Effective for FHA loans for which the case number is assigned on or after October 4, 2010 the Upfront Mortgage Insurance will decrease from 2.25 to 1.00 (100 basis points) on all FHA insured loans except Home Equity Conversion (HECM - "reverse mortgage"). Chances are you have heard this or some version of it but until yesterday, September 1, 2010, it was not in writing in the official form from HUD.

When are FHA case numbers assigned?

Case numbers must be assigned prior to ordering third party services such as the appraisal. Appraisals are not ordered until there is a fully executed sales agreement in the lender's possession. The lender orders the FHA case number and assigns it to the loan application where it becomes permanent record. 

Monthly Mortgage Insurance also changing.

With UFMIP going down MMIP is heading up. Much more dangerous to the industry because it impacts monthly payment and thus debt-to-income ration (DTI). Currently on loans of over 95% the MIP is .55% annually and from 95% and lower it is .50% annually. Effective October 4, 2010 those numbers will be .85% and .90% which results in an increased monthly payment.

Contrary to some reports there has been no notification of change in the amount of closing contributions by the seller which can be contributed to cover closing costs which is 6% and has not (yet) changed. The buyer must contribute 3.5% of their own money but it can be a gift.

This information applies to 203b and 203k loans.

Examples - top row is now, second row is after 10/4 and the $43.39 is the monthly payment increase:

Questions? Don't hesitate, ever, to contact me.

COMMENTS ARE GOLDEN - this is about you so sound off ...

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

Having the ability to use a down payment gift from a friend or family member is wonderful. In today's real estate and employment economy it is almost crucial in a small percentage of cases. During a time when many are selling below payoff and needing to bring the deficiency to the closing table they may be greatly decreasing their available cash to close. When this happens having a gift from an employer, family member or friend can mean the difference between getting that home and not getting the home.

Many will argue if a buyer does not have the down payment they do not deserve the home. Continue your argument and feel free to comment here but only if you include actual facts and data to evidence your contrarian view. Not having down payment does not automatically translate into future default - especially in today's economic climate.

Who can give a down payment gift?

Any direct relative such as a sibling, parent or child can give a gift without any further explanation as can an employer. Distant relatives and friends can only give gifts if they have a vested interest in the buyer making this purchase. The goal is to make sure no party with an interest in the sale of the property (builder, seller, agent) are providing the gift to the buyer.

The borrower must list the name, address, telephone number, relationship to the homebuyer, and the dollar amount of the gift on the loan application or in a gift letter for each cash gift received.  If sufficient funds required for closing are not already verified in the borrower’s accounts, document the transfer of the gift funds to the homebuyer in accordance with instructions described in Handbook HUD 4155.1 REV-5

Often the most challenging aspect of the gift is having the donor understand they will be required to provide evidence of their ability to give which may include showing some private information to the underwriter. It is often a battle, especially with older generations who have been well steeped in protecting private data. However the HUD rules are as follow:

Documentation Requirements.  The lender must document the gift funds by obtaining a gift letter, signed by the donor and borrower, that specifies the dollar amount of the gift, states that no repayment is required, shows the donor’s name, address, telephone number and states the nature of the donor’s relationship to the borrower.  In addition, the lender must document the transfer of funds from the donor to the borrower, as follows: 

1. If the gift funds are in the homebuyer's bank account, the lender must document the transfer of the funds from the donor to the homebuyer by obtaining a copy of the canceled check or other withdrawal document showing that the withdrawal is from the donor's account.  The homebuyer's deposit slip and bank statement that shows the deposit is also required.  

2. If the gift funds are to be provided at closing: 

a. If the transfer of the gift funds is by certified check made on the donor's account, the lender must obtain a bank statement showing the withdrawal from the donor's account, as well as a copy of the certified check. 

b. If the donor purchased a cashier's check, money order, official check, or any other type of bank check as a means of transferring the gift funds, the donor must provide a withdrawal document or canceled check for the amount of the gift, showing that the funds came from the donor's personal account.  If the donor borrowed the gift funds and cannot provide documentation from the bank or other savings account, the donor must provide written evidence that those funds were borrowed from an acceptable source, i.e., not from a party to the transaction, including the lender.  "Cash on hand" is not an acceptable source of the donor's gift funds. 

Regardless of when the gift funds are made available to the homebuyer, the lender must be able to determine that the gift funds ultimately were not provided from an unacceptable source and were indeed the donor's own funds.  When the transfer occurs at closing, the lender remains responsible for obtaining verification that the closing agent received funds from the donor for the amount of the purported gift and that those funds came from an acceptable source. 

NOTE:  FHA does not “approve” down payment assistance programs in the form of gifts administered by charitable organizations (i.e., nonprofits).  Mortgage lenders are responsible for assuring that the gift to the homebuyer from the charitable organization meets the appropriate FHA requirements and the transfer of funds is properly documented.  In addition, FHA does not allow nonprofit entities to provide gifts to homebuyers for the purpose of paying off installment loans, credit cards, collections, judgments, and similar debts.

