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THIS MORNINGS QUICK LOOK

1. TOUR DE MTG FINANCE – Fed Funds Rate Vs Discount Rate
2.  PRODUCT HIGHLIGHT –  FHA Gaps Of Employment
3.  MARKETING – If It Ain’t Broke – Break It

Tour De Mortgage Finance Learn Something New Everyday About Your Industry

FED FUNDS RATE VS FED DISCOUNT RATE

Their is some confusion between the two types of rates that the FOMC (Federal Open Market Committee) aka The FED movers and shakers talk about when you are hearing those names in the news.

Monday some FED folks started tossing out potential dates to increase the Fed Funds Rate by end of 2022 or 2023. 

The FED Funds Rate is the “suggested” or “target” rate that the FED sets for banks to borrower from one another on an overnight basis. Every bank that is part of the Central Banking System which is most must keep on reserve with the FED a certain % of the deposits they have with its clients. 

Due to large withdrawals or whatever may happen banks fall below the minimum requirement and therefore must increase their reserves and therefore must borrower from another bank who has excess reserves. Those two banks negotiate the cost at the target rate and borrow from one another. 

Due to the short term lending of banks for LOC’s, car loans, credit cards and any real short term or adjustable portfolio type loan this rate can impact short term interest rates because said banks have to pay more for the excess reserves or they can lend to another bank for a certain % therefore they must increase rates to clients. It goes both ways.

The FED Discount Rate is the rate at which banks borrower from the FED to use with the intention of paying it back in a short term model. For example, Flagstar Bank closes 3 billion in loans. Well, we can go to the Fed Bank and get the 3B secured by Notes then fund your loans then sell to Wall Street then make our margin and pay the FED back what we borrowed at the FED Discount Rate then we do it all over again.

So each one impacts consumer loans differently. Both control the ebb and flow of money.

Product & Guideline Highlight Knowledge That Gives You An Edge Over Your Competition

FHA AND GAPS OF EMPLOYMENT

FHA has not given any leniency to the gap of employment rule of 6 months out then you must be 6 months back at work as of case number assignment. Conventional has given more leeway due to covid on the gaps of employment but FHA is standing strong on their guideline.

The guide is if you are out of work for any reason for greater than 6 months you must be back to work for 6 months. PLUS you must prove 2 years consistent employment history prior to the gap. One last tidbit of information is that after the gap it is 6 months back in CURRENT job. Not total jobs but CURRENT job.

In this scenario they had been back to work 1 year and 10 months after a 6 month gap of employment. Many would think just get 2 more months and you are good. But FHA requires 2 years of verification prior to the gap so in this scenario you would need 3 yrs 10 months of employment history.

At some point they must have had 2 years employment without a 6 month gap anywhere.

Now you know……….

Marketing Ideas And Opportunites Little Things That Can Make A Big Impact

IF IT’S NOT BROKE THEN BREAK IT

I learned last week that their is a new definition for Insanity. Thanks DH!

Previously it was Doing the same thing over and over and expecting DIFFERENT results.

The new definition is:
Doing the same thing over and over and expecting the SAME results. 

Whatever you are doing now may have worked for quite some time but the world is changing at speeds never seen before whether it be technology, diversity, age changes in the industry and every other thing you can imagine.

Yesterday, I asked the question “Are You Easy?”. What has worked for years can still work but you have to make sure what you are doing now will keep the same results based on what others are doing in your industry. If you are not keeping up you are not staying where you are you are actually backing up. Beep-Beep-Beep………..

Here are some reality checks:
Nobody trusts anyone. Especially if you don’t know them.
70% of people fully trust online reviews.
For every star review lost = 5-9% loss in revenue.
There are 6.4B smart phone users.
Are you optimized for smart phone use?
Rival competitors are perfecting the consumer experience.
Long term loyalty is a thing of the past.
Customer experience is everything.

This is just a small peace of the technology reality check.
Just some thoughts to get new ideas going and to create your new insanity.

Turn Times As Of This Morning Lookin Good!