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Pray Silently or Silently Prey: How Locking In Low Rates Requires Jungle Economics

Every time a loan is locked, does it require the same mysterious skills used by a CAT stalking its prey? POUNCE when the moment is perfect. Purely instinctive, no skill required.

Or not?

Who hasn't seen a feline in hunting mode, silently frozen, eyes like lasers, tail twitching?

Suddenly, a guttural noise escapes, and pupils enlarge. Without warning, every muscle springs into a perfectly choreographed POUNCE.

Its IN FOR THE KILL.

Well, there are similarities. Like that tail twitching thing. I'm pretty sure I've seen mortgage brokers do that when rates get REALLY low.

Or how about this one? Just because you are an expert at pouncing does not mean you are eating fresh meat for dinner.

You may need to settle for that stupid old dry Meow Mix that is always in a bowl on the back porch.

Timing this new kind of prey takes instincts that evolution has not yet instilled in the mortgage broker species.

Those little creatures called RATES are damn slippery and seem to disappear before you ever get a chance to POUNCE. And here I thought my stalking skills were honed to perfection.

Hah! A new day, a new skill required.

We mortgage brokers must have the most toned and exercised brains in the industry. Hopefully, the intense stress of constantly needing new skills to hunt in this jungle will help us live longer, become smarter, or rise further up the food chain.

Or something?

Predicting when to pounce is more difficult because a newer, more elusive breed of prey moves around so quickly. There are weeks of hiding while you starve. Then out of nowhere, so much dinner is out there you think to yourself "easy kill".

Being a lone hunter, it never occurs to you that all the other cats are also starving and pouncing. By the time you are in the game, the prey has disappeared and you see the BIG CATS licking their paws, bellies bulging.

You wonder how long it will be until the NEXT opportunity for fresh meat comes along.

You never understood survival of the fittest because after all, you could always come home to that bowl of Meow Mix.

But now you get it. It takes cunning and perfected skills to be a great hunter.

You must prowl. You must practice pouncing when there is no prey. You must study the prey relentlessly to be able to predict its habits. You must sleep with one eye open. You must get there first. Above all, you need to be 100% ready when the prey appears.

You realize you must hunt like there is no Meow Mix. Here's why:

You never know when the bowl will be empty
It is in your nature to want to be king of the jungle
Life is short and meow mix tastes like crap

Written by Janet Guilbault, San Francisco Bay Area Mortgage Lending Expert

Posted by Janet Guilbault California Mortgage Banker/Broker on 03/23/2009 01:33 PM

Comments (17)

Skills in the Sales Strategies / Tactics Channel

monday musings, mortgage rates, locking loans, new day, success strategies

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17 Comments on Pray Silently or Silently Prey: How Locking In Low Rates Requires Jungle Economics

MAR

Your graphics are out of this world! Someone had a lot of creativity when putting cat-n-mouse together. 100% ready. What a concept!

Janet: I always like your analogies. No wonder your blogs are read! It's an interesting game we play; one I'm not very good at I'm afraid. Last week on one day my company locked over $33 million in loans. The question is how many will pull through and what will those cost? We are currently locking loans for 40 days and still having trouble closing every one due to longer underwriting and appraisal times. That's why when I hear about our brethren trumpeting the fact that they get their loans closed quickly I shudder. It's amazing to me how many LO's still don't know what the heck they're doing. The good news is we're all busier and it couldn't happen at a better time. I wish you well this year! Take care.

Hey Paul: This post is for the troops. I absolutely knew that other mortgage brokers out there would feel my pain and understand this analogy.

It is very frustrating to lock for 40 days and get all the way to the end and need to pay half your commission to relock. You did everything right, but still you end up paying. The banks refuse to add staff because they think this could all go away.

Then because so many loans fall out they raise what it costs to extend????? While out there in media land they tell everyone about 4% rates. Yep, on a short term lock which does not exist except if you are willing to RISK not locking, or have a bank that will underwrite while you float.

Seems like once again, we take the brunt. Ok. rant over. Yes, it would be worse not to be busy, but the kinks need ironing out.

Another impressively written posts. I think the same analogy could be used to describe real estate agents. After all the only time we eat is is when we make a sale.

Justin: Yes, I guess you are correct. As it applies to real estate agents I would say being ready means you know your inventory and your market like the back of your hand, so when the right customer comes along, you are 100% ready to make the deal happen.

