Georgia FHA Home Loans - (& Opinion)

So just exactly how does it feel to be in a highly regulated industry which is constantly under attack from both the media and dis-informative insiders? I don't recall too many real estate agents sticking up for the mortgage industry over the past few months - in fact, I believe all of the ones I have heard supporting are here on Active Rain. The media sure has been hot on the trail of the Entire Mortgage Industry - baby, bathwater AND tub!

I guess Leslie Stahl's piece on the "sacrosanct 6% commission" could be compared to Clark Howard's continual bashing of mortgage brokers ... until I heard he had to swallow years of crow when the report came out last Summer that brokers, on average, cost less to the borrower than going directly to the national lender or the bank. (I never listen to him, he's not even a journalist, only a cheap tickets kind of travel agent who just happened to get a radio show).

The real estate industry has it's insiders who are going to attack just like the mortgage industry does. I wonder, do discount brokerages defend their clients as veraciously as established full-service brokerages when there is a problem? I really don't know the answer. What happens when an issue arises prior to or post closing that is the fault of the listing agency? How do they react? I'll have to research that a bit.

In the mortgage broker industry we all know there is at least one loudmouth little Texan who has convinced thousands that he is giving them something for nothing - of course the public loves it because he throws the rest of the industry under the bus. I love it too because as another big radio, television and print advertiser I receive a lot of calls asking if we can do the same. "Do it? Of course! Anyone can do it - their is no special secret or trick. In fact, I can do it and beat the pricing and not lie to you about what's happening. There ARE closing costs and you WILL pay them - albeit over a period of time and if you are keeping this loan less than about 40 months (or whatever) it will make sense!"

I have a very dear long time friend who operates a franchise of one of the large discount brokerages. I can tell from speaking with her that, for the most part, just like the little nervous motion bald mortgage broker, they are doing okay but they are not likely to destroy or even take over the market.

Just like people still go to the bank for mortgages (the old traditional way) even though the bank may actually BE a BROKER and not a LENDER it's still the traditional way where people feel "safer" people will always continue to go to the local real estate broker who is there to "hold their hand" and do all the work.

As for the report about commissions I can tell you in the thousands and thousands of deals I've funded over the years I can definitely say that every deal does not have six (6) percent sales commission. I have and still do see everything from 2% to 10% depending on the deal. Usually it's less than 6% and even when it comes in with 6% I have seen agents take less just to make the deal work.

And the lady who said she only worked 5 hours and made $12k commission? Great job! You did well! If you can sell my home in 30 days and do only one hour of work I'll give you $30,000!!! In fact, I don't even care if you do anything more than put a sign in the front yard and list it in the local listing services as long as it sells fast and for something close to my price!

But I bet most agents, at least those I know, work with and care about, may work only 5 hours to sell their listing but let them get a buyer. A first time buyer. A first time investor. Let them get a listing on a distressed property. Oh, and what about their insurance? Their continuing education? Their auto and travel expenses? Their broker split, their advertising costs and their cell phone bill? 

The media is not honest. The media does not report the truth. The media is NEVER unbiased (even though my friend swears NPR reporters are required to be). The media ALWAYS has an angle: if it bleeds it leads. When Americans get their heads back out of accepting news as unbiased fact and start doing a little self-study they'll see they have been misled by the talking heads. It gets back to personal responsibility. I believe I have blogged on here that I always negotiate with the listing agent on how I want to pay and they always counter and we agree.

Try it sometime for yourself! Be reasonable in your expectations and demands and LEARN HOW TO DO BUSINESS INSTEAD OF LISTENING TO JOURNALISTS WHO ARE ONLY and I MEAN ONLY trying to get better ratings which means better pay and longer work for them! It's ALL about THEM not YOU. They are not on TV or the RADIO to protect YOU. They love a good story and they'll make it bleed to make it lead. Don't get bloody with them.

Now can I have some coffee? 

Does my face look a little discolored? Is there a shade of blue beginning to peak through?

Of course I know one simply cannot make a one time statement and then have everyone on the face of the planet automatically know what you said but there is one particular statement which stands out from the crowd, always costs the broker/lender/loan officer a ton of time wasted and is uttered at the beginning of every loan.

