Archive for August, 2006

On the Way Out of Dodge

Just thought I’d toot the ol’ horn today. Scale measured me at 187 this morning, meaning I have lost 35 pounds since I began exercising last June. Essentially, that means that I ran my first 5k carrying my 6-year-old daughter on my back. Unbelievable.

Well, the markets digested poor CPI numbers and housing being in a “deep freeze” (see this post), that means that rates have actually declined to roughly where they were in March. We’re quoting 6.375% on a 30-year. I honestly didn’t expect to be doing that again until a few years from now.

We’re on our way to Oregon to spend an entire week with some friends, something I haven’t done vacation-wise in about ten years. I’ll probably blog while I’m there, but in case I don’t, we love you and we’ll be back in 10 days.

P.S. And yes, I’ll still be working on your file. Nathan. Karen. Keith. Michael and Jodi. Jason. Brandon and Justin and GordonandSteveandOliviaandShaneandGiniandKelly. And Ben. And Rob. You know who you are.

If It Bleeds, It Leads

Okay, this one just stuck in my craw, so I’m going to hit it here and let you finish tearing it apart.

Headline: Home Prices in Deep Freeze!

Actual data from paragraph 2 of the article itself: Nationally, the median home price rose just 3.7 percent to $227,500 from last year’s second quarter to this year’s, according to the National Association of Realtors.

The “just”, for the uninitiated, is called “editorializing”. The rest of the sentence is fine. Let’s do some very brief math, shall we?

4 quarters in a year. 3.7% growth per quarter. Let’s see, that’s…carry the 2…add the other thingy… 14.1% annualized growth in housing prices for 2006.

Poll question: Your home rises in value by 14.1% this year. You think:

  1. Kachinnng!
  2. Solid. Better than I’m getting at the credit union.
  3. A little disappointing. We’ve been seeing 45% (this is for those in Vegas and San Diego)

If you answered d), then please navigate elsewhere on the World Wide Web right this minute.

Sigh. This is the stuff we have to deal with here. Still, it’s better than politics, where this is the sort of thing one has to guard against six times an afternoon.

The rest of the moderately interesting article is here. Also note that although things are not so rosy in Danville, Ill (-11%, worst in the nation), the increase in Baton Rouge, LA (+27.3%) is almost 2.5x higher than the worst drop. This is typical. Bull markets average significantly greater gains than bear markets average losses, which is why smart people stay in the game.

Statistical disclaimer: nothing in the national statistics tells us anything about what YOUR home is doing. For that, call a professional. We know a good one.

A Good Time Was Had By All…

Especially those that attended. The annual client appreciation barbecue was more fun than ever, and we’re thrilled to have been able to feed a record number of people. Those that were there, make sure you tell your friends about Jeanette’s Secret Blackened Chicken. We’d love to see twice as many friends at the next one. Mark your calendars. August 2007.

Having received in the mail Arbinger’s Leadership and Self-Deception, let me heartily recommend it to everyone in business, and for those that are not, I’m going to recommend the personal edition, which is the Anatomy of Peace. In between, there’s the immortal classic The Bonds That Make Us Free, by Terry Warner, which is a graduate-level course in interpersonal relations.

All of these books do a tremendous job of helping me to see where I am not serving my clients or my family. I do have a huge number of responsibilities, and I do a pretty poor job of discharging them all. This is not because there isn’t time – there is always wasted space in everyone’s day – but because I don’t focus on the important things if they aren’t screaming at me. And worse, if I am not in the right frame of mind – if I’m in the box, as Arbinger would say – then I actively avoid engaging those tasks that would make my clients’ lives, and my life, easier and better.

Yes, I admit it. Sometimes I am selfish and just don’t want to deal with another phone call. I find myself getting frustrated at the incessant ringing of the phone, as if the people on the other end ought to know that I’m in the middle of something. Silly. Human, but silly. But there are times when I get out of the box, when I can see things much more clearly, and those times are glorious and beautiful. Those times I see things from the client’s point of view (or from my child’s, or my wife’s), and as Arbinger would say, their humanity calls to me. Then I can focus, because I care about the right things.

This doesn’t mean that work will now consume every minute of the day, any more than Rotary will, or the various Chambers of Commerce. Everything has its place. My wife and children need things that only I can provide them, and that same thing is not true of my clients in most cases. Still, the key for me is to be able to see clearly, so that I can discern the right thing to do now.

Last week was extremely difficult. We had a number of business-related difficulties that mounted and increased from about 4pm Wednesday right through 7pm on Friday. My wife and I were preparing for the barbecue on Friday night at about 11 and I found myself wondering if we were simply rearranging the deck chairs while the Titanic sank beneath us.

Nothing cures that feeling like spending most of Saturday surrounded by some of the kindest and best people I know. So we’re back, and raring to go. Things are not perfect, and we have some pretty significant challenges left over from last week. But I told the Empress that I thought we might look back on Saturday as the day things really began to take off, the day we turned away from what we were and embraced what we might become.

If you were there on Saturday, it’s your fault. I can never thank you enough.

Why More People are Not Mortgage Lenders

A quick peek behind the scenes at 75 minutes of the cushy job that is mortgage lending (from Wednesday afternoon):

3:40 – one of our long-time clients’ files is selected by the lender for manual underwriting.  This will delay the anticipated Friday close until at least Wednesday of the following week.

3:42 – I email the client with the news.

3:44 – She responds that she won’t panic until I tell her to.  This is code for “I’m panicking.”  I wish I could tell her there’s no reason to, but her file has iffy-ness in it and was on the line to start with.  The possibility that the deal will not close rises from about 10% to closer to 30%.  We’ve been working on this deal, which involves her parents and another borrower and three pieces of property, since April.  

