Maryellen's Blog

Straight talk before you get your hand slapped or worse!

I have read a lot lately here on AR about the recent drop in interest rates.  Good, bad or indifferent, that is not the purpose of this entry.

The purpose of my entry is to remind other mortgage professionals (and REALTORs who care to know or do include interest rates and/or payment in advertisements) that there are certain Federal Laws and State regulations that must be followed!!!!

Anyone heard of the Truth In Lending Act of 1968 aka: TILA?

I'm not a certified trainer and this is NOT an exhaustive list of the rules included within TILA, but you need to keep a few things in mind before your state regulator, HUD or banking commission comes knocking on your door (trust me, it's not pretty).

Following is a blurb from the most recent Idaho Department of Finance newsletter which shows what some of the penalties might be:

RIVERSIDE MORTGAGE, LLC (Rupert, Idaho) - June 5, 2008 -- Consent Order of Revocation of mortgage broker/lender license for various violations of the Idaho Residential Mortgage Practices Act and federal regulations applicable to mortgage brokering/lending.  Violations included engaging in unlicensed mortgage brokering activity; failure to disclose yield spread premium; and obtaining documents signed by borrowers in which blanks were left to be filled in later.

ASSURITY FINANCIAL SERVICES, LLC (Englewood, Colorado) - May 1, 2008 -- Cease and Desist Order for advertising violations.  To address the allegations included in the Cease and Desist Order, the Respondent entered into a Consent Order from which it paid $15,000 administrative penalty and $2,000 in investigative costs and attorney fees.  Respondent must provide all proposed advertisements or solicitations for Department review for a period of 12 months.

21ST CENTURY FINANCIAL CORPORATION, INC. (Oakland, California) - March 4, 2008 -- Cease and Desist Order for advertising violations.  Respondent paid $2,500 administrative and $1,000 investigative costs and attorney fees.  Respondent must provide all proposed advertisements or solicitations for Department review for a period of 12 months.

To see the newsletter posted by the State of Idaho in full, CLICK HERE.

So, how can you avoid the fate of the aforementioned companies?

Like I stated before, I'm not a certified trainer.  If you want to know the skinny on advertising laws, you can start with companies like TrainingPro.com or AmeriTrainEdu.com.  But, maybe I can help for now.

1) - When you advertise (and your blog is an advertisement!!!) an interest rate, you must include the corresponding APR.  And, please, don't just make this figure up!!!!

In the state of Washington (where we are also licensed) you MUST have copies of your advertisements on-hand and attached to EVERY piece of advertising in which you have detail rate/APR you must include:

1 - your lender RATE SHEET for that date detailing their fees;
2 - GFE and TIL showing the advertised rate, lender fees, broker fees, title fees, closing fees, etc.

One auditor even said they would ask to see HUD-1 Statements from closed loans during that same time period to make certain what you advertise is what you are ACTUALLY closing.

2) - When you advertise payment, you must include the following:

• the assumed loan amount
• interest rate/APR
• down payment requirement, if any
• credit score required
• type of loan (30 year fixed, ARM, etc.)
• whether the payment includes taxes and insurance
• I don't think I'm forgetting anything...

So, please, before you advertise rate or payment, know what you are doing first.  All this talk about 4.500% will do you NO GOOD if the state, HUD or banking commission comes in and shuts the door, or fines you so much you have to get a mortgage for yourself to pay for it.

Happy Originating!

Maryellen Garasky
Mortgage Broker
KMG Mortgage Group
(208) 664-3600
(509) 638-3455
www.kmgmortgagegroup.com 

Listing Agents: Trying to unload a property?
Be Careful What You Offer as Incentive to Buyer

Yesterday an agent I work closely with called me about a particular listing she has.  It has been on the market for well over 6 months and the sellers are getting anxious.  They want to include some of their furniture in the sale, along with their boat and boat slip.

For those of you who are unfamiliar with North Idaho and Eastern Washington, this is lake country.  North Idaho boasts some of the largest (outside of the Great Lakes, of course) lakes in the nation.  Our lakes are glacier lakes so they are large, deep and COLD!!!!!