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

MONDAY AUGUST 16 - 3PM EDT - ONLINE
http://loanofficers.eventbrite.com/ - free RSVP REQUIRED*

Congress, most specifically Barney Frank and Chris Dodd, have had their hands in banking so long they and so deep if anyone can have the blame laid at their feet for the industry crash it is they. Their insistence and relentless pursuit on allowing the "underserved markets" to have equal access to home mortgages back in the 90s led to wild west banking where anything went. They were able to gun down conservative opposition in the early to mid 2000s to which would have brought an earlier end to the way mortgage pools were rated and which people were granted access to loans.

Then, like now, any opposition to their free and open lending market resulted in us being called bigots, nazis and prejudiced. You know that is not true and I know that is not true but it's the level of intellect we are fighting against for the future of our industry and borrower's rights.

Now the real problem comes. Your very income - regardless of how difficult the loan is to get through processing and underwriting not because of fraud but because of, quite bluntly, disorganized applicants who have little or none of the documentation needed, union workers who work a dozen jobs in a year sometimes, and all the other reasons you know why loans can often takes literally weeks of man hours to close.

Note to readers: If all you can say is "well those people don't deserve a loan" then move on. I will delete your comment because that is absolute foolishness.

Most of the actions recently taken by Congress including the passage of the "Wall Street Reform Bill" are reckless and have endangered the American economy even further. More than half of their regulations will prohibit activities the banks no longer engage in. A great percentage of the new regulations will make it almost impossible for anyone borrowing less than $200,000 because no loan officer will want to mess with a loan that takes a week of their time to earn maybe $350. 

Congress is WRONG. You are not the problem loan officers. You've been too quiet while your very future has been obliterated. It is not too late. We have friends in Congress. This is the year you're going to need to make a vote based on business, history and numbers - not who makes empty promises while stealing your income and crippling the real estate industry. NAR is not going to fight for you. NAMB is weakened because of a drastic loss of membership. Other little groups are springing up here and there but they don't have a real voice in DC.

Join this free conference call for loan officers. The line is limited to 300 and it better be packed. This is your time to wake up your voice and get ready to send a message to the opponents of honest lending practices and those who blindly regulate a process they simply cannot comprehend.

IF YOU HAVE SOMETHING SPECIFIC YOU WOULD LIKE TO SAY you need to contact me now. Email me at http://kennycook.com/contact or call me at the number below.

It's not that you are going to lose it's that you have already lost. This fight now is to (a) wake up the industry to the adverse consequences of these foolish regulations and their cost to the industry (b) fight for borrower's rights to have access to home mortgages (c) go full bore with pressure on both Houses of Congress to reverse the insidious damages before they actually begin to hurt 35% of American borrowers.

Homework - READ THIS Sect 1401 of HR 4173 but don't just read the black and white on the page. Think about the consequences:

1. How lenders are going to protect themselves from violations of the compensation rules
2. How brokers will be compensated since the lender cannot know which loans are receiving higher fees
3. Unintended consequences to the borrower when there is no coverage of costs on lower loan amount
4. Where the maximum fees will impede free trade

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

Down payment assistance from the State of Georgia

Yes, you read it correctly. We can get you up to $7,500 to be used for down payment and closing costs on homes with sales prices over $150,000 in Georgia. Under that and you can get up to $5,000. Unlike other down payment programs the buyer does not need to be a first time home buyer. If you search the Georgia Dream lenders on Georgia DCA you will see my team members make up 6 of the top loan officers and 3 of the top 4. We understand Georgia Dream!

As a reward for higher credit scores and to encourage savings, eligible borrowers will:

1) Have a total annual household income that does not exceed the Georgia Dream First Mortgage Loan Financing Limits below

2) May retain cash assets up to the greater of $20,000 or 20% of the purchase price

3) Contribute a minimum of $1,000 of borrower funds to the purchase transaction.

$5,000 if sales price is $150,000 or less

$7,500 if sales price is greater than $150,000

If the home is located in one of the following Georgia counties:

Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Cobb, Coweta, Dawson, Dekalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Haralson, Heard, Henry, Jasper, Lamar, Meriwether, Newton, Paulding, Pickens, Pike, Rockdale, Spalding or Walton Counties

Your total household income based on the number of persons living in the home can be no more than:

One to Two persons $71,000

Three or more persons $82,000

Buyers must have middle credit scores of 660 or higher. Buyers must contribute $1000 of their own funds.

As always don't think just because these few numbers are published here these are all the answers. The very best thing to do is click the "Call Me" button below and the computer will call me and connect me with the phone number you enter. Only a short interview will usually determine if this is the best home mortgage loan for you.

Loan rates are not determined by the lender but are set by Georgia DCA.

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

Recently there have been several posts here on AR with agents, loan officers and a couple of readers chiming in about pre-approvals, pre-qualifications and even Commitment Letters. In this very short post I am speaking only for myself and my companies and what he have, can and will do and the value of it. Specifically focus is on the commitment letter.

