Author Archives: Tim

Let Brokers charge what they want. Do away with YSP.

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Couldn’t the whole yield spread premium (YSP) debate with all the trimmings end with a simple solution such as allowing the broker to charge whatever they want? Let the free market sort it out. Certainly lenders would have to be on board and do away with incentives or change them somehow, but it seems to me that everyone is making it so complicated.

Yes, compliance issues, licensing and fair dealing issues are important and should be implemented in some manner.

Solution:

  • Just disclose up front what the compensation is based on the interest rate or program the borrower qualifies for. Therefore…….
    • No more the need to attend sales seminars on learning how to overcome objections, which will allow more time to attend seminars on how to provide sterling service.
    • No more awkward moments for the loan officer attending an escrow singing when the borrower questions that “YSP thingy.”
    • No more loan officers asking escrow “how will you explain YSP” to the borrower, as if escrow’s response somehow dictates whether or not they will receive future business.
    • No more agents having to watch helplessly at their clients becoming frustrated or stressed out due to lending problems associated with YSP’s and the completely preventable situation where a transaction spirals out of control at the last moment.
  • How about lenders just have a simplified schedule of programs and rates that the borrower can choose from and if they pay a higher interest rate they receive a rebate that can be used on their behalf. How about just turning the PC monitor around and showing the consumer the several programs available and then have a good old fashioned counseling session. It would save every single moving part in a transaction a lot of grief. And it would save transactions from failing at the last moment because a “nuclear bomb disclosure” by a lender about the yield spread premium a loan officer is earning that freaks out the borrower.

I can just about darn near guarantee that if a consumer knows where all the chips are on the table, they would have no problem moving forward with a transaction. Give a consumer the very best rate they can qualify for, at the very lowest fee structure you can, with all the chips clearly on the table and Bam! you have a happy client, fostering long-term value.

When will someone just give the consumer what they want? Somebody is working on it and they are going to will be very successful. Is it really more complicated? If so, sound off.

My inspiration for this week: Hamoody

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Life in real estate. Good days, bad days, good weeks, bad weeks. When things get a little bit crazy, what picks you up? A few weeks ago I mentioned that inspiration is everywhere, if you let it in your world.

My inspriation was someone who I read about, but today, I got to see in person. A remarkable story. An amazing boy.

Meet Hamoody.

Be sure to click on the photo’s.

Blog Wars: It's everywhere.

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The last month has been educational for me in a lot of ways about our industry and confirmed a lot of my thoughts, both good and bad. There is a lot of passion out there in the blogosphere and out in the work place. The one nugget I always come away with is that the real estate industry is full of very independent people who are fierce in the way they do business and in the manner in which they convey their positions on issues. Both in the work place and blogging, some are professional, others make fools of themselves, intended or not.

One common denominator I see is that people genuinely want to improve our industry, its function and image. The problem is, how can that happen with such fragmented independent practitioners that all play a part in this industry? There are so many moving parts with industry specific (lending, title, escrow, Realtors, consumers) internal self-serving issues. Perhaps this fragmentation of independent real estate practitioners is a core reason why the industry and associated moving parts has suffered from image and credibility problems for so long. Just take a recent look at all the folks that were operating under the radar over the past two or three years with criminal records.

Recently, I don’t know how many times on local or national blogs and forums, I’ve seen the quote from agents and loan officers, “sure be glad to see (insert any practitioner here) get out of the business,” or “I’ll be happy if there are less (insert practitioner) here as this market shifts,” and so on. Again, the problem is, everyone is saying it. It’s like each team praying to God…..”and help us beat the other team.”

Passion and Blog Wars extend far outside our real estate industry. That’s what is so interesting to me as a small business owner involved in the real estate industry and blogging. I know this is foreign for many of my friends and colleagues in the real estate business, but here goes anyway: The world does not revolve around real estate. The Blog Wars extend into every crack and corner of our society: soccer mom’s, politics, economics, Church, professional sports and the “Holy Land of Blogging” known as the technology and software industry.

It's Stormy out there, but we are having fun!

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OK, so it’s stormy and gloomy outside and there are blogger civility issues going on. The stock market gloomy today? Oh yea, that too. But,we are having fun! What are you doing around the office to keep things bright and morale high?

