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License? We Don't Need No Stinking License
There's a point of contention in my house these days about the "poison" contact solution that I used to clean my contacts the other day. I argue that Katie (my wife) should have told me not to use the "poison" contact solution. She argues that I should have read the bottle. Either way, this led me to a trip to Dr. Chris Heetland at Insight Eyecare in Chandler for an eye exam. He is excellent.
In the past, I had not had any kind of vision insurance so I have gone the cheap route of getting my contacts and eye exams from Nationwide Vision. Today, I learned that this has been an ongoing mistake for the past 10 years. It turns out that I have astigmatism in both eyes and the people at Nationwide Vision never bothered to address it. Thanks to Dr. Heetland, I know have the proper prescription and the proper contacts and I am amazed at how wonderful the world looks to me now. Good vision is really cool.
What's the point of all this? I realized after leaving Dr. Heetland's office that my eye care escapades are eerily similar to what is going with Loan Officer licensing.
Because of the S.A.F.E. Act, all loan originators are required to be licensed by July 1, 2010. Except for those that are employed by a Federally chartered bank. The good loan officers are getting their licenses. I believe this to be true. The not so good ones are either getting out of the business or going to work for one of the big banks.
What difference does that make? The licensed loan officer does not rely on his big name company to generate his business. If I do a bad job on a loan, word gets around pretty quick and my business suffers. But if I'm a loan officer at Bank of America for example, I can do a bad job and I don't have to worry about my business. I have millions of potential customers that walk through the doors of the thousands of branches everyday. I just have to wait for the next one to come to me.
I am not arguing that having a license will make a loan officer better. However, a loan officer that is not willing to put in the effort to obtain his license may also not be willing to put in the effort to make sure you home loan closes smoothly. The easy way out of licensing is to go work at a bank. It makes sense.
If you're an optometrist, maybe the easy way out is a place like Nationwide Vision. Why do a good job when all you have to do is wait for the next person to come in? No thanks. I'll stick with the professionals.
The Smooth Loan Process lesson for today: Check to see if your loan officer is licensed at http://www.nmlsconsumeraccess.org/ . Here's a copy of my license Harold License .
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
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Thursday, May 13, 2010
The Smooth Loan Process #2010-29
Lots of People Go To School for Ten Years--They're Called Doctors.
Today is my ten year anniversary with The Mortgage Advantage! Ten years ago, I was a young, idealistic loan officer with aspirations of changing the world. Today, I'm not so young and I've found that it's going to be harder than I thought to change the world. Hopefully, Diane Gerdes was joking when she told me it seems like it's been 20 years.
The year was 2000. We all just narrowly escaped the clutches of the Y2K bug. My oldest son was my only son. He was three and still at the peak of cuteness. It never occurred to me that he would be a teenager one day. I had just purchased my first home for the mind boggling price of $50,000. I wondered how I would ever be able to afford the $421 per month payment (that included escrows, by the way). That payment would be sweet now. It was also the year I got my first cell phone (my number is still the same) and it was the year I discovered email.
My journey that brought me to The Mortgage Advantage is filled with fate and destiny. I had been with another company for the first two years of my mortgage career. Something always seemed off to me about the other company. The day I finally realized it, I called a realtor friend of mine while I was driving to an appointment. I asked her what company I should talk to because I was thinking of a change. She told me to talk to The Mortgage Advantage. At the exact same time, an escrow officer in the area took it upon herself to call The Mortgage Advantage to tell them that they needed me. I made the call and the rest is history.
My trip down memory lane is not just for the nostalgia. What I realize is that any level of success that I have achieved is partially due to the longevity of my company and my longevity with my company. How many loan officers do you know that can say that they have been with the same company for 10 years? How many loan officers do you know that can say they have been in the business for 12 years? I know loan officers that changed companies more times than I change the oil in my car. What I always wonder is how their clients find them five years or even one year or even six months down the road.
Mortgage Originating is not a one shot deal. Often times, I will get calls with questions years after the loan has closed. I imagine that it is comforting for my clients to know that they can call me with a question years later and I will still be there to answer the phone. Remember, my number is still the same.
A couple of weeks ago, I was donating blood and the tech that was sticking me looked familiar. After staring at her for a few minutes, she finally broke the ice by reminding me that the reason I knew her was because I refinanced her house ten years ago. I'm not making this up. She said, "you're Harold Perkins with The Mortgage Advantage. I know you." As soon as she told me her name, I remembered exactly who she was. And, it didn't hurt when she stuck me with the needle so I'm guessing I did a good job on her loan. How many loan officers can say that they can walk into any place of business and have their client remember them from ten years earlier? Not only that, but then be able to tell the client that everything is still the same.
