So You Think You Know The Mortgage Industry

Real Estate Technology with Content, coding, marketing, host.

Mortgage Interest Rates - the rideAnyone who thinks they know the mortgage industry - especially well enough to predict it - is like someone saying they know which star has a planet in orbit that can support human life. Seriously, everything anyone knew about the mortgage industry just six months ago is completely different today.

Yesterday, May 27, 2009, interest rates at par went from about 4.75% to a par at about 5.25% between lunch and five PM eastern. Did anyone see it coming? Well, the indicators were there that's for sure so some people did call it. Many completely blew it like Dan Green who wrote on his blog on May 14, and I quote, "I am predicting that rates will decrease over the next 30 days." Oops.

Not to make an example of Dan but if you read his blog you would think he is a pretty sharp individual and his website certainly gives the impression that he is a consummate professional worthy of trust.

Well - he missed it. Either way I would have never predicted rates decreasing over the 30 day period between May 14 and June 14 and I don't know of anyone in my national mortgage professionals groups who would have. But this is an example to show you that even people who look, sound and act like they know exactly what they are talking about. (Insert big honking buzzer sound here.)

Recently there was a big flap over some things Lenn Harley wrote about pre-qualifying her customers. I can see how she riled a few and ruffled a few feathers but I still believe what she was saying was she doesn't want to waste her time with people she believes to not be qualified. On the broad spectrum that may be okay but when it gets down to actually getting an approval from a lender there are multiple factors examined and weighted algorithms applied. In fact I am often surprised when certain borrowers are approved and flabbergasted when others are not approved.

Every day, literally every day, something changes in underwriting guidelines or lender overlays. Even the underwriting engines, the automated decisions making software, are tweaked and changed every day. Nobody - not one person - whether they have 3 days or 30 years in the mortgage industry can know for certain if an apparently qualified median borrower will be approved or denied until they have exhausted the correct protocol. Just having 800 plus credit scores is not all you need, just having the right income or reserves is not all you need. Even combining 800+ scores, good income and good assets is not all you need.

Now you can even factor in the HVCC and the wild results overstressed, underpaid appraisers are likely to bring to the table. And who knows when that will change? Not me and not you.

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I started writing on Active Rain in 2006 when I was representing the mortgage industry. I am no longer in that industry and many of the older posts contain outdated information. Please do not contact me for LENDING or MORTGAGE questions but rather contact a licensed mortgage professional from your area. I have always been in marketing and branding and that is still what I do. Thanks for reading!

Comments (8)

William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX


I'm shocked and dismayed! You can't predict rates in the strangest market since the 30's. Well neither can I!

Even a pre-approval is of little value in an ascending market!

Good post.


May 28, 2009 05:07 AM
Scott Geary
Infinity Home Mortgage Company Inc - Allentown, PA
Your Pennsylvania Mortgage Source

Well said Ken. I've been at this over 30 years. I vaguely recognize the industry that once was. Sometimes, with automation of approvals, credit scores, appraisal reviews and the like, I am thinking that good ole Georgie O may not have been that far off. The human touch, it appears has left the building. Thank goodness that we have these dependable systems and our tenaciouspoliticians to keep everything simple, and foreseeable. Just when you think it can't get any uglier....

May 28, 2009 05:30 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Sweet!  Nice job Ken.  All of us think this and are saying it!  Im surprised Jason hasnt chimed in yet!  :)

I am bookmarking this one, and sending ON to people!


May 28, 2009 05:50 AM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Ken, I can say with full authority that the rate will change over the next 365 days. How did I do?

May 28, 2009 10:39 AM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

I know that rates have to go up... it is unavoidable.  But when and by how much.. don't know...  And I wouldn't even TRY to guess.

May 28, 2009 02:06 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Ken.. I agree, nice job here... I said rates would go up and stay up by August....  I wasn't expecting it this quickly. I am hoping some of the jumps were premature, that we get half of it back in 30 days... and then in 2 months, they would go up. I know for a fact though, that inflation is a key here. But you have to love gov't promises, that they promised rates near the low 4's... in order for that to happen now, they need to spend big bucks. Whoops... we have done that already. lol   PS.. I ran into Dan Green Tuesday night.  .. and was hoping to have lunch with him the next day... but dude, it was the end of the month. Why do they plan these real estate things at the end of the month???

jeff belonger

May 28, 2009 03:35 PM
Matt Stigliano
Kimberly Howell Properties (210) 646-HOME - San Antonio, TX

Ken - What shocks me is that as rates fell lower very few wanted to speak up and say the "end is near," when it reality, even if you didn't know what you were talking about at all, it was a pretty safe bet that they would soon enough.  If I was in Vegas I would have bet on a raise, that's for sure.  I think we rely to much on analysts to predict the future at times.  My favorite example is the run up of gas prices.  As the price per gallon kept climbing, analysts were falling all over themselves on TV to tell the world that the prices were going higher and higher and higher.  One analyst I watched predicted $5 or $6 a gallon in the coming weeks.  Instead, prices began to drop quickly and we hit a low that was welcome relief to everyone.  Just as we were hovering above a dollar a gallon, I saw that same analyst predict prices would go below $1.  Um, pardon me, but weren't you the guy who was just telling people that they'd soon be paying $6 a gallon?

May 29, 2009 02:07 AM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Bill - thanks for the CD and the comments. I've been meaning to call but ....

Darin - Jason is too busy loating flocks.

Bryant - you are better than almost every analist (tic) I have seen on teh toob.

Lane - that's why your a smart one.

Jeff - it ain't over 'til it's over, eh? I don't know Dan - I just stumbled on his blog.

Matt - hilarious and sad all at the same time. Sad because it happens all the time.

May 29, 2009 04:31 AM