack of common sense for quite a while now. Buffett has always used common sense and sound financial's when deciding who to invest in. With stakes in Wells Fargo and Bank of America already, Buffett must feel very secure about the mortgage industry. If Buffett feels confident in the mortgage industry, Wall Street will as well. Will they open up the vaults and allow crazy spending again? Absolutely not, in fact, that would run counter to what Buffett believes in, but there will be money available for conforming lending.

     The fact is, the mortgage industry is a sound investment. Most people pay their mortgages and pay them on time. Lenders who can offer huge blocks of conforming mortgages and have large servicing portfolios are rare and valuable. Run correctly, they are cash cows-and Buffett knows this. Again, Buffett's involvement with Countrywide is only speculation, and it's kind of sad that the industry even needs his involvement. As for myself, I feel more secure placing loans with CWD Wholesale and I may buy a few shares of Countrywide with this months check. If it's good enough for the Oracle, it's good enough for me.

     When it comes to fixed vs. adjustable rate mortgages, there really is no question as fixed-rate mortgages are the way to go! Opponents of this position will argue all the finer points of their ARM products and how the v buyer can more greatly benefit from them. That may even be a valid argument for a minuscule percentage of their clients but the vast majority of that clientele would be better suited to a fixed-rate product.

     Holden Lewis of Bankrate.com reported recently that, of the 8.4 million ARM's originated between 2004-2006, 1.1 million of them will default due to payment shock from resetting. As a side note, fixed rate mortgages do not reset. Mr. Lewis also went on to report that 1 in 8 sub-prime ARM's will default due to resetting and, even more disturbing, that 1 in 3 ARM's originated between 2004-2006 with a teaser rate of less than 4% will default due to resetting. The latter aren't sub-prime borrowers with questionable credit and spending habits. They are prime borrowers with impeccable credit who are in mortgages they often don't understand.

     The crux of my argument isn't even the numbers, which are staggering. It is simply "Peace of Mind". The American Dream is hard enough to achieve nowadays without the worry of your mortgage turning upside down. The war on terror, rising gas prices, the music of Nickelback...these are the horrors that the average person has to deal with constantly! This isn't even counting the day to day hardships. People need to know that, despite all of this, they can go home to their families, that they have at least that.

     Qualifying potential homebuyers on a 30 year fixed-rate payment and making sure that payment works for them is responsible lending. Being confident and certain that you can afford to make the 30 year fixed-rate payment is responsible borrowing. We all could have used a lot of both in the last several years.

     The final point for fixed over ARM is this: Look at what the market is doing. Many lenders have done away with their 2/28 and 3/27 products. Moving forward, both lenders and borrowers are going to be looking for fixed-rate mortgages. The ARM will have gone the way of the Dodo. Too bad it's going to take more than a million foreclosures until it finally happened.

     You know him.                                                                                                                                  He makes grandiose claims about what he can do. He is beyond confident, more like arrogant. He has a long list of supposed accomplishments. He is an expert at every type of financing. He would have you believe that he is this:   

 When, in reality, he is this:

     It turns out that:                                                                                                                               He is more style than substance. His grandiose claims and promises go unfulfilled. He is impossible to get in touch with when a problem arises (and, with him, it always does). He hits his clients hard with his fees (because he has no hope of repeat business)

     His name is Todd Rinsley! Todd Rinsley is actually completely fabricated but I'm sure you know loan officers who fit the description. Todd could very easily be a realtor or an appraiser. In fact, Todd Rinsley regularly works with a realtor and an appraiser who are just like him. They form an unholy trinity bent on world conquest!

     Actually, instead of world conquest, they are interested in "getting deals done" no matter what! At first glance, you might admire their can-do attitude but, with deeper inspection, you realize they are villains of the worst sort. Their clients mean very little to them but a paycheck. Where the rest of us see each client as another opportunity to make a difference in someones life, they see dollar signs.   

     The thing is: If you follow the right course, work hard, and treat both your clients and business partners well, you can make an awful lot of money in this business! We, both realtors and mortgage consultants, really do have the greatest jobs! Every day we get paid, potentially a great deal, to fulfill people's dreams. As hokey as that sounds, it really is true.

     With this in mind, I really dislike Todd Rinsley! I accused he and his cohorts of being the worst sort of villains. That's a bold statement and, in hindsight, I may have been a bit overzealous. In the grand scale of super-villainy, Todd and his partners in crime probably rate right about here---------                                                                                                                     V

                                                                                                                     V

                                                                                                                     V

     As you can see, Todd is in evil company! Scary! I sincerely hope the current market condition weeds out guys like Todd.         

