BloodhoundBlog

There’s always something to howl about.

Author: Morgan Brown (page 1 of 2)

Mortgage Banker

December 28, 2007

Thank You Seth: “Why not be great?”

by

Mortgage Banker

Author website

In his last post of the year, Seth Godin visits the archives to pull out a piece of encouragement that has never rang more true in our industry until this year.  Read his whole post and get excited about 2008.

From Seth’s post on Why not be great?

Are these crazy times? You bet they are. But so were the days when we were doing duck-and-cover air-raid drills in school, or going through the scares of Three Mile Island and Love Canal. There will always be crazy times.

So stop thinking about how crazy the times are, and start thinking about what the crazy times demand. There has never been a worse time for business as usual. Business as usual is sure to fail, sure to disappoint, sure to numb our dreams. That’s why there has never been a better time for the new. Your competitors are too afraid to spend money on new productivity tools. Your bankers have no idea where they can safely invest. Your potential employees are desperately looking for something exciting, something they feel passionate about, something they can genuinely engage in and engage with.

You get to make a choice. You can remake that choice every day, in fact. It’s never too late to choose optimism, to choose action, to choose excellence. The best thing is that it only takes a moment — just one second — to decide.

Before you finish this paragraph, you have the power to change everything that’s to come. And you can do that by asking yourself (and your colleagues) the one question that every organization and every individual needs to ask today: Why not be great?

November 28, 2007

Please, please, please do something different!

by

Mortgage Banker

Author website

This dawned on me the other day as I was filling out my Inman Connect Speaker Information email that they’ve sent me 4 times now but I hadn’t properly synthesized it until now and while it is an axiom as old as time it is something worth remembering every day: Be remarkable.  Why remarkable?  Because remarkability wins.  Because remarkability is what makes you stand out from the white noise that impinges on success in every competitive ocean out there.  Because with out remarkability you are just a part of the landscape; and no one that I’ve yet to meet likes the prospects associated with that business proposition.

It’s said a million different ways, but it all amounts to the same thing: a purple cow, a free prize inside, an unique selling proposition, are all imploring us to do one thing – something remarkable.  It’s as simple and as complicated as that all at once.  See different and remarkable are interchangeable in language but not in action.  Being different is easy, being remarkable is hard.  Being different doesn’t win and doesn’t necessarily have any attached benefits to the customer; in fact being different can have adverse affects on them – but being remarkable is a different story.

Being remarkable is about being different to a point where that person you are trying to impact takes notice and is so moved that they make an effort to tell someone else.  Seth Godin illustrates and “riffs” on this beautifully in the above mentioned titles but allow me to indulge just a bit further.  There are examples of remarkable things across the real estate and mortgage space and they range from the mundane to the spectacular.  A mortgage broker that discloses YSP on a GFE and explains it (sadly, not as mundane as you would like to believe) is remarkable.  A Kris Berg post is remarkable.  A Zillow Zestimate is remarkable.  The NAR home sale forecasts are remarkable.  (You can see that being remarkable is a powerful force for both good and bad).  Remarkability is what gets noticed, what rises above the rest, it is the short Read more

October 7, 2007

Show Me the Numbers!

by

Mortgage Banker

Author website

There is no question that I am one of the more dour of the Bloodhound gang; if we were the “seven dwarfs” I’m laying decent odds that I get tagged with the “Grumpy” moniker.  And while I may, on occasion, revel in astonishment at the self-inflicted pain that the industry has kindly laid at our feet via the past 5 years of transgressions; I am in no way a fan of the current havoc buffeting our industry.  I don’t like seeing people losing their jobs, their homes, their future plans – it’s not a pretty sight.  But one thing I do like, is honest, important inspection of real estate and mortgage; and Greg Swann’s recent post on “You’ll Lose Money if You Buy a House?  Which House?” reminded me of why I blog and what I believe we should all strive to achieve in one form or another through our blogging: cutting through the sound bites to get to the truth.
I believe that cavalier shibboleths are the primary cause of Realtor-focused ire on behalf of the disgruntled public.  We’ve heard for too long that “Now is a great time to buy,” “Rates are dropping,” “It’s a buyer’s market,” and more that unfortunately to the everyday Joe just ring of hollow greed on the part of the real estate professional.   And why do they ring of greed?  It’s in the numbers stupid!  It rings of greed because the main stream media is showing them graphs and charts and year-over-year figures that show real estate, as a whole, is a losing investment right now.  They’re saturated with it.  6 months ago ask someone what the Case-Shiller Home Price Index was and you’d probably get a blank stare; ask today and you’ll probably hear about what the index is doing for that person’s MSA.  This data dump has created a problem for real estate professionals.