Pre-Qualification

If you get a pre-qualification letter from me you are getting a letter which says I have taken an application, examined the credit history and used an Automated Underwriting System to receive an approval level. No income statements have been verified, employment has not been verified and assets have not been verified. This letter means they have the credit history and have indicated they have the income, job history and assets to prove they are truly qualified. This letter can be had in as little as 15 minutes from the first phone call. My letter indicates only the credit has been examined and income, assets and employment have not been verified. Worthless? Not totally because credit tells a lot ... that's an entirely different blog.

Pre-Approval

If you get a pre-approval letter from me it means I have examined the income, assets, credit history, employment history, and have proven all the statement that we made on the application as well as satisfied any conditions of the AUS which apply to the borrower. I may or may not have seen an appraisal, title, home owner's insurance, and other factors related to the property. I also may not have finished the fraud screening in you (the agent) the seller, the appraiser, and the others involved in the transaction. If the deal busts after this it's because the buyer changed jobs, spent their assets, applied for new credit, or the seller or one of the agents has a fraud history or the appraisal, title or insurance has an issue. Valuable? You decide.

[UPDATED] - this can take as little as a day or as much as a few days depending on how co-operative the third parties are. Since it involves verifying rent and income those can be delays.

Commitment To Lend

You will not get a commitment to lend from me. Ever. Likewise from almost every bank and lender in the nation. Commitments to lend are of essentially no more value than the Pre-Approval from above. (Argue if you like, I said I'm writing from my experience and my viewpoint.) A commitment to lend can be issued at any time the bank or lender wishes. I used to work for a company that issued commitments to lend with about 2 pages of small print. Those two pages of small print turned that Commitment to Lend into a Pre-Approval in the first paragraph.

My experience with commitment letters

From the late 1900s through about 2008 my company and I were well known in Georgia among real estate investors. I was deeply involved, well sought by investors and even taught in the John Adams Real Estate Investment Institute at Emory University. What I saw from them about shady deals would pickle the toes of the average real estate agent or loan officer.

The very first Commitment To Lend I held was many years ago and it was a very official stamped and signed document from Barclay's Bank. The loan commitment was for $50,000,000. The "gentlemen" who were brought to my office by a couple of very well known former NFL stars - and I do mean stars - as they were attempting to raise $18,000,000 for a development on an island not too far from Florida.

The men brought at least 1000 pages of documentation to my office. It was all well bound, much of it notarized. It included tax returns, corporation papers, applications to the FTC, and a litany of other items. I listened, watch the eyes of these big football players sparkle and shine and watched them almost giggle as the men described the millions of dollars in profit that awaited them ...

Was it a scam?

Immediately following the meeting I shook hands with the men and the football players and I headed to Marietta Diner for some really good lunch. They asked me what I thought and I told them. They didn't like the answer. You see the Commitment To Lend was real enough. It was the 2000 or so words crammed into a run-on paragraph that made it pretty much more useless than a pre-qualification letter. 

One of the conditions of the Commitment to Lend was that the men first raise $18,000,000 to be placed in escrow with the bank in London. Then there was a second approval process that needed to be completed. All Commitment Letters come with disclaimers and those disclaimers, in most cases, turn the Commitment To Lend into a pre-qualification with a more official sounding name.

Since then I have seen several "commitment letters", "letters of credit" and even some "German bearer bonds" not to mention a title to the rights of a dilithium mine. 

If you think a commitment to lend is any better than a well performed pre-approval letter you've been the victim of some really bad pre-approval letters. This probably makes you ripe to be the victim of a really normal Commitment to Lend.

A Commitment Letter requires a lender to completely underwrite a file with no property. It still takes hours of work if done properly and most lenders are not going to commit their underwriters, processors, set-up team, and the others to even looking at a file until there is a real deal on the table. 

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

The home buyer sees an ad on the internet for guaranteed 5 day closings, no minimum score and stated income from a "lender". Oh the hilarity! Unfortunately it can also end with a home buyer, home seller, a couple of real estate agents and their brokers, and a few other people doing a lot of work for nothing. Many outrageous claims are made by lead generation companies who sell the information to dozens or more loan officers who will call, email, fax, or email.

If it sounds too good to be true and every true mortgage professional is telling you there is something wrong with what one particular company or person is offering you can pretty much bank on it: it's smoke and mirrors designed to hook the buyer in and hope they'll get so far in they feel compelled to continue. They will, too, threatened by that ominous closing date on the purchase agreement and they will ride a bad loan all the way to the closing table then be strapped with it for years.

In defference to some wild claims about FHA I have read lately here are five facts every buyer and agent needs to know:

1. FHA does mention credit scores but lenders have overlays and almost every lender requires a minimum middle credit score (not necessarily the FICO score) requirement is 620. Some lenders even require a 660. There are no major lenders actively closing loans with credit scores lower than 620 and only a very few broker type lenders closing down to a 580.

2. FHA does not make loans they insure loans. The loan is actually made by lenders and often sold to Fannie Mae or another major pool investor. The only time FHA actually sees the loan is after it is closed and the files are sent to them for their insurance records. Most bigger lenders are called Direct Endorsement (DE) lenders and they make the actual decision. 

