It seems as though the economy is already beginning to show signs of improvement. A recovery, albeit slow, is already beginning to happen in both the financial and the broader markets. As you saw this week, rates jumped from Tuesday to Friday by almost 38 bps on the 10 year yield, which cost you almost two points in yield. Are you upset? Don’t be, and here is why.

We like low rates, and your clients love them, especially on the rate and term refi side, which is where most of us have been getting our business the last 6 months due to appraisal issues, rate hits from Fannie and Freddie, and MI restrictions. But what about purchases? Supply and demand are what eventually drive the market, and as the markets improve, new jobs are created or rehired, and liquidity increases both on the credit side, the cash side, and on the investment side, which is what will drive new home purchases. As prices drop, and they did, many are seeing this as a chance to buy because home prices seem reasonable. What about the media?

First of all, they thrive on negative information. Reporting is not based on telling on how great your country and your life is, but rather how horrible, dangerous, gloomy, and corrupt it seems. You need to be the new media, or rather the correct messengers of information telling your borrowers that things are better than they seem. Gas prices are high; did anyone you know not take their spring vacation this year? Do people still go out to eat, shop on the weekends, and buy cars? Of course they do!

One major part of the news that has caused headlines is that most financial institutions have lost much less this quarter than originally anticipated. What does that mean for you? Well when a company forecasts a loss, they have to properly capitalize (save) in order to sustain that loss in order to avoid bk, or a bailout form the another company, federal home loan bank, you get the picture. When those losses are much less, that capital raised can be used to rehire, invest back into the market through loans and credit cards, or gives them a greater ability to further capitalize on a potential future downgrade in the economy. They also have to rely less on advances from the federal home loan bank, can portfolio more, need less commercial lines, and have to lay off less people. They also have to leverage less, which tends to trickle down to us. Yes some banks are opting out of wholesale, but that has more to do with the regulations the states are imposing rather than the losses they think they will take by subcontracting out work.

Brokers, be it in wholesale or retail, are paid yield by banks like Indymac because of one major reason: it’s cheaper! You advertise for us, and because of that, my company does not have to hire more people, fire more people when they fail to produce, lease more retail space, and pay for marketing. In a couple of years the banks that turned their back on you will be calling you and begging you for business. This will also open up room for smaller banks and lending institutions to get into the market with less overhead because they do not have to throw a million parties, pay a million reps to sell, less marketing, or undercut themselves into extinction. All they have to do is tell you they are committed to doing business with you in this market and half the battle is over. What else?

These mortgage backed loans no one wants to buy are actually performing at a rate of over 99%. Where else can you find that level of success? Foreclosures, although very high, are tied to two sectors in the market, first time home buyers and speculators. These people make up less than 30% of the total market yet make up over 85% of the foreclosures. What about the other 15%? Well these people lost their jobs, got divorced, got sick, or made some bad financial decisions which happens in every market regardless of rates, type of loans available, who is in office or what laws are in place. What happened in 2000-2007 was we were able to slow and ward off the eventual issue these people would have to face which was this: they could not keep their home and no one could save them this time. No longer could they use their homes as credit cards and home prices are now coming back to the median incomes reflective of those areas. Trust me, at the rate we were going home were going to cost one million dollars everywhere!
We need purchases and these signs of a slowly recovering economy will help, look for a slow recovery beginning this summer and back into full swing by 2009. Many say longer because they invest in real estate, which by its very nature will always give a more conservative estimate. Do not worry, Europe and China are not taking over. Do you remember what people were saying the late 80’s about Japan? Japan is going to buy everything, and they were. Within three years their economy crumbled and ours went into full swing with a couple of bumps in the road, one being late 2007 from a credit-over-leveraged economy. As people have to put more skin in the game, they will be more cautious of what they are getting themselves into. So to will the banks, attorneys, builders, and you!

Inventory is now the issue. As homes begin to sell, and less building is done, it will make the lower supply go up in value, due to the limits on choice. In any product, the less you have to offer, the higher the prices will go. The reverse can be said if there is too much of something. Borrowers must not only show the willingness to pay, but also the ability on paper. They now need to look at a home as a long-term investment, and not a day traded stock they can sell whenever they feel like it. The answer to rebuilding things is to work on building new relationships, as well as cementing the ones you already have. Do not be afraid to work outside your comfort zone. If you only do refis, work on purchases. If you only work with Realtors, try and work with financial advisors. I know it sounds easier than it is, but in fact it actually is! You sell money, and so long as people need money, you will have a job. Good luck!

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Good credit will basically roll out the red carpet and open the door to the bank for you as if you were the Great Gatsby himself. It’s your umbrella during this economic thunder storm, as you watch others get drenched in financial stress and discomfort. In order to stay as dry as possible, you must continuously maintain an above average credit score. FYI, in todays market that would be about 720! For some this is a simple task, but most find this very difficult to accomplish.

