Mortgage Brokers and Loan Originators Should Support HR3915

Why am I not surprised that mortgage brokers are in a panic over HR3915, the Mortgage Reform and Anti-Predatory Lending Legislation? Back in January, Barney Frank gave everyone ample notice that he was committed to passing anti-predatory lending legislation before the end of 2007. Then the subprime meltdown began, setting a political stage for a perfect storm, putting mortgage brokers right in the path of harm’s way. Bush, your weapons of mass destruction are in the hands of Congress. Or so the mortgage brokerage industry would have us believe.

The fear racing through the brokerage community is rampant.  Wide-eyed loan originators are dragging themselves into my classroom looking like Iraq war veterans needing post traumatic stress disorder talk therapy, and the bill hasn’t even been put before the full house for a vote yet.   Let’s see if we can identify where all the fear is coming from.

Establishes a Licensing System for Residential Mortgage Loan Originators
We already knew this was coming. Chuck Cross with the Conference of State Bank Supervisors has been working on national loan originator licensing for months. Even better, the current proposed version of HR3915 says we’ll be keeping track of all LOs, including loan originators who work at federal and state chartered banks. This is what the mortgage brokers have said they want.

Creates a Residential Mortgage Loan Origination Standard

There’s nothing inside this paragraph that sounds too scary.  Licensing? Full disclosure? LOs are already required to do these things. What’s next? Oh, here it is:  Anti-Steering.

Anti-Steering
“For mortgage loans that are not prime loans, no mortgage originator can receive, and no person can pay, any incentive compensation (including yield spread premiums) that varies with the terms of the mortgage loan (except for size of the loan and number of loans).  Regulations will be promulgated to prohibit mortgage originators from (1) steering any consumer to a loan that the consumer lacks a reasonable ability to repay, does not provide net tangible benefit, or has predatory characteristics, (2) steering any consumer from a prime loan to a subprime loan, and (3) engaging in abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but different race, ethnicity, gender, or age.”
Let’s try to analyze why mortgage brokers and LOs are so upset about this provision. For the past year, LOs on this website have fallen all over themselves telling us how they don’t do any of these things like (gasp!) steering consumers from a prime to a subprime loan IN ORDER TO MAKE A HIGHER YIELD.  So, if you good guys out there didn’t steer or originate loans with predatory characteristics, why are you so mad about this bill? You keep saying you want the bad guys out of the business. If it’s true that you’re not doing any of this stuff, then why all the whining? If the subprime market weren’t already dead enough, this bill will put the nail in the coffin. But don’t be fooled. Instead of subprime, the loans will be called something else.  When there’s money to be made, the creative mind knows no boundaries.  This provision gives mortgage brokers and LOs exactly what they’ve been telling us they want: the end to the abuse of YSPs.

Ability to Repay/Net Tangible Benefits
“Requires creditors to make a reasonable determination, at the time the mortgage is consummated, that  the consumer has a reasonable ability to repay the loan, or;  for refinancing, the refinanced loan will provide a net tangible benefit to the consumer.”

Well I call “reasonable ability to repay

Three Steps to Staging a Listed Property

[photopress:Jackass_20Penguin.jpg,thumb,alignright]On Friday Fieldtrips, I have been going to properties that are already listed for sale and doing a 3 Step Staging Technique. Since the properties are already for sale and listed in the MLS, it is a shortened process that takes anywhere from two hours to most of the day. Getting a property ready for market that is not already listed often has more steps and takes much longer. This simple process will help to improve a property already on market.

It is also the method I use on a listing appointment to give the seller a few tips of what they might need to do before putting the home on market. These homes are occupied and already furnished.

1) WALK LIKE A PENGUIN

From the time you enter the front door, walk at a fairly rapid pace from the front door, through the main living areas and back to the front door. Keep your arms at your side with your hands about 8″ from your hip. In other words…Walk Like a Penguin.

Remember there are often three people walking through the property during a showing, the buyer(s) and their agent. Anytime they need to walk around a piece of furniture or get cornered inside the furniture or are just uncomfortably fitting through an opening, the house “feels too small” even if it is a 2,500 square foot home.

Make sure the walk path is as wide as possible. If one of your hands hits anything as you walk through, whatever you hit with your hand likely needs to be moved.

As you walk quickly like a penguin, keep your head straight and even with your shoulders. Don’t look up, down or sideways. When you get back to the front door, walk through again in the reverse direction.

2) HAPPY FACE :)? SAD FACE :(?

It really is quite that simple. When your hand hits something, you get a sad face. When you can move through freely and without impediment, you have a happy face. When you smell something bad, you have a sad face. When you see attractive things, you have a happy face. When you see unhappy things (I call them implements of destruction) you have a sad face. Remove knives, arrows, scary masks on the walls, anything that makes you grimace or feel uncomfortable for even a split second.

Now go back through the area slowly and look for your best items (mirrors, pictures, vases, etc…) that you DID NOT SEE while walking through like a penguin. Move those to the walk path so that you see your best pieces when walking through quickly.

Do you see something good out the window, or something bad out the window as you walk through quickly? Open all the blinds and window treatments and walk through again. Happy Face? Leave the window treatments open. Sad Face? Close the blinds or drapes if you see moving cars, trash cans or anything else that is not attractive.

If when you first walked through you had 3 happy faces and 14 sad faces and now you have 14 happy faces and 3 sad faces, you have improved the property showings. If a buyer feels good most of the time during the showing, they are more likely to buy the property, than if they had a sad face during most of the showing.

Pretty simple stuff.

3) SHOP AND UPDATE

If it is a newer property, I often don’t have to shop. One of the purposes of shopping for items is to have at least one item in every room that is CURRENT. Often the homeowners things are very nice, but from 15 years ago. If the house is 15-20 years old and all of their things are 15 to 20 years old, the house screams “needs updating”, and that means lower offer.

