Tom Perotta's New Book is Out!

Last year I had the pleasure of meeting the novelist, Tom Perotta, who happens to live in a nearby town. (He became somewhat of a local celebrity when his book "Little Children" was made into a movie starring Kate Winslet.) The book he was working on next was apparently going to have a mortgage broker as a main character. Tom was put in touch with me by a mutual friend so that he could pick the brain of a real mortgage person. We had coffee at Starbuck's in Cushing Square and chatted about the business. At the time, I was in the middle of a mini-crisis where I had promised someone a certain deal but the rates had meanwhile gone through the roof before I had a chance to lock her in; I was explaining to Tom that my intention was to honor the rate even though I was going to LOSE a big chunk of money by doing so.* I didn't want to let my client down and I knew it was my own fault for not getting to the computer soon enough and getting her rate taken care of. Anyway, we had a nice chat and I tried my best to share with Tom a little bit about the trials and tribulations of being in this business. That was a little over a year ago and I haven't talked to him again.

Just the other day a package arrived on my desk and it's Tom's new book "The Abstinence Teacher", complete with a personal note inscribed AND an acknowledgement to me. He even mentions my company, Lentegra Mortgage Group. I was thrilled! Now the only thing is I have to find the time to read the book to make sure he 1) heard me right and 2) portrayed the mortgage broker in a good light!

It's ironic that he chose to focus on a mortgage professional; when he started this book, it was way before the current "meltdown" in the industry. Kind of timely, though.

* For those who are curious, no I didn't end up losing money after all. I waited a little bit longer and the rates came back down. I made less money than I had originally planned, but I didn't lose any at least --- and the customer got the rate she had been promised. Alls well that ends well.

Thoughts about the "meltdown"

The mortgage business has been all over the news lately --- and all everyone hears is bad news. Well, the business is going through a transition, that's for sure, and things have gotten a little messy. Who ever thought it wouild ever be possible for people to find out at the the closing table that their previously cleared to close loan was not going to fund? Who ever thought mortgage insurance would start to become popular (and necessary) again? Who ever thought American Home Mortgage would go out of business?!? Man, oh, man. Not me, that's for sure. It's been incredible to witness all the changes going on over the past couple of months and to realize how *FAST* things can change. It's really been unbelievable.

But, you know what? Of course I'm sorry that there are some people who have been hurt in all this (mortgage employees losing their mortgage jobs; customers not qualifying for mortgages they thought they had), but in many ways I find myself saying "it's about time". The mortgage business had really gotten way too loose in terms of loan eligibility guidelines and there were way too many people in the business promoting loans that weren't right for the borrowers. This is a great opportunity to re-set and get our focus back.

Wall street investors are definitely overreacting and things are bound to settle down there. But, at the same time, our lenders ought to take this opportunity to think about whether they've been leaving themselves too vulnerable to Wall Street fickleness by overselling products that Wall Street may lose their appetite for overnight. And maybe those same lenders need to think about having a little more of their own money to keep things afloat in tough times.

Did you know that people are leaving the mortgage business in droves? That is fantastic news as far as I'm concerned. The industry was way too glutted with everyone and his brother opening up their own companies. This is a chance for those of us who are committed to the business and committed to doing right by our customers to shine. If there are fewer companies and fewer loan officers, that means more business for those of us who are planning to stick around.

Even though business is incredibly slow right now and I'm worried about keeping food on the table, I am still strangely excited about the coming year. It just seems like with all the troubles that have emerged lately it is a great opportunity to really take a hard look at how this business functions and to try to make it better. Speaking as an individual mortgage consultant, it's also a great time for me to dig down and work hard for my customers and look for ways to do it better.

Lenders have been dropping like flies, but there are still plenty out there. And there are plenty of customers. We just have to work hard to find them and to get them what they need, just like always.

Salespeople aren't perfect --- but we're not all bad

I recently had a weird experience where I met with a couple looking to buy their first home. Usually I meet with people well before they have found a property and we build up a little trust before they need to apply for a loan. In this case, in the few days between when I first spoke to them and when we met, they had already made an offer on a place and had it accepted. So here I was meeting with people for the first time who not only needed to hear all the usual mortgage basics, but also (so I thought) needed to apply for a loan already.

In my mind, I was doing something helpful by having an application ready and waiting for them, but in their minds they were still at the "getting to know you" stage. In the end, after I spent more than 2 hours going over the entire mortgage process with them and talking about options, they were not comfortable signing the application then and there and, unfortunately for me, ended up going with someone else. I honestly think the reason is that I scared them by having a loan application ready and waiting for them. Even though they were days away from needing to submit a loan application, they just weren't ready.

Here's today's lesson: What we do every day for a living is familiar and routine to us, but it may not be to our clients. Getting a mortgage, especially for the first time, is a huge step. To me it's routine ... so it's easy to forget how intimidating it is to someone who hasn't been through it before. And I honestly can't blame these folks for being wary --- even though *I* know I'm totally down-to-earth and trustworthy, and even though I sensed that they were fairly comfortable with me, it was just the idea of being asked to sign something when they weren't ready to do so that, I think, caused them to look at me with suspicion. Lesson learned.

I just got off the phone with another prospective client whom I had advised not to refinance now but instead to work on improving her credit first. After meeting with me a few weeks ago, she had an appointment with another broker who was driving up from Rhode Island to present a refinancing option to her. My client insisted that she was not going to sign anything and that the RI broker had simply stressed to her that she likes to meet her clients before she does a deal, but I was absolutely positive that the woman would arrive from RI with an application in hand ready for her to sign. It turned out I was right. The RI broker tried her best to get my client to sign an application that would've put her into a mortgage that was no better than the one she had and that would've cost her almost $15k in closing costs! The broker was irritated that my client wouldn't sign the application and, since then, has had her boss making annoying followup phone calls.

