MORTGAGE RATES REPORT

Mortgage Questions And Answers

Consumers want answers to mortgage questions in a low-pressure environment.  I created a forum for consumers with five topic headings:

• Jumbo Loans
• VA Home Loans
• FHA Mortgages
• Should I Lock or Float My Rate?
• Grab Bag

It's pretty slick because it allows you to sign in with your credentials from Facebook, Google, Yahoo, Twitter, Myspace, or Twitter.  I'll get an email that shows your question and come back and answer them daily.

Ask your questions here.

How REALTORs Are Getting Business Today

I've been on a bit of a mission these past two weeks.  Debra has a great handle on the loans and keeps our office running smoothly so I decided to stay out of the office and in front of real estate agents.  I met with over 20 agents in June and asked each one of them "What's working for you today?".  Here are some of the responses:

• Door Knocking- one agent said that his most effective tactic was to solicit listings by introducing himself, in person, to homeowners.  He is committed to doing this twice a week.

• Just Listed/Just Sold Post Cards:  the agent described this perfect "investment" to me.  She mentioned that she'll spend $2500 on post cards to generate 2-3 listings, which will produce $30,000 in gross fees
• Absentee Owners Post Cards:  two agents picked a town, found 500 investment property owners, who live more than 90 miles away, and mail a postcard to them every six weeks.  It's the exact same postcard and directs the recipient to a blog site which publishes just listed/just sold stats.  They have over 100 people who have "opted-in" to their investment newsletter and have closed 8 transactions from this strategy in the past 12 months.
• Geographic Farming:  I met an agent and a coffee shop (for the first time) and the barista asked if he was a REALTOR as soon as we walked in.  The barista remarked that he has "known him since he was a little kid".  The remarkable thing about that comment is that the agents has only been in business for ten years (he started when the barista was in junior high school).  This agent told me that he still "farmed", via direct mail and local newspaper advertising, and that the "farm" was located about a mile from the coffee shop.
• Referral Prospecting:  One newer agent told me that she has closed about 25 transactions in the past four years; mostly buyers.  She made an effort to try to take each homeowner to lunch, beginning in January.  At the end of the lunch, she thanked them for their business and asked if they know anyone they should be speaking to about buying a home.  She just took her 20th past client to lunch last week and has closed 9 transactions, year-to-date with three more in escrow.  She's on target to close 18-20 this year.  She has literally tripled her business from this strategy.  The cost ?  About $500.
• Telemarketing Expired Listings: A newer agent focuses strictly on calling recently expired listings.  She starts at 7AM, each morning, and has an appointment by 9:30AM each day.  She literally drives directly to the house when the home owner agrees to meet her and wins 25% of the engagements.  She lists 4-6 properties monthly, carries a dozen listings at any given time, and is on track to close 40 transactions this year.

You'll notice that none of these strategies has anything to do with online marketing or social media.  Each one is very "old school".  When I directed the conversation to social media, each agent remarked that their weblog was the most effective source of business.  When I talked about Facebook as a business generator we found the results to be much more effective.  Agents who successfully initiated and participated in online conversations found that Facebook was the most effective medium online to generate appointments. 

PS:  An agent emailed me, after reading this article, to ask what MY best business development practice is.  That's simple; getting in front of agents and asking this very question.  Don't be surprised if you get a call from me asking you to have a cup of coffee :)

Twenty-One Steps (A Poem)

Reprinted with the permission of the author, Thomas Holmquist:

Arlington where our unknown soldier lies
The place to honor those who gave their lives
Those that died that generations be free
May we remember them through eternity

This Unknown Soldier guarded day and night
By the choice of a few and with all their might
To show mankind their respect and dignity
To those who defended our lives and liberty

Twenty one steps, he takes twenty one steps
Eyes locked in honor for the soldier he guards
And twenty one seconds before he turns
To honor the soldiers who never returned

Twenty one steps until the end of time
For our lost soldiers we cannot find
They gave their lives for you and me
The price paid to preserve our dignity

So let's take twenty one steps, just twenty one steps
Lock our eyes in honor for our soldiers that died
And think for twenty one seconds about their sacrifice
To preserve our freedom and our children's lives.

Remembering Fallen Veterans This 2010 Memorial Day Weekend in San Diego

Memorial Day is a time for remembering those who have paid the ultimate sacrifice for the Republic.  I ask you to remember Lt. Col. John C. Spahr, who died over Iraq in May 2005.  "Dukes" was a high school  friend and a shining example of why America is an exceptional nation.  After graduating the University of Delaware, he entered Officer Candidate School, was commissioned in the USMC, and earned his flight wings in Pensacola.  John was stationed at Miramar MCAS.

A list of 2010 Memorial Day events in San Diego:

SATURDAY, MAY 29

Balboa Park: Vietnam Veterans of America members will read names of local Vietnam War casualties, 8 a.m. to 7:30 p.m., Veterans Museum and Memorial Center, 2115 Park Blvd., San Diego.

Midway Museum: Free public ceremony, 9 a.m., 910 N. Harbor Drive, San Diego.  Free admission to the USS Midway Museum for those who attend the ceremony.