Seems silly, but I can tell you for fact that homes where buyers said, “It’s going to cost $100,000 to update this place”, sold after a bit of updating. The more people see something in the house that they may have seen recently while shopping, the more you have added current to needs updating.

By Shopping and adding currently popular items and colors, you can change your showing feedback from “too 80s!” to an offer.

My inspiration for this week: Hamoody

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.

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.

A Shopping Trip for Staging a Home

For the past several Fridays I have been taking “Friday Fieldtrips” with agents from my office.  Mostly we have been staging their listings.  Just a little spruce up.  Adding a bit of color.  I thought I’d share some of our great finds.

The home we were staging is in Woodinville, so we shopped in Woodinville at TJ MAXX, Target and World Market.  The photo below are just the things we bought today.  I have a huge growing collection in this particular color family of reds, golds and greens which work well for homes built in the 1980s.

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The curtains are only $15 at World Market.  They come in that orange twisted coil in a little bag of the same fabric, to create the wrinkle effect.  We used the patterned ones behind the dining room table.  They are only about 24″ wide and tie on.  Best buy were the small wavy square plates at only $2.00 each at TJ Maxx on the clearance table.  I try to keep pillows at $10 each, these came in sets of 2 for $20 at Target.

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The big green goblets were $5.00 each at World Market.  I get plates of all shapes and colors at Target for $3.00 to $4.00 each all the time.  They have every color imaginable and I usually buy them in sets of 4 from $12.00 to $16.00.

The tall red oval vase on the right I just had to have and was about $12.00 and we spotted the red and white photo box below it for only $3.00 and it was a perfect color match.  Most of my big pictures are out at my two pending listings in Sammamish and Edmonds.  Often I can take them from one house to another, but this was Hilde Webber’s listing so we started her collection and I added a bit to my collection and lent the items to her.

We staged most of the first floor, but didn’t pre-set the kitchen area too much as a family of five still lives here.  It’s tough on a family getting the house ready and keeping it that way.  A little help goes a long way, and if you shop well you won’t spend too much money and you can use the items over and over again from one listing to the next.

This one is all ready for the Open House this Sunday and Hilde and I had a great Friday Fieldtrip.  I find it’s also a great way to get to know my agents really well.  Gives new meaning to TGIF! 

 

Photos are worth 1,000 words (and a lot of money too)

We “dog food” our real estate search product at Estately (we use it like a consumer): I subscribe to a couple of daily email alerts, a constantly updating RSS feed showing properties as they come onto the market near my house, and I subscribe to a feed of my saved homes to see when they sell.

Today two properties came on the market (welcome to Seattle prices, out of towners!):

$720,000 3 Beds / 2.25 Baths / 15 photos / 1,412 sqft / $509 per sqft
$729,000 0 Beds / 0 Baths / 0 photos / 1,700 sqft / 2,400 sqft lot / $428 per sqft

I didn’t even look at the second property – really, what’s the point? Like most buyers, I’m driven by emotion. I click through photos pretty much as fast as they load until one catches my eye, I linger, something about the property gets past my reptilian complex and I actually consider the details. Good agents know this on both sides; they take fantastic, eye catching photos or hire a professional to do so. Some of our Agent Match clients have found that they overlooked a great property with bad photos until they were dragged there by their agent and at least one was pleased to find that bad photos and staging could cost a seller upwards of $25,000.

If you are a consumer selling your house, dog food it. Subscribe to a daily email of new homes for sale for a month or two before you list your house and see what catches your eye. It’ll make “decluttering” easier.

If you are a realtor who works with sellers, dog food it. Sign up for a daily email from your company’s website. If your listing doesn’t look good there, you’ve lost a lot of the buyers who are currently in the market. You missed your chance to catch their eye and they’ve moved on to Craigslist. Maybe you can have a second shot at impressing them there.

The Mortgage Witch Hunt

Just in time for Halloween, officials from various levels of government are gathering together over the [photopress:salemexamof.jpg,thumb,alignright]frightful happenings going on in the mortgage industry. Home values were going down, mortgage payments were on the rise and consumers did not contact their mortgage professional for advice. Some were provided opportunities to own homes by using “non-traditional

Update on Sixty-01 Seattle Area Appreciation

[photopress:six.jpg,thumb,alignright]Earlier today, John D asked me to update the Seattle Area Appreciation post I wrote back in February. You’ll have to click the link to get the history. I’ll start from early 2006 with a cut and paste of that portion and take it from there. These are 2 bedroom 1/ 1/2 bath townhomes.

03/30/06 – $177,000

06/07/06 – $205,450 (list at $199,900)

07/11/06 – $205,000

08/25/06 – $227,500

09/13/06 – $235,000

11/01/06 – $245,000
01/06/07 – $220,000
01/17/07 – $252,500

03/07/07 – $230,000 (not on lake)

03/09/07 – $269,000

03/23/07 – $243,500

03/30/07 – $227,000

04/09/07 – $251,000

04/03/07 – $258,000

04/23/07 – $244,000

04/25/07 – $223,000 (not on lake, no photos)

05/02/07 – $266,000

05/09/07 – $276,000

05/14/07 – $275,000

05/22/07 – $282,000

06/04/07 – $262,500

06/18/07 – $286,000

06/18/07 – $300,000 (purchased for $94,000 in 97 and remodeled)

07/30/07 – $269,950 (no inside photos)

07/30/07 – $229,950 (not on lake) wow

08/31/07 – $268,950 (not on lake)

09/27/07 – $249,000 (not on lake)

10/06/07 – $308,000 (purchased for $130,000 in 09/02 and remodeled)