Priest Lake is so wild and natural that most of it can't be accessed by vehicle.  Anyone wanting to visit "Upper" Priest can get there by boat only.

Lake Pend Oreille is so deep that it is a Naval training center.

Hayden Lake is 38 surface acres and over 175 feet deep and, because of the irregular shape, has over 40 miles of shoreline.

Lake Coeur d'Alene is fed by three rivers (the Saint Joe, Coeur d'Alene River and Saint Maries River), is over 180 feet deep and has over 110 miles of shoreline.

 -- So, as you can see, a boat and slip would be a HUGE incentive to buy in our area. --

She asked what my thoughts were on the matter and how it would affect the lending aspect of any potential buyers.

WARNING!  This is considered an "Inducement to Purchase!"

"Well, duh," she said, "that's kind of the point!"

Right.  But what she did NOT know is that these items CANNOT be included in the appraisal value of the house and, if a value is given (which, as a matter of fact, will be at the time of the appraisal), it is taken right off the top and CANNOT be considered in the purchase price of the home.

Other examples of Inducements to purchase are as follows:

• Seller paid contributions that exceed the 6% limitation (if using FHA financing);
• Decorating allowances;
• Repair allowances;
• Moving costs;
• Excess rent credit (if a rent-to-own option was being executed);
• Gift funds not meeting FHA gift requirements (again, if using FHA financing);
• Seller payment of buyer's sales commission on a present residence;
• Seller payment of buyer's Real Estate buyer agent Fees above the normal and customary seller paid realty fees;
• Personal Property items (like furniture, cars, boats, riding lawn mowers, televisions, theater systems).

All of the above items will result in a reduction of the mortgage for your buyer!

However, certain items, depending upon local custom or law, may be considered as part of the real estate transaction with no adjustment to the sales price or appraised value necessary. These items include the following:

• washers and dryers;
• ranges;
• refrigerators;
• dishwashers;
• window treatments.

Some lenders require that the sales contract list these items as being provided at no cost to the buyer.  However, all lenders KMG Mortgage Group works with will allow this verbiage to be excluded from the sales contract, as long as the appraiser addresses it in his/her report.

So, be careful what you offer as an incentive to potential buyers.  If you have any doubt whether your incentive is considered an Inducement to Purchase or just a normal part of the real estate transaction, please give KMG Mortgage Group a call BEFORE your buyer's financing is affected.

Maryellen Garasky
Mortgage Broker
KMG Mortgage Group
(208) 664-3600
(509) 638-3455
www.kmgmortgagegroup.com

Do Your Clients Love You Enough ... Part 2

My last post (featured, thank you very much) - Do Your Clients Love You Enough to Keep Coming Back? - got some really positive reviews.  Thanks to everyone who stopped by and commented.  I was truly awe-struck by how many of you took the time to contribute.

Because of the success of the entry, and the encouragement from fellow Rainers, I have created this second entry with the hopes of continuing (by expounding on each point individually) with aims to help us all step up the service we provide our clients, clients-to-be, and fellow real estate professionals.

Ok, now down to business...

Point #1 ... Everyone is your customer.

Benjamin Clark - Exclusive BUYER'S AGENT (Salt Lake City, UT) made the following comment:

My favorite from your list is "Always Call Back".

You have no idea how much money this simple rule turns into. Making that phone call is very valuable.

And, even though Benjamin was commenting on point # 5 - Always Call Back!, I think it is fitting to relate it to "Everyone is your customer."

Here's why...  My response to Benjamin was as follows:

Benjamin,

We got once a voicemail from a fella who called us asking for the name of an appraiser who appraised a property of his.  We weren't the loans officers on the loan in question (he was referred to us by a past client of ours who happened to be his friend), but he couldn't find the appraiser's name in the phone book and his loan officer hadn't returned any of his message in a 3 week time period!!!

In his voice-mail message for us, he said, "You don't know me, but I'm a friend of Sally Smith.  She said you might be able to get the name of an appraiser for me.  I think it's Tom Jones, but can't find him in the phone book."  We called him back, knowing that we didn't have a loan app on the horizons.  It turns out he couldn't find the name of the appraiser because it wasn't Tom Jones, it was Tim Johnson.

