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The Single Most Important Question You Need To Ask Your Loan Officer: Right Now.

by Justin McHood

in Justin McHood, Mortgage Related Topics

Pull up a chair, I need to have a serious conversation with you for a minute. Something happened this week that you may not be aware of yet and although I don’t want to alarm you unnecessarily, I want to help you protect yourself from the fallout of what happened.

What Happened This Week

This week something out-of-the-ordinary happened when the government effectively shut down a large wholesale bank named Taylor, Bean and Whitaker. Yes, it has been all over the news but I worry that many people just assume that it was just another bank failure – heck, they pretty much happen on a weekly basis (always on Friday of course) so what is the big deal, right?

Wrong.

Why Taylor Bean and Whitaker Closing Is Important To You

No matter who you are – or whether you are currently in the process of getting a loan or not, the closing of Taylor Bean and Whitaker will impact the way you shop for a mortgage. One of the reasons it will impact everyone is that Taylor Bean and Whitaker was one of the “last options” for many types of loans. As lenders have tightened up their guidelines, many lenders simply “don’t do” certain types of loans anymore. FHA Jumbos, FHA Manufactured Homes, FHA 203k Streamlines, USDA Loans – these were all loans that TBW did and loan officers all over the country used TBW for years.

The Single Most Important Question You Can Ask Your Loan Officer

With the closing of TBW, many loan officers are now scrambling to get their loan placed somewhere else – and the sad truth of it all is that many people who were just about to close their loan will not be able to close their loan somewhere else because no one else will do the loan that TBW would have done.

So, the single most important question that you can ask your loan officer — please pick up the phone right now and ask it if you haven’t already is:

Do you have a backup lender in place in case the current lender you have my loan with closes their doors?

And don’t settle for any answer other than yes or no.  Don’t let your loan officer go wishy-washy on you. This is an answer that you need to know. You need to know that your loan is in line at XYZ lender and should something happen to XYZ lender, is there a backup plan in place?

And if there isn’t… well – it is time that you demand that your loan officer get one.

Because in today’s mortgage market – as proven again this week by the closing of Taylor Bean and Whitaker – anything can happen.

And by being proactive and making sure you have a backup plan in place should something happen, you can mitigate the risk of a financial crisis of your own.

More Information:

HUD Press Release

Wall Street Journal Article

Taylor Bean Press Release

Dan Green does a great job of putting together a FAQ list for many questions people have about the Taylor Bean and Whitaker event.

Read More:

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Zillow Mortgage Marketplace: 3 Day Rule?

Are you still asking yourself “what exactly is so special about the Zillow Mortgage Marketplace anyway?” Previously, we learned that the first rule of negotiation is the first one to talk loses and that the second rule of negotiation is that when you are explaining, you are losing . Ready for the third rule of negotiation? Wait. Before we get to that, let’s forget about mortgage-related stuff and think about something sunnier — love . Let’s think about love for a moment. Think back to the best first-date that you have ever been on. You know, that once-in-a-lifetime kind of date that happens only once or maybe twice in a lifetime. You met that special someone for the first time in a date-setting. You really liked the other person, had a fabulous time and fell asleep that night wishing the feeling would last forever. And then you woke up the next morning and wanted to call your date just to tell them how much of a great time you had… but you just couldn’t allow yourself to. Why? Because of the three day rule. You know, that unspoken rule that everyone seems to know about but yet never speaks about with other people. The one rule of dating that you wouldn’t dare breaking for fear of messing something up. The one that you are absolutely positive would jinx the entire relationship and could possibly lead to sudden cardiac arrest. The three day rule is a very real rule because it follows the third rule of negotiation. The third rule of negotiation is: The person with the least interest controls the relationship. How Zillow Mortgage Marketplace Puts You In Control Everyone has been chased by a rabid, commissioned sales person before. When shopping for a mortgage on Zillow’s Mortgage Marketplace, you fill out your information and immediately you get phone calls and emails from up to 150 rabid, commissioned loan officers who have too much time and not enough to do, right? Wrong. You won’t get a single phone call or email once you submit your information on Zillow’s Mortgage Marketplace because the lenders never see any of your personal information so they have no way to contact you or even know who you are . To the lenders on Zillow’s Mortgage Marketplace, you are just a set of numbers. Important numbers, yes — but just numbers that are only related to your mortgage. However — once a lender submits a quote to you, you are able to not only see their “numbers” (notice how I didn’t use the word measurements ) but you will also be able to see their lender profile, see what other clients have said about them and probably even a picture or two of them along with a profile and short bio. Put quite simply: there are two ways to shop for a mortgage online. One way is to submit your information to a company and that company sells your information (yes, even your phone number) to up to 8 rabid, commissioned loan officers with too much time and not enough to do… Or You use Zillow’s Mortgage Marketplace and collect all of the information about “what the lenders can do for you” without them ever even knowing who you are. Back to the Third Rule of Negotiation — The one with the least interest controls the relationship. Say that you don’t feel like calling (or emailing) your favorite loan officer for three days after you get their quote because you don’t want to get the relationship started off on the wrong foot? It is your choice — assuming you used Zillow’s Mortgage Marketplace and not some other way to shop for a mortgage online. And I am sure the loan officer will understand — after all, you have to wait at least three days according to legend or the relationship may be cursed!