3. FHA does not make loans to people with bad credit. FHA was never intended for bad credit borrowers. While it is true they do have less stringent guidelines than some conventional conforming loans it is not true they accept people who have neglected their payments and have been careless with their credit over the years.

4. FHA does finance rehab, upgrades and other construction costs to existing homes. In fact the FHA 203k streamline is a much underused FHA loan product. Many lenders do not offer this loan and the majority of loan officers do not know how to structure the FHA 203k streamline which offers up to $35,000 in costs.

5. FHA does offer a special loan with only $100 down payment required on HUD owned foreclosure homes. This is also something often overlooked and not offered by many lenders. Ask your local FHA home loan specialist about the HUD $100 down FHA home purchase loan - which is only valid for primary home owners, not investors.

There are a hundred other FHA facts and there is a growing list of "Myth's Busted" at Mortgage Myth Busters where you also can ask a question. Or, as you may have noticed, on the original publication page for this posting at Active Rain there are three ways to immediately contact the author.

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

They call their selves "mortgage specialists" or "mortgage professionals". They are definitely everywhere inside the real estate industry and you see their ads all over real estate centric websites, at real estate events and even in your email. They admittedly buy articles to publish which were written by others and since they have the rights to them they publish them as their own. 

Then something strange happens - you see them on news feeds and being interviewed on news channels. Oh, they may indeed have been in the mortgage industry and may even have done very well for their own careers. In fact it may not even be such a bad thing. But are they really providing accurate and trustworthy information?

It's expensive to put on a well produced video and maintain a website with fresh content multiple times per day - I know, I've done it myself. In the end I decided I would much rather run my mortgage company with deeper knowledge about the process, the products and the service I can provide to my clients even if it is one of my team members, well trained and prepared, who actually work with them.

So my question is would you rather work with an FHA mortgage professional who has personally held an FHA endorsement or someone who just buys articles about them to get you to call? Would you rather work with someone with wild claims and page long disclaimers or someone who shoots straight even if you secretly wish the other guys could really do what they say?

Listen to your brain. If the advertiser/blogger/YouTuber is making claims that get you excited but clash with everything else you are seeing you better stop, take a breath, and think three times. Even though there have been many changes in the mortgage industry there are still people who have found ways to get you excited about nothing just to keep you from dealing with someone who is more trustworthy.

Moreover we really expected the Federal Trade Commission to crack down on mortgage brokers, lenders and banks who publish false advertising. Much to the dismay of many it seems you can say pretty much anything you want to as long as you publish enough disclaimers. Read it twice, think about it three times and make sure you are getting accurate advice from someone with a long reputation of trust in the mortgage industry. 

As The Who said, "We won't get fooled again." The nasty truth is there are people out there jumping at outrageous claims only to be told they don't fit in that particular scenario and instead of doing what I would do and leaving dust in the trail heading to someone I can trust they are rewarding the marketing specialist by allowing them to continue earning thousands of dollars even though they couldn't really offer what they claimed unless you, the borrower, did all the work.

I will finish by saying I haven't seen any advertisement I can't meet except a very rare few. There are hundreds of mortgage professionals like me with years of experience all across this nation. Generally you won't find them to have the biggest ads, the most outrageous claims, lowest rates, lowest closing costs, or fastest closing times. You will find, however, when they give you a number and a date you can depend on it.

(The last time I wrote something like this I got a few phone calls and several emails from "competitors" who thought I was attacking them. Laugh. I was. I may not have known their name but I know their game.)

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

http://reid.senate.gov/newsroom/pr_063010_hometaxextend.cfm

In spite of the fact I sat in front of multiple monitors all day long this got past me. I even wrote an hour ago that it did NOT pass but thanks to some good friends and one alert AP reporter here you go.

If your short sale or other closing was held up because the borrower didn't have all the documentation or had some income verification issues - you now have until September 30th to close.

Sheesh - can I get rid of this dizziness now?

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

Selling homes is much more than showing someone a catalog and letting them "pick one out". Unless you're one of those discount listing companies, maybe. You spend a couple of hours interviewing the prospective sellers or buyers discovering their "pain" or whatever their motivation is. Then you use your training and experience to communicate with them the process based on what they have told you and what you have seen.

If it's a listing then there is all the paperwork, advertising, marketing, and whatever other methods you use to do your job properly. If you're the buyer's agent there is the time working with the loan officer to make sure the buyers are pre-approved (yes, that's always the first step unless they show you a suitcase full of crisp Benjies), narrowing down the geography, layouts, styles, etc., you know the drill.

Currently, as an agent, you are paid for your time and effort on somewhat of a gamble. You may spend just two or three hours with the customers and they make an offer that is accepted and away you go. Conversely you may spend literally hours and hours, week after week, go through several offers and maybe even a contract or two, just to have the customers decide it's just not going the right way and decide to wait. How much exactly do you get paid for that? Right. Zero, nada. Still, the value of the "score", the actual sales, keeps you pushing and doing your very best to accommodate the customer and their needs.