Point Loma: San Diego Boy Scouts will place U.S. flags on the military grave sites at Fort Rosecrans National Cemetery, 6:30 - 8 a.m. .

SUNDAY, MAY 30

Balboa Park: Second day of the "Reading of the Names" ceremony, 7 a.m. to 8 p.m.

MONDAY, MAY 31

Balboa Park: Remembrance ceremony at 7:30 a.m. with Vietnam Veterans of America San Diego Chapter 472, then an open house from 10 a.m. to 4 p.m. Both events at Veterans Museum and Memorial Center.

Coronado: 10 a.m. service hosted by Coronado Navy League, Coronado Military Officers Association of America and VFW Post 2422. Coronado Star Park, 1121 Star Park Circle.

Escondido: American Legion 149 will host 10 a.m. ceremony, Oak Hill Memorial Park, 2640 Glenridge Road.

Fallbrook: 11 a.m. to noon service, Masonic Cemetery, 1177 Santa Margarita Drive. Guest speaker will be retired U.S. Army Col. De Martini

Julian: Observance from 11 a.m. to noon at Julian Pioneer Cemetery, A Street at Farmer Road. Potluck afterward at American Legion Post 468, 2503 Washington St.

La Jolla: Program from 2 to 3:15 p.m., Mount Soledad Veterans Memorial, 6905 La Jolla Scenic Drive South. Memorial Day ceremony honoring Col.Robert L. Howard, Medal of Honor Recipient.

Lakeside: 10 a.m. ceremony at Veterans of Foreign Wars, Carter-Smith Post 5867, 12650 Lindo Lane. Speakers will be Rep. Duncan Hunter, R-Lakeside, and county supervisor Dianne Jacob.

Midway Museum: Honor guard, 10 a.m. on the aircraft carrier Midway, 910 N. Harbor Drive, San Diego.

Oceanside: Indoor Mass, 8 a.m. at Mission San Luis Rey Parish, 4070 Mission Ave.

Oceanside: Combined Veterans and Fraternal Organizations of North County ceremony, 10 a.m. at the Elks Lodge, 444 Country Club Lane.

Point Loma: Annual Memorial Day Service and Day of Remembrance ceremony, 10 a.m. at Fort Rosecrans National Cemetery. Guest speaker will be Rear Adm. Garry Bonelli, deputy commander of Naval Special Warfare Command.

Ramona: Ceremony at 10 a.m., Nuevo Memory Gardens, 532 Ash St. Flags and poppy bouquets will be placed on all veterans' graves.

Rancho Bernardo: Ceremony from 10:40 to 11:45 a.m. hosted by Rancho Bernardo Veterans Memorial Association, at Webb Park on Avena Place off Bernardo Center Drive.

San Diego: Ceremony will start at 1:30 p.m., El Camino Memorial Park, 5600 Carroll Canyon Road.

San Marcos: VFW Post 3795 will host an 11 a.m. service, San Marcos Cemetery, 1021 Mulberry Drive. Potluck afterward at the VFW post, 212 W. Mission Road.

Solana Beach: The city and VFW Post 5431 will host a ceremony from 11 a.m. to noon at the Veterans Memorial in La Colonia Community Park, 715 Valley Ave.

Considering A Reverse Mortgage? Waiting Could Prove Costly

Last August, I recommended that reverse mortgage borrowers should act quickly:

The reverse mortgage borrower is about to screw things up royally; he’s going to live longer than expected….and like sub-prime, that risk is not priced into the current market.

A reverse mortgage is basically a negative amortization, no-payment required loan.  Actuaries consider the borrower’s life expectancy,  discount a reasonable return on the future loan balance, and loan the borrower whatever is remaining.  When the borrower dies, the loan balance can be paid off so that the heirs can “reclaim” the asset or the house is sold.  The deal goes sour when the now 65-year old lives past his expected death date.   Consider that baby-boomers are the healthiest (and largest)  generation; they could add 4-5 years to that life expectancy.

The loans are still being underwritten as if the oldest baby-boomers were just 56 years old.  Throw in the fact that a tremendous amount of home equity evaporated, since, 2007, and you have a recipe for disaster. While you remember the wreckage an uptick in defaults had, on a levered sub-prime secondary market, imagine how those measly four years could cause the Great Recession of 2030, complete with bailouts.

Low rates compelled action while the demographics shift would require underwriters to offer less generous loan amount offers.  Rates are still low but the principal reductions look guaranteed now:

If Congress fails to appropriate $250 million for the Federal Housing Administration reverse mortgage program, seniors could see the principal amount of a new loan reduced by 30%.  "Without the budget request, we would be forced to reduce the amount of funds that would be available to seniors by more than 30%, which is, on average, a $23,000 to $27,000 impact," said FHA commissioner David Stevens. Last year, the Department of Housing and Urban Development requested $798 million in funding for the FHA home equity conversion mortgage program. When Congress rejected that request, HUD reduced the HECM principal limit by 10% for fiscal year 2010, which started October 1

Act now rather than waiting.  The product is priced overwhelmingly in favor of the borrower and the inherent risks associated with the product are tilted to the lender/insuring agencies.  The reverse mortgage product could be a victim of a liquidity crunch like the home equity product suffered in 2008.