Paul W Thompson

Given my 15 years of wisdom(or attempts at wisdom), the question always arises in my mind as to what does attract and maintain a successful Loan Officer-Realtor partnership. As I continue my quest to add more realtors to my database, I have now figured out that "The Rule of Seven" is necessary to have a long lasting professional, successful relationship between Loan Officer and Realtors. Basically, the rule of seven is a list of seven factors below that I feel have to be met or exceeded when a Loan Officer starts a relatioship with a realtor:

COMPETENCE: Loan Officer has to know his programs. Nothing frustrates a buyer and a realtor more than indicating financing can get approved and in actuality the loan not only doesn't close but it never had a chance of going through.

ACCESSIBILITY: Loan Officers and Realtors both, although we do have families, we have to answer our phones while a transaction is in it's process. At the very least, the parties should call back within a couple of hours or text back. Slow or no responses are infuriating on both sides.

CUSTOMER SERVICE: After several transactions together between a Realtor and a Loan Officer, both sides need to know that the buyer was happy and satisfied with the service. If a Realtor was happy the Loan Officer closed three transactions in a row but those same borrowers were unhappy with the Loan Officer, that diminishes the Realtor's credibility and could jeapordize future referrals from those buyers.

PERSONALITY: Face it, people do business with people they like. A realtor could partner up with an incredibly high loan producer and vice versa which could be great short-term. However, is the price for that business is non stop arguments, disagreements, and one-sidedness, it is not worth it in the long run. No one multi-million dollar producer is worth getting an ulcer.

RATES AND FEES: No matter how great the Loan Officer is, if the lender that the Loan Officer works for has rates and fees that are not competitive, nothing may overcome that buyer objection, and the buyer may find financing elsewhere.

CLOSE OF TIME: Nothing causes more stress to all parties when real estate transactions cannot meet the close deadline, especially with a short sale or bank owned property. Loan Officers need to really work with urgency or set realistic expectations up front with the buyers and the Realtors.

REFERRALS AND MARKETING: This one is the most complicated one. Both Realtors and Loan Officers need new business. Sometimes, no matter how hard a Loan Officer tries to refer their client to a Realtor, that client already has a Realtor, and vice versa. In that regard, it is imperative that a Loan Officer and a Realtor can find ways jointly to attract new business. That being said, expectations need to be set for what each other's vison is and what is an acceptable and realistic ratio of reciprocal business.

So, that is my take on what makes a successful Loan Officer-Realtor partnership. It may be a challenge to have the team excel in every one of the seven factors, but it is something to continually strive for.

I would be interested from those of you who read this blog as to what you think is the MOST important of these seven factor and what you think is the LEAST important.

Thank you for your time and your business.

Even now, in today's real estate world, I hear these stereotype, ignorant comments:

"Police officers spend most of their time in the doughnut shop."."

"Firemen spend most of their time playing poker in their firehouse"

" Realtors and mortgage professionals made EASY money up until 4 years ago"

In all honesty, I am ready to ask for Charlie Sheen's help in settling the score with these people.

Why do people continue to think that realtors and mortgage professionals are such bad people who don't work? People outside our industry need to understand the following:

(1) We are commission-based. You close nothing that month, your family has nothing that month. One transaction can make a difference between having your bills paid and dining out once in a while or sharing a can of Chicken Noodle Soup between a family of four that month.

(2) The driving around, flexible hours, playing around during the day, and thinking we only work 25 hours a week is B.S. The professionals in our industries that are working 25 hours a week either are set financially for the rest of their life, have a spouse that makes great money or are working only 25 hours per week because they are probably the ones you will see at your door when you pick up your Domino's pizza delivery. In other words, they are working a second job. So we may take a day off on a Wednesday. What about Christmas Eve when a buyer wants to make an offer on a home and client needs a preapproval letter from the mortgage professional? How about Super Bowl Sunday back in 1999 when our realtor sold our first house. He had to come over and have us sign the paperwork. That was before the DVR so we missed most of the game.

