Dennis' Mortgage Blog

Question of the week:  Why do you stay in the industry?

Answer:   This is a question I get from within the industry from time to time, and from within myself from time to time as well, checking in to see if I am still doing what I do for the right reasons.  With all that has occurred in the last several years, and all the regulatory changes that are on-going, it certainly has been easy to question our participation and motivation.  That said, I am a firm believer that everyone should ask this question of themselves regularly.

This week confirmed for me why I am in the mortgage business.  While at times I enjoy what I do more than others, in the end helping a family achieve their dream of homeownership is the core of what I do.  Along the way helping other families with financial management with refinancing is a big plus, but still secondary to the homeownership piece.

Every family’s home is special and I appreciate working with all my clients get the keys to their own front door.  Some families however take a bit of a stronger hold on my heart as we pursue together their new home.  These are the loans that strongly remind me why I am in this industry and will be in it for many, many years to come.

In April I was contacted by Eileen.  She and her husband, Nick, wanted to purchase a condominium.  They have a daughter with disabilities and wanted the permanence of their own home for themselves and for her as they raise her.  There were challenges for us, we would be using a PERS loan, Eileen is a member of the Public Employees Retirement System which allows accessing retirement funds as a secured loan to use as down payment for purchasing a home.  Because of the type of loan our lender partners were limited.  As well we had less than 20% down so we would need private mortgage insurance, PMI, on a condo.  Further complicating the issue was Nick teaches at night at a couple of different colleges so he can be with their daughter during the day.

One thing that came across very early was the commitment Eileen and Nick had to becoming homeowners.  On meeting them and going through their qualification material I too became committed to their goal. Along with their agent, Jennifer, a team Eileen and Nick came together.  Quickly they found the unit they wanted, unfortunately it was beyond their price range.  But they were committed and this was the home they wanted.

Writing an offer below list price and at the edge of their price range, Eileen and Nick wrote a letter to the seller explaining why they wanted to purchase this property.  Being honest about their situation and their desire for a home for their daughter had an impact and the sellers agreed to their offer.

Loan processes these past few years have become increasingly challenging with lenders tightening their standards and double crossing every “t” re-dotting every “i” and scrutinizing every comma.  The primary reason is to ensure any loan they fund will be purchased by FHA, Fannie Mae or Freddie Mac.  Knowing this and also the lender we would need to work with because Eileen and Nick were applying for a PERS loan, I warned everyone in the transaction, “By the time this transaction is completed we will probably go through the wringer.  The lender will ask for additional paperwork, forms, etc that we do not even know about yet.  There is a very good chance that at the end you will not want to do business with me again, and that is fine.  I understand that and it is part of the business.  But despite all this I will focus on one goal and that is the goal of Eileen and Nick to become homeowners.  No matter what happens that is my goal.”

Thankfully, very thankfully, everyone in the transaction understood and were committed to the same goal.  The professionals in the transaction acted as professionals (thank you Jennifer, Carol and Carmen among others) and when a snag popped up did not lose their heads calling and screaming at everyone.  

It could have been one of those deals to get the label “Nightmare.”  But instead it became one labeled “Career Validation.”  No matter what was needed, instead of asking “why do they need that…” and trying to argue the request from the underwriter, the document or form was provided by whoever needed to provide it.  No matter what the delay, instead of yelling and screaming about docs not being sent from PERS, or underwriting not signing off on a condition yet, the response was, “okay, let us know when you hear something.” 

Everyone was on Team Eileen and Nick.  Everyone wanted them to have this home for themselves and their daughter.  Everyone worked together and kept working together to the finish.

Yesterday after more running around and collecting documentation asked for by the underwriter an hour before the funding deadline we finally provided everything we thought could be provided.  As the 12:30 deadline approached I sat at my laptop staring at the clock in the corner.

At 12:31 I received an email and picked up the phone.  “Eileen, we funded.  You are going to be a homeowner.”  Gratitude. Tears. On both ends of the phone. 

Thank you Eileen and Nick for allowing me the opportunity to help you with your goal of homeownership.  Thank you for showing me why I am in the mortgage business and what it is I get to do every day. 