So take a good long stare into my scarred face and repeat :

I CANNOT REFINANCE MY LISTED PROPERTY. I CANNOT REFINANCE MY LISTED PROPERTY. I CANNOT REFINANCE MY LISTED PROPERTY. I CANNOT REFINANCE MY LISTED PROPERTY.

Actually you CAN refinance your listed property but you will need basically a LOAN SHARK (or brother-in-law with a fat wallet) or ... 

If you need "roll over" or "bridge" money then you need a bridge loan NOT a Cash Out Refinance.

When a loan officer asks you, "Is the property currently listed or has it been listed for sale at any time during the previous twelve months?", the answer should not change between the time you make application and the time you close!

Just because you have made application and received an "approval" doesn't mean if you go list the property for sale that the approval cannot be revoked! It's the same as quitting your job, buying a new car or getting a divorce during the period between the time you get the approval and the time of the closing.

Thanks to one repeat client we just wasted about 50 office hours where we could have been working on YOUR loan.

Scheduled to close this Friday on a refi - $460,000 with $50,000 cash out on a $680,000 investment property. Not going to happen now.

PEOPLE - PAY ATTENTION: Lenders are not fools. We have departments and employees who love to find things like brand new MLS listings on properties that are being refinanced! When you can go to Google and type in an address and the first link that pops up says, "RealtyCity - NEW LISTINGS - " followed by the address in question it kind of puts a brake on things.

Every time the game changes the players just change jerseys and get back on the field. There is a LOT of hype and talk about Cash Back At Closing (from a conventional loan any cash that goes back to the buyer from the SELLER's proceeds) is mortgage fraud. Period.

So how are people getting around it? 

Some are adding in "marketing fees" that just kind of disappear after the closing. Many are using "shell companies" which are easily sniffed out. A few are having the listing agent jack the listing fee to 10, 12 even 15% and kicking back out of the "broker's commission".

Some are using PRIVATE MORTGAGES (which, by the way, in most states are illegal on owner occupied properties for JUST THIS REASON). Private mortgages don't care about real values so the seller can jack the price as high as they like and the buyer can pay far more that the real value for the property. Private mortgages don't care if the buyer walks away from the closing with thousands of dollars in cash in their hand.

Private lenders are about to get a big whopping dose of reality:
(1) As a private lender you are paying for the house. Why would you pay more than the house is worth?
(2) Private mortgages on primary residences in most states are illegal.
(3) RESPA applies to ANY loan given on a primary residence in EVERY state in the US.

Others are just flat out committing good old fashioned fraud. What you have to remember is that most "lenders" are middle women and just passing the collateral along to some other investor. It's the ultimate investors who shut down sub-prime (that's why so many "lenders" vaporized) and it will be the ultimate investors who shut down cash back at closing. In the mean time there will be arrests, convictions, housing lost, and lives disturbed.

So hang on. All those ads you see on here and on craigslist are just the trail of crumbs back to the witch's cottage. Set your watches and mark your calendar.

Keep your eye on the ball - this one.

When you've been in the business for a while you can pretty much "smell them". They come wrapped in shiny packages with great promises of superior value, impeccable service and all for free. In fact, CNN recently published an article about one. A short little bald-headed Texan with an ego the size of Alaska and nothing but slight of mouth for advertising. 

I call them "The Unbeatables".

They are not just your competitors - they are your clients. They are your school mates and your work partners. For home owners and buyers they are the listing agents and buyer's agents who've done it all. They are the Loan Officer who can do any deal for a lower price than anyone else and can do things nobody else can do. (In fact there is a national lender with ads proclaiming just this fact!) Everything you've done they've done twice - faster, higher and farther. It's the client who applies for a loan and tells you they make 3 times what they can prove or the seller who tells you about the tens of thousands of dollars they invested into their kitchen when you can plainly see it was no more than three.

You keep working your fingers to the bone, days and nights, weekends and holidays - you're there for your clients. Then you lose a sale to a fast talking sales wiz who puts your client in a house you know they can't afford, in an area where they will be pressed to "keep up" and they did it in two weeks even though you had been working with the same client for two months?

Outsold? Evidently.

But how?

There is a fellow who advertises that all mortgage brokers are rip-off artists and that they charge thousands of dollars in fees to do the same thing he'll do for you and he'll pay all those costs for you. You an I, we know that's a lie. It has the skin of a truth around it but it's mostly not true.