Oh, yeah, PS: It would also mean having an incredibly brilliant loan officer to help you with the mortgage side and dazzle your client.

Pat: In our business practicing during down times to be 100% ready is tough to do. Dry runs are boring, and chasing after less desirable prey seems to always be a priority.

Janet - AMEN! It is a tricky game of skill we play when we decide to float or lock a loan. Depending on our lending source can we go for the tasier 30 day lock (fresh kill) or do we play it safe and go for the 45 day lock (Meow Mix).

I've been lucky lately in floating for just the right amount of time and locking in for 30 and getting away with it. But it did get a little hairy there about a month ago when a particular client wanted to float for practically the whole transaction and when he finally agreed to lock, we got the 15 day lock, which was very attractive. Don't much care for the stress of that particular kill but once in while, when it turns out ok, it is exciting.

Donne: I used to be the master at floating...funny because I am not a gambler by nature but just loved playing the game. Usually I won. There is no such thing as a lock in the car business so I thought this was one of the more fun things about the mortgage business.

Of course no one ever teaches you how to lock a loan. You just bumble along in the beginning.

This is no business for rookies that is for sure.

I believe we are headed to 60 day locks. I keep trying to warn everyone to refinance now. No one seems to understand that the longer the lock, the higher the rate. It is one of these little secrets in the mortgage business.

Another excellent post. I didn't realize how quickly the rates can change. Blink and you missed it? Oh, and I love the photos. LOL

Lisa: Actually rates can change several times every day. It is why we are glued to our Crack Blackberries all day. It is why we don't get out much. It is why we get up at 7AM to check our rates.

Honestly: It is nuts. Absolutlely blink and you miss it. I think that should be the title of my next post. That is a saying that consumers would understand (trying to do one Localism post for every AR post)

And Lord knows locking loans is something consumers just do not get and makes them very nervous.

Absolutely right. I just reminded everybody today about the Spring business boom.

Of course, I also warned them that it won't last forever and to save their money.

Hopefully. . . . .

Lenn: And how that boom will need to flow through the same banks that all of these refi's are flowing through...

There are warning signs everywhere. So when it takes 4 months to get a mortgage? You heard it here first.

Janet - Isn't it the truth about consumers and locks. So much so that I am feeling the need to blog about it in an effort to educate my local market about lock policies. Are you seeing this too in your market? No matter how much we explain it to them, they just don't understand why we can't perform magic for them.

Donne: I am going to write about this same subject and post it to Localism a little later in the week. The whole process is something that needs some transparency. I may also use it in my Realtor newsletter, because I am pretty sure Realtors don't know much about this either.

This was a fun blog and nicely illustrated. Thanks for writing.

MAR

Janet. We've been through refi booms before, but our new mortgage clients get top priority.

The key is to know your loan officers. If they know that you refer good business, they'll see your call and your buyers' call and file as top priority.

All the above said, a loan officer with whom I've sent business for 15 years took two days to return the call for a GFI for one of my buyes last month. His excuse (after the loan went to another lender) was he was swamped with refis.

As a buyers agent, I can't take the risk that a deadline, (written commitment letter) would be missed because, as the frenzy for good homes picks up, our buyers could be NOTICED out of a contract.

So, you're right about some things taking a back seat to refis these days, but as the buyer's agent, I have to watch it and make sure my buyer gets priority.

Janet - rate locks and policies is something that I've been thinking of blogging about for awhile but the challeng is that policies vary for different lending sources. It's because of this that the conversation must be discussed when talking to a client about where is the best source for their loan.

To do a generic post about rate locks seems a waste of time and probably wouldn't offer much of an education. Without getting into the specifics, you can't really accomplish a true lesson but then you run the risk of losing an audience if you get too specific because the laymen (and most Realtors as well) don't understand the dynamics that go into determining "worst case pricing".

For a novice writer like myself, writing an educational post that will keep the attention of my audience is a tremendous challenge and needs time to be planned out. For the experienced, eloquent and prolific writers like yourself, it's probably a no-brainer.

Blog on girlfriend because everytime I read one of your posts, I learn a little bit more about how to become a better writer. Eventually, I will get mine out as well to my local market but I have to spend more time in planning mine in order to be able to put out something worthy of reading.

MAR

Thanks Janet,

I am enlightened every time I read your blog. You have a great perspective on the changes going on in the industry.

Dan

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