Change is in the Air!

Well it has happened! After months of showing up, doing the work, telling the truth and not worrying about the outcome; I have accepted the position of Branch Manager for Cornerstone Mortgage, www.cornerstonestl.com. I have spent the past 10 months reflecting upon a life plan that went awry, what I liked about it and what I didn’t like about it. Ultimately, I came to the conclusion that I truly love coaching and mentoring loan officers and sales people. Unfortunately, in my previous position prior to First Integrity I had made some business decisions that went the wrong way and I stopped working for the right reasons and only for the wrong reasons, which was to chase the almighty dollar. Somewhere along the way I forgot the old adage, if you help enough people get what they want, you will get what you want.

I have spent many hours reflecting on what gives me joy and energy. I realized that I need to surround myself with other people who are goal orientated, are looking for opportunity at every turn and have a sincere desire to help people. When I do that, I flourish with ideas and tap into the wealth of knowledge of sales that I have acquired over the years. Ideas and concepts are refined, sales opportunities are faced with enthusiasm, and everyone achieves their dreams. This is what made me a successful salesperson and sales manager to begin with. I am going back to being the originator and manager that led previous companies to greatness.

I am humbled and honored to be chosen for this position with the many talented people that are looking for work in our industry at this time. I also want to thank the management at First Integrity. Joe Bayer, the president of the company for treating me with respect and allowing me to leave a positive imprint on his company. Paul Turin, for being the great friend that he is and providing me with a place to let me practice my trade while I took the time to lick my wounds and recharge my batteries. I would be remiss to not mention all the other staff at First Integrity who each and every day work to make “each closing a celebration.”

So as I make this change, be aware if you aren’t all ready that the mortgage industry is changing. But it is a change that is long overdue and those of us with the experience know how to handle this change and make it a great opportunity for all of our clients and referral partners. As I told someone earlier today, in your mind, roll the calendar back to 2000. The programs and underwriting guidelines that we had then are the same ones we will be embracing today. Yes, the crazy loans are disappearing, but if you have credit, income, assets and collateral, you will still be able to get a loan today and for many years to come.

What the hell happened?

As the dust of the collapse of the 10th largest mortgage company in the United States starts to settle (http://money.cnn.com/2007/08/03/news/companies/american_home.reut/index.htm) the mortgage industry is being faced with its greatest change in lending policies in years. As fast as you can hit send/receive investors are sending out e-mails with changes for their product guidelines. Rate locks are being cancelled as investors realize there is no one who wants to buy the loans that they want to sell or if they want to buy them they don’t want to buy them for the price the investor has agreed to pay the originating lender.

So what loans are changing and disappearing? It is the liar loans. For years the mortgage industry has fed its growing appetite for originations with increased products for people who don’t make the taxable income needed to qualify for the home they wish to purchase or refinance. Now I am not saying that some of these people don’t have the cash flow to handle their obligations, but what I am saying is that they don’t declare taxes on that income or they are self-employed and find ways to write off expenses so that they don’t have to pay taxes. What happens when a self-employed person has a rainy day, they start robbing Peter to pay Paul and then their mortgage and other obligations become jeopardized. The same has happened to the mortgage companies that make these loans.

Countrywide, the self proclaimed largest lender in the United States has now fallen on the same woes as the rest of the industry, http://www.iht.com/articles/2007/08/17/business/mortgage.php

The entire industry has been built upon the hope that there never will be a rainy day. Now that is has started to rain we can watch as the poorly built straw houses wash away. When it is all over what will be left is a base of traditional lending values, Income, assets, collateral, credit and equity. In the meantime, for those wanting to borrow that don’t have all of the previous 5 keys, you will pay a significantly higher interest rate than the market if you can find a loan at all.

For more discussion on this topic, please feel free to add comments to this or any of my other blogs.

Sales Assitant Position

FIRST INTEGRITY MORTGAGE SERVICES

Job Description 1/2007

Job Title: Sales Assistant

Reports To: Senior Tenured Loan Officer

Department: Mortgage

Summary: The primary duties of this position involve handling routine tasks so that the salesperson has more time to focus on direct selling activities.

Essential Duties and Responsibilities include the following. Other duties may be assigned

• Manage all databases, Encompass, Mortgage Returns, Act.
• Prepare letters and other mailings from databases including birthday and thank you cards.
• Organize and maintain excel and word files on server in individual loan officers folder.
• Print guidelines for loan officer to read daily.
• Ensure that all pre-approvals are on touch campaign and manage that campaign.
• Assist with application input as needed including running credit on pre-qualifications.
• Run automated underwriting as needed.
• Copy documents, create application packages and mail out when loan officer is not meeting with client.
• Register and lock loans within approved pricing guidelines.
• Develop and maintain lead tracking system.
• Develop and maintain lead distribution tracking system.
• Follow up with appraisal values with both agents and customers.
• Assist loan coordinator gathering of missing documentation, getting verifications, making copy packages, and any other needed functions.