*Note, all names have been changed to protect the innocent ;)

Well, the point of my story?  When this fella decided to finance his next FOUR rental properties, he came to us.  And, he referred his daughter, his niece, and sister-in-law.

Yeah, you're right.  You never know how much money is to be had by simply returning a call.

Have a great night and thanks for commenting!

Maryellen

Now, we could have just deleted the voicemail.  We could have wrote it off.  We knew that he had already closed his loan.  There wasn't a loan for us to have?  Or was there??????

Since you have read my reply back to Benjamin in full, you know that there was another loan to be had ... 7 to be exact.  But we didn't know that at the time.  All we knew is that this fella needed the name of an appraiser, knew a client of ours, and was looking for someone to help.

Keep in mind that you have
NO IDEA the power of influence
one single person can have over your business.

KMG Mortgage Group is very proud of the fact that 100% of our business is referral.  We have not, for 23 solid months, marketed to a single Realtor.  Now, I'm not down-playing the roll of agents, we have just found what works for us, and we're sticking to it.

Far too many mortgage professionals have relied on Realtor business as their means to a paycheck.  Those days are gone!  Find an agent or two you believe in.  Who has a similar business philosophy and level of expectation, and you'll find a business PARTNER that adds, not only money to your wallet, but value to your business!  (But, that's a different topic...;)

Please read what our latest client has to say:

Maryellen Garasky
Mortgage Broker
KMG Mortgage Group
(208) 664-3600
(509) 638-3455
www.kmgmortgagegroup.com

Do Your Clients Love You Enough to Keep Coming Back?

For a brief period I took a break from mortgage lending and became a Regional Corporate Trainer - Customer Support for a nationwide telecom company.  I was recruited into the position by a client of mine.  She called me up one day and offered me the job after we had worked professionally together for almost one year.

It was a GREAT job and I loved it!
I loved the excitement of living out a hotel room (this was pre-kids)
and eating out at fancy restaurants on the company's dime.

One day I asked my client (who, by this point, had become my colleague) why she asked me to join her team.  She said it went back to a single conversation we had: I was complaining.  Complaining?!?!  "Are you kidding me," I asked her.  No, she wasn't.

I remember that conversation very well.  I had just received, without a shadow of a doubt, the WORST customer service I had ever experienced.  (For the sake of your own sanity, I will spare you the details.)  She said, at that moment, she knew that my view of customer service meshed directly with hers.  We were a professional match made in heaven.

I have the HIGHEST expectation of customer service and I am VERY difficult to please.  I have to admit, I would probably be the highest maintenance customer you would ever have.  Therefore, I pride myself on providing great customer service.  I can't be perfect, nor can I please all the people all the time, but I sure as heck try.

Below I have included 5 simple steps that you can follow in order to be on your way to GREAT customer service:

1) Everyone is your customer:

I don't care if it's the client sitting in front of you, their Realtor, their mortgage lender, or the Man in the Moon.  THEY ARE YOUR CUSTOMER!  Nothing gets under my skin more than when I hear fellow mortgage professionals gripe and complain about an agent, or vise verse.  Get over it.  Provide them the kind of service your most cherished client would receive, and they'll love doing business with you and, if permitted, would do it again.

2) Set reasonable expectations:

There's the old saying, "Under promise, over deliver."  And it's true.  You only set yourself up for failure if you promise the moon.  Be reasonable in the expectations you set.  But point out when you deliver.  Point out when you over deliver.  But, that brings me to my next point:

3) Don't be arrogant:

Nothing turns off a customer more than the feeling that they are being talked down to.  They are people, too.  Who cares if they've never borrowed a dime before and you're the lending expert.  There was once a day when you didn't know squat.  Remember that!

4) Match the customers personality and excitement level:

If your customer is bubbly and out-going.  Be bubbly and out-going.  If they are reserved and quiet.  Be reserved in your conversations and speak (as my mom would call it) in your church voice.  If they are demanding and high-maintenance.  Make them understand that you are being equally demanding and high-maintenance on their behalf.