However, those who do keep their credit flawless will enjoy a more pleasant financial journey. Whether you are refinancing your home or getting a family plan at a cell phone store, credit equals power. It gives you the advantage and rewards those who abide by the rules. You can truly save enormous amounts of money on your mortgage payments, credit cards, car loans, and even get that 5th phone on the family plan for your grandma.

Financial discipline is a skill that needs to be learned and mastered. Try keeping at least 2-4 active trade lines open (credit cards, mortgage, car loan), and try not to overspend by keeping the balances lower than 50% of you credit card limits. In addition, you can track your spending more efficiently on your credit card statements allowing you to save more every month. Credit will ultimately make life easier no matter what the economic status is. It’s definitely not too late to arm yourself with good credit, and it really doesn’t seem like anyone knows when this battle will end.

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Being a Mortgage Planner, is a lot like being a fisherman…
You go out to the lake (Office) to try to catch Fish (New Clients) so you can eat (Make Money)…
You get in the boat (Your Desk)…
You get your bait ready (Leads)
You cast out your fishing line (Pick Up The Telephone Line)…
You get a nibble (Someone Sounds Interested, Then They Hang Up)…
You wait, and wait (Make Calls, After Calls)…
And then it happens, a fish is caught (You Take An Application)…
Yet, its a very small Blue Gill (Not A Deal)…
So you throw your line back out (Get Back On The Phones)…
And you wait, and wait (Make More Calls, After Calls)…
And then it happens again (You Take Another Application) …
Turns out its a, Big Red Snapper (A Great Deal)…
So the fisherman brings the fish in (Sells The Deal)…
Then the fisherman prepares, and cooks the fish (Originates And Closes The Deal)…
The fisherman then eats what he worked so hard for all day (YOU GET PAID)…

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Traditional loan officers and mortgage planners have obvious similarities. Although both processes result in a mortgage transaction, MP’s focus on the long-term relationship and financial well-being of the homeowner. TLO’s focus on the transaction–getting the loan closed and moving on.

TLO Objectives:

• Transaction speed
• Taking applications
• Measuring units and outcomes

MP Objectives:

• Relationship value
• Delivering valued advice to earn a trusted relationship
• Measuring margin and key performance indicators

So when you are ready to purchase your first home, investment property, or even refinance your existing loan, really consider using an MP. Just like you have a doctor, dentist, or accountant; you should have a mortgage planner. Use the knowledge of a mortgage planner for any future issues with your mortgage, budget, investing, or any other financial related topics.

Your biggest financial liability other than your family will always be your home mortgage, so ask your self who do you really want to handle your loan: someone who is just looking to take an application and move on to his next client (TLO), or someone who you can trust, build relationship, and give you his or hers expertise in your specific home loan scenario (MP)!

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The media has a way of shaping our thoughts, and our imagination. If you listen to the news long enough you will think we are headed for living in a cave. Subprime, Credit crunch, housing bubble, exotic-ARM, Jumbo, write down, blah, blah, blah.

Buzzwords are all the rage in the media and our mortgage industry is the new red-headed step child.

You need a dictionary just to keep up with the news cast and you can’t go anywhere in public without an overnight expert telling you how we are headed for financial Armageddon. Every industry is cyclical and we often forget that but the masses need something to complain about so until the all-knowing media personalities feel that we need to improve our vocabulary keep your pencils sharp and your dictionaries handy.

PS (If you never hear from me again it’s because my girlfriend, who is a TV reporter, has disposed of my body.)

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(Thanks Government!)

Within the past couple years our federal government tried to help out our veterans by putting the Certificate of Eligibility online for supposed easier access. Mission Failed. I, myself had a veteran father who served in the Air Force his entire life and just out of curiosity I tried to jump online and get his ACE (Automated Certificate of Eligibility), and it was like storming the beaches of Normandy! Not an easy task.

I consider myself pretty internet-savvy when it comes to most things; I could not find any website with the actual steps and procedures to get his ACE online. Numerous websites, many of them sponsored by the government, just directed me to different websites saying the exact same thing! It was like they were all standing in a big circle just pointing their fingers in different directions with no answers in sight.

I appreciate their efforts to help veterans out, because online access would be extremely beneficial to servicemen and women all over the country, but a little user-friendliness would be nice. I will continue my search, now mostly out of being stubborn, to find his ACE online. Wish me luck, and let’s cross our fingers that other veterans in the United States are not having the same challenges I am.

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GET IT RIGHT ABOUT REVERSE MORTGAGES!!!!

Yep, it’s true, there are some pretty significant fee’s associated with reverse mortgages. As compared to “forward” mortgages, these fees seem out of character and have all the elements of STICKER SHOCK!

But, let’s get some clarity. All the barking in the press about the fees is usually unbalanced and doesn’t measure the extreme and sometimes life saving benefits brought to our senior borrowers. These seniors are saved, yes saved, from having to choose between moving out, paying for medicine, and even loosing their homes because taxes and other housing expenses have gone through the roof. Yep, the fees are there, however, protecting their golden years in a dignified way trumps all the mis-characterization’s about fees. FEE’S SCHMEES!

Uncle Bee

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