Currently Mortgage Loan Originators (they used to be called Loan Officers) at many lenders and most brokers work that way, too. They do hours and hours of work "for free" and on the deals that close they get paid a fair amount of income. This keeps them driving to reach more customers, make sure the customers understand the process and are sold on working with that MLO, work with credit reports, tax returns, income verifications, rent verifications, gift letters ... quite literally hours of work on every application. They get paid when? Usually about a month after the closing.

Going back to the listing agent.

We know a good listing agent makes 2 to 3 points on their sold listings and that can be either a few hundred dollars or a few thousand dollars. The listing agent, a good one anyway, makes sure they do more than just plop a listing and maybe one photo in the MLS. The goal is to get the home sold and do so as quickly as reasonably possible. The cost of advertising and marketing is all fronted by that agent. It may be just a few dozen dollars or it may be thousands of dollars depending on the property. The point is there is a cost involved not just in time but in real dollars to market that listing. The agent gets their money back when? Not until the closing is done and the closer releases the check.

What if a listing agent could get a fair salary.

Let's say $80,000 per year. Just for comparison let's say the top listing agents in that market who sell 30 or 40 homes per year make in the neighborhood of $200,000 easily. Then let's say the government, the federal version you know the bicameral thing with the House and the Senate who's tiny salaries we pay from our commission, decide agents can no longer earn commission. In fact they can't do anything except get a salary and that salary is set by the Congress.

While $80,000 sounds pretty good to the agent who has been selling only 2 or 3 homes per year it sounds really crappy to the one who has been selling 40 per year. The reason Congress decided to do this is because they believe agents have "steered" customers to more home than they could actually afford or have failed to lower a sales price just because the agent makes a higher commission on the larger sale. Congress doesn't like that and they say the agents are causing harm to the innocent citizen.

Think it can't happen?

It's been happening to Loan Officers for years now. So you just thought, "well that's different". No, it's not. Loan officers can and do make more commission on higher loan amounts. In the past they have been able to make more and higher commission on certain loans and in certain states. In Georgia, North Carolina and Illinois that has not been true for several years. Lender fees have been capped in those states for about 7 to 10 years depending on the state.

So what's the problem?

The problem is a societal one. It's all about creating a common base and including doers and slackers in the same pool. It's about demanding people who don't give even 20% be treated the same as people who give 100% (there is no 110% by the way so you don't give it). The problem is if people make the same for doing a crappy job as they do for being as perfect as possible and taking pride in their work then the community at large is going to suffer - not because people who care will start doing crappy work but because people who don't care will be on a level playing field with people who really care.

In reality this is about the massive failures of socialism, communism and acceptivism. It's about how that idea and thought process has so penetrated our industry and our nation that it may be impossible to completely root it out. The result is a diminished "give a hoot" factor and fewer service providers caring to go the extra mile. Limit a loan officer a salary and now everyone is dealing with the same level of incompetence the big banks had before there were mortgage brokers to compete with them. We've almost come full circle and with Congress continuing to blame the service providers for the greed and ignorance of the buying public (at large, not everyone of course) you're next my agent friends.

To the buying public.

This should sum it up. Right now your loan officer at most lenders, most brokers and a few banks get paid only if and when your loan closes. They know if they don't get you to the closing table on time, as promised, all of their work is going to have been done for nothing. Their work costs them time and money. If they don't close your loan they have lost time, money and commission. If they get paid $45,000 a year (which is what most banks are paying in salary) think they'll give a real hoot about whether they close your loan, on time or not, or if you have any problems with it? Some will, most won't.

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

Folgers "Good to the last drop", Campbell's Soup "Mmmm mmmm good", CNN "News around the world". Want some without the company? Choosy moms choose ______(1), Maybe it's _______(2), Built ______(3) tough.

These "slogans" are powerful, tied to a brand, recognizable as tied to a specific brand, bring to the top of mind the brands they are associated with when used stand alone, and very valuable to the companies they describe. While the stories vary about how these phrases came to be the results of their impact on the community at large is undeniable. These phrases sell.

King of Beers

Not every brand can be king. Likewise not every real estate agent can be #1 in their market. Well, actually maybe they can. Hard to find an agent who isn't #1 - but I digress. Buyers and sellers know this, too. They figured out the Million Dollar Club, they got too smart for the "Number 1 Agent in Poopadooba City" and they aren't buying "it's a great time to buy". The question we want to answer today is "what can I say to give me the best opportunity to do my job?"

There's a formula

One of the lamest and least effective value propositions is "100% satisfaction guaranteed". It says nothing about what the product or service is or does, does not mention the brand, is wildly misunderstood, and leads to almost certain trouble. There are a few mortgage companies, for example, who offer "Guaranteed XX day closings". The V factor is completely lost without a litany of disclaimers. Countrywide blew it for everyone with their "No closing costs" promises and "Number 1 agent in ________" has no little or value to the seller or buyer unless it truly is the agent with the most closings and least complaints.

Want to improve your likelihood of success?