3:45 – an appraisal comes in for a borrower in Saratoga Springs that needs to get $40,000 cash out of his home.  The appraisal is $17,000 lower than we projected.  We can still do the deal, but we have to cut our pay to less than $1000, or half what we need per file for the business to survive.  We decide to go ahead.

3:52 – a reply comes in to an email sent to the underwriter on another file.  This file is supposed to close tomorrow.  It tells us that because three underwriters are out sick today, the file we need won’t be ready for review until tomorrow morning and no underwriting decision will be made until tomorrow afternoon at the earliest.  This now means that the loan will not close until Monday, and there is a 50% chance that our clients will lose the house they are buying.

3:55 – I call our clients’ Realtor and though he is understanding about it, he makes sure I understand that he’s not sure he can negotiate an extension and that if he can’t, I have just caused my client to forfeit their earnest money.  The impression is conveyed that I might be incompetent.  Heck, at this point I’m starting to wonder that myself.

3:59 – I call the client, but there is nothing I can tell them about whether they’re going to lose the house or not.  The loan will be approved, it just won’t happen until tomorrow.  We are late because 1) the Realtor negotiations took almost a month 2) the appraiser took 3 days longer than projected 3) Ray was out of the office on a medical emergency on Monday and did not get the loan uploaded and 4) the lender’s entire underwriting department is out.  I can’t do anything about any of these except apologize for them.  I have become extremely adept at apologizing for pretty much everything.  And the truth is that I feel awful about it and wish I could do something useful.  But I can’t.

4:10 – another client calls to set up a time to review the final numbers and make sure the loan is going to work.  On the client’s assurances (he’s been a friend for years) that his credit is excellent, we ordered and paid for an appraisal and are ready to submit the file.  Just for luck, I pull the credit while I’m on the phone.  The credit comes back with 13 mortgage lates on it.  His score is 477.  (Aside: credit scores range from 850 to 450-ish, the higher the better.  620 is required for a conforming loan.  680 will qualify for most anything.  580 is the lowest that can qualify for 100%.  520 is the lowest that can qualify for much of anything.  This score is 50 points below the absolute rock bottom for any kind of loan, and I can tell you that getting below 500 takes some serious work.)  The loan is DOA.  We’re out $350, plus the fee for the credit, plus four weeks of negotiation and discussion comprising roughly 15 hours.  We’ll do another 5 hours before we send the client sailing off into the sunset to help him get figured out how to repair his credit into something like a normal range.  He’ll stay as a member of the Group forever, of course, but it will be five years before his credit is back into a useful range for his purposes.  He appears truly mystified about how his credit can be so poor.

4:29 – I call a referral that found us on the Internet.  He has a bankruptcy from 30 months ago and a foreclosure from 23 months ago, and wants 100% financing on a $250k purchase.  He says he has a deal already at 7%, but wants something better.  No, he doesn’t have 7%, and what he wants is probably irrelevant, but I’ll try.

4:47 – another client rings in to ask about her loan.  It is a complicated, multi-part deal involving a federal agency, a state agency, two banks, two inspectors, an appraiser and us.  We got the deal because the previous mortgage broker wanted to charge her 8.5% on a deal that ought to be at 6.5%.  It has already consumed 30 hours of our time and we are not submitted yet.  While I am on the phone with her explaining that I paid her appraiser $450 yesterday, I get an email from the lender – one of two in the state that do this particular loan – stating that as of noon today they will no longer accept any loans of this kind.  They are dropping the program.  I swear to you, I am not making this up.  The loan is not dead, but it is in critical/unstable condition and could go into arrest at any time.  The couple in question has put dozens of hours and untold bucks into this little fixer-upper and have had it under contract for more than two months.  All they want is to close it.  I have no idea whether I’m going to have to tell them tomorrow that they’ll be living with their parents for the foreseeable future.

5:01 – I try to call the backup lender – a lender that has such a bad reputation on this kind of loan that the appraiser refused to do the appraisal if the loan was headed there, which is why we had to pay him up front – and it is past 5pm and they are gone for the day.  It will be 16 hours before our client couple will know if they have any chance at all to get into their house.  They are displeased to hear this information.

5:05 – I call two more prospective clients, each of whom has failed to return my phone calls since last Friday.  Every day that goes by reduces the chances that we will be doing their loan by 25%, according to our numbers.  Neither client answers.  If tomorrow goes by without response, three deals, worth $7000 together, are dead.

Lots of people tell me how they wish they had a job like mine, so they could take the morning off and go fishing with their kids.  Look, I tell them, I’m not special.  Anyone could do what I do.  If the above sounds to you like an afternoon that you’d enjoy, then maybe you ought to consider it.  It is days like today that cause 80% of loan officers to quit the business within 1 year of starting up.  Some of it might have been avoided.  Most of it not.  Some days are like that.  I feel terrible for my clients, and terrible for us, and there’s not one blessed thing I can do to fix it.

But tomorrow is another day.

The Pause that Refreshes!

The Fed paused, which was widely expected, but left the door open for further rate increases in the future.  I almost never have anything good to say about the Fed, but this seems to me to be the right thing to do.  Bond markets responded by doing absolutely nothing, which is an indication of a good call. 

In one sense, it’s good for us because it leaves things where they currently are, which is pretty advantageous historically speaking.  On the other hand, it’s a pain in the neck, because now the market is somewhat released from Fed worries and will be looking much more closely at economic data.  That means I have to look at it, too.

But I guess that’s the job.