We’ll, someone had a birthday at our office and her Elvis memorabilia continues to grow at her desk and Pumpkin season is here! I love the Fall. My wife dislikes it and hates my favorite saying this time of year: “it’s great Soccer weather!”

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The funny thing about this cardboard Elvis is that it has a sensor so that when someone walks by, Elvis talks! Elvis appears to also be light sensitive. When we turn off the lights after work, he said, “hi, good to talk to you.” Can’t wait till the night cleaning crew comes and turns on the lights. They will be in for a treat!

Does the NAR & the Big Brokers really want to fight The Blogosphere?

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There have been a lot of discussions lately regarding Blogging, both it’s merits and potential for fallout on many levels. The problem with trying to keep Blogging under wraps: If you do, you have the potential for political backlash, both from the agents that build the brand of the broker (Re/Max, Windermere, Coldwell Banker, etc. ) and the Blogosphere itself, an enormous Goliath. Is it a battle anyone really wants to have?

Over at the Seattle PI Real Estate Professionals Blog, agent Sandy Kaduce remarked, “they will take away my blog from me when they pry it from my dead cold hands.” And, our friends howling down in the Sun in Phoenix take on the National Assn. of Realtors possible policy on curbing blogging for its membership.

But, what if an agent’s very own client blogs about their very own listing for sale and soliciting advice from the general public? For example, this case at Seattle Bubble from blogger “Econ101”. (a little more than halfway down in the comment fields)

I’m not certain anyone understands the possible repercussions of curbing blogging.

Inspiration is everywhere if you decide to let it touch you.

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There is nothing better than an underdog. Meet Paul, a phone salesman from Wales. This will blow you away. (need sound for You Tube)

The gentleman below inspires me everyday I drive to work. He is disabled and uses a broom to help support him and keep himself from falling while on his way to Walgreens. The beauty of it is that he sweeps EVERY inch of sidewalk or street in his path. It probably takes him about 2 hours to walk the four blocks round trip and he is smiling every inch. Look close at the photo on left and you’ll see the up-swing of his broom.
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When I feel like I’m not positively impacting the lives of 23 kids I coach in soccer or the stresses of work or family (extended or close ) gets us down, I look for ways to be inspired. It’s everywhere if you let it touch you.

Perspectives: Is this a former loan officer or a customer of a LO/subprime lender?

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Evidently, this is circulating in e-mails everywhere. Depending upon your perspective it could be funny or not so funny. On the one hand it could be a former employee of a defunct sub-prime lender or it could be a customer with a toxic loan. Either way this evokes a lot of different views.

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The Pre-Payment Penalty: Gold mine or equity Quicksand?

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Ninety-one year old Seattle woman’s mortgage mess as detailed by the NY Times.

“……That was the case for Gertrude Robertson, a 91-year-old widow and nurse’s aide living in Seattle who took out an adjustable-rate mortgage of $450,000 in January. Even at her age, Mrs. Robertson was earning $3,500 a month, largely by caring for another elderly woman. Then the woman died. Mrs. Robertson’s income was reduced to her monthly Social Security payment of $1,500. Meanwhile, her loan ballooned to $475,000. Unable to make the payments, Mrs. Robertson is listing her home for $510,000.”

Mrs. Robertson’s pre-payment penalty was $14,400.00. We have seen pre-payment penalties slightly higher than this paid out through our escrow office. I think there are many cases where consumers really don’t understand what they are signing. My wife Lynlee and I argued about this pretty robustly this morning. Lynlee contends that people should know what they are signing and if they are uncomfortable for any reason, they should not sign or at least consult an attorney or other party to help them understand the documents. She argues that if people get in trouble with loans they should not blame the loan officers or anyone else but themselves.

I don’t think Lynlee and I will agree on this issue. I think she is very naiive about why pre-payment penalties were so widely used. I think there are a lot more pressures to consumers and it leads them to make decisions that are not necessarily wise. How many Gertrude’s are out there? Thousands.

Update :  the New York Times Article was available through the link earlier this morning, but as of 9:50am it has been archived and you have to  log-in to access it.  Sorry about that.

Hey Zillow! Yeah, you have fun, but do you have a George Foreman Grill?

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Zillow may have fun playing around in the office, but unless you have a George Foreman Grill in your office….

 
 

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Sammy, our senior closer and LPO, shows her skills of fine grilling. And, can any Zillow folks run a John Deere excavator as Lynlee shows? (and yes, she can run it)

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