ARM Reset Hangover, Opportunity or Doom?

Paul Knag points out some ominous forward affects of the consumer ARM inventory.

Opportunity: If you think investors are prepared open up or get creative in future mortgage products to work-out payment shocked clients. Or, some magical nationwide, rapid property value appreciation.

Doom: If you think investors will still maintain tight loan amount and equity guidelines. And, no magical economic indicators to support nationwide, rapid property value appreciation.

Consumers: It is time to find ways to rapidly increase your income or reduce non-mortgage debt!

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Kaleidico is coming to Los Angeles and San Diego

Keith Burwell and I will be in California most of next week and we would love the opportunity to get everyone (lenders, lead providers, etc.) together for dinner.

Any suggestions for good places to gather?

Here is the tentative schedule:

If you can make it and/or have an idea for a location leave a comment, call, or email me.

UPDATE: Feel free to invite anyone that you think will be interested. These are informal, fun, and full of networking opportunities!

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Putting Love IN the Game

Last night, I had the pleasure of experiencing Roy Firestone. What a great way to wrap up a week with thousands of loan officers motivated, even in a down market, to grow their business! 

During this memorable final evening at the Loan Toolbox Business Plan 2008 conference I took away a key concept that I want to share with you. This is an idea that will enrich your business and your life.

Loving what you do–you have probably heard this advice. Encouraged to take a walk-about in life and find that thing that you are passionate about and make it your business. Face it, that can be hard to do. Do you really think that mortgage professionals are passionate about taking 1003s and funding mortgages. No, of course not.

Let me alter this phrase a bit and I bet I can find what you are, or can be, passionate about:

It is not as much the love of the game as it is the love IN the game.

My guess is that you are passionate about helping people obtain the dream of owning a home or helping them get back into a stable financial position. This is about putting love in the game. If you are looking for a great example take a look at how Capt. Denny Flanagan puts love in his game, in one of the worst customer satisfication industries, the airlines, puts love in his game.

Stop focusing on how your job is mundane or routine. Stop focusing on how your commissions checks are lighter than six months ago. Focus on putting loving into the game. Sharing that love and passion with each and every client and all those negatives will go away. Your job will no longer be mundane or routine. And your commissions will come roaring back, bigger and better than ever.

Put love IN your game today!

Lead Quality Decline or Market Change?

There has been a bit of discussion over "declining" lead quality. Of course, it is easy to lay the blame of declining app and funding rates at the feet of lead providers. I must admit this was my initial reaction.  However, I then got curious and decided to think a bit broader and dive into the data from our client network and tie it to market news during the period of decline.

Here is the chart:

The most notable observable points in this summary is that lead providers tend to stay very close to their general trend line; however, there was a general trend of decline on or about August 18, 2007. I would also suspect as we look at final September data we will see all of the lead providers returning to their typical trend lines.

So, I am not certain that the general assertion that lead quality has declined over the past several months is supported by market data.

However, if you do make the hypothesis that there has been a sudden precipitous decline in lead quality something must have changed–methodology, market, or consumer. We often assume and stop at lead generation methodology. Did lead providers radically alter their techniques and methodologies on August 18, 2007? No, but your application rates did decline in the short-term.

Something obviously changed. That leaves market conditions and consumer behavior. This is where I put my chips (I am currently in Vegas and down $100).

On that day, the mortgage market was being shook to the bone by Countrywide’s announcement they were tapping a credit line to fund loans. Notice the relative correlation between the Countrywide stock trend line and the lead provider application rate trend lines. At the same time, general news and panic media coverage is shaking the confidence of the consumer. Then, the for the triple threat–loan programs are disappearing for the majority of the borrowers needing financing and FHASecure has not arrived yet.

This is what happened to lead conversion rates. Not poor marketing, but poor market conditions and consumer confidence. They inquired, but got shocked, paralyzed, or left without a program.

The ironic part of this story? As rates stay flat, the mortgage market stabilizes, confidence returns, and programs come back, who is going to write about the dramatic, mysterious improvement in lead quality?

By the way, hopefully you have a good lead management system that is allowing you to manage these consumer inquiries over this longer sales cycle because they are ready to apply now!

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Helping 2000 Mortgage Professionals Build Their Internet Business

If you are attending LoanToolbox’s Business Plan 2008 in Las Vegas make sure you introduce yourself at the Kaleidico booth. We will be helping hundreds of mortgage professionals build their Internet mortgage origination’s business.

In addition, we will be offering special, at the event, pricing and instant implementations. You may even close a deal while you are building your 2008 business plan!

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Quicken Loans Puts Consumer First

There seems to be an outbreak of consumer-first marketing.

First, there was LendingTree focused on improving the consumers experience. And now you have Quicken Loans opening an entire library of consumer education resourcesHome Loan U.

Not sure they are truly advocating the consumer? Did Bob Walters, of Quicken Loans, just say refinancing may not be your best option?

"With so many ARMs adjusting higher in the near future, a lot of folks are confused and worried about what to do. Their first impulse may be to immediately refinance but, in some cases, that might not be the best option," said Bob Walters, chief economist for Quicken Loans. "There are several factors to consider when an ARM resets, such as the new interest rate and how long they plan to stay in their home."

Yes, he did! Refreshing and I can guarantee you profitable.

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Mortgage Applications Climbing Out?

It looks like borrowers are breaking out of their fear, hesitancy, and the market finally products to help their financial needs. The Mortgage Bankers Association announced a 2.4% increase in applications and similar increases in the purchase and refinance indexes.

Quicken Loans’ expert attributes the increase to a combination of affecters:

Quicken Loans Chief Economist Bob Walters attributes the gains to historically low interest rates, an increase in the popularity of FHA loans, and some easing in the credit markets.

 I can certainly agree with all of these factors at play, particularly a larger FHA impact than I expected.

However, I also think there is another significant trend pushing up applications: Borrowers finally coinciding to the realization that they have to “take the medicine” (higher interest rate and payment) they have been resisting to avoid alarming payment shocks in the near future.