Why do people believe his ads? Because they want to. They want to believe they are getting something for nothing. The truth is any mortgage broker can do it. I can do it even better at lender rates - and I do. But I don't advertise it and I sure don't use the low class language he does.

So, what happened on the way to the top?

Recently we witnessed the demise a lot of competition who used unethical practices to steal away legitimate promises with absolute lies, corruption and even fraud. Homeowners was one of the first and we may never know how much damage they did. The stories I've heard about Loan Officers with blank pay-stubs, tax returns, verifications and more in their desk drawers sickens me. But they are not the only sinner. In fact, one of the largest, most successful builders in the Southeast is currently under Federal investigation for, among other things, mortgage fraud which includes falsified documents.

No wonder I couldn't get a foothold in those subdivisions.

Can you do a no closing cost loan? No, there is no such thing. You can, however, do what that little Texan does, you can raise the interest rate enough above par to use the proceeds from the lender to pay the closing costs. This is not an article about that practice - it's an article that says what goes around comes around and your competition who lies on deceit and unethical practices won't last forever unless they change.

We're hearing fewer and fewer stories where we turned down a borrower who went to another lender and closed.  

Maybe the market is being purged ... something we legitimate folks like we here on Active Rain have been pushing for over many years. It won't last though. They'll come back as soon as they can find another loophole. 

Agents and Real Estate Brokers, you can help clean up the mortgage industry. You know when something is fishy - you can help stop the fraud.

For you agents there was, for a long while, a broker here advertising that if your home didn't sell in __ weeks he'd buy it. Of course you and I both know he wouldn't buy it at full value and he would only buy it under very strict conditions. I haven't heard those ads lately. I know some of the agents I work with steamed every time that ad came on!

Yes, we've lost a few clients. (But the war is still on.)

At Novation Mortgage we don't quote rates until we have an application. Period. I know when someone calls asking the rate they've been watching too much CNN. It takes a lot of time educating the caller that the national Dot Com lender who advertises incessantly on television is not making a big deal that to get those rates you have to pay discount points. In fact, it is very common for the first 5 minutes of our new caller conversation to be educating the caller that this industry is full of ways to say things that are true only with major conditions.

One of my favorite agents just lost a deal because a lender out of California (not even licensed in Georgia) issued a blank commitment to lend for up to $2,000,000 that wasn't worth the paper it was written on.  Investor clients lose all the time because the "wholesaler" provides them with inflated values from their own appraiser, no qualification loans from their own lender and promises of big equity and provided tenants. Ouch.

* I do not think the Texan is committing fraud. I state simply that he is deceiving people and they are eating it up by the thousands. PT Barnum said it best. He's running a circus and many of his borrowers (the uninformed) are the clowns. Don't be a clown. 

Yes, I've been BUSY! I realized that blogging is still a Winter sport!

Actually, we have been extremely busy for the last few weeks and in addition to that I have been moving some offices across the hallway in my building to have a better view. But something which, to me, is very exciting has happened. It has nothing to do with real estate but it has much to do with every proud citizen.

Some of you who know me personally know that my son is in the Army. He is 11 Bravo in the 192nd Infantry. His regiment and batallion have seen much fighting in the middle east over the last few years. We received a letter from him last Saturday with some news that to him didn't sound as good as it does to us!

The 3rd Infantry, the oldest active duty regiment in the United States Army, selects a very specific group of men to hold a very patriotic duty right here in our nation's capital. They must be of a very specific physical stature, have an impeccable civilian and military record, agree to an exemplary lifestyle for the remainder of their life, and make a different kind of sacrifice than they see in the smoke hazed sands of Iraq and Afghanistan.

My son is a member of E Company of the 3rd US Infantry Regiment. He is a Sentinel of the Tomb.

The Sentinels are our equivalent of the Palace Guard. There is a wonderful tribute to them located at this link. There you can read some powerful words about this select group of young soldiers.

I'm proud to be an American, fearful for our domestic future in the hands of liberal leadership and boastful of one young soldier I call, "Son". 

I'll be back with my witty banter and experience soaked viewpoints as soon as I can stop playing golf and working in the garden!