PASS vs PLAY: Why This Mortgage Broker Would Rather Be RUTHLESS Than PERSISTENT

IS BEING PERISTENT REALLY A GOOD THING?

Yesterday, when I FINALLY got approval for a silly little loan that had been sent to no less than 3 banks in 3 months, I got a compliment of the highest kind from the head processor in our office. "WOW. I would like to have you as my loan officer because you are so PERSISTENT."

Or was it a compliment? Maybe not.

Our owner had asked me to move on and stop trying to get this loan placed. Because he is the boss (and a brilliant mortgage broker by all accounts) I listen to his advice.

Then I go right ahead and do what my instincts tell me to do without stressing about it too much. (and I wonder why all 3 of my children could best be described as HEADSTRONG).

SUCCESS IN A NEW ERA

My observation has been that the most successful mortgage brokers in this market are those that have skills that allow them to DISCARD loans that are NOT WORTH THE TIME TO CLOSE.

I will confess, this a difficult skill for me to wrap my head around. Here's why:

A. Before this era of over-the-top ridiculously tight guidelines, I closed nearly every loan and never had to make a decision if it was "worth" the time to continue on.

B. I feel such a strong sense of commitment to my clients that I have a hard time doing anything less than going to the ends of the earth to get the loan closed

C. I NEVER decide how hard to work on a loan based on the amount of money I will make. I just don't roll that way.

CUTTING LOSSES AND GETTING RID OF THE NEVER GIVE UP MENTALITY

While I am not certain, I am willing to guess that many loan officers still left in the business must also walk this line between maximizing profits (the businessperson) and commitment to clients (I'll do whatever it takes). It is a balancing act, and I am not very good at it (yet).

I am trying.

At some point you must cut your losses and move on to a loan with a better chance of closing. Or, ruthlessly decide right in the beginning that you will PASS instead of PLAY. Because even though you MIGHT be able to close this loan, the time it would take renders it a loser. Are there mortgage brokers that are this ruthless?

Well, yes, and maybe we should be calling them brilliant business people instead of ruthless editors.

iT IS BUSINESS, ITS JUST NOT BUSINESS AS USUAL

The number of mortgage brokers here in California has plummeted. The number of people making loan applications to buy cheap properties this summer is going through the roof. With all loans requiring full documentation, and all banks simply NOT in the mood to approve anyone (or allow any property to pass through appraisal review), the time we must invest in closing a single loan has gone through the roof.

Naturally, this is changing the way we must do business. Our costs have gone up. It is just more difficult to acknowledge when it is hidden in "time invested" vs costs that are easy to evaluate, such as "gas" or "rent".

Many of us have foolishly robbed time from originating (marketing to obtain new loans) since borrowers are plentiful, even if closings are not. But as I see it, the skill that will be the most important for the next few years, is NOT persistence. Persistence can easily distract you down the path of working for $10 an hour in the name of "commitment to my client".

THE NEW SURVIVAL SKILLS

The most important skills will be the ability to be selective, and the ability to be efficientt. In a past life I might have said the luxury of being selective. But I don't see it that way anymore.

Every smart business person must control costs, or they are soon out of business. When what you have to sell is your time and your expertise, putting it to the highest and best use will not only allow you to survive, but hopefully prosper.

That may mean someone farther down the food chain will close a loan that I determined was a "pass" and not a "play". It may mean I appear to be ruthless.

I guess I will just have to live with that.

Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area

Realtor Roulette: How Should A Mortgage Broker React When Client Ditches Realtor?

Early in my career, I was fortunate enough that a well-established local Realtor referred me a teacher, who was also a single mom, seeking to buy her first home. To say I was thrilled and flattered would be an understatement. Realtor knew I was somewhat new to the business, could have chosen one of the proven horses in her stable, but took a chance on ME.

Seriously, I wanted to send her flowers, but tried to contain my enthusiasm at having the opportunity to impress one of the top producing Realtors in our area.

Luck continued to smile on me as I met with teacher, bonded immediately, and realized she had good scores and enough income to qualify. I produced one of my first pre-approval letters and sent it to the top Realtor that very day, thanking her once again.