The consumer is being fed numbers by the media on one hand and weak aphorisms by the RE machine on the other.  The numbers, regardless of their flaws will win; because numbers have authority and sayings do not.  In Read more

August 20, 2007

So if there has to be a bail out…

by

Mortgage Banker

Author website

What if Jeff and Brian are right?  What if it is preordained in the cards that a federal bail out of Countrywide is an absolute necessity and a foregone conclusion should the behemoth lender fail?  While Jeff certainly provides a well reasoned and thrilling John Grisham version of a Countrywide rescue; why wouldn’t we look at some other (less plausible no doubt) bail out options?

Let me say this first and foremost: I don’t support a bail out of Countrywide.  Period. I think its a horrible idea for all the same reasons bail outs in the past have been bad ideas – they reward the wrong-doers.  Why do we reward the Mozilos and their billions of dollars while punishing the American public?    If I am forced to accept a bail out, I would rather it be a bail out of the American public rather than a few rich puppeteers overlooking the pacific ocean from their posh Malibu homes.

Here are a few outrageous ideas that probably won’t work for a million reasons, and have a shot longer than you do of being hit by an asteroid tomorrow morning; but just for fun lets float a few out there.  My bail out options to keep from rewarding the greedmongers:

A couple of general guidelines:

  • Bail out options apply only to loans secured by primary residences; and maybe even just to owners of one property.
  • Bail out options apply only to those loans underwritten with full income documentation (maybe stated income for self-employed borrowers)

Bail out options for the American public (hey, if my tax money’s going to anyone, I’d rather give it to my neighbor):

  • Pre-payment waivers: Anyone with a prepayment penalty on their existing mortgage receives a voucher to refinance with out being penalized. This could be financed by individual lenders, Wall Street banks, or investors.
  • Voiding of pre-payment penalties: Alternatively, the government could pass legislation nullifying all pre-payment penalties allowing borrowers to refinance immediately with out paying the fees associated with the penalty.
  • For those that paid a pre-payment penalty between June 2006 and today – a tax credit for the full amount of any pre-payment penalty paid Read more
July 29, 2007

A Simple Question, What Can You Blog About?

by

Mortgage Banker

Author website

I imagine that many of the readers of this blog are bloggers themselves; who in their daily perusal of the blogosphere for inspiration and news land here as a reliant destination for intellectual discussion of the issues at the fore of our industry. If I’ve got the readership pegged then I will assume that most of you tend to write about the issues you feel most strongly about. Divorced commissions or Zillow or discount real estate operations are all part of the RE.net cacophony. Amongst this backdrop of honest, well-reasoned discourse I pose a simple question:

“What can you really blog about?”

Let the initial reaction of “anything I feel like” go by the wayside and think about it for a moment. What can you really blog about? The reason I bring this question up here is that there is a rather disturbing series of events developing in the blogosphere – not too far from the RE.net over at a web site called Mortgage Lender Implode-O-Meter. As members of the real estate community I’ll assume that you’ve heard of it – an f’d company for the new bust that is mortgage lending. It may be loosely grouped with housing bubble blogs; but really it is an aggregation of news and information about the “implosion” of the mortgage industry. It is written with a “Daily Show” sarcasm that I personally find enjoyable; and although it is a private site, conceived and started by one man – it has become the web site of choice for thousands in the industry each day looking for the latest news.

Regardless of your personal feelings about such housing bubble sites you must admit that ML-Implode is quite a phenomenon. One man starts with an idea – to aggregate and track the downfall of mortgage companies via a personal web site; suddenly thousands of people visit it every day for news and information. Such is the power of the Internet.

It is not unlike Bloodhound in that regard. Bloodhound started as one man’s idea and grew in to a vital Read more

July 16, 2007

The 800 pound gorilla in the corner – the meltdown of the Wall Street mortgage market

by

Mortgage Banker

Author website

As we go about our daily lives in the mortgage and real estate world; dutifully performing our job functions and taking the high road of customer enlightenment via blogs such as Bloodhound; we are faced with a very large gorilla looming in the corner of our workplace. That gorilla is the amazing meltdown of the Wall Street mortgage market and its subsequent impact on the future of housing. If you’ve been following the financial news lately you’ve noticed that the indexes that track the collateralized debt obligations (CDOs) – Wall Street’s favorite securitization method for subprime and other mortgage debt – have taken a severe beating.