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Bait and Switch: How To Ruin This Game

I got a call from a young lady in Oregon today who asked me a simple question: “Hello, I am about to close my loan tomorrow on a FHA loan and I think something is wrong. Throughout the whole process, my loan officer told me that I was going to get a 5% fixed rate and just today he told me that I could only get a 5/1 ARM at 5%, but that because it was an FHA loan, I could refinance with the FHA streamline program 3 months from now with no cost. Is it true that I can refinance in 90 days with no cost at 5%?” A siren went off in my office and a red flashing light turned on. I was on the phone with a potential victim. Someone who had not-yet-been-taken-advantage-of, but was about to. Now was my moment! Forget about the FHA streamline program, this poor young lady needs to get the rate she was promised! “Maam, I don’t know a nice way to say this, but you just need to put your foot down. You were promised a rate and you might have to work a little bit to get that rate. The good news is that I can pretty much promise that if you do what I am about to tell you, you will get a 5% 30 year fixed rate and not have to worry about the future of whether-or-not you can do an FHA streamline.” What To Do If You Have Been Promised A Rate But Are Getting Something Else: Ask to speak to the manager. Explain to the manager what has happened and that you were promised one rate and now that it is close to closing you are getting something else. Be nice, but firm. Do not, do not, do not back down. If the manager won’t help you get the rate that you were promised, ask to speak with the company owner. Yep, the company owner. The company owner will be able to help you. If the company owner won’t help you – it is time to call in the government. Each state has some form of governing authority over mortgage lending and now is the time to find out who this is and how to contact them. Hint: Google can help you. Call them, tell them that you wish to file a complaint and see if they can help you. Chances are that they will just take your information for now – but depending on what state you live in, they may be very actively involved in investigating claims like yours. Call your local tv station and ask them for their “XYZ news channel on your side” reporter. Tell them how you have been taken advantage of by a mortgage company and there is a good chance that they will not only help you, but maybe you will even get the “bad mortgage company” on tv for promising you something that they refused to deliver. The above scenario is just one of the many reasons to use Zillow’s Mortgage Marketplace . If this poor young lady would have used ZMM to start with, she could threaten her loan officer with something way more powerful than any of these 4 items — she could just threaten him with negative feedback. Will my friend from Oregon get the rate at the table that she was promised? I don’t know. But I do know that her loan officer isn’t all that worried because she didn’t use Zillow Mortgage Marketplace to find him, so she can’t leave any negative feedback. I bet that with the recent jump in mortgage rates , there are many people in this same situation.