(3) It is very very difficult to not only prospect for business, but to qualify them, keep client from going to a competing realtor or mortgage professional, and hope to God the loan doesn't get declined or the house fails an inspection.

Very very disturbing that we still hear these comments 4 years after 2007's meltdown, as if we single handedly caused this. We have to continue to reinforce that realtors and mortgage professionals are honorable professions.

Here is something for people to think about:

The percentage of mortgage professionals and realtors in Oregon and Washington that have left their respective industries since the heyday of 2006 is nearly 60%.

That means the ones that were dishonest, in it only for the money, were unethical, etc. are GONE. That is a lot of people that have left the industries.

If you go to a website called www.ripoffreport.com , it will show you complaints of "rip offs" claimed by consumers, The number of complaints is categorized by industry. Of all the industries, realtors were one of the LOWEST in terms of number of complaints. Great to hear.

For mortgage professionals , there were 109 complaints in the state of Oregon, ONE of them in Portland( if you don't count the subprime lenders no longer in business). THERE HAVE BEEN NONE SINCE 2009.

For mortgage professionals in Washington state, there were 78 complaints, and ONE in Vancouver, WA against mortgage professionals. That is not very many.

If you look up the Better Business Bureau, of the 4,370 different categories, realtors are ranked near the top in terms of LEAST complaints.

What does that tell you for the consumer? The respective industries of realtors and mortgage professionals are not only left with survivors, but with people who have integrity, ethics, and competence.

Don't get me wrong. There will always be differences in level of service from one individual mortgage professional and realtor to another, but NOBODY should be disrespecting our professions.

DEAL: I won't talk about the doughnuts and the poker games to those of you who are policemen or firemen as long as you stop thinking that realtors and mortgage people make $200,000 a year while playing golf four times a week and vacationing in Cabo every other month.

Let's put these stereotypes aside and respect each other's businesses.

Thank you again for your business.

WHEN I GREW UP IN FLORIDA AND SURFED ALL THE TIME, A CLASSMATE OF MINE DROWNED WHILE SURFING.
HE GOT BLIND SIDED BY THE POWER OF A LARGE WAVE AND WIPED OUT. HE GOT SUCKED UNDERWATER, AND NEVER MADE IT BACK UP. IT WAS TOO LATE FOR THE LIFEGUARD TO SAVE HIM. IN THE AFTERMATH, THE LIFEGUARD KEPT GETTING ASKED THE SAME QUESTION: HOW COULD SUCH A GOOD SWIMMER AND SURFER DROWN?
HE REPLIED WITH AN ANSWER THAT HAS STUCK WITH ME FOREVER. HE SAID, "MOST PEOPLE DROWN BECAUSE THEY PANIC. THEY TRY TO FIGHT THE WATER INSTEAD OF JUST PAUSING FOR A SECOND, GETTING THEIR BEARINGS TO KNOW WHICH WAY IS UP AND RAISING THEIR BODY AND HEAD TO GLIDE TO THE SURFACE. THE ANSWER FROM THE LIFEGUARD,TO THIS DAY, HAS STUCK WITH ME FOREVER. IT HAS CERTAINLY STUCK WITH ME IN THIS REAL ESTATE MARKET.

FOR THOSE OF US WHO GET INVOLVED IN REAL ESTATE TRANSACTIONS,WE ALL GET "BLIND SIDED". THE BLIND SIDES RESULT IN "WIPE OUTS". IN OUR PROFESSIONS, JUST LIKE SURFING,
BLIND SIDES AND WIPE OUTS ARE INEVITABLE. LIKE SURFERS, NO MATTER HOW PREPARED AND SKILLED WE REALTORS, CLIENTS, AND MORTGAGE PROFESSIONALS ARE, UNEXPECTED POWERFUL "WAVES" CRASH DOWN ON US. THAT BEING SAID,I WILL CONDENSE THE REST OF THIS TO ONE BLIND SIDE EARLY IN MY CAREER:

MY BLIND SIDE: DISCOVERING THAT AN UNDERWRITER COULD NOT USE A SELF-EMPLOYED CLIENT'S BUSINESS INCOME SINCE HE HAD HIS BUSINESS LESS THAN 2 YEARS. MY ARGUMENT WAS THAT HE BECAME
SELF-EMPLOYED IN 1995 AND SPUN HIS BUSINESS OFF INTO ANOTHER BUSINESS AND WENT FROM A 50% OWNER IN OLD BUSINESS TO 100% OWNER IN NEW BUSINESS. UNDERWRITER DID NOT SEE IT THAT WAY. BECAUSE ONE HAS TO HAVE NEW BUSINESS FOR AT LEAST TWO YEARS TO COUNT THE INCOME, THE UNDERWRITER DID NOT COUNT ANY OF CLIENT'S INCOME. A HUGE, HUGE WIPE OUT!!

I GOT ANGRY, FRUSTRATED, AND STARTED ARGUING WITH EVERYBODY. I PANICKED. I GOT MY BOSS INVOLVED AND CALLED MY CLIENT AND HIS CPA COUNTLESS TIMES TO TRY TO EXPLAIN TO UNDERWRITING THAT TECHNICALLY IT WAS NOT A NEW BUSINESS. WE LOST THE ARGUMENT AND NOW BEGAN TO SINK FURTHER UNDERWATER. MY REALTOR AND CLIENT REALLY BEGAN TO PANIC. THEY ASKED ME
TO KEEP APPEALING THE UNDERWRITER DECISION. I APPEALED TO THREE DIFFERENT UNDERWRITERS. THE UNDERWRITERS ALL ENDED UP WITH THE SAME CONCLUSION: THIS WAS CONSIDERED A NEW BUSINESS AND THE CLIENT'S INCOME COULD NOT BE USED. NOW, WE HAD LOST A WEEK'S TIME FIGHTING THIS. THE KICKING, ARM WAVING, AND EVENTUAL FRENZY GOT WORSE. WE WERE FURTHER "UNDERWATER" AND WERE LOSING AIR . THE TRANSACTION WAS DROWNING, AND WE WERE RUNNING OUT OF BREATHING TIME.

THE PANIC ESCALATED: THE CLIENT, LISTING AND SELLING AGENT BEGAN TO TELL ME HOW HORRIBLE MY LENDING COMPANY, THE UNDERWRITER, AND THE INDUSTRY WAS.
THEY WANTED TO KNOW WHY LENDERS DON'T USE COMMON SENSE ANYMORE . I ADMIT THAT I GOT SUCKED FURTHER INTO THIS PANIC MODE. I CONSIDERED REFERRING THE FILE TO ANOTHER LENDER. THEN I THOUGHT ABOUT THE LIFEGUARD QUOTE FROM YEARS AGO: ALL OF US WERE FIGHTING, KICKING AND FLAILING SO HARD THAT WE COULD NOT CALMLY THINK OF A WAY TO REACH THE SURFACE. OUR ENERGY WAS TAPPED BECAUSE WE ALL SPENT COMPLAINING, KICKING, AND FIGHTING LOSING BATTLES. ALL WE REALLY HAD TO DO WAS STOP TO THINK HOW WE COULD CALM DOWN, GATHER OURSELVES, AND USE OUR KNOWLEDGE AND EXPERIENCE TO SWIM OR GLIDE OUR WAY TO THE SURFACE. WHAT ENSUED WAS THAT ALL PARTIES INVOLVED, INCLUDING ME, CALMLY CAME UP WITH A SOLUTION TO MAKE OUR WAY TO THE SURFACE AND KEEP THE TRANSACTION FROM "DROWNING". AS MUCH AS IT HURT THE CLIENT'S PRIDE, HIS PARENTS ENDED UP CO-SIGNING. THE TRANSACTION MADE IT TO THE SURFACE OF THE WATER, GOT SAFELY TO SHORE. END RESULT: A CLOSED LOAN AND A NEW HOME FOR THE CLIENT.