5) Always call back!

I can't stress this point enough.  Nothing, I mean NOTHING, gets under my skin more than un-returned phone calls and messages.  I would constantly tell my customer service reps to call clients back.  "But, I don't have the answer they want."

I don't care!  This is what you say:

"Mr. Jones, I know I told you I would call you back by 3:00 with an answer.  Well, it's now 3:00 and, I'm afraid, I don't have an answer for you yet.  I promised I would call, and I didn't want you to think that I forgot about you.  I will continue to look.  Do you mind if I call you back by 9:00 tomorrow morning?"

And, when 9:00 tomorrow comes around, call them!  Good news, bad news, or no news at all.

I don't know of one single thing you can do better than this to win customer loyalty.  They will grow in respect for your professionalism and resourcefulness.

People often think they are showing a sign of weakness if they "don't know the answer."  But, I tell you the truth, your client WILL NOT SEE IT THAT WAY!!!  Instead, they will see that you will go to the ends of the earth to provide them the great service they deserve!

And, if you have been reading my blog for any amount of time, you will know that we send out client surveys with every loan we close.  Following is a survey from a great client of ours.  She owns five financed properties and, I'm proud to say, they have all been financed through KMG Mortgage Group.

Maryellen Garasky
Mortgage Broker
KMG Mortgage Group
(208) 664-3600
(509) 638-3455
www.kmgmortgagegroup.com

News Update 12/1/2008:

I cannot tell you how excited I am to announce that after nearly one year of audits by the Federal Government, KMG Mortgage Group is proud to announce that we are now a "Non-supervised Loan Correspondent" lender for FHA loans!

What does that mean?
The Government has authorized us to originate FHA loans and trusts that we will do it in a meaningful and trustworthy manner.

This is a noteworthy distinction.
Usually only banks or mortgage companies with large corporate backings get this kind of recognition from FHA.

It is very rare that you will find a small mortgage shop like ours with their FHA approval.  The audit alone scares most people away.  They are extensive.  They are difficult.  They are not a lot of fun to go through.  They are pricing.  But, they are worth it!

With everything you read and hear in the news today, FHA loans are becoming a larger player in the world of home finance.  FHA loans have always had a good portion of the market share.  But now, more than ever, they are becoming a necessity.

If a mortgage broker or lender wants to serve their clients the BEST way they possibly can, considering an FHA loan is no longer an option, it is a necessity!

Contact us today and take advantage of the flexibility FHA loans have to offer!

Maryellen Garasky
Mortgage Broker
KMG Mortgage Group
(208) 664-3600
(509) 638-3455
www.kmgmortgagegroup.com

For those of you who may not know, this year's Special Olympic World Games are coming to Idaho this winter.

This is a HUGE honor for the state of Idaho.  The honor, however, will be extended to our very own community.  The Olympic Torch will be passing through Coeur d'Alene January 29th and 30th!

A couple of weeks ago our Kiwanis Club had the privilege of meeting Christine Jarski (VP of Development and Marketing, Special Olympics Idaho) and Kirk Grogan (Global Messenger AND Bronze Medalist for shot put) - see photo below right.

Kirk shared his many experiences with Special Olympics.  In addition to participating in Hong Kong games and meeting the President of the United States, Kirk has visited many other countries around the world on behalf of Special Olympics by supporting and educating the public on the many Athlete Leadership programs they have to offer.

Now you, too, have the chance to support Special Olympics Idaho.

Breakfast With Champions
Tuesday, December 17, 2008 at 7:30 a.m.
Coeur d'Alene Inn

Breakfast With Champions is the largest annual fund-raising event for Special Olympics Idaho, a non-profit organization that provides year-round sports training and competition for children and adults with intellectual disabilities.

As former athletes ourselves (Kevin played football and Maryellen played softball - both went to college on full-ride athletic scholarships), this speaks to our hearts.

We encourage you take part in this great event and show your support for Idaho's Special Olympic Athletes.

Maryellen Garasky
Mortgage Broker
KMG Mortgage Group
(208) 664-3600
(509) 638-3455
www.kmgmortgagegroup.com