Our industry gets kicked around a lot.  There are plenty of people who do damage to the industry with their rotten behavior and looking to make what they can on who they can.  But for most of us in the mortgage business we are in it because of Eileen and Nick.  And Curtis and Lisa.  And Donna. Or Lee. Or Steve and John.  We are in the business to enable and protect homeownership and allow families to fulfill their goals and objectives.

Thank you for allowing me this indulgence this week to tell why this business is so important and why most of us still in it remain.  And a special thanks to all those who support my business and have used me for their mortgage needs throughout the twenty plus years I’ve been taking loan apps and making the phone call, “we funded.”

Have a question for me?  Ask me!

Economic data this week was like the Kentucky Derby.  Just as there are ten races on Derby Day leading up to the big race, most people don’t care about those races, just the Derby.  So too with economic data this week leading up to the jobs reports.  And jobs reports were definitely market movers.  Big time.

Initial Unemployment claims led off. Reporting yesterday the Department of Labor announced that 453,000 Americans filed last week for first time unemployment insurance.  A slight decline from the prior week, but higher than expectations.  Shortly after this announcement Fed Chairman Ben Bernanke in a speech to business owners in Michigan said that employment was a big concern.  What he meant was, unless employment improves we are going to be raising rates anytime soon.  He then went on to speak at length about the lack of lending to small and medium size businesses, lending that must occur in order to create jobs.

Today’s jobs report was huge.  The consensus seemed to center around 500,000 new jobs in May.  Early this morning the Labor Department announced 453,000 new jobs in May.  Pretty decent right?  Lower than expectations, but still that’s a lot of jobs.

Not enough and not the right kind.  Of the 453,000 jobs only about 40,000 were in the private sector.  411,000 of the jobs were attributed to the hiring by the Census Bureau of temporary workers.  Casting more doubt on the number are reports that some census bureau managers are hiring and firing then re-hiring workers to pad their hiring numbers, and therefore the Labor Department stats.  Between possible double counting of hirings and the lack of private sector jobs the report was a big disappointment.

Unless you are in the market for a mortgage.  Stocks have dropped over 200 points right at the bell and look to be headed lower.  The proceeds from all the stock sales appear to be headed right into bonds and mortgages with Mortgage Backed Securities (MBS) surging throughout the day.  As long time readers know, when bond prices (or MBS) go up rates go down.

Also pushing rates is news from Hungary.  While world focus has been on Greece’s economic woes the past several weeks, quietly sliding into the abyss has been Hungary.  Like Greece a small economy.  Like Greece part of the world economic community and therefore a debtor to many nations.  Hungary according to senior official is one the verge of a Greece like meltdown.  Already supported by the International Monetary Fund Hungary may need several billion more to keep afloat.   

Rates for Friday June 4, 2010: After a relatively flat week Mortgage Backed Securities broke out today.  As a result rates go lower after last week’s bump.

FIXED RATE MORTGAGES AT COST OF 1 POINT*

30 year conventional 4.5%                                Down 0.25%

30 year conforming-jumbo 4.75%                     Down 0.125%

30 year FHA    4.375%                                    Down 0.125%

30 year FHA jumbo 4.75%                              FLAT

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, and period rate is locked. 

Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment and a minimum FICO score of 740; APR is not quoted as it is dependent upon specific loan amounts, lenders and services selected.  Numbers provided are for comparative purposes only.

Busy weekend as one of our daughters will be performing in the Long Beach Ballet’s “Cinderella” at the Carpenter Center at Cal State Long Beach on Saturday and Sunday afternoons.  If you need some mortgage assistance give a call or email and I will get back to you as soon as I can.

It is a week of gratitude for me.  As I mentioned above I am grateful for all my clients and referral sources for keeping me in a business I love.  On the other side of my life I am grateful, and honored, as Leadership Long Beach has awarded me the Jim Ackerman Leadership Long Beach Alumnus of the Year.  I am truly honored and look forward to the ceremony and the graduation event on June 21^st.  Thank you!

Have a great week,

Dennis