As I reflect, the one thing I realize is that I'm glad I'm not new in the business today. We all know how much more difficult it is to close a mortgage these days. I cannot imagine how difficult things are for the new people today. The level of expertise required to be efficient today is exponentially greater than it was ten years ago. There is nothing wrong with being new. Everybody is new at the beginning of their career. I'm just glad that's not me...and I'm glad I did not pick truck driving school.
The Smooth Loan Process lesson for today: Pick a loan officer who has experience or has the support of very experienced people. Those loan officers are still in the business for a reason.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
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Today is my ten year anniversary with The Mortgage Advantage! Ten years ago, I was a young, idealistic loan officer with aspirations of changing the world. Today, I'm not so young and I've found that it's going to be harder than I thought to change the world. Hopefully, Diane Gerdes was joking when she told me it seems like it's been 20 years.
The year was 2000. We all just narrowly escaped the clutches of the Y2K bug. My oldest son was my only son. He was three and still at the peak of cuteness. It never occurred to me that he would be a teenager one day. I had just purchased my first home for the mind boggling price of $50,000. I wondered how I would ever be able to afford the $421 per month payment (that included escrows, by the way). That payment would be sweet now. It was also the year I got my first cell phone (my number is still the same) and it was the year I discovered email.
My journey that brought me to The Mortgage Advantage is filled with fate and destiny. I had been with another company for the first two years of my mortgage career. Something always seemed off to me about the other company. The day I finally realized it, I called a realtor friend of mine while I was driving to an appointment. I asked her what company I should talk to because I was thinking of a change. She told me to talk to The Mortgage Advantage. At the exact same time, an escrow officer in the area took it upon herself to call The Mortgage Advantage to tell them that they needed me. I made the call and the rest is history.
My trip down memory lane is not just for the nostalgia. What I realize is that any level of success that I have achieved is partially due to the longevity of my company and my longevity with my company. How many loan officers do you know that can say that they have been with the same company for 10 years? How many loan officers do you know that can say they have been in the business for 12 years? I know loan officers that changed companies more times than I change the oil in my car. What I always wonder is how their clients find them five years or even one year or even six months down the road.
Mortgage Originating is not a one shot deal. Often times, I will get calls with questions years after the loan has closed. I imagine that it is comforting for my clients to know that they can call me with a question years later and I will still be there to answer the phone. Remember, my number is still the same.
A couple of weeks ago, I was donating blood and the tech that was sticking me looked familiar. After staring at her for a few minutes, she finally broke the ice by reminding me that the reason I knew her was because I refinanced her house ten years ago. I'm not making this up. She said, "you're Harold Perkins with The Mortgage Advantage. I know you." As soon as she told me her name, I remembered exactly who she was. And, it didn't hurt when she stuck me with the needle so I'm guessing I did a good job on her loan. How many loan officers can say that they can walk into any place of business and have their client remember them from ten years earlier? Not only that, but then be able to tell the client that everything is still the same.
As I reflect, the one thing I realize is that I'm glad I'm not new in the business today. We all know how much more difficult it is to close a mortgage these days. I cannot imagine how difficult things are for the new people today. The level of expertise required to be efficient today is exponentially greater than it was ten years ago. There is nothing wrong with being new. Everybody is new at the beginning of their career. I'm just glad that's not me...and I'm glad I did not pick truck driving school.
The Smooth Loan Process lesson for today: Pick a loan officer who has experience or has the support of very experienced people. Those loan officers are still in the business for a reason.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
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Thursday, May 6, 2010
The Smooth Loan Process #2010-28
Fake Tax Returns-What Could Possibly Go Wrong?
Fortunately, I've never had the pleasure of dealing with somebody that has provided me fake tax returns with their loan application. But there are people who would do this and those people suck.
These days, every piece of documentation that is provided has to be verified. Pay stubs are verified with the employer. Bank statements are verified with the bank and tax returns and W-2's are verified with the IRS. For the vast majority of us, verifying this information is not a problem. If you have purchased a house recently, you probably don't even know that this happened. If you are purchasing and you are aware of the IRS validation, you are probably not happy right now.
The problem is that taxes were just due on April 15 and millions of people file at the deadline. The IRS records all of the data from your tax returns and it can take several weeks for that to happen. If your closing is going to occur within a month or so of April 15, waiting for the IRS to process your tax returns could cause a delay.