MORAL OF THE STORY:
ALL OF US, NO MATTER HOW SMART, SKILLED, AND EDUCATED WE ARE (INCLUDING CLIENTS), WE HAVE ALL "WIPED OUT" SOMETIME IN OUR REAL ESTATE CAREERS. SOME OF THE
TRANSACTIONS MAY HAVE DROWNED OR COME SO CLOSE TO DROWNING WHEN, IN ACTUALITY, IT COULD HAVE BEEN AVOIDED. ALL WE WOULD HAVE NEEDED TO DO IS GATHER OURSELVES,
STAY CALM, AND USE OUR PROBLEM SOLVING SKILLS INSTEAD OF UNNECESSARY ANGER. THE FACT IS, SOME WAVES ROLL IN SMOOTHLY AND SOME OF THEM COME IN WITH FURIOUS INTENSITY. :

IT IS HOW WE HANDLE THE INTENSE WAVES AND WIPE OUTS THAT MAKE THE DIFFERENCE BETWEEN US CLOSING OUR TRANSACTIONS, GETTING THE CLIENT IN THE HOME, AND HONESTLY KEEP US REALTORS AND MORTGAGE PROFESSIONALS IN THE BUSINESS.

THANK YOU FOR YOUR BUSINESS

We are all pitchers in this real estate world. That includes lenders, realtors, potential buyers. Many of us are "ace pitchers" who have been in this industry for a long time. However, we are not striking out batters as easily as in the early innings(2000-2006). Since mid-2007, we are now giving up extra base hits, throwing wild pitches, walking batters, etc. Our no-hitter is gone: Why? We are fatigued. We are facing a Yankees lineup that consists of: industry regulations, low appraisals, ridiculous increases in FHA mortgage insurance premiums, to name a few. If we want to preserve our lead, we cannot continue to stay in the game, throwing the same pitches and hoping we can "work through it". There is no shame in us having to go to the bullpen to give us a fresh perspective and a fresh approach to this "Yankees lineup". So, it is time to go to the bullpen: Here are some other pitchers in our bullpen:

FHA CHANGES: One of the worst changes in our industry has been the ridiculous increase in FHA mortgage insurance premiums over the past year. EXAMPLE:

On a $200,000 loan, what was a $91 mortgage insurance premium last year is now a $193 mortgage insurance premium. That could price some people out of their comfort zone or worse, their market for certain home prices. So what do we do? We try to find the buyer a lesser expensive home by thinking FHA is the saving grace for loan programs. It is because of the lower down payment requirements, flexible guidelines, etc. that FHA offersHowever, we don't look at alternatives for our buyers.
This is when we have to go to our bullpen. We don't want to continue to throw the same "pitches" to our buyers by trying to show less expensive homes or myself trying to get the buyer to put more money down to lower their payments. It is time to re-think our approach. It is time to take our pitcher out of the game and look to our bullpen(alternative loan programs). Some " pitchers" in our bullpen are:

USDA RURAL HOUSING: This is a loan designated in certain areas considered rural (it does not have to be farm land with goats,roosters, etc). Actually, most of Battle Ground, WA is
considered a designated rural area. Now, there is an income limit in Clark County to qualify, but it is actually pretty liberal: ($82,000 for family of four). CALL ME FOR MORE DETAILS ON THIS.
Difference between this and FHA: On a $200,000 loan going FHA, 3.875% rate , that payment with mortgage insurance is: $1131.
Here is the relief pitcher: USDA Rural Housing loans have very very low mortgage insurance premiums. Rates are generally the same as FHA. That is now a payment of $990 instead of $1131, a $141 difference. Oh, by the way, it is also 100% financing, meaning NO down payment required.