The reasons are many and the events of the recent weeks impact everyone tied to the mortgage industry and economy at large. Some of the major recent events that have changed the rules of the game we are playing:

  • Wall Street rating agencies like Moody’s, Standard & Poors and Fitch have changed the way subprime debt is valued; essentially emasculating large portfolios of CDOs made up of subprime mortgages
  • The complete under-performance of these CDOs as mortgage delinquencies continue to rise resulting in a liquidity and credit crunch at the investor securitization and investment bank levels
  • The elimination of mortgage programs as securities become illiquid and unsellable to Wall Street
  • The escalation of foreclosure properties and borrowers attempting short sales that are degrading mortgage pools even further

Let’s take a look at today’s events just as an example. Option One announced that they are no longer offering the 2-year fixed adjustable rate mortgage. Commonly referred to as a 2/28 mortgage this product was wildly popular during the recent credit boom. It offers a low “teaser” rate for the first two years before adjusting to a much higher “fully-indexed” payment. These loans, issued in trillions of dollars during 2000-2006 are resetting in record numbers to ever-higher interest rates. Many point to the 2/28 reset as one of the primary causes of mortgage default, foreclosure and – ultimately for Wall Street – poor security performance.

Why did Option One eliminate the 2/28? Simple. Profitability. Read more

July 5, 2007

Marketing Brilliance Courtesy of Homer Simpson

by

Mortgage Banker

Author website

When it comes down to it I’m more of a marketing guy than a mortgage guy. Sure I own a mortgage company but I wasn’t brought in to do the selling or the secondary marketing or the finances or office admin – I was brought in to be “the marketing guy,” to bring in the leads and market our company. It’s my background and my passion. So even though I spend a lot of time dealing with all of the items listed above it is the marketing that really gets me excited.

With that introduction you’ll understand why I’ve so hastily penned this post about out-of-the-box marketing after reading this article about 7-11 and The Simpsons teaming up to transform 11 7-11’s across the country in to Kwik-E-Marts to promote the upcoming movie.

To promote the movie not only did they completely redo the exterior of the store, but consider the other details:

  • Green aprons for staff (a la Apu)
  • Squishee cups instead of slurpee cups
  • Buzz soda 6-packs for sale
  • Pink frosting-covered donuts with sprinkles
  • Radioactive Man comic books
  • All new signage “Thank you for loitering.”
  • Tons of Simpson-esque memorabilia products

People drove from miles around and waited in a huge line just to get inside. Once they were inside it felt like being in the cartoon. You can see more photos from the Burbank store here.

Can you imagine the creative meeting that led to this? Can you imagine the scared conformists who thought the idea was too risky to be pitched to the client? Those that thought this could never be pulled off, that no one would go for it, that people wouldn’t care? Can you imagine the courage of those who conceived of the idea had to push it through the doubters and those that said “we should just do a viral internet video?”

Can you imagine what it would take to come up with something as remarkable as this to market your business? Every time I see something like this I shake my head and give a silent round of applause to the marketers that made this happen. I immediately think how can Read more

June 21, 2007

The responsibility of mortgage brokers and other front-liners in the foreclosure fiasco

by

Mortgage Banker

Author website

A quick note: I am a mortgage broker and banker so I wear both hats. I consider myself in the group below.

Seth Godin wrote a great post the other day simply titled “Responsibility” that focused on one key question: “Are you responsible for what you market?”

His answer was a resounding yes based on this premise: marketing works. If you agree that marketing works then you should agree that the idea of free choice is really not that free. Marketing influences choice. Godin cites the decline in cigarette smoking over the period since advertising has been significantly curtailed as one (of many) examples:

If marketing works, it means that free choice isn’t quite so free. It means that marketers get to influence and amplify desires. The number of SUVs sold in the United States is a bazillion times bigger than it was in 1962. Is that because people suddenly want them, or is it because car marketers built them and marketed them?

Cigarette consumption is way down. Is that because people suddenly don’t want them any more, or is it because advertising opportunities are limited?

This post led me to some new thinking on our embattled industry and the current round of finger-pointing up and down the money-ladder. The common refrain from mortgage brokers as a defense to the “predatory lending” accusations being bandied about by consumer groups and government entities is “We only sold what the banks gave us to sell” and “Brokers don’t underwrite the product.” These notions that depict brokers as impotent pawns in the mortgage game with little control over their actions-resigned to the whims of the banking world, forced to peddle whatever products were made available by the banks- is callous and dangerous. This position is clearly one that Mr. Godin would whole-heartedly disagree with; and I do too.