Silly me. I thought that all systems were go for an offer to be written by the top Realtor, on a condo that teacher had already seen with her.

Imagine my shock when teacher calls the very next day to tell me she has decided to ditch top producing Realtor for a different Realtor she has found on the Internet. Why? Because, in thinking it over, she preferred to work with a Realtor who had formerly been a teacher.

"This won't be a problem, will it, Janet?"

Well, YES, lovely teacher (who really does not understand this completely). It presents a huge problem for me. My mind whirled. She had no intention of calling top producing agent back, she was embarrassed. She asked me to do it.

I considered my options and wondered:

1. Should I refuse to do the loan out of loyalty to my Realtor?

2. Should I continue with the loan, but offer some kind of compensation to the Realtor? (Wait....isn't that against the law??) What would make up for losing this sale?

3.  Should I try to convince client to go back to top producing Realtor?

4.  Should I NOT call Realtor at all and insist that teacher do it?

5.  Should I call the Realtor and tell her she has been ditched? Won't I somehow be guilty by association?

6.  Should I call Realtor and say there is a problem, please call the teacher immediately?

What do you think? If you were the Top Producing Realtor, taking a chance on a new mortgage broker, would you hold her responsible? Would you ever send her another one of your clients? And how is this situation best handled, in your opinon?

Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area

Insider Info: Wachovia to Eliminate Neg-Am Loans & Pre-Pay Penalties on Existing Loans

Our office has learned from a reliable source that Wachovia (formerly World Savings) has decided to stop doing neg am loans completely.

In conjuction with this news, they will also announce the closure of approximately 100 offices nation wide.

It has also been reported that for all Wachovia loan customers that currently have neg am loans, Wachovia will immediately WAIVE their pre-payment penalty. This will be true even if customer refinances with a bank OTHER than Wachovia.

Somewhere, somebody decided that they want all the neg am loans off the books, pronto.

Throw them down the disposal, and flip the switch, quick.

Do you think someone got sick on one?

Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area

Freshly Killed Mortgages and Jungle Economics

Here in California, its a jungle out there. Buyers have stopped waiting for houses to "GO LOWER". They are not wondering if buying real estate is a "good idea". And they sure aren't thinking about the potential for appreciation.

They have only one thing on their mind: Get in while you can. They are out in full force everywhere, hot on the trail of REO's, and operating at a fever pitch.

They are the economic scavengers in the real estate jungle....picking the bones of all those freshly killed mortgages.

Do I blame them? Of course not! It is the law of the jungle. We need scavengers so things won't go ROTTEN, you know. Just when they were convinced they would NEVER own real estate in California, along comes the mortgage crisis and they are salivating at the chance to feast on all those cheap houses.

Here is a twisted irony: Suddenly we are back to multiple offers. Buyers are bidding up the prices of REO's. Have we really come full circle leaving a giant swath of carnage in our wake? At what cost did we recycle that $500,000 house into the $295,000 REO (bringing buyers back into the market)?

Well, at least there are BUYERS again.  I guess we should consider this some kind of consolation prize.

Some of you are probably wondering why, if the price was going to be $200,000+ cheaper, we didn't just let the original guy who paid $500,000 stay there?

Some of you are probably thinking about all those real estate owners. You know, the ones that have seen the value of their house sink to the "give away" prices of those lender owned properties.

And if, in all the frenzy to grab the cheap REO's, I am reminded of the guy who lost his house, will you forgive me? For every house that proudly displays a "LENDER OWNED" sign, let's not forget there was someone who lost his house to foreclosure, ruining his credit for years to come.

Now, I know these are the laws of the jungle. They call it the circle of life, right? And its all a part of the process to keep the eco(nomic) system in check. With all those dead mortgages lying everywhere, we should be very grateful that there are hungry buyers ready to devour what remains after the kill.

So I try not to think about all that has died in the name of balancing this out of whack eco system.  But working and living in this jungle means I must pass by the carnage every day.

It isn't pretty, and I can't help but wonder if the tiger is still somewhere nearby, silently lurking.

Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area

Daddy Dearest

Daddy Dearest,

When you get to my age, having a father like you is definately a pure luxury. Did you know when we are together, people often pull me aside and say this with great envy: "That's your Dad? Wow."

The only reply I can muster is, "Yes, that's him. That's my Dad".

What they see is the 80 something guy that climbs to the top of the 9-story Mayan ruins with me while vactioning in Central America. The guy that jumps in and out of the car as we cruise through all the garage sales (our Saturday morning ritual).

They see the grandfather that is there to see his granddaughters get married, then dance with them through the night. The one who brings home-grown something to every family event, who attends every graduation, and no matter what anyone needs, it is there, stashed in the world's best stocked garage.

Yes, Daddy dearest, you are a treasure, on so many levels, and in so many ways.

A few years ago, when we were together, my cell phone rang. I was expecting a call from my husband, who had gone to the doctor for some tests. When I answered, it was the call no wife should EVER have to hear.

"Mrs. Guilbault, this is Dr. _____________. Your husband has had a heart attack and you must come to the hospital immediately and ask for me." Click.

You had no idea what I had just heard, but you saw me burst into tears. Naturally, I fell into your arms, exactly like a 5 year old who had scraped her knee, and naturally you embraced me without hesitation, as through sobs, I repeated what the doctor had said.

Without a thought, you took control, you drove me there, you held me tight, you held me together, you dried my tears. With a little thing called a stent, husband was fine, and recovering nicely by the time we arrived. How does one get so lucky to have his heart attack right in front of the best heart surgeon in the county?

Only heaven knows.

What a luxury it is to be able to fall into your father's arms when you are hurt. No matter how old you get, it is the greatest gift in the world to TO BE THE KID. 

You have someone to dry your tears. To take control when you just can't be grown up.  To love you no matter how bad it gets.

Your love is my safety net. It is what enables me to go boldly into the world and take chances. It is what enables me to understand how to be that safety net to my own kids. It is why I am still the kid showing off and looking over my shoulder to see if there is approval on your face.

There always is.

Thanks, Daddy Dearest. And Happy Father's Day.

Love, Janet

Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area

The Fish Whisperer: Catch and Release is No Way to Land Clients

My readers know I have confessed to having a bad case of COMMENT ADDICTION. But when a post inspires an outsider to comment, we are afforded the RARE OPPORTUNITY of getting inside the head of the very person for whom the blog tolls.

Could there be more valuable insight than this about how the world sees our industry?

We all had a great discussion about walking that very thin line between having GOOD JUDGEMENT, and simply being JUDGEMENTAL over on my last post.

 Out of the blue, this anonymous comment appeared on that post:

 Ring Ring

 Them: "Home Town Realty can I help you"

 Me: "Yes Im curious about the house on main street"

 Them:"Are you pre apprroved?"

 Me:"Huh"

 Them:"Are you pre approved,.... here is a number for a guy I know , call him first."

 End of Conversation every time

This one stopped me in my tracks. All the blogging in the world, all the brilliant marketing ideas, the best website money can buy.....and it comes down to this?

WOW. Talk about a waste of effort. Talk about falling off the horse before you're even out of the starting gate.

Now you might think as a mortgage broker I would be thrilled with this. It supports my theory that if things continue the way they are now, Realtors will be bringing donuts and flyers into mortgage broker offices, NOT THE OTHER WAY AROUND.

But I already know that this discouraging conversation will not bring this potential buyer into ANY mortgage office. This guy is trying to establish a connection with a professional to help him buy a house. It is only DISGUISED as an attempt to get information about a house.

Brian Brady tells us that if you are fishing for borrowers as a mortgage broker, RATES are THE BAIT. If you are fishing for buyers as a Realtor, HOUSES are THE BAIT.   

I don't know about you, but I'm not into CATCH and RELEASE fishing. I want to LAND ONE and every little nibble presents an opportunity.

Maybe we should all learn to become FISH WHISPERERS.

My theory is this: there are very FEW people who call you because they want THAT HOUSE or THE LOWEST RATE (I will admit there are some). 

