Rate Shock Action Plan

When I wrote my blog posts of May 23rd and May 30th, little did we know what was headed for us? Volatility is one thing, but hundreds of basis points in hours are really something else. For those of you that had already had conversations with your clients and your referral partners some of the sting was diverted, but nobody was fully prepared for what took place.

While we will all try to figure out the reasons, the reality is we need to take positive action. We need to look at this situation and be ready to be the mortgage professionals we need to be. Most of all we all need to remain calm. Creating panic is never a good thing and certainly not what you are paid for. We need a simple and straight forward action plan.

First we need to get in front of the facts and know where to show information. First stop I think we need to look at is the Freddie Mac site and their table of historic loan rates over the last 30 years. You can find it at: http://www.freddiemac.com/pmms/pmms30.htm

This will give you a good historical view of 30 year fixed rate mortgages and the rates that were available. You will note that for quite a few years we were solidly between 5% and 8%. Sure, we can go back and find many years of double digit rates, but we have both highs and lows to deal with. We can all agree that 3.25% on a 30 year fixed rate loan was well below anything we would call average. We can certainly see that 5% certainly doesn’t qualify as “high” under any circumstances.

Mortgage backed securities like the FNMA 30- 3.5% yield went from a price of 106.5 on May 1st of this year, to closing yesterday, June 26th at 100.72. And that is up 78bps from the prior day’s trading! That is a really long way from the September 27th 2012 high of 107.5.

As rates have moved up, you need to get this information into the hands of people that need to know this and provide a plan of action.

1)    Call everyone you have pre-approved in the last 90 days and update their numbers and share with them options.

2)    Get in touch with your Realtor® referral partners and share with them this information so they can take positive action:

a)     Call all their clients and have them re-certify their preapprovals and discuss options

b)    Call all of their deals that are in contract that are set to close in the next 7 to 45 days and be sure that have a signed and dated lock agreement with their lender.

c)     If they have any questions or concerns, they need to call their lender right away.

d)    If they don’t get an immediate response, have them call YOU!

We have plenty of great options. Obviously if the client can afford the higher payment, then there is not an issue. If they no longer qualify, they may very well still find mortgage options that will work. We still have 3/1 – 5/1 – 7/1 ARMS that will fill the bill, or even pulling money from an IRA or getting a gift to lower the loan amount so they payment falls in line with their income. There are plenty of options. However, not sharing the news isn’t one of them! Bad news is like a dead fish, it doesn’t get better with age! Get out in front of it!

Unfortunately there will be people who are unaware of market conditions, people who are floating, or who think they are locked but aren’t. I am sure we will all hear stories in the days and weeks to come about lenders who may not have acted in good faith or reneged on their commitments to their clients. It will happen. It just can’t happen to those you work with!

Nobody likes to pay more money for something than they could have. Nobody likes when the cost of anything goes up. However, mortgage loans still are a great deal! Home values are growing stronger and owning a home is still a better option than renting in most of the country. We just need to share the information and have a solid strategy on what to do and how to do it. Take control and earn the respect and business of the people you help through this jump in mortgage rates.

Questions or comments please email mike@IMTCoaching.com or visit our website: www.improvemytomorrowcoaching.com and please “LIKE” us on Facebook® https://www.facebook.com/ImproveMyTomorrowCoaching

“Win the Day”

In the mortgage and real estate industry we tend to focus our attention on the results of closed transactions each month as a measure to dictate how well we did. I know most companies also focus commission structures, bonuses, and awards based on both monthly and annuals achievements. While tracking those numbers are important, I feel that by focusing on these two areas often prohibits the very success they are intended to inspire and measure.

Most mortgage professionals and even more real estate professional never reach a level by which they are closing a transaction for each day that they work. If we are only measuring closed transactions as a way to gauge our efforts, this means that more times than not, people work without reaching that unit of measure. This can often lead to days that all just seem to run together as we get used to the fact that it takes multiple days working on something to be rewarded for those efforts. And while those rewards are great, the lack of daily sense of accomplishment can lead to lack of focus and distracted attention. In other words, being busy rather than being productive.

What I try to share with my clients is to break down your business into three distinct areas, Prospecting, Processing, and Managing Communications. We all must learn that prospecting daily is essential to our overall success. If we don’t set daily goals for specific prospecting tasks to be completed, we run the risk of losing important sales momentum. While missing just one day of prospecting won’t ruin your business, the loss of sales momentum by missing that day and not completing all the assigned tasks can lead to the loss of opportunities and deprives you of the overall consistency that it takes to keep your opportunities flowing. This multiplication of actions over time that yield ongoing rewards happens when you keep your sales momentum moving each day.

