Archive for May, 2013

Rising rates are inevitable as long as our economy continues to gain momentum.

May 31st, 2013

About every other call this week has been from a borrower who was nervous about rising interest rates. The headline news all week has been that mortgage rates are rising. Unsatisfied with the 3.625% rate we quoted them last week and holding out for the elusive 3.25%, they decided to take their chances and float. Now that rates have ticked up to the 4 % rates, they want to hold out longer still in the hopes of capturing anything in the 3’s. It’s sort of like putting more quarters in the slot machine in the hopes of getting back what you’ve lost. I’ve made the mistake in the past of predicting what rates might do in the future. However, this week I’m going to step out on a limb and tell you what I’ve been telling people all week.

A couple of years ago the Federal Reserve started buying $85Billion a month in mortgage backed securities in an attempt to get a struggling economy moving again. With the federal funds rate near zero and no place else to provide stimulus, this was a tool to keep long term rates on mortgages very low for a time. The housing market was in a slump second only to that of the Great Depression and the thought was(is) that keeping interest rates on mortgages ultra low would provide an incentive to buy or refinance which would put dollars into the economy. Consumption is what makes our economy GO. Well, it has been working. While the jobless rate is still too high to call normal and 21% of sales are still distressed properties(compared to 5% in a normal economy), the stock market has been going up and up and up. Things are getting better. Originally the metric that the Feds said they would use to determine when they would stop propping up the mortgage market was a 6.5% unemployment rate. Lately, Mr. Bernanke and Company have been inkling that the buying might stop sooner than that. Wednesday, former Fed Chair, Paul Volcker, made the statement that the Federal Reserve is being forced to take on too great a role in propping up the economy with its bond buying program(QE3) and the bond market reacted strongly to this and the already circulating rumors. Rates ticked up to 4.0%. Read the rest of this entry »

Are we educating buyers and sellers on what’s REALLY going on in today’s market, or are we just assuming they know?

May 24th, 2013

I can’t believe Monday is Memorial Day already, while at the same time I am SO excited about the golden days of summer that will follow.  I don’t know about you, but after this long winter and lack of spring, I am REALLY ready for lots of sunny hot days!

Three days ago my son and future daughter-in-law closed on their new home – and it has a swimming pool!  I’m not sure if they realize how fortunate they are that they found this house when they did. It took a month to successfully negotiate the purchase agreement due to a distressed situation on the part of the sellers.  This is a chance in a lifetime for them.  They get the house they wanted, and as prices continue to rise they’re going to build equity.  Another’s misfortune, in this case, is their gain.  The house appraised for more than they agreed to pay for it.  It’s a nice bonus for them as they start married life. Read the rest of this entry »

Communicating the details leaves nothing to chance.

May 17th, 2013


I know that our Realtor and Builder Partners need to be in sync with our loan process. They need to know all the members of our mortgage team who will assist from contract to closing. Likewise, our mortgage team needs to know who is involved in the transaction so that all loan services for your file will be ordered quickly and correctly. Communicating the details leaves nothing to chance.

Lay out the game plan right up front. Be the conductor to make sure your wishes and the wishes of the client are clearly spelled out. Provide clear direction so our team can follow your lead and execute without fail.

Here is the easy way to communicate information, a cover letter. Yes, it sounds corny but every loan file we submit to underwriting has a cover letter. The underwriter needs to know what we know about the loan file we have carefully crafted. This cover letter, for a Realtor or Builder, is as simple as a contact list that includes all parties in the transaction. This list will provide the contact information for the Builder, Listing and Selling Agent(s), and Title Company that will be used. Our mortgage team can then execute with speed and accuracy when ordering the necessary services for your file.

It is easy to implement and it is the most effective way to communicate the file structure. Try it, you will like it! - Randy Cullen

I remind my team frequently of several team convictions.

May 10th, 2013

On April 18th, my husband and I purchased what can only be described as a “unique” property.  Everyone in mortgage or real estate ought to have to buy a home every 5 years just to remind themselves of what buyers and sellers go through during the process.  We wrote the contract to purchase contingent upon the successful closing on the sale of our home and ended up with a nail biting decision.  The property we purchased had 4 offers and with our home sold by a very reputable agent, and the buyers pre-approved, we made the decision to up our offer to non-contingent to compete with the other offers.  Ours won but only after making our rather large earnest money deposit  non-refundable if we failed to close. Read the rest of this entry »

Get ready for a few more changes coming up in June. Escrow Requirements under the Truth in Lending Act (Regulation Z)

May 6th, 2013

Along with the season changing from Spring to Summer on June 21st (hopefully the weather will cooperate), get ready for a few more changes coming up in June.

Escrow Requirements under the Truth in Lending Act (Regulation Z): If you currently pay your own hazard insurance and property taxes on your home that could change the next time you get a new mortgage.

The final TILA Escrow Rule, which takes effect for applications received on or after June 1, 2013, has three main elements:

1. Higher-priced mortgages secured by a first lien on a principal dwelling require an escrow account be established and maintained for at least 5 years regardless of the loan-to-value.

2. Escrow for insurance premiums are not required for condominiums, planned unit developments(PUDs), and other common interest communities where the homeowners must participate in governing associations that are required to purchase master insurance policies.

3. A lender that operates predominantly in rural or underserved areas and meets certain asset size and other requirements may be eligible for an exemption from this rule for certain loans they hold in portfolio. Read the rest of this entry »

During our journey in the profession we enjoy we have the opportunity to be face to face or voice to voice with so many.

May 6th, 2013

I just heard a commercial that stated outcomes are directly related to experience. It is so true. In this business of ours, experience matters. We are not dealing with life or death outcomes, although sometimes it feels like it when things start going a little wrong. We are not doctors that perform complicated procedures that can prolong the quality of life, but we are in the life improvement business to help everyone we come in contact with achieve their dream. We put our best efforts into what we do and deliver what we promised.

During our journey in the profession we enjoy we have the opportunity to be face to face or voice to voice with so many. We become the voice that comforts, consoles, encourages, educates, and then solves problems. We must be masters of our craft and provide solutions by listening and then executing. We are not playing a game where a roll of dice lands us on the slide that takes us back to the start of game. We put all of our education, expertise, and life experiences into the game to win. Read the rest of this entry »