But  most people frame the conversation around rates and houses, because they have no OTHER idea how you go about interviewing, selecting, and making a connection with an agent.

You will probably never pick up the phone and hear this:

"Hello. I am interested in buying a house, and don't know where to start. Please pay attention to me. Talk this through with me. Help me understand the process, and feel confident with something that seems overwheming. Put me in a comfort zone. I want to trust you. I want you to lead the way. I want you to show me how. Give me confidence.

If you do, then I will not make the next call to the next agent. I may have called you about a house, but I don't REALLY want that house. I really want an agent, but I don't know of any other way to connect with you except by asking about this house. Can you help me?"

"Oh yeah, and I'm not going to call "your guy". It was scary enough making this call, and you want me to call some mortgage broker type and give them my personal information? Not gonna happen."

And with that, the fish disappears into the cool dark waters, never to be seen again.

Learn to be a fish whisperer.

Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area 

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Would You Sell A House to A Kid in Flip Flops and Jeans?

When daughter and her betrothed could not ignore my nagging any longer, these 23 year olds (freshly graduated from UC Berkeley) set out to buy a house. Back then, the market was on fire here in California. 

The kids looked, well, like kids. Blond and skinny, jeans and flip flops. I knew they had landed lucrative jobs with their architecture degrees, won design awards, and were brilliant (okay, I am the mom, I am allowed to add that last one).

But no one else did, and guess what? They could not get a real estate agent to give them the time of day.

Now, like many people, they decided to start their search for a house by going to open houses on Sundays. Maybe open houses are not a good place to connect with an agent, what do I know? During this era, cheap little bungalows in Berkeley brought forth droves of people afflicted with California real estate mania.

I know this, because I went with them one afternoon to look at houses. When I walked into the open houses, it never failed. Attention was lavished on ME, even when there were 20 other people in the house. (older, Suburban, driving BMW, wearing real shoes, not flip flops...stuck out like a sore thumb in younger, urban, Toyota-land).

Sometimes, as I stood waiting for the kids, people assumed I was the real estate agent (I swear there is some sort of aura around me...I wasn't even in the real estate business then).

But I had to confess, they were right. Not one agent paid any attention to this sale waiting to happen. Even when I explained: "they are the ones who are buying a house".

Were they too young? Did they appear to be tire kickers? Did everyone assume they had an agent already? I don't know.

But finally, they made a connection, all on their own, when someone who looked more like a professor, took an interest in the kids, their architecture, and their quest to buy a house. Within no time, he located a run down bungalow  in Berkeley that had original details hidden under a very bad 1950's remodel. It was DIRT CHEAP, and far less than the kids had planned to pay.

They had not asked for a fixer. He somehow understood that restoring this house to its 1920's splendor would become their post-graduate project, and result in something spectacular, architecturally, and financially (which it did).

How did he know that? How did he connect all the dots, and add all the right ingredients to bake the perfect cake?

When I think of how he mastered the situation, of the impact he made on my child's life, the value far exceeds the commission he earned.  To me, this is the very definition of what a real estate agent should do.

When times are good, we have the luxury of becoming cherry pickers. Be the agent willing to pick a couple of cherries that are still green. You'll be glad you did.

Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area

I'm Just Not That Into Your Video

It has been with great interest that I have followed Mike Mueller's blog the last few weeks, which to my amazement, has included an informative video on each post. Envious (as always) of his technical savvy, with no hope of EVER catching him (in points OR tech savvy...darnit), I finally came to a conclusion that surprised even me: I'm not that into video.

What the heck? Didn't Brad Andersohn tell us all to get with it? Flipcams, all around, we're talking about the wave of the future!!!!! 

So when Mike posted statistics showing his readership had actually gone down since including the videos, that got me thinking. Why do I prefer to read what someone has written vs listen to someone speak it?  

If you had to miss your nephew's wedding in London, would you rather have a 3 minute video of your brother talking about what happened? Or would you rather he write you a 2 page letter describing the wedding, including 3 stunning photos taken that day? 

No contest.