     There has been a lot of press lately bashing the mortgage business. A lot of the events happening right now are being blamed on mortgage companies, especially sub-prime companies, making "bad" loan products available and mortgage professionals, especially brokers, selling these "bad" loans to an unsuspecting public. We all know that it's not that simple but, for arguements sake, we'll assume that it is. I'm not here to suggest that there isn't some truth to that assessment, but rather to suggest that there are some other villains, who deserve some wrath as well.

     There are a number of other industries that, by their very nature, delight in keeping middle-class America down. For example:

Payday loan lenders. These companies charge exorbitant fees to, essentially, lend their customers a few dollars. $15-$25 per hundred dollars borrowed for a 2 week loan! At that rate, their customers would be better off going to these guys and risk getting their legs broken:

P.S. There are now more payday loan places in the U.S. than there are McDonald's and Burger King's combined!

Finance companies: Don't get me wrong, they have their uses but they prey on the same customers as sub-prime mortgage companies. The biggest problem with them is that they tend to keep people who are in a tough spot right there by charging hefty double digit interest rates for most of their products...which leads us to...

Credit card companies. Is there any industry that causes the average American more financial grief than these guys? The question is more like "Do credit card companies cause more financial grief than every other industry combined?" The answer is a resounding "Yes!" Compare the number of people who face foreclosure to the number who file bankruptcy due to credit card debt. With huge interest rates and stiff penalties for being even a day late, credit card companies are keeping more Americans in the hole than ever before.

I don't want to upset everyone so I'll skip talking about the oil companies getting rich off of all of us going broke!

Now, personal responsibility certainly needs to play a role here. Too many people now like to pass the blame to someone else. Even though people need to be responsible for their own choices, these companies prey on people in a difficult position and make it much too easy for even financially responsible people to avoid falling into their clutches!

     Besides being a mortgage consultant, I also happen to be a landlord. My dad and I have a 6-unit and a 5-unit. We have had fairly good success with screening potential renters through reference and credit checks but have the occasional late payer. Twice, we have also had to deal with a tenant who felt, for some reason or the other, that they didn't need to pay rent at all!

     I have recently been thinking very strongly about Section 8 housing. I'm sure each state has this or some version of it. Basically, it's subsidized rent for low income tenants. A prospective tenant needs to go to the local social security office to get approved. When approved, the applicant gets a portion of their rent paid by the state. Depending on their income, the state will cover most or all of their rent payment. Now, from the landlords end, the property needs to meet basic HUD guidelines to be suitable to rent and pass inspection. Unless you aspire to be a slum landlord, these are not difficult guidelines to meet.

     If your property is already approved and on the list, prospective tenants will be sent your way. You are not obligated to rent to anyone, you are allowed to check the tenant out in any way you feel is necessary, and you can charge them a security deposit (which must be kept in an interest bearing account) Section 8 will pay the landlord $327 per month for an efficiency apartment, $426 for a 1 bedroom, $516 for a 2 BR, $644 for a 3 BR and $708 for a 4 BR. This number includes all utilities. If you don't include certain utilities, they will be subtracted from the total and you'll be given that amount. If the tenant is approved for 80% of that total, they need to pay you the difference. If they don't, they risk losing the benefit permanantly.

     Let me say that I normally charge $400 for a 3 bedroom apartment, including water, sewage, and garbage. The tenant pays their own electric, which includes heat. My buildings are well insulated and have newer, more efficient electric baseboard heat so the electric bill is fairly reasonable. Again, the HUD guidelines are very easy to meet and all my units would have no trouble doing so.

     To me, this seems like a no-brainer! I understand that there are still risks to my property from bad tenants but it appears that I would be more well insulated against non-payment. The government portion of the rent would be paid on time every month and any smaller tenant paid portion should be easier to retrieve with the threat of losing benefits.

     If anyone in the ActiveRain community has any thoughts or advice from their own experience, I would be grateful to hear it. Also, if any of the information I've relayed is inaccurate in any way, please let me know. Lastly, if there is something I don't know or am not looking at, I would appreciate some insight. Thanks!

