“Spring Ideas For Your Business”
Seven of the states I do mortgages are cold weather states and this season, we have had our fair share of bad and cold weather.
Growing up on a dairy farm, when we had lots of snow, it meant good things for all of the fields. As the snow melts, the ground will be in much better condition for the spring planting.
In preparing the fields for planting, fertilizer (various kinds) needs to cover the ground before the ground is tilled, seeds are put into the ground and then over time the crops grow and are harvested.
Isn’t that what all of us do in our business lives? Don’t we market and network, which is like preparing the soil. As a result of our networking and marketing we make connections with prospects, then customers and finally with clients, all of which is like planting the seeds and then finally the harvesting.
Here is what I have learned from my farming days, the marketing and networking never stops, the interaction with prospects, customers and clients is never ending and the harvesting of these relationships will continue as long as we are in business. I guess, that means it is spring, all year long.
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“Appraisals Aren’t Always Equal”
Clients of mine were in the process of purchasing a historic home in a village setting. Their credit was great, they were putting $100,000 down on a $400,000 purchase, so far all was great.
The appraisal was completed and the value came in above the sales price, but we had a problem. There were no comparables that were considered historic homes. The home was built between 1880 and 1890, the style was a Victorian. All the comps were from the same town and all were colonials built between 1998 and 2009. All sold above the subject and all in a similar price range.
The lender went back to the appraiser asking for the comps to be in a similar “vintage” to the subject. There weren’t any sales in the same town, other than one short sale and the closest similar comps were 40 miles away.
I asked the selling agent to see if they could find any sales that did not come through MLS and as luck would have it, because of some great homework, two comps were supplied to the appraiser that were within 10 miles, which eventually satisfied the lender.
The unfortunate thing, the appraiser really didn’t want to do any extra work, as he felt the lender was being unreasonable. Even though I felt the lender was being unreasonable, they were the ones loaning the money for the mortgage. It’s tough when egos get in the way of getting the transaction accomplished for the buyers.
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“Do You Have an Identity Problem?”
I remember reading a biography of Lee Iacocca, who was an automaker extraordinaire for Ford and especially Chrysler. When he was with Ford, he became the head of the pickup division, this division was not doing very well at the time. He asked an extremely important question. Is there something about our pickup that is better than any other pickup?
His point was to identify one thing that they did that was better than anyone else and then we can build from there. He went on to build the Ford pickup division into a powerhouse. He then went on to run Chrysler and take it from a bankrupt automaker into one that was relevant. I believe under his leadership, they came out with the K-Car, which was a real hit at the time.
Many folks that are in business have an identity problem, so my question to you; Do you know what you do that is better than anyone else? A quality that you can pinpoint and can say I can do this better than anyone else? If you can’t answer that question, I would suggest it should be a goal to establish as soon as possible.
It is my belief that I can solve any mortgage problem. I wish I could say that I was 100% successful, but I am not. I have continued to identify areas of my mortgage practice, that separates me apart from anyone else. One thing for sure, I never focus on the problem, only the solution.
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“Using the Home You Inherited as a Credit Card”
The home has an estimated value of $180,000 and the two existing mortgages total $101,000, plus she has $80,000 in credit card debt and a $16,000 car loan. She was referred by a bankruptcy attorney as she wanted to file her credit card debt into a bankruptcy, but she makes too much money to file. How crazy is that?
The ONLY way to solve part of her problem was to refinance and pay off as much credit card debt as possible. To get the maximum amount to pay off the most debt was to do an FHA mortgage. By the time we were done, we saved her $688 per month. I hate the idea of paying off credit card debt with the equity in a home, but there just was not an option.
I told her that I would do the mortgage on one condition. The condition was to allow me to introduce her to a referral partner of mine. She is a “Financial Organizer” and a very good one, which she agreed to meet with her to set up a strict budget. This financial organizer reminds me of an army drill Sargent, but I am not convinced my client will follow through.
Most in the mortgage business run into situations like this from time to time and sure we all struggle each time a loan like this is done.
image courtesy of stuart miles/freedigitalphotos.net
“Even After Bankruptcy, Banks Cause Much More Harm”
When someone goes through bankruptcy and there is real estate included, the ability to be able to get a mortgage in the future has many variables. The shortest distance between two points is usually and FHA mortgage.
There are some basic guidelines. There are a number of variables that I will not get into this post, but as mentioned here are the basics:
1) You must wait 2 years after the BK.
2) You must have re-established credit, preferably 3 accounts that show up on the credit report and a minimum of 580 credit scores.
3) No late payments after the bankruptcy.
4) A minimum of 36 months past the completion of the short sale or foreclosure.
The biggest issue is the number 4. Many institutions don’t complete the foreclosures immediately, as a matter of fact, sometimes it takes them years and there is no real way to force them to do it sooner rather than later. Many have even attempted to do a deed in lieu of foreclosure, but this seldom works either.
A client of mine moved from Hartford CT to Sarasota FL. He has filed bankruptcy in 2008 and the home he used to live in is still in his name and the foreclosure has still not happened. There have been attempts by him and his attorney to get this completed. At one time the value of this property was $350,000, when he files bankruptcy and moved out the value at the time was $200,000. The property has since been vandalized many times and would probably sell for under $100,000. The property taxes are about $8,000 per year, which the bank keeps paying. If there is any sense to this, someone has to explain it to me.
My client is not alone there are tens of thousands of people in the same boat. Most have done everything they can do to be a homeowner again, but are just plain stuck.
image courtesy of stuart miles/freedigitalphotos.net