HOMEPATH: This is a loan in which no appraisal is required on these loans and down payment is only 3% Homepath is for those wanting to purchase Fannie Mae, bank- owned properties. (There is a website to find Fannie Mae homes that are eligible). Again, the beauty: No mortgage insurance required on this. Rates are higher on Homepath (4.375% vs. 3.875% FHA). However,on a $200,000 loan, the payment is $998 on Homepath vs. $1131 on FHA. Thus, it is still a monthly savings, AND again the beauty is no appraisal required on these loans.

CONVENTIONAL WITH MORTGAGE INSURANCE: Yes, on conventional loans, with less than 20% down, mortgage insurance is required. However, we have a mortgage insurance
company we work with that has some very low mortgage insurance rates. Now for conventional, you would need 5% down instead of 3.5%. Here is the difference, however:
On the same $200,000 loan comparing conventional mortgage insurance with FHA, the premium on conventional is less than that of FHA. Again, for $200,000 loan, that means instead of $1131 for FHA, $1099 for Conventional. Not a huge payment difference there, but here is a major difference: You can cancel conventional mortgage insurance after ONE year if you have the equity. Regardless of equity, you have to keep FHA mortgage insurance a minimum of five years.

So, there are some relief pitchers in our bullpen. For those low down-payment borrowers, FHA is not the only thing out there. We have to adjust our mind set, learn what alternatives are out there, and not be afraid to take your All-Star starting pitcher (your original marketing approach) out of the game. We all need a bullpen to survive.

(Disclaimer: there are some different credit guidelines between these three programs above and FHA. Call me for details).

Thank you again for your business.

It is challenging enough to (1) find willing buyers, (2) buyers who qualify, and (3) a combination of the two that are not short sale transactions and are transactions that don't implode 3/4 of the way through the process.

Today, every borrower is under increased scrutiny. Here is a checklist that can eliminate as much turbulence as possible and increase communication between all parties. Now more than ever, loan officers and realtors need to work as a TEAM and be pro-active in helping our clients have a good experience every time.

Now the list:


PURCHASE AND SALE AGREEMENT ON A PROPERTY

Call out or identify any Red Flags:

o Is it a Log Home, Man Home, Out Buildings, Acreage, Mother in Law Quarters
o Any personal property listed with value? (hot tub or desk included, etc)o Has the property been bought and resold in 90 days (If property sold in the last 180 days confirm that there is no more that 100% increase in price) If yes, field review required (timeline 7-10 days)
o Upon visual review, are there any health & safety concerns?
o Confirm that the names on the Agreement are the same borrowers on the loan
o Confirm the loan program and estimated timelines for closing
o Please note 203k loans requires separate pest & dry rot report
o Are all pages of the Purchase and Sale Agreement initialed and/or signed
o Is the zip code included on the property address
o Confirm closing costs & keep your buyer within their approved purchase price

If an FHA loan, have all parties signed the FHA Amendatory Clause?

INSPECTION

o Confirm the date so that we may order the appraisal as quickly as possible
o Communicate any repairs you're negotiating
o Do you need a contractor referral, we have them!

o Is the contractor willing to be paid at closing?

APPRAISAL

o Confirm whom to contact for appraisal
o Do the utilities need to be turned on?
o How much time is needed to do so?

TITLE

o Confirm escrow contact
o Is the title company out of the area?
o Are the clients planning any vacations, trips, either borrower out of country during expected signing?
o Will we need mobile notary or courtesy signing?
o TRUSTEE INVOLVED: Confirm days needed for delivery so we may time signing accordingly

CLOSING
o What closing gift would the client like?

Helpful Reminder: Please allow a 14 day grace period for unforeseen turbulence, under no circumstances advise a client to move out of current home. This may create undue stress on the borrower.

Thank you again for your business

Sincerely,

Paul W. Thompson

Home Mortgage Consultant