Seeing and listening to your brother might appear at first to be a more complete experience. But that letter? It would be an absolute treasure. Maybe, just maybe, we experience more without the distraction of vision and sound. Maybe simple written words say more. Far more.

Why is it easier to tell how a person is feeling by reading their words as opposed to seeing them speak? There is a reason we have the expression "reading between the lines". The tone that a writer sets is quite distinctive and the mood is easily understood in most cases. When we speak, we have learned to be guarded.

Would you want to watch the video of your brother talking about the wedding again? Probably not. Would you re-read the letter and look at the pictures over and over? Of course you would. Speaking is disposable. Writing is forever.

Would reading the letter allow you to visualize the wedding in your mind more easily than if your brother TOLD you about it? Well, yes.  Not only is he likely to use descriptions we rarely use when speaking, but we are trained to visualize when we read, but not when we listen.

When we speak, we are always in a hurry.  When we listen to someone else speak, we are quickly bored. Why do you think videos need to be under 3 minutes?  

Written words are a communication luxury.

Writing a letter (or a blog) takes time, as one thinks, finds the perfect words, rearranges the words to work in harmony, connects random thoughts into opinions and ideas, and takes advantage of the delicious freedom afforded when there is no one growing impatient on the other end, wishing you would just stop talking.

As much as we'd like to pretend our writing or blogging is the same as how we would communicate by speaking, who are we kidding?

If you logged on and watched me talk to you every day for 3 months in a video, you would know how my voice sounded. You would see my facial expressions, and know how I look. And I would be just like the neighbor you wave to every day, but have absolutely no idea who they really are.   

Read what I write, and we would be laughing and talking easily within minutes of our very first face to face meeting. It is at the very core of what blogging is about. 

Here's my final confession (and maybe there are customers who think like this as well): I don't need to see your face or hear your voice to enjoy and appreciate who you are. Sometimes, it might even burst my bubble. When I am ready, I would far rather meet you face to face. By then, I will know you well.

If you do use video, could you make it the icing and not the cake?

Just keep on writing, sharing tiny pieces of your soul day after day... and if you never once post a video?

I'm okay with that. 

Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area

Roofs That Leak, Decks That Creak: Sorry, Home Depot, Things Are Bleak

They sat together, sipping wine, and gazing out at the lake on the creaky old deck that badly needed replacing.  They would need to step gingerly for yet another summer, and live with that precarious deck a little bit longer. 

They stepped into the garage, which should have been pitch black. But sunlight danced against the walls, travelling from the small holes in the roof. They looked at each other and shook their heads. They would need to cover the Christmas boxes with plastic and hope for the best.

Its going to be a long, hot, summer here in California. We are in the middle of a severe equity drought, and all those projects that used to be funded by real estate appreciation?

They will sit undone. Sorry, Home Depot.

Silly us. When houses were madly appreciating, we adopted the philosophy that "the house should pay for itself".

Now that we have to pay? Can you say MONEY PIT? It is completely different when you actually have to EARN the money to pay for home repairs. Ah, but those equitylines lulled you into a false sense of wealth. They sat there like safety nets and seemed like FREE MONEY.

The Bank of Equity is officially CLOSED.

"You, house. Yes, YOU. Why should I support your lazy ass? Go out and get a job like the rest of us and earn your keep."  And so, the job of the house became to APPRECIATE. When roof leaked, and decks went bad, the house had to pay.

So we wrote the check from the equityline, the contractors appeared, and so did a blip of a payment when the equityline bill arrived. Not to worry. More appreciation would be right around the corner. The next raise/commission was on the horizon. Times were green and lush, and we were flush.

And so, that ritual of HOME IMPROVEMENT that takes place every year at this time, will just need to wait. Getting a new equityline is nearly impossible, with only a few players still around. Many who had equitylines, have had their lenders close the line.

Banks are reluctant to do "CASH OUT" refinances and will only do so when equity is plentiful, and borrowers are pristine. People lucky enough to have equity, may not be able to qualify to refinance due to the demise of most stated income loans.

And so, the highest earner in the family, the one that got a huge raise every year, has become disabled and can no longer bring in money.