If you're buying a house during this time of year, the best thing you can do with your taxes is to file electronically. Tax returns that are filed electronically are available for validation within a day or two. If you're not going to file electronically, the next best option is to hire a CPA to prepare your taxes. Sometimes we can have the CPA verify that the copy of your taxes we have are the same as what was filed with the IRS.
So why is all of this done? It's been discovered that one of the highest incidents of loan fraud involves tax returns. A self employed buyer might have a lot of deductions and expenses that makes his net income too low to qualify for the loan. There were many cases of self employed borrowers giving the bank tax returns without the deductions for qualifying but giving the IRS tax returns with the deductions to reduce his tax liability.
Also, we all have access to the software to produce W-2's and tax returns with any amount of income you want. There's even a website that will produce real looking pay stubs and you can put in any salary you want. They advertise that it's for entertainment purposes to "impress your friends." Come on!
This probably goes without saying but if you provide documentation that is not accurate for home loan, chances are your loan will not be approved.
The Smooth Loan Process lesson for today: Give your loan officer your real tax returns and W-2's. It's easier that way.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
Share
Fortunately, I've never had the pleasure of dealing with somebody that has provided me fake tax returns with their loan application. But there are people who would do this and those people suck.
These days, every piece of documentation that is provided has to be verified. Pay stubs are verified with the employer. Bank statements are verified with the bank and tax returns and W-2's are verified with the IRS. For the vast majority of us, verifying this information is not a problem. If you have purchased a house recently, you probably don't even know that this happened. If you are purchasing and you are aware of the IRS validation, you are probably not happy right now.
The problem is that taxes were just due on April 15 and millions of people file at the deadline. The IRS records all of the data from your tax returns and it can take several weeks for that to happen. If your closing is going to occur within a month or so of April 15, waiting for the IRS to process your tax returns could cause a delay.
If you're buying a house during this time of year, the best thing you can do with your taxes is to file electronically. Tax returns that are filed electronically are available for validation within a day or two. If you're not going to file electronically, the next best option is to hire a CPA to prepare your taxes. Sometimes we can have the CPA verify that the copy of your taxes we have are the same as what was filed with the IRS.
So why is all of this done? It's been discovered that one of the highest incidents of loan fraud involves tax returns. A self employed buyer might have a lot of deductions and expenses that makes his net income too low to qualify for the loan. There were many cases of self employed borrowers giving the bank tax returns without the deductions for qualifying but giving the IRS tax returns with the deductions to reduce his tax liability.
Also, we all have access to the software to produce W-2's and tax returns with any amount of income you want. There's even a website that will produce real looking pay stubs and you can put in any salary you want. They advertise that it's for entertainment purposes to "impress your friends." Come on!
This probably goes without saying but if you provide documentation that is not accurate for home loan, chances are your loan will not be approved.
The Smooth Loan Process lesson for today: Give your loan officer your real tax returns and W-2's. It's easier that way.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@HaroldPerkins.com
Share
Tuesday, May 4, 2010
The Smooth Loan Process #2010-27
You Want To Buy A Condo? (or should I say con-d'oh!)
I'm officially putting condos in the category of ridiculous. In general, I like to believe that Fannie Mae and Freddie Mac have a pretty good grasp on what they're doing. Of course, I'm not talking about their management or leadership but their loan guidelines make sense for the most part. Except when it comes to condos! I never imagined I would say this, or even worse, put it in writing but I would rather finance a condo FHA than deal with Fannie or Freddie.
Here's the story:
Our perfect buyer decides he wants to buy a condo close to work. He lives in California and commutes to Arizona. Rather than stay in hotel, he wanted something small with low maintenance to stay in while he was in town. He has no mortgage on his house in California and no debt. Excellent credit and was planning on putting a 25% down payment. His payment would be 4% of his gross income. Can you imagine having a house payment that is 4% of your income? That would be sweet. So what's the problem?
The condo he found that suited him had 15.1% of the homeowners that were currently 30 days past due on their association assessments. Fannie and Freddie only allow for 15.0%. Not, 15.0001%. 15%. There were two homeowners too many that were past due out of 397. By Fannie's rules, that makes this property a piece of junk that is not financeable. Rules are rules so fine. We'll deal with it.
My first call was to the HOA manager. She informed me that the delinquency rate was not actually as high as they were reporting because they were still counting the properties that had been foreclosed and resold but in the sale, the previous owner still had a balance owing. They just needed to write off the old balances as a loss and the delinquency rate would reduce to about 5%. Great, right? No...we would be so wrong.
