Eric Nichols

Where to start....................

Is using a professional service to secure a mortgage modification worth it? Sometimes yes, sometimes no.

Heres a yes: You are uncomfortable with the process, worry about representing yourself to the lender or have a hard time dealing with it. For many of us we will always want to lean towards someone more experienced then ourselves and this is where a professional would come in. Mortgage modification companies are familiar with the lender and the routes that need to be negotiated. The process with most mortgage modification companies is the same:

1. They will typically send you a letter or a brochure outlining their "expertise" in these matters.
2. You will fill out an application over the phone or in person, very similar to a mortgage application. It will ask the same questions regarding address, income, assets, employment etc.
3. You will sign releases allowing the modification company to access your mortgage information.
4. You will draft a hardship letter for your lender. This letter will include information from you regarding your struggle to pay the mortgage, things that have changed that have made it more difficult, and how a modified mortgage with a lower payment will make a difference on your financial well being.

The modification company will put together a financial picture based upon your information, contact your lender on your behalf and attempt to negotiate a lower payment for you. If they are successful, they will then earn a fee. LET ME STRESS THIS: It is against the law to collect a fee for this service prior to service being rendered. If anyone asks for money up front, it is fraud and against the law. They often have payment plans and you usually can use a credit card to pay your fees. If they are not successful than no fee is earned. Keep in mind the average fee is about $3000.00, which is no small potatoes.

Heres a no:You have a good relationship with your lender and are willing to deal with them directly. If this is the case you may be able to save yourself some money and get the desired result. Will the result be the same as if you used a modification company? This is the great unknown. Some say yes, some say no, modification companies insist that they can do a better job, but at this time I do not have any documented truth. Many banks now have a dedicated department solely for mortgage modification.

Success rates of modified mortgages for the banks: Numbers vary, but it is actually quite common for a borrower to still end up in foreclosure, even after a modified mortgage. This is one of the reasons that you need to have a very compelling example of how you will make it financially if your loan terms are modified. The FDIC has calculated a default rate of 33% on modified mortgages, which is staggering, but figures from market watch say it runs up to 50%! Banks are between a rock and a hard place. They absolutely do not want to end up owning your house. They have too many properties already. But with 50% default rates, they may be becoming more reluctant to deal with customers modification proposals.

Tomorrow, who's fault is this mess. I pull no punches folks.................

As I was in the middle of work on some marketing materials this morning, I took a moment to look back over 2008 and ponder what I have done this past year to better my community. I have been involved in a number of projects in Lane County, primarily with my wife as volunteers and donors. What I haven't been involved with to any major degree is any charitable projects with other professionals, and I'm not sure why.

Now is the time to take a look at 2009 and see where we as professionals in the Mortgage and Real Estate businesses can be leaders in our community. I am open to any and all comments and suggestions. Your thoughts?

We have heard much talk lately of a possible 4.5% interest rate coming our way. I have had Realtors ask me about it and I have had several clients that have heard of the possibility. I think 4.5% would be great, but it is only a possibility.

The recent announcement by the FED that they are going to buy up $600 billion in mortgage backed securities has done wonders for rates. Investors have flocked back to bonds and mortgage backed securities, increasing the supply of ready cash for mortgages and driving down prices, which is what got us to todays rates (about 5%).

The challenge is that there are many factors, hundreds perhaps, that affect mortgage rates on a daily basis. Constant reports being published on topics ranging from consumer confidence levels to jobless rates to manufacturing indexes all weigh in on the investors decision making processes, helping them decide where to invest their money, which through supply and demand helps determine rates.

I personally track many sources daily to help form an educated opinion on which to base my advice to clients. Its a complicated process that requires a certain level of commitment daily to help insure what I advise is accurate.

So whats my bottom line opinion on a 4.5% interest rate? It's quite possible that the nation will see it at some point. Here in Oregon it may be another story. Banks charge different rates based upon which state the loan will be made. Sometimes rates are better in Utah than Oregon. Why? The answer varies. Typically it comes down to the cost of doing business. If internal costs are higher, such as employee wages, taxes etc, then those costs are passed on at a regional level. In addition, the next most common reason is that Lane County is classified as a declining market by many lenders. This also raises the rate that I can negotiate for clients. Final point: The situation may arise if rates drop, that those rates may only apply on purchase loans rather then a refinance.

Whats the bottom line? If 4.5% happens and it is the lowest rate, we won't know it until we see it in the rear view mirror, as rates have started to climb. buyers that are extremely rate conscious need to be prepared. The need to already be pre-approved, they need to supply banking, asset and employment data quickly, along with a completed application, so that they can move quickly, as sometimes these rates are available for less then a day, and sometimes for only a few hours with todays volatile market.

If you enjoyed this brief primer on rates, please feel free to comment. I have many resources available to Realtors to complement their data made available to home purchasers.

Also check me out on the web at www.lendingwitheric.com

Thanks and I hope 2009 is a banner year for you!

Snow days usually end up lazy days. They can however be the most productive day you've had in months! With mortgage rates under 5%, we are seeing more buyers and most of us are ready to capitalize on this blessing. The challenge of course is, when we are busy is the time to be planning ahead.

1. What are your target goals for 2009?

2. Have you implemented plans to get you on the way?

3. Is every aspect of each transaction analyzed for 100% customer service and every referral source? (Real Estate transactions could have up to 17 referral sources per deal)

4. Who are you enilsting to help you? Remember those that need your business and leverage your relationships for success. The escrow office, the mortgage broker, the appraiser, they should all be playing a role in your success. Don't be afraid to ask "what have you done for me lately?" Get the absolute best service from those involved in your transactions, meet with those mentioned above and ask them, How are you playing a role in my success for 2009?

5. Attitude comes first. A recent survey of top agents in the United States found a common thread: The best have managed to maintain a positive outlook through good times and bad. A positive outlook helps spawn new ideas for sales and keeps us motivated to continue to use the good tools that have performed in the past.

6. Get the best of information from reliable sources. My daily communicator that I send out to Real Estate Professionals covers not only current rates and trends, but more importantly, sales and marketing information for open houses, client retention, business builders and many other topics. This information is incredible and motivational and is free of charge, passed on with a smile! Email me at enichols@fcmapproved.com for more info.

As we enjoy this snow day, lets take a moment to identify our upcoming 2009 success plan, get excited about it and build it!

As a mortgage broker, I am pleased with the service I provide agents. I don't bring donuts and rate sheets to offices unannounced. Actually i don't bring them at all.

In the past, it was common for an agent to ask a mortgage broker "whats in it for me?" Guess what? It still is, and rightfully so! Use me! I'm the expert! I can get loans closed! Pick me!

Guess what, so can everybody else. So.... what are you doing to help the agents in your network to not only succeed, but to expand their business in these challenging times? Are you supporting their open houses, co branding literature, co branding buyer guides, teaming up on mailings, identifying additional referral sources from each transaction?

How about spending your time and money (within RESPA guidelines) to help them succeed? I have had many people comment to me about how terrible business is, I don't know how you can make etc.......

I am making it by providing more than anyone expects, every day in every transaction. By making sure that the client is absolutely thrilled by the service they receive, with all communication provided them having multiple ways to contact and encouraging feedback. Client communication being personalized, sharing the Realtors name and logo every time without exception.

Oregon has gone from 4000+ licensed loan originators two years ago to now below 1600. Am I worried? Nope. Why? Because superior service sells. Why pass on this information to people I am competing with? Because less then 5 percent of you will go beyond 10 minutes worth of motivation, and Realtors need to know they have much better options out there, my friends.

Good luck to all in these trying times.