Additional Responsibilities: The employees talent will enable them to dictate additional responsibilities.

Competencies:

To perform the job successfully, an individual should demonstrate the following competencies:

Analytical, problem solving, customer service, interpersonal, team work, visionary leadership, ethics, strategic thinking, adaptability, dependability, initiative, motivation, professionalism, planning/organizing, quality, quantity, judgment.

Qualifications:

To perform this job successfully, an individual must be able to perform each essential duty satisfactorily. The requirements listed below are representative of the knowledge, skill, and/or ability required. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

Education/Experience:

High school diploma, or general education degree (GED), or one to three months related experience, and/or training or equivalent combination of education and experience.

Language Ability:

Ability to read, analyze, and interpret general business periodicals, professional journals, technical procedures, or governmental regulations. Ability to write reports, business correspondence, and procedure manuals. Ability to effectively present information and respond to questions from groups of managers, clients, customers, and the general public.

Math Ability:

Ability to work with mathematical concepts such as probability and statistical inference, and fundamentals of plane and solid geometry and trigonometry. Ability to apply concepts such as fractions, percentages, ratios, and proportions to practical situations.

Reasoning Ability:

Ability to solve practical problems and deal with a variety of concrete variables in situations where only limited standardization exists. Ability to interpret a variety of instructions furnished in written, oral, diagram, or schedule form.

Computer Skills:

To perform this job successfully, an individual should have knowledge of Word Processing software and Internet software.

Work Environment:

The work environment characteristics described here are representative of those an employee encounters while performing the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

The noise level in the work environment is usually moderate.

Physical Demands:

The physical demands described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions.

The employee must regularly lift and /or move up to 10 pounds and occasionally lift 25 to 50 pounds. While performing the duties of this Job, the employee is regularly required to sit; use hands to finger, handle, or feel; reach with hands and arms and talk or hear. The employee is occasionally required to stand; walk; climb or balance and stoop, kneel, crouch, or crawl.

Please fax resume to Chris Scheer 314.878.5636 or e-mail to chrisscheer@firstintegrity.com.

Are you ready for a Mentor?

No matter where you are in your career, until you have hung it up, you need a mentor. When you first enter any industry everyone has ideas of how they should be a success, but if you take the time to look around you, you will find people who are doing things right and who are seemingly doing things right but having no success. Seek out those people that are doing things right with success and let them know you have noticed their success and you are looking to learn from them. Tell them initially you just would like to e-mail them a question once in a while and when they are ready to invest quality time, start by buying them a cup of coffee or lunch and pick their brain on what makes them successful. If you are having success, look to more successful people either in your industry or others and approach them about developing a mentor relationship. In the meantime, find someone new to mentor. By finding someone to mentor, you will rekindle the energy and passion you had when you entered your field, be reminded of you successes as you help the new person overcome their challenges and still have the opportunity to learn how others view and want to solve challenges. If you find yourself at the crossroads of not having anyone to mentor you, find a coach or mentor that will work with you for a fee. The nominal fee is often recouped in the first sale and often you are reminded of the reason that you are a success in the first place.

For more information about my mentoring program, please send me an e-mail at chrisscheer@firstintegrity.com.

The Dark Side Part 2

So how do you avoid the “Dark Side?”

Let me first say that I believe that everyone should have the opportunity to make money. The Mortgage Industry is a great place to earn a living, provide for your family and help people make dreams come true. However, with every industry there are always people who are in it only for themselves. These people prey on others who are less educated, less intelligent and sometimes less qualified. When they do, they usually abuse the system, creating large incomes for themselves while staining the reputation of their entire industry. Not to mention that the people who are usually their prey are the people who need to have a lender who will treat them fairly as opposed to taking advantage of them.

Once a “B” always a “B”. When the sub prime lending market was in its beginning, there were borrowers who would not qualify for the “A” paper loans. On more that one occasion I would hear an account rep say that “B” borrowers don’t change their habits and they don’t learn their lesson. That may be true about some people, but I believe that people can learn to manage their credit and they can learn to manage their finances. All they have to do is have an honest chance!

So what is an honest chance? Well it is putting someone into a loan program so that they can develop a budget off of. It is creating a mortgage solution that will not penalize the client in a short period of time. It is not gouging them in fees when they do come back to you eating all of their equity up with refinance fees. It is treating people the way that you would want to be treated.

As we see mortgage delinquencies rise and foreclosures happening at an alarming rate, there is a change that must take place. But it is going to have to be consumer driven. Legislation is not the key. Education of both the consumer and of the mortgage sales people will be the basis of this revolution. The consumer must learn not to fall into the trap of working with people who spend tremendous amounts of money on advertising. Mortgage originators need to learn that if you are going to stay in this business for a career, relationships are a necessity. To nurture those relationships you must take care of people so that they want to come back and refer other clients to you.

