Loan Think

As I noted in the daily column yesterday there seems to be a glimmer of hope for the loan brokerage industry. Several brokers concurred in emails to me, noting that a chief reason for their survival is the hands-on customer service they offer the applicant. One responded by writing: "You wonder why mortgage brokers still have a place in the landscape? Have you ever tried dealing directly with a bank's retail division to get a mortgage? As a mortgage broker, in order to avoid any conflict of interest, I applied to a Wells Fargo retail branch in order to refinance my existing Wells Fargo mortgage. The experience was awful. The refinance has not been completed and I am actually going to give up." So there you have it -- if big banks think they are going to control the residential business going forward they may be sadly mistaken. Meanwhile, plenty of hand wringing is going on concerning the rising yield on the 10-year. At press time the note rate was 3.83% -- almost double its 52-week low. Market participants are worried that an oversupply of government debt could push interest rates yet higher, increasing the cost to own a home. Will desperate house sellers cut their asking prices even more just so they can escape? Stay tuned…

An online benchmark survey conducted by the Extraordinary Sales Performance Institute in April 2009 found that in a typical organization, the top sales performers, defined as the top 15% of the typical sales team, contributed 32% of the organization's sales revenue.

Jess Lederman is somewhat bullish on loan brokers -- but only what he calls the 'top tier' of these third-party salesmen and saleswomen. In a recent interview with National Mortgage News Mr. Lederman predicted that although many brokers may die out the "upper crust" of the brokerage industry will survive and thrive. "They're alive and well and they know the right way to originate," Mr. Lederman said. And who exactly is Jess Lederman? He cut his teeth on Wall Street many moons ago at Bear Stearns (when Wall Street was smart enough only to securitize 'A' credit quality loans). He also was a top executive at Ohio Savings for many years and then Countrywide. He is now helping Kinecta Federal Credit Union of California, a $4 billion asset institution, build its mortgage business, especially in regard to jumbo loans…

Homebuyers who used a Federal Housing Administration insured loan to purchase a house in Orange County, California, made an average 3.6% down payment, the same as in March 2009 and April 2008, reports The Orange County Register, using information provided by DataQuick. The minimum FHA allows is 3.5%. But the FHA limit has been raised to nearly $730,000 in Orange. As one observer pointed out: "FHA loans are hot and have taken off because brokers and lenders are pushing the program to consumers." Orange was once the home to many subprime shops including Ameriquest, New Century, and the list goes on and on…

In last week's article, we discussed the importance of clearing your mind of the question: Why is this happening to me?As you know, no one is a born success. And let me add, no one is an overnight success and no one, and I mean no one, has ever been able to float along on a flowery bed of ease, for long anyway. Everyone has his or her ups and downs. I know that I have and have accepted the fact that I will continue to have ups and downs until I die.Also, in review, the article asked you to identify the motivational event that occurred in your life that you might use, from time to time, to gain the strength that is required to overcome the negative and fear generating thoughts that come to you and that will keep you from succeeding.Again, for the sake of review, I told you about the Salisbury steak dinner motivational event that keeps me focused to this day. Last week's article can be found in the archives.In addition to a motivating event, in times like these, when it seems like one darn thing after another just keeps coming at you, when it seems like there is no relief, no flat plain on which to get any relief, no cool stream by which to rest and regain your energy, in order to have the strength to overcome, you must rely upon the purpose for which you are struggling.In times like these, you must know:• Why did I decide to get in and stay in this business?• Why do I get up in the morning?• For what purpose do I exist - both business and personal?I will have to admit to you that initially I got in the real estate business because my family had always been in the business. However, over the years, I have concentrated primarily on the first time homebuyer market. Crazy me, right? But, that is what I did and that is what led me to start building homes. No one was building a decent product for first time homebuyers and my purpose led me to see an opportunity. I like to say: one day I looked up and realized that I had built 500 houses.Then, the down payment assistance business came along and since my purpose oriented me to first time homebuyers it was a natural fit. Looking back at the last eight years, it is unbelievable where that purpose took me. I have walked the halls of Congress, was invited to testify before Congressional Committees (didn't work out but I was invited), met with the top officials including two different assistant secretaries of the Department of Housing and Urban Development and eventually filed a lawsuit against HUD and actually won.Beyond that, I've made some good money, met some great people all over the country and I have done my best, because it's my purpose, to continue to try to help first time homebuyers overcome the No. 1 obstacle to enjoy the number one generational life changing event: The purchase of their family's first home.So, while I entered the business because that was the path my life took, eventually, and you will have to do this too, I acquired a purpose. You've got to find something that drives you every day. You must find a purpose that not only you can define but also that will eventually define you.A purpose beyond: "I'm just in it for the money."While I've made that statement, and while I am in "it" for money, money alone is not enough to get you up again and again, and it seems like again and then again-again.In today's climate, you must reach within yourself each day to obtain energy from the purpose and from the motivational event, and perhaps from both, in order to have the personal power to push through some of the nearly insurmountable situations that we face in today's mortgage and real estate industry.It takes a lot of energy to help homebuyers improve their credit.It takes a lot of energy to start another new marketing campaign.It takes a lot of energy to send your referral partners a weekly update on each file in process.It takes a lot of energy to change companies even when it is obvious that that is exactly what you should do.And, it takes a lot of energy to admit that sometimes you just have to give up and live to start another day. That's what I've had to do with regard to down payment assistance, purchasing the first time homebuyer tax credit and many other plans I've made to continue to fulfill my purpose.The extra work it takes these days just to get someone approved is incredible. The work it takes to start a new business is staggering. But that is what it takes these days and you must have the inner strength to continue to overcome the question: Why is this so hard and why is this happening to me?It's not just happening to you. It's happening to everyone. But, that fact is of little consolation or benefit. You alone must deal with your problem and the only help you have is the strength that comes from the personal power that is developed and continuously charged by your identified purpose and your identified motivational event.Think about the reason you are in this business. I am confident, if you are reading this article and you are still in the business after all of this, I'll bet you that down deep inside of your being that you are driven by some unidentified but recognizable purpose.Over the weekend, spend the necessary time to identify your motivational event and the purpose that has kept you in the business. Once you reduce it to a statement, then you can begin to draw the strength that is contained within it. Sounds corny, but try it, it works.And keep an open mind. If you are like me, and your purpose is to help first time homebuyers purchase their first home, perhaps, you can't assist them the same way you have been assisting them. It is time to adjust. I have had a very hard time accepting this fact. But since it is still the purpose that keeps me in the business, instead of helping them with their down payment, I'm now helping them with their credit.By the way, beyond enjoying writing articles that help people overcome their fears and find the inter strength that is within them, I want to make you aware of another reason I write this article. It is to tell you about the benefits of learning how to build a network of referral sources. If you have not committed to building your business, and you are still trying to originate loans on your own, from your own efforts, now is the time to spend a few hours over the weekend to educate yourself on the concept of building an enterprise based on, not only your efforts, but the efforts of referral partners. Agents, builders, and real estate owned platforms control over 70% over the buyers of houses. And over 70% of the time, the buyer uses the services of that originator. Either you can learn to take advantage of this process or you can continue to work by yourself. Make your life easier by learning how to build this type of organization today. We even have a couple of ideas that will help you help your client improve their credit.To learn more, visit Joel Pate's website at http://www.roadmaptosuccesswithagents.com.