As brokers we’re responsible for the loans we choose to put our customers in. When we choose to put a retired person on fixed income in a negatively amortizing payment-option loan for maximum rebate with out clearly identifying their comfort level and understanding of the Read more

June 13, 2007

Ask the Broker: What’s up with my APR, and why is it so different from my interest rate?!?

by

Mortgage Banker

Author website

Hot out of the broker oven mailbox today is this question:

I am in the process of refinancing. Can you please tell me what the APR should be for a $295,800 loan? The broker is charging 2% origination fee and 1.5 loan discount. The interest rate at 6.64. I’m not sure if it makes a difference but its a adjustable rate and balloon loan. After 2 years mortgage will go up.

The total settlement charges are $14,590.77. The truth-in-lending disclosure has an annual percentage rate of 10.634%. This doesn’t look right.

I questioned the broker and he said that rate is all the fees and payments that are in the loan. This is not my first time refinancing and I never saw it that high. Why is the difference so much?

Disclaimer: I am not privy to the reasons or motivations for this transaction; nor the particulars above and beyond the above question. Below are simply some general thoughts that stand out from the above inquiry. I could be completely off-base in any one of my assumptions.
I had to step away from the computer and take a lap before responding to this mailbag question. Before we get to the APR/rate discussion there is another point I want to highlight first:

(1) Paying discount points to achieve a lower rate when taking a short-term ARM is always a money-losing proposition. Because this is a short-term 2-year ARM loan you will never recoup the money you paid in points to get the lower interest rate (1.5 points or $4,437 in this instance). In order to simply break even on the money spent for the loan discount in the two years before your rate adjusts your monthly mortgage payment would need to be $185 less than it would be otherwise with out the discount points.

If we make a rough assumption that each point paid in discount reduces your interest rate by .5% (a reasonable assumption on a subprime 2-year ARM, might be a bit generous) then your interest rate with out paying the 1.5 loan discount points should be around 7.39. This makes Read more

June 4, 2007

Podcast interview with fellow Bloodhound Blog contributor Dan Green

by

Mortgage Banker

Author website

At my home blog, Blown Mortgage, I have the privilege of interviewing some of the best and brightest in the real estate and mortgage world. In this interview I spoke with Dan Green of Bloodhound and TheMortgageReports.com. As a blogger with over 2 years of posts logged he has a lot of experience and insight in to how blogging can help you business. Dan sources 25-30% of his business from his blog. Chew on that ROI!

This is the second Bloodhound I’ve had the pleasure of interviewing and I hopefully get to talk to the rest of the gang in the near future (hint, cough, hint).

Because I don’t want to put Greg through the FTP wringer again I’ll simply provide a link to the 13 minute interview over on Blown.

I hope you enjoy it – I know I did.

May 30, 2007

OC Register’s Matt Padilla talks mortgages, blogging, and the main-stream media

by

Mortgage Banker

Author website

On my home blog, Blown Mortgage, I have the honor of talking with some of the best people in our industry about their take on the current market and the forces that are shaping each of our lives in this profession. I’ve interviewed housing bears, loan originators, marketers and more. The level of ability and professionalism in our industry amazes me each time I have the opportunity to talk with someone new.

This week I had an opportunity to speak with Matthew Padilla. Matt is the Real Estate and Mortgage reporter for the Orange County Register. I was looking forward to this interview because it marked the first time I had a chance to speak with a member of the main-stream media about the mortgage and real estate markets. I was interested in hearing him talk to what he has heard from his investigative reporting (since he does get to spend all day chasing down the stories).

While his insight on the market is, in my opinion, spot on and valuable; the reason I wanted to share it here with you is that Matt provides interesting insight in to how blogging has impacted his reporting and coverage. Speaking with him it became very apparent that what we do as bloggers has caused a paradigm shift in how the main-stream media thinks about, generates, and disseminates news. Matt talked at length about how and why he uses a blog, how he designates pieces for the blog versus the paper, how other blogs drive his research, and a wide range of other topics about the interface between the new and old mediums.

I think that all of us that blog each and every day should always remain aware that what we are doing is of extreme importance and consequence. Each blog post, each insight, each story and personal experience shared by experts such as those I have the privilege of writing with here at Bloodhound is shaping the news that is told tomorrow. If you ever wonder if anyone is listening and you wonder if it is worth Read more

May 23, 2007

Internet leads, Distrust Mountain and Scaling the Face – Base Camp

by

Mortgage Banker

Author website

In one of my last posts I wrote about converting internet leads or as I called it, successfully navigating “Distrust Mountain“. I received a ton of response to that post via email and the number one question was “What is the answer, what are the tactics?” to this statement in my original post:

The ability to climb that first, nearly insurmountable, face of defense on Distrust Mountain is what separates the good loan officer from the average one who is struggling to earn a paycheck. I call it scaling the face. Scaling the face requires all sorts of special talents including building rapport, telling a compelling story, having a unique selling proposition, displaying excellence and professionalism, building on small commitments, and numerous others. The tactics for doing so is a topic for another post, but needless to say, that wall is there and needs to be scaled.