Thank you to Tracy Nolan for referring Andy Revelle.

Thank you to Andy Revelle for referring Joshua McDowell.

Thank you to Klaus Bank for the referral of Sarah Stroup and Pete Wilkens.

Thank you to Libby Emmer for referring Rob Steinkuehler.

The Dark Side

The Dark Side

If you have read any of my previous writings you have seen where I have referenced someone giving in to the “Dark Side.” What is the “Dark Side” you ask? Well the answer is the lender; you pick them, who prey on the uneducated borrower. They spend a lot of money on advertising, radio, print, television, even the internet to attract the borrower with promises of a lower rate, lower payment, and no mortgage payment for 3 months, anything that they can say to make the phone ring. Enticements such as a free cruise or vacation if you close your loan with their company. Anything to get the borrower in the door and take advantage of them.

Now what do I base this on you ask? Here is the simple truth; we are all getting the money from the same place. It really comes down to who has the lowest overhead and who has the least amount of people getting a commission out of the origination of the loan. 95% of the time the loan is backed by a mortgage backed security that was put in place by Fannie Mae or Freddie Mac. When you go into the sub prime mortgage market, their loans are securitized also and a premium or value is place on the note at a certain rate. If the loan is sold at a higher rate, then more value is placed on the note or the seller of the note receives more money. On occasion a lender will secure a block of loans at a rate that is slightly below the market rate. In this instance they have guaranteed delivery of a package of loans that meet the secondary guidelines at that interest rate. When this occurs, the lender is making less than the normal premium for the sale of these loans and will use this as a loss leader to generate phone calls. Those loans that don’t meet the criteria of the loans for the package are the loans that the lender then makes their money on by selling their other products at a premium price or with additional fees.

What about the really low interest rates or the Option A.R.M.’s you ask? The Option A.R.M. is a fantastic product for the right person. However for most borrowers this is too complex of a loan for them to comprehend or to manage effectively. This loan starts with a low teaser rate, but that rate is only good for as little as one month, and then the rate starts climbing monthly. When the rate has fully adjusted it is usually about 1.5% higher than the current 30 year fixed. The catch is that the payment is set off of the initial interest rate and they give you 4 options on what payment to make every month. You can pay the minimum payment, which covers the interest only at the initial rate, you can make an interest only payment, you can make a principal and interest payment on a 30 year amortization schedule or you can make a principal and interest payment on a 15 year amortization schedule. The sales pitch teases you with the low rate and the idea that you can pay off your loan in half the time of a normal loan. What they gloss over is the fact that if you don’t pay the 15 year payment schedule every month and only pay the minimum, then you end up adding to the principal owed and create a negative equity position. In addition, this loan has origination fees and a pre-payment penalty which make it expensive to get and even more expensive to get out of when you realize your mistake. Now, if you are diligent and pay the 15 year schedule you can pay down the principal quickly, but most people do not do that. They see the minimum payment every month and only pay that. At the end of a year, the minimum payment adjusts 7.5% while the rate has increased and the negative equity gets worse each month. If you are someone who gets large bonuses each year and can pay down the equity balance, this loan will work for you. Pay the minimum each month and at the end of the year, recoup your losses by paying down the principal balance of the loan. However, if you are not one of these people, run from this loan.

More on the “Dark Side” next week.

Special thanks to Peggy Kohl for the referral of Mike Kitson.

Thank you to John and Jessica Doll for returning to me for a refinance.

Congratulations to Melanie Cooper and her team for joining Keller Williams Realty. I wish you the best of luck on your growth path!!!

What is bugging me?

What is bugging me?

As I continue to write pre-approvals for people who have no intention of using my services to purchase a home I am faced with the dilemma of playing the game or playing my own game?

One of the services realtors expect now is for lenders to offer free pre-approvals and then once the client gets their pre-approval they go shopping for a perceived better offer. I don’t want to prevent people from shopping and getting a good deal, but I also don’t want to provide my service without some expectation of getting a chance at earning their business. Within the last 2 weeks I have provided this service to the realtor and their client when both knew that they would never use me for their loan, but because I am more available, i.e. nights and weekends, they called on me to get the pre-approval done so they could get their contract accepted. Once the contract was accepted the clients would not even return my phone calls to attempt to give them an interest rate quote. Aside from being rude, it is poor business practice for the Realtor to expect a lender, one that they should consider a business partner to work for free.

If I decide to play the game by my own rules, then I run the risk of chasing off the potential client and Realtor. But am I better without them? I am not ready to answer that question, but for now I will take my chances with Karma and believe that when I do good things for people, good things will happen to me.

Special thanks to Mary Brown for the referral of Mathew and Jill Cobb.