Think about what you do. What is your niche? In which small pond are you the biggest fish and what is the end result of you being the biggest fish in that pond where you customers are concerned? For example is it not more important to have the most sales than to have the most listings? Be accurate and succinct in your statement of value.

Most people I interview truly think they have a marketing strategy. Generally what they have is a marketing abstract. Marketing stratagem may be complex or simple but they are not a strategy until they have an assessment, a plan and scheduled execution finished with measurable results.

One of the most important aspects of your value proposition (aka Walmart "Everday low prices") is to be able to provide evidence you can always do what you say. "XX day closings" isn't a value when followed by a list of a dozen fine print, conditional statements. Walmart can't say "Everyday low prices" then add "if you have at least $1000 in your pocket, while wearing a red tennis shoe and hopping on one leg". They *could* say that but the value would be lost. Same goes for "Number one agent in Poobalooba County".

How to get direction on your Value Proposition

Do a little brain storming. Preferably surround yourself with people who know poop when they smell it. You're never going to as critical as your customers who don't care whether you eat caviar or soda-crackers. You may forgive yourself for a little inequity - the public will not. Make sure you ask the hard questions and answer them accurately. When you finish you should be able to rattle off your VP in 10 seconds or less.

Determine your niche. What do you do very well? Don't give any attention to whether or not anyone else does it or if you do it better. Just write down at least 3 things you do well.

Question your buyers motives. Would they choose you because your price is better or because your service is exemplary? Write that down.

Who would need your services? Do you specialize in beach or mountain home? Large condominium units in high-rise towers? Do not choose something you *want* to specialize in, choose things you actually have real experience in doing.

Now create a mashup for each set of keywords. In other words use only your results and make some phrases. Steam on them a while and then hold a survey with the people you know will be the most honest. If you said you are a short-sale specialist an you've maybe read a blog post about them and closed one deal where you were the buyer's agent - you're not SS specialist. Pick something REAL because people can smell the other from a hundred pages away.

Have fun with it and let us know what your VP is. Seriously - "We Want To Know" lol.

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

What does it mean if the NFIP is not authorized and Section 502 loans (USDA RD) are not funded by Congress? All of you should have received an email from the NAR about Section 502 and NFIP and how Congress left it unattended before breaking for the Memorial Day stretch. Included in that email is a link to voice your opinion with your Senators and Representative. 

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

Recently I had the opportunity to sit in with and co-moderate a panel of local business professionals who want to know how to be prepared for business tactics in the immediate future - at least over the next 5 years. It was amazing to me how many of them still reject or at least avoid social media as a viable venue for engaging the general public for their overall marketing strategy.

Since I am now 50+ I can tell you the world has changed dramatically in my lifetime. When I was a child most of my friends still were hoping for the day when dad, their real dad who was still married to their real mom, would bring home a clunking heavy, US made, color television. If they were really cool they would have a remote control that used tuning forks to operate. In fact if you jingle your keys or the ice in your glass near one of these the channels or volume would change or the set would turn off.

Everyone was excited for the Sears Christmas catalog which meant hours of fantasizing about what neat toy they would get for Christmas and FM radio was all but non-existent. When you did listen to FM it was classical albums with people who spoke quietly like they are at a golf tournament.

What is very amazing to many people who are terrified of Facebook, Twitter and other social media actually still happens today. Once a year, usually in the spring, a book would arrive at our home. Inside that book was the name, home address and home phone number of everyone in town! Can you imagine giving complete strangers your home address and telephone number? Oh the security failure! Save us from ourselves! To top that off you would occasionally find a listing and underneath it would say "children's phone". I kid you not. But I digress ...

The lack of "getting it" where today's social media is concerned will, and already is, becoming the lack of being on top of people's minds. With Facebook now being one of the largest search platforms and YouTube serving up more searches than Yahoo or Bing if you aren't on those platforms you're missing major numbers of searches.

For this post I went to Facebook and searched the terms "real estate marietta". The results were four friends on the top of the list: Heidi Schwartz, Waverly Thornton, Terri Anne Powell-Paguibitan, and Mike Pennington, coming to the top. Facebook is smart enough to show my friends first and the rest of the world later. 

To the right is Mike's Facebook profile - the first words in his editable block are "real estate" and his city is Marietta, Georgia. Facebook knows this and delivered his profile link to me when I searched on those terms. What if he had not used the words "real estate" or if he had not allowed me to search his home city? 

What I am getting at is Facebook can be less threatening than the phone book and we've had the phone book all of your life. Yes times have changed and today more people can do more bad with less information. They don't need Facebook or Twitter to do so - all they need is a phone book to get them started.

If you are not using social media because you don't get it or you're afraid there is a cure for both of those horrible and limiting conditions. However you can also use social media "wrong". Most of you who are here on Active Rain are doing at least that much right but if you are depending on AR for your only social media you're missing most of the opportunities this great internet provides you.

One of the questions I am most often asked by people who are just getting into or who are interested in joining social media is, "how much time do you spend?" The answer varies from day to day. Some days almost no time at all. Other days as much as an hour or more depending on how many blog posts I write and home many people I engage. What matters is the result and my results have been good.