We waited a month as instructed by the HOA manager and sent her a new condo questionnaire to complete (which costs $100, by the way). I was giddy with excitement for the results. When the new questionnaire arrived, we found that delinquency rate had soared to 25% What?!?! How could this be? How could nearly 40 people go past due in just one month's time?
Back on the phone to the HOA manager. It turns out that she forget to tell me that her management company had just taken over the HOA from a different management company. Many of the homeowners had automatic debits from their accounts to pay their HOA dues. With the change in management company, many of the homeowners were now paying the wrong management company or their automatic debits had stopped and they had not made arrangements to start making payments to the new management company. D'oh!
Our buyer's journey on this property has now ended. I found out the other day that the delinquency rate in this subdivision has now dropped below 15%. Once the HOA manager sent notices out to the homeowners that were paying the wrong management company, the owners made the arrangements to pay. All of this about 30 days too late for our buyer.
So in the course of two months time, the property went from almost financeable to not a chance to no problem.
In fairness, an insolvent HOA will have a significant negative impact on the property value. The intention of Fannie is to ensure that they are not financing properties with an insolvent HOA. That makes sense but somewhere along the way, common sense left on a back packing trip through Europe to go 'find itself'. Let's hope it comes back soon to join the rest of us in the real world.
The Smooth Loan Process lesson for today: Spend the time and money to investigate a condo before you put your offer on the property.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@Perkins.com
Share
I'm officially putting condos in the category of ridiculous. In general, I like to believe that Fannie Mae and Freddie Mac have a pretty good grasp on what they're doing. Of course, I'm not talking about their management or leadership but their loan guidelines make sense for the most part. Except when it comes to condos! I never imagined I would say this, or even worse, put it in writing but I would rather finance a condo FHA than deal with Fannie or Freddie.
Here's the story:
Our perfect buyer decides he wants to buy a condo close to work. He lives in California and commutes to Arizona. Rather than stay in hotel, he wanted something small with low maintenance to stay in while he was in town. He has no mortgage on his house in California and no debt. Excellent credit and was planning on putting a 25% down payment. His payment would be 4% of his gross income. Can you imagine having a house payment that is 4% of your income? That would be sweet. So what's the problem?
The condo he found that suited him had 15.1% of the homeowners that were currently 30 days past due on their association assessments. Fannie and Freddie only allow for 15.0%. Not, 15.0001%. 15%. There were two homeowners too many that were past due out of 397. By Fannie's rules, that makes this property a piece of junk that is not financeable. Rules are rules so fine. We'll deal with it.
My first call was to the HOA manager. She informed me that the delinquency rate was not actually as high as they were reporting because they were still counting the properties that had been foreclosed and resold but in the sale, the previous owner still had a balance owing. They just needed to write off the old balances as a loss and the delinquency rate would reduce to about 5%. Great, right? No...we would be so wrong.
We waited a month as instructed by the HOA manager and sent her a new condo questionnaire to complete (which costs $100, by the way). I was giddy with excitement for the results. When the new questionnaire arrived, we found that delinquency rate had soared to 25% What?!?! How could this be? How could nearly 40 people go past due in just one month's time?
Back on the phone to the HOA manager. It turns out that she forget to tell me that her management company had just taken over the HOA from a different management company. Many of the homeowners had automatic debits from their accounts to pay their HOA dues. With the change in management company, many of the homeowners were now paying the wrong management company or their automatic debits had stopped and they had not made arrangements to start making payments to the new management company. D'oh!
Our buyer's journey on this property has now ended. I found out the other day that the delinquency rate in this subdivision has now dropped below 15%. Once the HOA manager sent notices out to the homeowners that were paying the wrong management company, the owners made the arrangements to pay. All of this about 30 days too late for our buyer.
So in the course of two months time, the property went from almost financeable to not a chance to no problem.
In fairness, an insolvent HOA will have a significant negative impact on the property value. The intention of Fannie is to ensure that they are not financing properties with an insolvent HOA. That makes sense but somewhere along the way, common sense left on a back packing trip through Europe to go 'find itself'. Let's hope it comes back soon to join the rest of us in the real world.
The Smooth Loan Process lesson for today: Spend the time and money to investigate a condo before you put your offer on the property.
Harold Perkins
Galaxy Lending Group, LLC
602-595-1233
Harold@Perkins.com
Share
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