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Zillow Mortgage Marketplace: When You Are Explaining You Are Losing

If you have shopped for a mortgage in the last 20 years, chances are that you know what it feels like to walk into a gunfight with a knife. In negotiations, knowledge is power and until the recent launch of the Zillow mortgage marketplace , it was all too hard to get enough information to find yourself with enough leverage to get the best deal on a mortgage. But that has now changed – and as I recently promised when talking about the First Rule of Negotiation , here is how Zillow’s mortgage marketplace puts you on the right side of the Second Rule of Negotiation. The Second Rule of Negotiation is: When you are explaining, you are losing. In any negotiation, there is a time to talk and a time to listen. The best negotiators spend more time listening than talking. The rookie, all-to-eager-salesman spends far more time talking than he does listening. When the best negotiators do talk, it is usually concise and addresses the concerns of the other party. Generally speaking, great negotiators will follow a simple rule introduced by Stephen Covey: “Seek first to understand, then to be understood” If you shop for a mortgage and choose NOT to use Zillow’s mortgage marketplace, chances are that you will call a loan officer, and immediately start “explaining” your situation. What you don’t realize is that while you are “explaining” your current situation, any loan officer who is worth his salt is sizing you up and figuring out if you are really something that he can deal with and make money on — and even sizing up the amount of effort your situation will require and how much money he stands to make. Within the first 5 minutes on the first call with you, good loan officers can tell if you are going to be a great deal for them (low effort, high dollars) or a bad deal for them (high effort, low dollars) and it all comes from things that you are explaining when speaking about your situation that have nothing to do with numbers . When you are explaining, you are losing. Now, if you shop for a mortgage using the Zillow mortgage marketplace, the tables are completely turned . You simply fill out the vital numbers of your situation and then the loan officers get to “explain” why you should choose them as well as submit their best offer. Then – when you are not feeling pressure or rushed or have that “somehow I just got sold something” feeling, you decide which loan officer you want to contact about your mortgage. Remember, when you submit your information to Zillow’s Mortgage Marketplace, the lenders don’t get to see all of the “other” things about you – just your vital numbers that they really need to know. We don’t get to see your personal information and we have no way of knowing who you are or how to contact you. Which leads into the Third Rule of Negotiation . And lucky for you, using Zillow’s Mortgage Marketplace puts you on the right side of that one too. Up next, find out how the Third Rule of Negotiation applies to dating AND shopping for mortgages. Zillow has your covered when shopping for mortgages, but you are on your own when it comes to dating.

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FHA To Allow 8,000 Tax Credit To Be Used As Downpayment?

Note: This is something that has not yet happened, but may soon happen. I originally posted this information about the 8000 tax credit being used as a down payment on my main site, and thought it was relevant enough to share with everyone as to what may soon be around the corner.  I once posted something about the then-pending 15,000 tax credit which passed into law as a 8,000 tax credit – so I have some experience as to how things change before they actually become official. But I thought everyone would be interested to know what may be lurking in the near future. Can you use the 8000 tax credit as a down payment for your home? Not yet. But that may change soon. Yesterday, Secretary of Housing and Urban Development Shaun Donovan gave a prepared speech at the National Association of Realtors Real Estate Summit. He said something that was probably beyond interesting when he mentioned that FHA was currently working on a proposal that may involve people being able to use the 8000 tax credit as a down payment. An excerpt from that speech regarding FHA’s position on the 8000 tax credit being used as a down payment : And we are taking action to further help the housing market recover. I’m excited to announce here at NAR that FHA’s policy on the “monetization” of the first-time homebuyer tax credit will soon be published. I know that you’ve been waiting anxiously to hear FHA’s position on the matter. We, like you, believe that this new tax credit is not only a tremendous opportunity for first-time homebuyers, but also an enormous benefit for communities struggling to deal with an oversupply of housing. According to estimates by the National Association of Home Builders, this new tax credit will stimulate 160,000 home sales across the nation – 101,000 of which will be first time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first time buyer purchased their home. We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to “monetize” the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly. Enabling first time homebuyers to use the 8000 tax credit as a down payment would be a big win for the market – it would allow many more people to move into a home who currently may not have enough for a down payment. We will be sure to keep you posted on developments in this situation as the happen. (h/t Mark Madsen at MyFHAMortgageBlog for sharing the video about the 8000 tax credit being used as a down payment and the guys at ThinkBigWorkSmall)

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