I’m sorry to disappoint, but I have no magic bullet. I am sure that you all suspected that to be the case; for there truly is no such thing – if there was we would have all seen the infomercial. There are no gimmies in the sales world (thank you for listening, choir). With that disclaimer out of the way I’ll do my best to outline the best practices THAT I HAVE FOUND help successfully close internet leads. Unfortunately it’s a long process and I’ll need to break it in to a handful of posts over the next week to keep your eyes from falling out of your head; but I will get through it — bear with me.

I think our approach works pretty well; I also know that there is room for continual improvement. I don’t purport this to be the best or only way to convert internet leads; but it is our way. Our un-audited results indicate that we receive a return of about 5 to 1 on our investment in internet leads; and we’re pretty happy with that. If you want greater ROI, you’ll need to do a better job than Read more

May 16, 2007

60 Minutes Redux – What it means to be Nordstrom

by

Mortgage Banker

Author website

After the fur is done flying over the 60 Minutes piece what are we left with? What has really changed? Has Redfin “revolutionized” real estate? Well if offering rebates on commission is considered revolutionary count me among the witnesses. With 6, soon to be 8 markets, I think there is some time before everyone that’s not Redfin is out on the sidewalk with their hat in their hand.

But really, after the complaining of how UNFAIR it all was, it all is — what are YOU going to change?

In all of the complaints and defense I heard a favorite refrain. It seems everyone likes to toss the Nordstrom/Kmart analogy around whenever the full-service v. discounter argument arises. It’s like a broken record “Realtors offer Nordstrom-level service, Redfin is the Kmart of the real estate world” we all drone on. But do we really know what we’re saying; what we’re implying when we toss around our favorite analogy?

Because, truth be told, there ain’t that many Nordstroms folks. There just ain’t. So what makes you as a Realtor THE NORDSTROM REALTOR? Let’s look at some of the elements that helped the Nordstrom brand become synonymous with excellence and see how we stack up.

  1. Do we follow the motto: “Respond to Unreasonable Customer Requests”? How well do we respond to reasonable customer requests? When is the last time we left a truly remarkable memory with a customer? Do we relish rising to the challenge of unreasonable requests like Nordstrom does? Do we look at them with dread and think “How am I going to deal with this one?” or do we think “Here’s the opportunity to add another story to the growing legend of my customer service”?
  2. Do we “Use [our] good judgment in all situations”? Do we shirk responsibility when our gut tells us not too? Do we look at the phone at 4:59 on Friday ringing and not answer it? Do we start or end the day in a bad mood? Do we brush off someone because they don’t look like a potential customer? Do we skip the neighborhood mixer for the ballgame Read more
May 12, 2007

Can I ease out of my pay-option loan?

by

Mortgage Banker

Author website

Heard this one before? I tell you what, if I had a nickel… skip it, you know what I’m saying. During the last few years home owners, especially in areas with exceptionally low levels of housing affordability, have flocked in droves to the “dreaded” pay option mortgage. Now with recasts looming, interest rates rising, and equity dripping away, more and more home owners are calling me asking how they can still afford their home AND stop losing equity.

A quick thought on the “dreaded” pay-option mortgage. Negative amortization gets a bad rap these days. The mainstream media loves these loans because they are the ideal poster-child of a mortgage market debacle. Think about these loans for a minute: they eat home equity, have high interest rates (usually), are confusing, and make the people who sell them A BOAT LOAD of money. That sounds like music to a reporter’s ears. And so they get a bad rap.

While I generally dislike pay option loans, it’s not the loans themselves; it’s how they are (mis)used. To be sure, neg-am pay-option loans have a place in the lending spectrum; but I believe that place to be with the short-term, savvy investor, playing the flipping game in a rising market, not with the family of four trying to buy a bigger house in San Francisco while working with restrictive cash flows. The problem is that the people calling me are not the savvy investors; it’s the family of four that took a neg-am loan, got addicted to the minimum payment option, and now is in a world of hurt.

These people chose the pay option for either the low payments, the low fees (with a commission north of 3 points on the back of these loans, anyone charging front points with a full margin is sadistic), or they liked the idea of choosing their payment option each month. Most people in the payment-option loans made two critical mistakes: 1. they took the loan for a property they planned on staying in for a long time and 2. they lacked the will power to make anything more Read more

« Older posts

Inventing Real Estate 2.0

Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

Media Contacts