These last couple of years have been really insane in the mortgage business.
Zillions of newbie loan officers jumped on the mortgage bandwagon hoping to make their first million dollars before they turned 21. A Sub-Prime industry out of control with lax underwriting, insanely cheap loan products (armed with timed fuses to explode in the near future), and more of those newbie loan reps eager to create business streams from experienced (and sober) loan officers like me.
Worst of all: consumers seeking to be guided not by the voice of experience, but instead hellbent on finding the LOWEST PRICE regardless of the consequences accepted negatively amortizing adjustable rate loans sure to bring trouble for that homeowner later on.
Whoa. Stop the carousel. I’m dizzy and I want to get off.
Wait a minute. I never got ON the carousel in the first place. But, man, it was difficult to do, avoiding that freak show ride! Think of all the money I could have made!
I kept on quoting 30year fixed rates for regularly amortizing mortgage loans.
You know, the kind that gets you a great rate for your circumstances (credit, income, equity), but doesn’t put you into a potential nuclear meltdown 12 months after closing. The kind of loan that helps you achieve your goals of homeownership or refinancing at a rate that doesn’t change and a payment that actually works over time to reduce your loan balance. The kind of loan that most consumers searching for the BEST QUALITY AT THE LOWEST PRICE should have. The kind of loan that doesn’t put you in jeopardy of losing your home in foreclosure. That kind.
But now, to quote Dylan, “Times, they are a changing.”
Think of the worst car wreck you have ever seen on the highway. You’re in the southbound lane, you’re stuck in bumper to bumper traffic backed up three miles, and then you come upon the scene of the accident after forty five minutes of cursing and steering-wheel-pounding. You see it: the accident in the NORTHBOUND lanes. That car wreck.
And boy, when you see it, it’s a grisly, twisted-metal, rubber-skidmark mess of something that used to resemble a couple of motor vehicles.
Well, that’s what the Sub-Prime mortgage industry looks like right now. These guys are in such a wreck, the programs are literally changing or disappearing every couple of hours. Not to mention the Lenders, themselves.
They have finally stopped counting the commission money and actually started checking the foreclosure statistics. After the fact. Yeah, that’s what I’d call excellent “due diligence” for Bankers!
The owner made a joke in our sales meeting this morning.
A loan product was outlined. Our Operations Manager said, “Those are the guidelines for XYZ Sub-Prime Bank for that product.”
“Until this afternoon,” said the owner, himself.
We laughed heartily. Jocularity rebounded around the table.
Why were we so mirthful? Because we’re still standing, originating good loans for our customers while all the fledgling-fast-talkers are running away! Because we tend to take a more sober approach to mortgage lending. We actually try to watch out for our customers. We don’t put them into loan products that are timed to explode sometime in the near future.
And when all those newbies are long gone, we’ll still be here, doing the right thing and closing mortgage loans.
Right, that having been said, let me say this: LOWEST PRICE IS NOT THE BEST PRODUCT!
(I came across that blurb yesterday when browsing through a circular from a computer superstore.)
Let’s jump back up top where I talked about how much money I could have made. Yes, I could have quoted low and written a whole lot more loans than I did.
Instead, I banged my head against that (concrete) wall telling prospective clients: “I won’t put you in a loan product like that. It’s not good for you. Let’s talk 30 year fixed rate, that’s the best loan for you!”
And I lost a lot of those prospects. And I didn’t make the money. Boohoo.
But I couldn’t do it. I couldn’t quote low just to write the loan. I couldn’t in any good conscience put my customers into a loan that would increase the loan balance every time they made a payment. Or a loan that would adjust to some ridiculous rate after only one year (Oh, the LIBOR Index is evil incarnate! What, all of a sudden my client’s income is going to increase 150% in twelve months? I think NOT!).
No, I could not do that.
But the folks refinancing their homes wanted to obtain the LOWEST PRICE FOR THE BEST PRODUCT. So they ran off to that 8pm telemarketer, fresh out of the fast-food-franchise-fryer-patrol, who promised a payment substantially lower than the one I had just quoted.
No matter which of a dozen ways I tried to explain how bad those loans were, all the prospective refinancers wanted to hear was: LOWEST PRICE.
The industry is a car-wreck. Aggressive loan programs are disappearing faster than Bruce Willis in “Armageddon” when the atomic bomb explodes. Lenders are waking up to analyses of their originations and finally using the term, “Common Sense Underwriting.”
Those youthful Millionaire Wannabee “Loan Officers?” Gonzo! All of a sudden the fast food restaurants ‘round Long Island seem incredibly well-staffed!
What was never real competition for we experienced professionals, only the commission-seeking enemy of consumers is now gone, gone, gone.
That leaves us, the happy, experienced, mortgage folks.
Lowest Prices? Yes, we’ll get that for you if it’s the right loan for you.
Experience is what we bring to the table and we’ll use it by the truckload to provide our clients with valuable loan services that get them where they want to go without any gimmicks, ticking time-bombs, or potential car wrecks.
Bank on our experience to get what’s BEST for you at the LOWEST price that makes sense. Because when the smoke clears from that northbound-lane car wreck, we’ll be standing there waiting to help you navigate the highway with patience, confidence, and a loan product that serves you instead of explodes on you.