Saturday, August 23, 2008

It could be easy to not tell the complete Truth

Today my client visited me and insisted on refinancing his ARM that is coming due into a 30 year fixed rate loan. In his eyes the problem is, his 5 year interest only loan is going to adjust or 'reset', a word used a lot by media. His present loan is wonderful; 5.25% interest only but it resets in December.

It could have been so easy to simply follow my clients wishes and do a new 30 year fixed rate loan. He would have been happy and I would have earned a commission. But his index is the one year Treasury and that rate today is only 2.18% and my clients margin is 2.75% which means he will reset to 4.93% and his rate will go down for the next year. This loan is just over $600,000 and that means each percentage is $6,000 a year.

The best 30 year loan he could get today would increase his interest cost by more than $9,000 a year. Of course eventually the Treasury rate will go up but for right now it is too costly to consider. This is a smart person but my guess is that 95% of the clients don't know how to read the promissory notes and to determine what is going to happen on the adjustable rate loans that become fixed.

It is easy to spin any situation and I easily could have written a new loan but I try to put myself into my clients shoes and do for them what I would do for me.....darn it, sometimes I wish I weren't so honest but I have to live with myself.

Friday, January 11, 2008

Community Service makes Business Sense

Doug Jones

We have an unusual policy at Mortgage Magic. We require everyone; employees and independent contractors to do some type of community service work.When we opened the doors in 1990 it just seemed to make sense to get involved with the community. We did not realize all of the blessings that would flow our way because of this decision.

Almost immediately we were recognized by the San Jose Chamber of Commerce and awarded the Comminity Excellence Award. Along with a plaque came $20,000 for local TV advertising. Then the Salvation Army awarded us with their Golden Kettle Award. We were the first small company to win the award. Past winners had been IBM, General Motors, Hewlett Packard, and the San Jose Mercury News; all large organizations.

We have worked with perhaps 100 local charities and non-profits. We even have a balloon tieing team and a face painting team that will help with local events where kids are involved. I am a magician and have done hundreds of free shows in the bay area for churches, schools and non-profits. I even swam from Alcatraz to San Francisco and raised money for a local charity.
We are rewarded many times over with recognition. But, you know what? The joy is so great that if no one ever knew what we have done, we would still do it. Helping is fun and rewarding. The feelings of joy and happiness is a great stress reliever and a great reward.

I recommend you contact a charity that seems to fit with your interest and personality and go do some acts of kindness. You will be so much happier if you do. If you are unsure about how to start you can join a local service club such as Rotary, Kiwanis, Optimist or the Lions. These clubs and clubs like them all do wonderful community work.

Going back to the first paragraph. What has it done for our company? We are really family and in an industry with a lot of turn over, we seem to be immune. We opened in 1990 and all of the first employees are still with the company. I think because we require community service work we attract people with high integrity and values.

Wednesday, January 9, 2008

Waiting For.........What?

Narma Delores Mayfield

As an undergraduate at UC Berkeley, I read Waiting For Godot, a play by Samuel Becket. The play is the story of two old mean awaiting the arrival of a mutual acquaintance who never appears. The old men hardly know this person, Godot, and admit that they would not recognize him even if they saw him. One of the continuing threads of the play is the idea that “nothing” is a thing that has to be done and the characters will spend the remainder of the play doing just that – while they await Godot.
There are three themes in the play that I find intriguing: waiting, lack of recognition, and doing nothing. The following is a brief discussion of the three themes as they relate to the real estate industry in today’s market. Certainly, I will relate these three to my recent experiences in the industry.
As a real estate agent and mortgage broker, I have had the opportunity to speak with many people in many areas of the real estate market: real estate professionals (title companies, loan processors, sales agents, loan brokers, lenders, buyers, and sellers). Their perspectives on the market have varied. Some, professionals, buyers, and sellers, have dropped out of the real estate and mortgage market. Some professionals have augmented their real estate income, or lack thereof, with income from outside the industry. Sellers have taken their properties off the market, after lowering their asking prices unbearably, homeowners have walked away from homes they cannot pay for, and buyers have put a hold on buying. Most are admittedly waiting – and doing nothing while they wait.
Waiting for what? They are waiting for the market to change. They are waiting for prices to bottom out. They are waiting for the best interest rates. They are waiting for the ‘right deal.’ Sellers - who still have the option to sell – are waiting for the right offer. Many, who have held their homes for a long time, are experiencing a reversal no one ever expected would happen in real estate: property values, instead of appreciating, are decreasing. Others who may not have had their properties quite so long, but who paid a competitive price for them in the previous market, are finding that they now owe more on their properties than the property is currently worth. Who ever heard of properties going upside down?
This market is, in some ways, like Godot. It is unknown, unfamiliar. Prices are dropping, but for how long? Interest rates are creeping down, but at what unforeseen consequence? The market is glutted with unwanted properties, but builders are still building new homes in some areas. The media paint horror stories, warning potential buyers to proceed with caution while industry people say ‘now is the time to buy, the potential for great deals has never been better.
Still they wait. Like the two old men waiting for Godot, potential buyers await the magic moment when the ‘good deal’ they want will arrive. In the meantime, they actively ‘do nothing.’ There are a couple questions that need to be addressed, however. 1. What does that ‘good deal’ look like? 2. How/Will the buyer recognize the ‘good deal’ when it finally comes along? I don’t know, but it seems to me that deals in any market are not the result of ‘doing nothing.’ In fact, they are structured through negotiation between the principals – the buyer and her agent and the seller and his. It seems to me that most deals don’t just arrive on the scene. There is work for all to do that must be done. It has always been my experience that the potential for a ‘good deal’ may be staring a person in the face, but if that person does not rise to the occasion and take some action, there is no ‘good deal.’
It would seem to me that, like the old men waiting for Godot, the potential buyers waiting for a ‘good deal’ would take some preliminary action. The old men needed to at least know what Godot looked like in order to know if and when he arrived. He might have arrived and gone unnoticed because they had no idea what he looked like. The same is true with ‘good deals’ in real estate – or for that matter, any other market. If a buyer doesn’t know what she is looking for, how can she know when she has found it? If she hasn’t taken some preliminary steps – identifying a real estate agent and mortgage broker with whom she can work; determining how much house she can buy or how much she can invest; gotten pre-approved for a loan or finding out what she needs to do in order to get pre-approved – and do it – before beginning the search for property, at the least, it’s unlikely she will be able to take advantage of a ‘good deal’ if one should come her way.
At the end of the play, Godot still had not arrived, though the old men did pass the time in conversation that may have been thought provoking for a viewer, doing nothing. Who knows, perhaps that was all the old men really wanted; but for those waiting for a ‘good deal,’ unless the wait is all they really want, there is a need to be proactive, to do something. In that way, at the end of the day, they may be able to say that they achieved their objectives. If you are looking for a ‘good deal,’ are a first time home buyer or investor, I specialize in discounted, bank-owned properties, 100% risk free! Please call me if I can be of any assistance. You can contact me at 510/638.6600, by cell at@ 408/439.0723, or by email @