THIS MORNINGS QUICK LOOK
- TOUR DE MTG FINANCE – Credit Crunch Increasing
- PRODUCT HIGHLIGHT – 10 FHA Myths Revealed
- JACKISM OF THE DAY- “I Do” Really Means “Do You”
START EACH MORNING WITH EASY TO READ MBS UPDATE
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Tour De Mortgage Finance Learn Something New Everyday About Your Industry
CREDIT CRUNCH INCREASING
This may not be about MBS specifically but it does bring up a great point to be discussing with people you know.
Refinances have increased over the past few months even with higher mortgage rates. One of those reasons is the massive amount of debt that people are accumulating.
In the graph below. From bottom left to right is 2014 to 2023.
The left side is measured in billions of dollars up to 1 trillion at the top.
On the right side is the personal savings percentage rate.
The dark blue is the U.S. personal savings rate which currently sits just above 4% on the far right. From 2014 to 2020 it averaged between 7 and 10%ish then went to 34% during COVID and was hovering between14 and 20% for 21 and then 2022 hit. Savings went out the door.
The light blue shaded area is credit card debt. From 2014 to 2020 is low as 600 billion and as high as 850 billion.Then it subsided down a little bit during COVID and has skyrocketed since early 2021 and is now approaching 1 trillion in credit card debt.
Some folks are spending because they wanted to get out of the house or spending because they are redoing a house and many are living on their credit cards to make ends meet.
Whatever the reasoning is the U.S. has a massive amount of debt out there. In addition, the U.S. has a massive amount of equity out there as well.
Whether you use our HELOC low cost program to offer assistance or run the numbers to see if a new cash-out mortgage meets their needs. You should be out there talking to your customers of the options they do have.
There is a huge need and you can fill it.
Product & Guideline Highlight Knowledge That Gives You An Edge Over Your Competition
10 FHA MYTHS REVEALED
I receive a lot loans from clients that other lenders cannot do.
I call it drinking the juice too long under a perceived myth that FHA requires something when in reality it does not.
Here are some items about FHA that you may not know and can help you close more deals.
I love FHA loans and we rock them out. If you do Govt then you need to be with Flagstar.
10 FHA ITEMS YOU MAY NOT KNOW
1. FHA will not approve a front end DTI > 46.99 nor a back end ratio > 56.99. If your over then tweek it down a bit.
2. FHA does allow you to gift reserves. You cannot gift manual underwriting 1 month reserves nor the 3 months reserves for compensating factor but you can gift reserves for AUS approval. Have to get an approve? Get a substantial gift if available and get an approve.
3. Gift donors do not have to give full bank statement. You only need the balance before, the gift coming out and the balance after. A 3 day transaction history works just fine.
4. You do not need to source nor explain any deposits in a donor’s account.
5. Don’t complicate close personal friend donor. Just write a letter stating they are a close personal friend and how. No supporting documentation is required.
6. Cash deposit to cover closing or down payment CAN be used. Just explain the way they saved at home and it must make sense but we can use it. Money saved at home is eligible if the storyline fits.
7. Positive rental histories can now be used to get an approve eligible where they could not before. Most still don’t know that.
8. Manual underwrites have fairly clear guidelines on installment and housing debt. Revolving and utility type collections play a much smaller role. Review mainly installment when deciding on submitting for manual. Charge-offs do not require adding 5% payment to them like collection accounts.
9. You only need to be self-employed for 1 year if you worked in the same line of work prior to becoming self-employed.
10 – Commission income is only needed for a year and not two years. No exception required as long as they have 1 year in.
Jackism of the Day Truths and Thoughts that make you go hmmm
“I DO”, REALLY MEANS “DO YOU”
Keeping a client committed to your loan is a lot like a marriage.
Many people think once you say “I Do” at your wedding ceremony that it is a done deal and the I Do is until the end.
In actuality, the I Do is the beginning of the other party asking Do You each day.
Speaking from a husbands perspective have you ever experienced this from your wife if you are married?
- Do you still love me?
- Do I look good in this dress?
- Wants to talk about the relationship over concerns?
- Reacts strangely due to no understanding of your own?
- Asks for space but then does not really want it?
- Gets upset when you want to spend time with others but didn’t before?
Most of the above happen in any relationship and there are plenty of bullet points on the husband side of the role.
But the point here is that each one of those actions at the core is a message being sent saying do you? To be reassured daily that you love your spouse is vital to them feeling secure in your marriage.
When things happen that make no sense what they are really saying is are we ok? That nobody is out looking for a new model and that what you had, you still have. This is vital to understand and they just want to know you love them and are here to stay. Every day!
Now take that same understanding and apply it to your clients. Just because a client locks in with you and sends you their documents and says I do to your terms and conditions. Throughout the process they are likely still saying Do You?
How often have you experienced this after your client says I Do?
- Have rates gotten better after they are locked in.
- Do you really need that additional documentation?
- I saw that so and so lender is offering this or that.
- Is their a different product I may qualify for?
- Are you sure this is your best deal at the closing table.
As you go through the loan process with your client begin to watch out for the signs that they may be asking the question Do You even though they said I do.
At each step through the process make sure you are re-assuring them that what they are getting is what is best for their situation. Know and understand they need to know they are ok, that their loan looks good, that they are appreciated as a client.
When they begin to act strange or stop taking your calls or begin asking for space you need to address your commitment to them and hold them and comfort them through the process.
Mortgage transactions are not just financial. They are emotional, bonding, personal and conditional.
Today, rethink your relationship with your borrowers and reach out and let them know they are cherished and a valued client. I assure you that someone else is likely trying to court them as well and the thoughts of committing mortgage adultery is on their mind even when you think you are happily married.
