A Little Coronita for the Mamasita

I didn't write much in April, but I have to say, it's like a muscle you work out. If you don't keep flexing, you'll loose all your strength. So! Here's to working out more. Cheers.

Are You Going to Keep Evernote?

I'm a fan of Evernote, but I'm curious about Google Keep. Apparently the reviews are mixed, but I imagine it will evolve into something better ... like Sticky Notes.

Happy Tax Day, Mr. President

Since 1913 we've had the fabulous Form 1040. Throughout the years, it's been revised over and over - only to make us love it even more. But even more interestingly, the presidential tax returns are publicly available. Take a look at them all here.

Self.

"The most important relationship you have within your life is with yourself, because no matter what happens, you will always be with yourself." - Dianne Von Furstenberg

Writing Copy is Creative

There's a misconception that copywriting is boring nonfiction, but I disagree. Copywriting is creative! When you're doing it right, you're catering to your demographic. You're giving them what they want to read, you're captivating them to read more, and you're selling them a product. Reader engagement is a lost art form in this economy.

Marketing executives are assigned with updating websites amidst their busy schedule, interns are recruited to communicate a value with no experience, and receptionists are responsible for entire social media campaigns because employers think it's a simple task. Effective copy is hard to come by, and I'm not saying the EVP or receptionist can't do it, I'm saying that may not be where their strengths lie. 

Thomas Jefferson once said, "the man who stops advertising to save money is like the man who stops the clock to save time." I mean, come on. Coffee may be cheap, but ideas are not.

O man and then comes into play Google adwords, SEO, and the all powerful headline. If you don't do it right, it's obvious you're not creative. Creativity comes into play when the audience doesn't even know you've engaged them, hit the mark with their online search, or convinced them to purchase. Professional copywriters study this craft and creatively implement the benefits, not the features. Want to learn more about this kind of stuff? Check here regularly.

In the Air: Training Us to Pay for Digital Content

There's a change in the air. Newspapers and magazines are already struggling with the concept, digital enthusiasts are calling it desperation, and my generation is stuck in the middle. It used to be anything on the internet was free, but now we have to train ourselves to pay for content online. And then ironically, mobile devices have made it easier for the content producers and consumers to pay. So why pay?

1. Stabilizes the circulation revenue and makes advertisers happy.
2. It's OK. It's an evolution of consumer behavior that started with porn, the music industry, podcasts, then print products.  
3. To get what we want. Information doesn't want to be free anymore. 

Call it a new frontier. I'm feeling a change. It's not just about online presence anymore, it's about experiencing the content and meeting the consumer's expectations. They're paying now, after all. It's in the air.

Lips.

"To conceal anything from those whom I am attached, is not in my nature. I can never close my lips where I have opened my heart." - Charles Dickens

Close Up On REO Deals: Understanding the Underwriting Process for REO Loans is Essential

As the housing crisis hit in 2008, the Housing Economic Recovery Act made the Federal Housing Finance Authority (FHFA) the exclusive supervisory regulator of the government-sponsored enterprises. Since then, in the eyes of many mortgage professionals, the industry has begun to over-correct itself and has created more conservative underwriting guidelines across the board.

In today’s market, if an originator cannot provide a detailed paper trail for every angle of a loan — from income, source of downpayment and accountability of payments — any conventional loan has a strong chance of being denied. The underwriting process is not that different when it comes to real-estate owned (REO) properties, but mortgage professionals should know that lenders have different approaches when it comes to regulatory changes and safeguarding against risk.

For instance, an important issue related to the underwriting of loans on REO properties is their time frame. Many lenders take weeks to underwrite and approve a loan, and if an underwriter determines that a buyer does not qualify, a property can get tied up in limbo for lengthy stretches of time. That noted, the listing agent on an REO property is tasked with providing the lender with frequent and reliable feedback regarding the transaction. To this end, REO listing agents often establish relationships with lenders that can pre-approve buyers quickly, provide the involved parties with daily communication on the transaction and have the ability to close REO loans in just a few weeks.

Just like more conventional mortgages, all Federal Housing Administration (FHA) REO loans are underwritten according to standard FHA guidelines. Even so, the FHA has risk parameters that are different from many lenders, and that’s where originators’ frustration can come into play.