Just like prospecting, not completing all of your work at one time will not cause you to fail. Leaving something for tomorrow or the next day by itself won’t prevent you from reaching higher levels of success. But over time, this lack of commitment and attention to detail will prevent you from being the best you can be. It will eventually lead you to “forget” to do something that needed to be done, or delay in getting something done that will now require a “rush”, or the help of others to get completed. The time it takes to generate this support and assistance could have been better used generating new opportunities of finding new referral partners.

The same holds true for managing your communications only in reverse. We have taught ourselves to be instant everything. We try to answer every phone call, text, and email the very second it arrives. Some are paranoid that if they don’t, that deal is lost and that referral partner will never call them again. Guess what; let them go. We can’t ever be 24/7. Nobody is available all the time. Just can’t be done and nor should it be. Your only obligation is to set reasonable expectations as to how and when you will return and respond to inquiries and questions, and then do so on that schedule.

You see, we have to win each day. We can’t work all week and all month trying to reach a goal we may not reach and then declare the month a defeat. Each day we need to set up a series of expectations for all three areas we are responsible for and meet each of those obligations. We need to set standards. How many prospecting calls will we make today? How many referral partner meetings will we have? How many deals will we structure today? How many calls will I return today? How many emails will I reply to today?

When you set daily goals in these three areas that are congruent with the larger monthly and annual goals you have set, you provide yourself with the opportunity to win each day. If you don’t win the day, you have the opportunity to get up tomorrow and win that day. You are never more than one day away from success! If you only track monthly and annual goals you set yourself up for major disappointments and have limited ability to change your momentum.

Break your business down into a series of daily activities that when executed consistently will provide you with the larger goals you are trying to reach. Setting the proper expectations of efforts and results will help you make adjustments to your activities almost instantly to be sure you stay focused and on track instead of just going to work and being busy.

For questions or comments email me at: mike@IMTCoaching.com

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Learn about our new “Lunch & Learn” program for mortgage professionals and Realtor® referral partners by going to http://www.improvemytomorrowcoaching.com

Time For Video

How do I use video to help my production? This is a question I hear more and more frequently as I speak to loan professionals and their Realtor® referral partners. I must admit, I am not using video as well as I should, but that is going to change pretty quickly. You see, I am not very technologically advanced. My own granddaughter who is seven, had to show me how to Skype®! If it weren’t for my wife and children, many of the things I do electronically, including this blog post would never get done.

We are surrounded by technology and I often feel that it makes things more difficult and time consuming than when we had less “instant communication”. In fact, one of my biggest coaching tips is to teach people how to keep in touch and NOT answer the phone when it rings or to constantly feel compelled to look for new email.

Video is becoming more and more relevant. YouTube® is the second largest search engine behind just Google®. The fact is, people enjoy video and it isn’t likely to go away anytime soon so we need to find a way to use this tool and benefit from it. So here are some thoughts.

I did my monthly “Lunch and Learn” with Terri Murphy on Tuesday and we had Michael Krisa who is http://www.thatinterviewguy.com . Michael is the resident expert on using video for marketing real estate. Nobody has more experience with video and Realtors® than he does. On the webinar Michael spent 45 minutes explaining how and when to use video, as well as made a special offer to those attending on how to have him be their expert. I never realized how simple it all is. I already have all the tools needed to get started and with a little practice, I will be using video much more frequently with my clients. For those of you who want more information on Michael Krisa, you can email him at Michael@thatinterviewguy.com or to see his offer, go to http://tabletvideoforagents.com/ it is simple to get started!

When I was thinking about additional ideas for the mortgage industry, it became very clear that a series of two or three minute videos covering things like explaining the GFE, or how to read the TIL disclosures would be very useful. What if you took the five or six most frequently asked questions you get and cover the explanation in a video that you can put on your website, email directly to the client, or even your own YouTube® channel? What if you recorded a video like my client Sheira MacKenzie that explains the loan process? Her referral partners send this link to the client along with her contact information. How powerful is that? People get to see and hear Sheira explain the process and set the expectations before they ever pick up the phone! Sheira also uses Mortgage Coach® software to provide important home financing information as well as the video feature to explain each loan program and to help describe the positive and negative aspects of each choice. How powerful is that? You can find Mortgage Coach® at http://www.mortgagecoach.com and if you need any help, please just email me and I will get you a private tutorial on how simple it is to use.

Video is powerful for many reasons. Sight and sound are compelling when used together. Video also can be shared and viewed over and over by many people so that you don’t have to explain the same thing repeatedly! How many times have you explained an entire loan program comparison to a person, only to have the spouse, father, mother, uncle, brother, or sister call and ask for clarification of the information? How good would it feel if they just had to watch the video? How much time would it save you to not have to answer the same questions? How many more deals could you do if these videos were being shared between friends, relatives, and the entire world of social media?