Funny thing. The thought of actually EARNING that $20,000 to replace that deck? You know, the old fashioned way: you contribute blood, sweat, and tears, then nearly half disappears into taxes, and you save a little bit each month until you have the $20,000. 

Not only does it seem damn near insurmountable, but who wants to spend it replacing a stupid deck? 

We're stuck with you, old house. Your roof is leaking and your deck is creaking, so this summer just won't be as much fun. Our vacation money just may need to be thrown into the money pit.

Oh, well. Gas is expensive.

Written By Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area

Why I Think Realtors Are Missing A Great Opportunity to Connect With Mortgage Brokers

In the real estate world, Realtors are higher on the food chain than mortgage brokers. Always have been. Always will be. Which, as Lola pointed out in her well written featured post, means mortgage brokers seek out Realtor relationships, with results that are not always successful, and tactics that are not always welcome.

But I say,Realtors take note: Judging a mortgage broker by his ability to market to you might mean you are barking up the wrong tree.

It used to be that if the Realtor-dog caught a rabbit, the mortgage tail wagged. FACT: In our current market, THE TAIL IS WAGGING THE DOG. 

Now it is bloody hard to get that tail to wag when it is half broken. And if the truth be known, it is not that easy to catch a rabbit when your tail is broken.. Which is why, understanding what makes the tail wag is of great importance to the Realtor-dog, especially when only the fittest will survive this miserable hunting season.

In my humble opinion, there has never been a time in our industry when Realtor/Mortgage Broker relationships were more important than they are RIGHT NOW. The woods are full of rabbits but only the MOST SKILLED hunters will come home with dinner.

Lola, I am going to defend those mortgage brokers who are sending you e-mails.

Is it possible that you are "spoiled" because you have the ability to read blogs from our group of amazingly talented mortgage professionals here on ActiveRain? I can honestly say I am blown away every week when I read the posts from Jeff Belonger's Mortgage Pro Week in Review. If your local lenders pale in comparison, I can understand why. ActiveRain houses the likes of Brian Brady, Jason Sardi, and Aaron Gordon to name only a few.

These people who send you e-mails? At least they are TRYING to connect with you. As Jason pointed out, we are beyond bringing you donuts. We know you are seeking information that will be applicable to selling more houses, and becoming a better, more successful Realtor. If the delivery isn't perfect, try not to kill the messenger.

Try to understand this perspective, which is very real to the majority of mortgage brokers: When we tried to connect with you during the BOOM, you ran the other way. We understand why. There were too many mortgage brokers, and any one of us could get the loan approved. We were a speck of dust on your shoulder and you brushed us off.

Along comes the mortgage housing crisis and our industry is considered pond scum. All hell breaks loose, lenders implode, foreclosures soar, equity tanks,  and home sales take a nosedive. The new reality: guidelines (what dictate if a client can become qualified) are what matter. NOT RATES.

Rates are easy to understand and to apply. Guidelines are difficult to understand and interpret, and are applied by real people (underwriters) who are imperfect and who need romancing.

Now, those of us that have remained in the business know this to be a fact: It isn't about GETTING the loan. It is about GETTING THE LOAN DONE.  Mortgage brokers have plenty of people who want loans right now, and a lot less competition.

The most important skill set we need to survive is this: marketing loans to our lenders (not marketing our services to Realtors).

My readers know by now that the most successful mortgage broker in our office does no marketing at all. But because of being a loan closing machine, Realtors flock to him.

Here is something my readers may not know:  Every mortgage broker in our office has buyers looking to get qualified BEFORE they choose a Realtor. See what I mean? Tail (mortgage) wagging dog (buying the house). They are coming to us first. They need to wag before they can hunt.

So if you really want to be an outrageous Realtor? If you want to do something totally outside the box? Turn the tables. Call up a mortgage broker and ask them out for coffee. 

Ask not how well your potential mortgage partner can produce marketing pieces. Ask how well he can get a loan funded.

This post was inspired by our very own outrageous Vicki Nagy. Vicki, I can't wait to meet you. 

Written by Janet Guilbault, Mortgage Lending Expert based out of the San Francisco Bay Area.