In dealing with REO transactions, underwriters will examine many of the same details that they consider for conventional loans. For instance, they’ll review every document submitted and scrutinize its income figures, appraisal report, Social Security number, date of birth and address. They’ll also make sure that the loan application is filled out in its entirety. Some additional areas covered include:

• Monthly housing expenses and total debt obligations

• Debt-to-income ratios

• Funds available to close

• Credit analyses

Many lenders even require a second underwriter to review the loan package before a final approval or denial is communicated to the borrower. The amount of verification involved depends on how risky your lender perceives the borrower to be, or how many overlays the lender employs.

When it comes to conventional and REO transactions, another important issue that brokers and originators should consider is the lender’s underwriting overlays. Every mortgage lender determines what level of risk it will allow and underwrites the borrower’s loan with these additional requirements in mind. According to the FHFA, however, there are three basic ways that loans can qualify for purchase by Fannie Mae:

1. By meeting its manual underwriting standards;
2. By meeting its underwriting standards, as amended by authorized variances; or
3. By meeting the evaluation criteria in its automated underwriting system, Desktop Underwriter.

Considering that some distressed properties are purchased for investment reasons, it’s also useful for mortgage professionals to know how this affects the processing and reviewing of a deal. Fannie Mae does allow a borrower to purchase an investment property and use the proposed rental income in their qualifications. Originators should know, however, that FHA financing is rather strict on certain income details and will ask for a history to consider this income. A lender may use about 75 percent of that income against the debt, and use around 25 percent for vacancies and maintenance.

In addition, originators should know that some lenders will not allow the proposed investment property’s rental income to be used to offset the borrower’s new payment, a stipulation that may make it more difficult to close REO transactions with certain lenders. Even if the borrower doesn’t qualify at the first bank, however, that borrower still may qualify for a loan at a different lender.

With the overlays in part to blame — combined with conservative underwriting and the lingering effects of the financial crisis — there is also a threat of losing community banks in the home-lending space. This is noteworthy because these types of institutions are frequent sources of funding for REO deals, as small community banks are an important network of local, familiar faces with whom you can talk openly about your clients’ finances.

Many experts argue that regulation is starting to reach a point where its benefits are outweighed by the risks of overburdening community banks and forcing them out of home lending altogether. Although it’s true that some subprime lenders abused certain tools — such as high interest rates and balloon payments — to create volume for themselves, many small community banks continue to use those tools successfully and hold their risk on their own balance sheets. A local bank will have the knowledge of measureable credit risk by personally knowing the borrower or the deal’s intangibles. That is, even if one of your borrowers may not be the best documented applicant, they may pose less credit risk to the right network of lenders.

Working with REO transactions can be trying at times, and in fact, mortgage bankers sometimes see as much as a third of their REO buyers back out of their transactions because of loan-related challenges. Even if some standards are advantageous, others often harm the cycle, especially when it comes to small community banks and REO timelines. Continued education on regulations as they change is a must for lenders and originators alike, as loan officers should be as thoroughly trained as underwriters to properly manage, process and close loan applications in a timely manner.

*originally published in Scotsman Guide's Residential Edition | March 2013 | Read it here.

P2P: Pushing Negativity Out and Building Relationships

I recently went through an eye-opening experience in my professional life. I realize now that if you let someone or something get into your head, they will get into your head. It's important to be mindful of your surroundings, but there are no exceptions when it comes to negativity. From small to massive, the most important things in business are relationships. We do have time for dat. I had the opportunity to sit down and speak candidly with a respected entrepreneur this morning and it came to me that strong relationships are what make business possible. It's a simple concept that can get lost in social media, the latest app, gossip, and revenue streams - but I am reminded of it as the shredded documents hit the fan. Figuratively, of course. If you throw out negativity into the universe there is no doubt negativity will come back at you, but if you step up and be positive, the possibilities are endless. People to people, people!

Shout Out to Downton Abbey: Are You Watching?

I'm in love with Downton Abbey lately. I caught the first season on Netflix on a whim and am thrilled the second season is just as good! I've fallen in love with the characters, the costumes, the stupid accents, and landscape. And my favorite character? It's probably Violet Crawley, better known as either Granny or the Dowager Countess of Grantham. She's already won a Golden Globe and two Emmys for her performance - and her one liners are the best.

My favorite thing to do is save the latest episode as a reward after a long day from work, get in PJs, and curl up somewhere cozy for viewing pleasure. Are you watching?