You all know I don’t spend much time endorsing products. When I do, I am sure that the product performs well and that I have a direct line to the people in charge in case of an issue. You can use any tools you like, but if you are looking to get started and need a turn-key set of tools, you should think about these two tools and spend a few minutes reflecting on how they could change your life for the better!

For all of my clients, there was a special offer made by Michael Krisa and myself regarding his product. All you have to do is go to the website and view the webinar to see the details, but hurry because my offer ends today at midnight! For those of you who aren’t clients, we will have this webinar available to the public next week. The deal will not be as special, but it will still be worth the investment!

For questions and comments please email me at mike@IMTCoaching.com or visit our website: http://www.improvemytomorrowcoaching.com

The Summer Schedule

Every year we head full throttle into the summer as we hit the peak of the home buying/selling season. One of the things most people forget to discuss is the added pressure of the new “summer schedule”. Let’s face it; between the kids being out of school, people taking vacations, and just the added volume of deals trying to get done, it can easily get away from us in a real hurry. Here are a few thoughts on how to make it through the season hassle free and happy!

#1 Set proper expectations!

Now more than ever, you need to lay the entire transaction out on a timeline for your clients and referral partners to see. Communicate right up front the timeline you expect to follow and how altering this timeline could jeopardize the closing if not the entire deal. Remember, in addition to everything else, with rates rising, you may not be in a position to miss your deadline. If your loan lock expires, you might not be able to re-lock or even risk not being able to close at all! Do not scare your people, just schedule the outcome everyone wants and needs!

#2 Don’t Create Panic!

Volatility can be a scary thing to people. Even long time professionals are shocked how quickly rates can move and change the landscape as well as the frenzy of bidding on available properties. Don’t create panic, educate and inform your client. In many areas multiple bid situations have eliminated the possibility of seller concessions and have caused offers that are far higher than the original listing price. Give your clients safe “ranges” of payments and closing costs so they can be sure the offer they make, they can close! Keep them calm with information!

#3 Beware of slow and short Appraisals!

In many parts of the country appraisals are taking two weeks or longer to get completed. This will expand the time it takes to get the loan to closing. There are a few things you can do to help with appraisal challenges:

a) Get all your other work complete while you are waiting on the appraisal so you can submit as soon as it arrives. b) Keep your client and referral partners informed about the current turn-around times on appraisals so everyone is on the same page. c) Get your Realtor® partners to help the process by getting them engaged. Have them gather the home comps they used to set and negotiate the price and have them ready to give to the appraiser. It is better to have them upfront than trying supply that information later. d) Values run behind the market. It takes 30 to 60 days to close a deal from contract to closing. That information takes time to hit the market. Closed home sales are the only tool we can use to determine value. e) The value of the home may be what someone is willing to pay CASH for it, but when it comes to financing, the banks are not your partners. If you want to over pay for a home, don’t expect a lender to share that with you.

#4 Ask about vacations and availability!

People have the right to their vacation. Please make sure you clear the air about everyone’s plans and availability during the time the transaction will take. If a Realtor® is going away, be sure you know who is covering for that person and be clear how to get in touch with the broker of record if you need them. Also, your clients are good to go away as well, but be sure you have contact information and warn them about SPENDING! Big additions to the credit cards or decreases in savings may end the deal faster than you think! If you are going away, be sure you have clearly explained the file to the person covering for you and shared that person’s contact information with your clients and referral partners.

#5 Try to eliminate the word “busy” from your vocabulary!

Busy is a four-letter word. It can cost you many loan opportunities and nobody really cares! Everyone thinks they are busy. Busy doesn’t mean productive and many people will not engage someone they think is busy out of fear they will be bothering them. Find other words to use to replace busy. Try and find words and phrases that are more positive and upbeat like, productive, very well, going great, very exciting, wonderful, and better than ever! In many cases, just not using the word will make you feel better and less stressed!

The summer is a great time of year. For those in the housing industry it is also one of the busiest. As professionals, we need to use our experience to improve the experience for our customers and referral partners. This particular summer we see the addition of rising home prices, short and delayed appraisals, and rising interest rates. It is our job as mortgage professionals to understand the market and prepare our clients and our referral partners for the process so there are as few “surprises” as possible. We don’t control the market, but we have to make adjustments and share information when the market moves and can have an impact on our transactions!

Hope is not a strategy. Prepare yourself and your clients by setting proper expectations, being aware of market conditions, and by having a plan to take each transaction from application to closing as hassle free as possible.

For questions and comments please email me: Mike@IMTCoaching.com or visit our website at www.improvemytomorrowcoaching.com and remember about our free monthly “Lunch and Learn” to share with your Realtor® partners!