     I wanted to welcome some new memebers to ActiveRain. Several of the realtors from Rushanan & DeStefano Real Estate have recently become members. They are the very first realtors from Schuylkill County, PA to join the site. I would be excited to see any real estate professionals from my home market themselves on ActiveRain but I'm particularly excited that the ladies from Rushanan & DeStefano have decided to do so because I've truly found them to be the finest real estate agents I've worked with. However unlikely it may be that the ActiveRain community find themselves in need of a real estate professional in my little area of PA, if that need does arise, don't hesitate to call upon one of the realtors from Rushanan & DeStefano.

Jessica Burns

Mickey Pellish

Ilyse Hampton

     As mortgage and real estate professionals, we often come across this situation: Your client is house hunting and, for a variety of different reasons, they are becoming frustrated. These reasons include not finding anything, finding something but not in their price range, finding something in their price range but with problems or, maybe the worst, finding a home that fits their criteria, making an offer, and not having it accepted. There are also the minor frustrations after an offer has been accepted. With all the anxiety and nervousness that surround such a life altering transaction, even minor things tend to be very traumatic.

     If you're like me, you probably have eased your clients minds on the first set of frustrations with the ever popular "It's a shame that home didn't work out for you but it was probably meant to be. When you do finally find your home, you'll be glad you didn't get all the ones you looked at before." Clients always agree with me and, invariably, that statement does turn out to be true. Whether that's from some great karma or simply things clicking when the situation was truly right is a matter of opinion but I always thought I was helping when I told clients that...

     Then it happened to me. My fiance, Jill, and I moved to Allentown to be closer to our jobs and began house hunting. Due to our rural backgrounds and Jill having the most sensitive ears known to man as well as a problem sleeping, what we wanted was not what we could afford. There was a happy middle ground, however, and we began looking there. Several months and many frustrations later, we weren't any closer to owning a home than we were when we moved here. I've given Jill the "It's not yet meant to be" line quite a few times now. After the look she gave me the last time, I realized she's just as aggravated hearing it as I am.

     The story isn't quite finished, though. At this time, I began working with a couple, Jeff and Lauren. They were looking to buy a home as well. Their situation could have been a mirror image of my own. 2 professionals looking to get a home before their upcoming wedding. Jeff and I are as similar in personality as Jill and Lauren. They found a house the first time out and settled this past Tuesday. I couldn't be happier for them and we've become friends. It's too bad they live 250 miles away as I could see the four of us getting together regularly.

     Now, you might think this is about how I learned that things really do work out in the end just like I've always told people. It's not, though. I've always believed that and continue to do so even when I've gotten frustrated. Jill and I are actually looking at two homes tonight. They are a little farther from where we work but in a much more rural area where prices are a bit more reasonable. I think we'll find this is where we should have been looking all along.

     Jeff and Lauren, by all accounts, had a very smooth transaction but, you know what, they had a lot of stress and strain involved. They had no knowledge of how to go about buying a house. The sale was from a friend of the family so they didn't have the advantage of an experienced real estate agent to help them. They stressed about the agreement of sale, the details of the transaction, the seller's inability to move out by the sales date (she did manage to) and the seller's attorney's inability to work the closing into his schedule. They also have a wedding in July and, at one point, Lauren seemed ready to pack it in, elope, and live in a hut somewhere.

     Alls well that ends well and, only a few days later, Jeff and Lauren are laughing about their "stress" and are thankful it went so well and so quickly. What I've learned from this is that there is a huge amount of stress and strain on all homebuyers, no matter how smooth we deem their transaction to be progressing. Obviously, a real estate agent would have shifted some of that strain onto themselves. I've probably also got a new appreciation for just how much stress and strain a real estate professional does take upon themselves and feel a little bit bad for my agent, Bonnie. I think Jill and I owe her dinner and a few stiff drinks.

     Scott Geary! Master motivator, mediocre golfer, and the Robin Hood to our band of merry men here at First Choice has challenged us all to make 100 contacts a day! Potential borrowers, former borrowers, former turn-downs, realtors, bankers, attorneys, and basically anyone imaginable in an attempt to garner more business. His thought, for those of us who are already very successful, is that now is the time to expand our business. For those of us who are striving to be successful, talking to more people and making more contacts is the best way to grow our business. With the upheaval in the industry, we all have to work harder than ever to attain success. I'm not sure that actually speaking to 100 people is an attainable goal but I am sure that the attempt to do so will bring about the intended goal. I'm going to try my best to hit 100 today ( A realtor just called me back while I was typing-I only have 96 to go!)