Of course, this is outrageous and it's the kind of behavior that gives salespeople a bad name. But what occurs to me is that my trying to pursuade the first couple to sign the application on the spot was, in a sense, no different. Just because I knew that I was doing a good thing for them to get their loan application in process and just because I knew that I would be giving them a fair and competitive deal, doesn't mean they knew that. In their minds, maybe I was just as pushy as the RI broker who tried to bully my client into signing up for a bad deal.

Lesson learned: I will never propose to a client that they sign a loan application upon our first meeting unless *they* make it clear that's what they want to do. I feel bad that this couple, whom I liked, ended up somehow not trusting me. That's never a good feeling. I would've loved to have helped them with their loan. But we live and learn.

Beware of Bait and Switch

Bait and switch. That's where you get lured in by some kind of "bait" (amazing prices, discounts, bonus prizes, etc.), but then once you sign or are about to sign on the dotted line, suddenly the deal is "switched" to something less than what you were hoping for.

The biggest problem we have in the mortgage business in terms of bait & switch is the fact that some lenders advertise rates they know they know they cannot deliver on simply as a way of getting borrowers to contact them. Once they have the prospect on the phone, they figure they have a chance to explain to you why you should do business with them and why you shouldn't pay too much attention to the advertised rates because, after all, "rates are always subject to change".

Another similar problem is when a borrower signs loan paperwork and then shows up at the closing to find that there are additional unexpected fees or some other aspect of the loan has changed, always in the wrong direction. This is completely unethical, but it does happen on occasion. Some unscrupulous mortgage companies figure that once you're at the closing table ready to close, you're not going to walk away from the deal, especially if it means losing your purchase deposit.

Mortgage brokers handle more than 70% of all mortgage loans these days. The work that brokers do is a great service to consumers. We bring a lot more choices and programs that would be unavailable through local banks. That's all good. But there are a few bad apples in every bunch ready to spoil the whole barrel.

When you select your mortgage source, choose someone who makes you feel comfortable and with whom you feel a sense of trust. Mortgage brokers need to make a living, too, but there's no need to rip anyone off.

"Equity Reimbursement" --- yea, right

I received a check in the mail today --- in one of those hermetically sealed envelopes like payroll checks come in. The ones with the pain-in-the-neck perforations and all. Can you believe it ... it was a check for $260,000! All I had to do was endorse the back to receive my "equity reimbursement". This was sent to me as a "reward" for "investing in the high appreciating properties" located in my area. Oh, and by the way, the check is not really a check. I'm supposed to call an 800# to "activate" my reward. Guess what, it's a home equity loan ... whoopie. I don't even want to know what the interest rate is. Aargh. This kind of mailing is what gives my business a bad name.

the domaniac speaks: Location, Location, Location

the domaniac speaks: Location, Location, Location

21st Century Networking: Discovering the World of MySpace

I recently set up an account on the infamous "MySpace" (which my dear cousin refers to as a "that online den of iniquity"). I’m curious to see if it is a good place for business networking. I had thought it was only a showcase for artists and musicians as well as a social network for the under 35 crowd. It never dawned on me that it would be a place for someone in my business, but I was surprised to find thousands of hits when, out of curiosity, I checked for other users who are interested in mortgages and real estate. I guess I’m not the first to think of it, but that’s a good thing --- otherwise I’d be the only one there like me and who would I be networking with?

With a minimum of effort I set up a site and, in a short time, I’ve already connected with a few real estate developers in my area and a few alum from my college. My biggest challenge was deciding on my “handle”. If I call myself just “Carol” then strangers I’m trying to network with won’t get that I’m a mortgage broker or that I’m looking to make business connections. If I call myself “Mortgage Broker” then my own friends won’t know it’s me. My solution, for now anyway, is to call myself “Carol the Mortgage Lady”. Kinda lame, I admit, but it covers both bases. I can always change it. I’ll let you know down the road if this ‘venue’ is worthwhile. Meanwhile, it’s quite an eye-opener just observing the myspace sites people have … it’s a whole different world, a whole different --- rather rude, I must say, way of communicating, but oddly enough, I’m finding myself getting used to it already. If nothing else, maybe this exposure will help me understand my teenagers.

A little sidenote: Before I was in the mortgage business, I worked for a long time at a company called Bolt Beranek and Newman (BBN) where extremely brilliant computer and networking gurus, in conjunction with their peers at a few other government contractors, developed a little thing called the "Internet" (well, originally it was its predecessor "Arpanet"). For years I was a fly on the wall observing the development of this thing that allowed us to sit at our desks and send messages to co-workers down the hall or people across the country. Pretty neat, especially since none of my friends knew what I was talking about when I would mention things like "email" and "ftp'ing files". It's been fun to watch this technology evolve over the years --- and, especially now that I'm not involved in the internet business anymore, it's fun to be on the user side of the fence and really appreciate how useful it is. Like it or not, it’s incredible that I can sit at my desk and, in a matter of minutes, join a community of over 10 million other people and fairly easily find new people to network with. And that’s just MySpace, which is only one of many places like it. When you think of all the websites and user groups out there, it’s an incredible time to be alive in terms of communication.

We’ll see if MySpace turns out to be a good place for me as far as business networking. Meanwhile, if any of you are users and you care to pay me a visit, I’m at www.myspace.com/cluddecke.

Featured Listing: 130 Park Ave., Arlington, MA

Beautifully maintained circa 1890 Victorian. Three floors of living space. In town Arlington Heights location.


For property info, call Bobbi Tornheim 781-861-7300 Click here to view listing.
For financing, call Carol Luddecke 781-472-3917