🔥 -32.9%?!?! Holy Schnikes! - The Letter X
Aug 01, 2020 2:06 pm
THE LETTER X
Does anyone say “holy schnikes” anymore? Well they should and in fact I am bringing it back in with this issue of TLX!
As I am sure you saw posted by the numerous Facebook Economists, the Bureau of Economic Analysis released second quarter gross domestic product data in which the BEA says, the American economy grew at an annualized rate of -32.9%. But did the American economy really shrink by a third last quarter? The short answer is no. But these discussions are best left for those smarter than me.
What does this mean for us? Well, I dug deep to bring in a capital markets perspective from a guy who has known me since I was in diapers. That is Bill Godfrey, who is the EVP of Capital Markets for Mason-McDuffie Mortgage. What say you Bill?
The biggest news of the week was Gross Domestic Product (GDP) for the 2nd quarter with a shocking record busting annual decline of -32.9%, but in this Covid-19 period, not surprising. The stock market initially moved lower than shrugged it off closing the Dow down less than 1%, S&P 500 down less than .50%, and the Nasdaq UP almost .50%!
Nothing is surprising anymore in these unprecedented times, including negative interest rates (never before seen in historic financing); and now we have another record low U.S. Treasury Notes and mortgage rates.
Encourage your customers to take advantage of these record low rates, as missing this 50+ year opportunity, leaves them at much more risk to rates rising, than the possibility that they will move much lower.
Another record, according to Redfin, is that almost half (45%) of the recent homes were bought sight unseen.
Now that July is over, the markets are focused on what Congress will do with the $600 per week unemployment supplement that ends today. The politico experts expect that political compromises usually come at that last possible minute. Let’s hope they’re right, as without it in this Covid-19 environment, delinquencies on mortgages and rents could soar.
I hope you didn’t gloss over the Redfin part because the more you understand about consumer habits the better you will be prepared to execute business strategies around them. Now let’s get rocking with this issue of The Letter X!
Say Yes Every Day
This week say yes to learning something new. Did you know that when we learn something new we actually grow brain cells? The more you practice a new skill you will stimulate neurons in your brain and you start to learn faster so this week I challenge you to learn something because not only is it fun you will become better at your existing abilities. Have a great week! - Laura Brandao
Sharing is Caring! Remember to share your personal referral link (bottom of email) for a chance to win a $50 Amazon Gift Card!
Is it a good idea to come in over asking price?
With housing inventory extremely tight, many homes for sale will have multiple offers. Your buyer may wonder if they should put an offer on a home that is above asking price in order to win the contract. The housing dynamics are very favorable right now, with strong levels of forecasted appreciation in many markets.
Let’s take a look at an example in Contra Costa County:
Listing Price: $450,000
1-year Forecasted Appreciation: 7.7%
5-year Forecasted Cumulative Appreciation: 36.59%
If your buyer were to offer 5% above asking price, or an additional $22,500, their offer would be $472,500. Based on the forecasted levels of appreciation, that home would be worth $484,672 after the next 12 months. The buyer would not only recoup the additional amount over asking price, they would net a gain of $12,172. After 5-years, that home would be worth $614,648!
Of course, levels of appreciation may vary depending on the market. MBS Highway not only offers you real estate data for every county and zip code, they provide you with tools that you can evaluate if this makes sense for your customer.
Be sure to RSVP to MBS Highway’s Facebook Live coming up on Monday, August 3rd with Barry Habib and Jay Abraham where they will discuss how to provide value to your buyers and referral partners to increase conversion!
The News X Recap!
The CFPB has been on a tear with enforcement actions. Most recently Two Mortgage Companies Hit With Over $1M In Fines By CFPB which has pretty much everyone I talked to saying “Good!”
Speaking of the CFPB, the CFPB chief welcomes GOP focus on restructuring of agency following the recent SCOTUS decision.
Last week we talked about housing trends as it relates to COVID which will continue as the pandemic shapes consumer sentiment and behavior.
Speaking of another COVID impact on housing, we are starting to see some of the effects on consumers who took forbearance. In this case a homeowner expected relief from a mortgage deferral, instead got a bill for $4,700! Yikes!
We can expect to see more of these stories since the whole process was poorly planned and executed, BUT on the plus said we are continuing to see a decrease in loans that are currently in forbearance.
And of course I can not mention the “F” word without letting you know that the #1 Forbearance resource on the interwebs is the Forbearance Report, put together by Scott Schang and Josh Lewis.
Too good to be true?
With interest rates in the 2’s (some lenders are even quoting with a 1 in front) originators pipelines are spilling over. Too often for consumers they fixate on one element of the mortgage, getting the lowest rate possible. They ignore other aspects like reliability, communication, ease of use, how long the process will take, and who will the loan be serviced by in the end. When things go sideways the complaints are centered on all the other stuff, not the rate. This is true in the mortgage recruitment side of the business as well.
This refi boom has led to a surge in hiring and recruiting in mortgage ops. There are huge salary and bonus $ being thrown around again. Those being recruited need to be cautious and not get sucked into the high $$ without considering other factors. Is it possible that the reason the company is willing to pay such a high salary and/or bonus is because they must? Meaning their culture, leadership, processes are so poor that the only way to acquire talent is by paying a premium? When it does not work the employee is not going to complain about the sign on bonus or salary.
Just like we counsel consumers to consider all the factors in their mortgage search. If you are being courted with large $$ you should ask a lot of questions, get references from current employees. Sometimes it is too good to be true. Chasing short term bonus $$ could cost you in the long run.. - Brain Vieaux
Good things come to those who Mastermind! Have you joined the Mortgage X Mastermind yet? I would like to invite you to join our community that is 100% focused on helping MODERN industry professionals crush it.
Mortgage X MLO & Agent of the Week!
How do we save the Baseball season?
Terrible news from the world of baseball. It seems that coronavirus is tearing through the Marlins and affecting other teams as well. I’m somewhat surprised by this development. I expected baseball to be the lowest-risk major sports league. Players have limited close physical contact with each other. So what do we do going forward? - Gregory Charlop MD.
What we are listening to
Mortgage X at CMLA!
Are you ready for the Colorado Mortgage Lenders Association (CMLA) Convention?
I know the Mortgage X Podcast team is! Honored that Christine Beckwith and I were asked to moderate this powerhouse panel of industry experts:
Rick Arvielo of New American Funding
Eddy Perez of Equity Prime Mortgage
Phil Shoemaker of Home Point Financial Corporate
Glenn Stearns of Kind Lending
We will be discussing the Future of the Mortgage Industry. What business model will thrive in the changing mortgage industry environment?
Meme of the Week
This is courtesy of Hammer J. Helmer.
If you have a meme you would like featured send it to firstname.lastname@example.org
This Month’s Giveaway
A special thank you to Laura Brandao who is again sponsoring this week’s Book, Everything Is Negotiable: The 5 Tactics to Get What You Want in Life, Love, and Work by Dr. Meg Meyers Morgan.
In order to win a free copy please text the word “letterx” (no quotes) to 66866 and follow the instructions. Good Luck!
Remember to share your personal referral link below for a chance to win a $50 Amazon Gift Card! I hope you enjoyed TLX #15! Have a great weekend.