Social media is not only a platform for sharing information with others but also a great way to harvest data and be alerted to important events in your area. While some people say they could care less when you list a home and share that on Twitter I say if it's in my area and you Tweet it I'm going to re-tweet it from my mortgage Twitter account so people know I can provide financing for that property.

Knowing when the next business social is coming up a town away is also important to me so that I can participate and rub elbows with others in my community - you see the goal, my goal, of social media is to interact offline and to either refer someone to you, get a referral from you, or just get in a good round of golf with you. It's social. Think of a cocktail party or church picnic but on your computer. Interact with people - be genuinely interested in what they are saying.

If you have enough friends you never have to sell anything - they will do the work for you. Do yourself a favor, call Jeremy Blanton and tell him Ken sent you. You'll be glad you did.

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

Not too long ago I wrote a post about short sale negotiation and included information from Ned Blumenthal about how the law relates to real estate agents and brokers. Ned was kind enough to email some more information back in April and I want to share it with you today as it is very important to those of you who operate in Georgia.

Let's back track momentarily so I can repeat my stance on "Loss Mitigators" who do not work for the lender, "Loss Mitigation Specialists" who took a class online and got a certification, and anyone else who gets in the mix who could royally blow your credit for as much as the next seven to ten years. They should get out of the way and should be held accountable, personally and financially, for any damage they have caused.

Negotiating a short sale, or any mortgage modification, is not a "no brainer". It requires experience, skill and personal liability. As licensed loan officers (now referred to as mortgage loan originators) employees of mortgage brokerages and lenders are held to a level of liability that should greatly diminish foul play. However there are people who are outside of these NMLS and State Regulatory licensing requirements who are prohibited, by law, from acting as intermediaries who still get in the mix. Some of them are licensed real estate agents who, likely unknowingly, are violating certain sections of (Georgia) law.

If you are not aware of Mr. Blumenthal he is a co-author, along with Seth Weissman, of the Red Book on Georgia Real Estate. In other words he is The Authority. Part of his job is to work with agents to defend them in criminal charges if it comes to that point. His experience along with the words directly from the Georgia Department of Banking and Finance are not subjective but reasonably "black and white".

In Mr. Blumenthal's article of April 2010 his second paragraph reads, "The Georgia Residential Mortgage Act (the “Act”) as modified to comply with the Secure and Fair Enforcement for Mortgage Licensing Act (the “S.A.F.E. Act), prohibits any person from engaging in the activities of a mortgage loan originator without first obtaining and maintaining a mortgage loan origination license." 

You just read that and about the bold part perhaps thought, "I'm not acting like a mortgage loan originator so this does not apply to me." Let me provide you with Mr. Blumenthal's contact information so you can put him on retainer because you may be in need of his services in the near future.

In the first letter Mr. Blumenthal wrote:

"Normally, real estate brokers and agents do not get involved in negotiating the terms of loans for their clients and should not run afoul of the Act.  However, what about in short-sale situations?  If an agent contacts the seller’s lender trying to negotiate terms for a short-sale, does this violate the Act?  We do not have any definitive case law on this yet, but the answer certainly appears to be “yes”. 

So, what’s an honest agent to do?  In short, the agent should limit their role to that of information provider and have no hand in actual negotiations with the seller’s lender.

It is okay for a real estate agent to gather information about the property, undertake a market analysis, create a BPO, suggest a list price for the property, assist in the negotiation of the terms of the sale to a buyer, and to generally do all the things agents normally do for non-short-sale sellers.

It is probably fine for an agent to provide all of the above information to the seller’s lender and to provide the lender with any other information or documentation it may request.

However, it is not okay, and likely a violation of the Act, for the agent to negotiate with the lender on behalf of the seller."

The example he gives in his letter is included in the FAQ from the Georgia Department of Banking and Finance and provides a more static view as opposed to theory:

Bob owns a house that, in today’s market, is worth $250,000.  Bob purchased the house in 2004, paying $400,000.  Bob’s current loan balance is $375,000, meaning that he is $125,000 “upside down”.  Last year Bob lost his job as a corporate manager.   He finally found work 6 months later but for a significantly reduced salary (his new job description involves asking “do you want fries with that?”).  Bob is 4 months behind on his mortgage and has received several letters from his lender threatening foreclosure.  Bob has not been able to get in touch with his lender and called you because he saw your web-site in which you claim to be a “short-sale specialist”.

Bob has not heard back from his lender’s “work-out” group and his current job forces him to be away from the phone most of the day.  Can you, or your assistant, contact his lender for him?  Probably not, at least not in any meaningful way.  It may be okay for you to call Bob’s lender’s main number to get a name and direct phone number of someone in the work-out department or to ask what information the lender needs as part of a short-sale application package.  However, it is seemingly not permissible for you to get into any of the specifics related to Bob’s loan.

You conduct your market analysis and suggest a list price of $275,000 to allow some room for negotiation.  Can you provide this information to Bob’s lender?  The answer appears to be yes.  This is merely providing information and not negotiation.