Before I get to the main event (Angelo Mozilo) it's time to take a look at the latest origination numbers from National Mortgage News and the Quarterly Data Report. The final first-quarter tally is in and there are some notables among the top residential funders: U.S. Bank Home Mortgage of Bloomington, Minn., has moved up nicely (once again) in the rankings. Its origination volume swelled 44% to $13.4 billion, good for sixth place nationwide. Also showing strong growth was Provident Funding, Burlingame, Calif. Wells Fargo and Bank of America saw loan production rise by 50% and 133%, respectively. But BoA's rise is misleading: its year-ago number does NOT include Countrywide. But here's what is most interesting about the numbers: all of the firms with nice-sized gains are STILL in the wholesale/broker market. Got that? Among the top 10 firms that experienced declines, two (Chase and CitiMortgage) have told brokers to take a hike. (In fact, Chase's Jamie Dimon, more or less, referred to brokers as ... well, you can fill in the blank yourself.) Are these new (and exclusive) originations numbers a sign that brokers are still indeed a viable force? For the complete top 100 ranking and top 40 wholesale ranking (and more) see the new QDR. For more information e-mail Deartra.Todd@SourceMedia.com...

In its recent IPO filing vulture fund PennyMac noted that the FDIC's Legacy Loan Program "has the potential to be a significant source of investment opportunities for us." But over the past two days it has become clear the FDIC is now going to use the LLP for mostly receivership assets. For the full story visit http://www.nationalmortgagenews.com/ later today. Meanwhile according to RBC Capital, the global financial crisis is over and bank stocks are at the beginning of a new, multiyear bull market. Today analysts at the Canadian company upgraded the banking sector to 'overweight' from 'sector perform'. What's next for the mortgage and banking sectors? The return of non-bank subprime wholesale lenders and ABS deals? Stay tuned…

In my last two articles I covered why how you dress matters and where you take your loan application matters. I touched on the reasons for not taking apps late at night because you are too tired and could make mistakes.

Scratch and dent investors -- don't forget to check if your firm is actually licensed to service loans in the states where you're buying product. We're hearing anecdotal stories where vulture funds are buying problem loans only to get their hands slapped by the state when regulators do some cross checking and discover that lo-and-behold said vulture fund is not licensed to process loans there. In its recent IPO filing PennyMac notes that this can be a problem saying the solution (for vulture funds) is to contract out with a subservicing firm. In other matters, one Northern New Jersey-based loan broker tells us he's starting to hear about a lack of (home) supply in eastern Bergen County (northern New Jersey). He also noted that some of his clients are starting to look at buying homes in South Florida but obtaining financing there is a "disaster." Concerning the lack of supply it seems hard to believe but he said "as soon as something nice comes on the market it's gone"…

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