Blog of the Mortgage

After fielding my umpteenth “Realtor” *rush* call today and after having a couple of separate conversations with my counterpart Terri Buckman and client Chuck Walrath I wanted to take the time to address these separate topics. Plus I have a bad habit of listening to people who have two of my careers packed into their own :)

First some background. I originally came from the broker side (that’d be your side of the fence). During those first four years I went from processor to LO to Manager/VP and the whole time I was taught to never make more than a point on a loan. Not only that, but we did loads of up front disclosure and documentation (ie. did the borrower actually qualify for the loan in question?). Shoot, we even had fee guarantees in 2003!

I went into Wholesale for a number of reason’s but the primary one was that I thought I would get closer to the secondary market piece of origination (boy was I ever wrong about that). I found out quickly that the market was full of recent additions (I was raising my hand back then). Most of the conversations I attempted to have surrounded the reasonability and affordability aspects of the qualification process. What it ended up being was a lesson in reverse engineering a qualification ratio to get someone into a house, any house (I stopped looking at appraisals). I realized that nothing I did would change most of my client’s minds about earning a commission over reasonable income/affordability.

As you may gather right now most (if not all) of my previous clients are gone (you’re sighing relief aren’t you?). The one’s that are still here were here when I got here and had been for almost 10 years (funny how that works out?) – likely too because the list that follows is old news to them.

So, here, in this market I get to go beyond back to basics, and train on how to do it. There are a couple of things we need to do.

1. Temper our Realtors and Referral Partners by explaining the process (it takes time for a loan approval).
2. Make sure that our clients are qualified for the homes they are buying
3. Be prepared to send clients back to the drawing board when it comes home buying. No one “Has to buy” a home. They need to afford it & and be able to plan for uncertain events.
4. Ask our clients to present every inch of income & asset documentation. This is after all 2008. We are the ones still here to help the clients weed through a mess someone else has likely put them in. If they don’t want to play then move on.
5. Be prepared to get every person living in the home involved in the loan
6. And finally be able to stand firm in telling our Realtors and clients: You need to find a cheaper home (h/t Terri).

One last thing as a take away and something that I’ve been thinking a lot about lately is this: What about these larger loan amounts (this what Chuck & I were discussing)? We know they’re going to help many people refinance (though not near as many as had been hoped), we know they’re going to help people buy homes at more affordable rates (again, not near as many as thought). But let’s consider beyond 2008. What about 2011? Or 2012 (when some say California will “normalize”). We must remember to address these forward issues with our clients in every transaction. We must ask the hard questions: what’s your long-term plan? What’s your goal with respect to housing, with respect to work? All of these things must become part of our conversations up front. I think we’re going to come out just fine. Scraped, bruised, a little dented sure but in the end these new requirements are going to allow us to go deeper in our initial client contact conversations and to solidify our positions as the Mortgage Experts going forward.