The property sits on the market for a few months with no nibbles.  Bob is worried that his lender will move forward with foreclosure.  Can you contact the lender and tell it that you think offers will be coming in as spring approaches ask it to hold off on foreclosing for a few more months?  This is a bit more tricky.  It is likely okay to let the lender know that you hope to get some offers soon.  However, requesting the lender to hold off foreclosure may possibly cross the line into negotiations.

Fast forward a while and you now have an offer on Bob’s house.  The offer is for $225,000 “as-is”.  Can you forward the offer to Bob’s lender?  Yes.  Again, this is merely the providing of information. 

Can you include a letter to the lender, saying that you believe this is the best price obtainable for Bob’s property and that you urge the lender to approve it quickly before the buyer moves on to another property?  It is probably okay for you to let the lender know that you think this is a good offer.  However, have you crossed the line between providing information and stepped into negotiation when you urge the lender to accept the offer?  Probably.

Bob’s lender has approved the $225,000 offer.  However, Bob’s lender says it will not allow Bob to pay you the 6% commission you negotiated with Bob.  Rather, it will only allow a 4% broker’s commission.  Can you call Bob’s lender and try to explain why the 6% commission is more than reasonable considering all the effort you put in to the deal?  You might argue that you are merely negotiating on behalf of yourself, not Bob, so this should be okay.  However, this could well be seen as an attempt to negotiate the overall terms of the short-sale approval, which is not permissible. 

Since Mr. Blumenthal will almost certainly be reading your responses fire away. Keep in mind we are talking about Georgia law. However the laws in Georgia and, in fact, the laws and regulations governing the mortgage banking industry are becoming more standardized every day. Seth is also admitted in Florida and Maryland.

Do you listen to REtechRadio ever Thursday at Noon Eastern? You should! We want to hear from you.

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

Selling or buying a home in Acworth, Georgia probably means you are within the FHA loan limits for the area. I know Acworth well, I grew up there from 1962 to 1977. The good news is Acworth home prices in the 30101 zip code have recovered much of their loss over the last few months.

With the median price of homes in Acworth being within the limits of FHA lending for the area you gain a great advantage. If the home buyer has 3.5% down or can get a gift from a qualifying party and the home price is within FHA home loan limits in Acworth, Georgia you should tell your prospective buyers and connect them with a trustworthy FHA lending expert from the area.

The school system in Acworth is a part of the very successful and renowned Cobb County School system and several private religious and secular schools are in the area as well. Acworth has long been the playground of Atlanta since it is situated on the south-western end of Lake Allatoona - one of the busiest lakes in the United States. 

If you have questions about the Acworth market, what to do in the area, or just have questions in general about FHA home loans please never hesitate to ask. Even if you are working with another FHA lender I will still be happy to provide accurate and trustworthy information about the FHA home loan process.

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.

If you have enough friends you never have to sell anything. If you have ever attended the Carnegie Institute you almost certainly know that in 1936 Dale Carnegie wrote, "How To Win Friends and Influence People". My uncle, Benjamin Wilkes Hale, did his best to get me to read it when I was about seven. It was much later before I finally picked it up.

During my formative businessman years, from about age twenty to age thirty-five, I really chewed through life. There were two kinds of people to me, useful and useless. Unfortunately for me most people were useless. My friends were all outside of my business world and everyone in my industry was relegated to a sub-category called "useless but necessary". Of course there was no actual list on paper or computer just a filing system inside of a mind yet to develop and grasp my opening sentence.

If you have enough friends you never need to sell anything. Why? Your friends will sell for you. Recently we had a kickoff to open our new southeastern regional office facilities in a very nice five star office building here in Atlanta. We gathered a good representation of our employees into one of the larger conference facilities and I was asked to close the event. 

When I stood up to speak I had my normal "so glad you came, sell a bunch by lunch - be a winner by dinner" talk when it dawned on me that's not what I do. I was about to tell these people to do something I don't do myself. So what is it I do and does it work for me?

I make friends. Of course I am a little older than most of you and I have been making friends for several years but it is never too late to start. Be a friend. Be more interested in what others have to say to you than what you have to say to them. Have you ever known a person who can't wait for you to shutup so they can get started saying what they want to say? Sure you have. If not you may ask your friend(s) if that person is  you. I certainly have been guilty.

When you enter a conversation lead with your ears and enter a lot of conversations. The squeaky wheel doesn't always get the grease - it also gets replaced. Attend meetings in person regardless of their size. If you are invited go! Collect business cards and send follow up emails or notes. Keep a birthday log and use it! Become that person who never sells anything and become that person who always comes to the top of people's minds when your industry is mentioned.

Ken Cook - Community Outreach Leader Southeast Region (I make friends, that's my job :) - FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452

My employer: AmericaHomeKey, Inc., 2300 Windy Ridge Parkway, 8th Floor North Tower - 840N, Atlanta, GA 30339. NMLS ID 102930. Georgia residential mortgage licensee 23191. Equal housing lender.