Archive for September, 2007
Random Thoughts
September 29th, 2007 Categories: Mortgage News, Random, Real Estate News, Real Estate Technology
Perusing my feed reader on a Saturday afternoon…
Active Rain vs Move.com. Nothing says I love you like a lawsuit.
There is plenty of speculation out there regarding it’s merit, likelihood of success, practical economics of it all, ramifications towards members…
One point sticks out to me…If Move told the guys of AR not to engage in talks with anyone else about strategic partnerships et. al. and stalled AR out until they opened the Kimono (regardless if this was smart or not), then Move should pay. Not that this was their intention, but since when did intent ever matter? When was the last time ‘I didn’t mean to’ worked for anyone?
AR was white hot at Inman NYC 2007 and they had plenty of options as to what to do with their platform and bustling community. It was at Inman that Jon Washburn told me he didn’t think he could engage in a previously discussed project due to some big yet still confidential news involving AR. He was definitely stoked about this new relationship yet admirably kept ‘the secret’ to himself.
If it can be shown that Move prevented these guys from engaging in what could have been other beneficial relationships, intently holding them ransom with the promise of money (women) and power, and then pulled the (BIG) rug out…it would seem to be rather easy to see that AR as a company and community have been damaged (intentionally or not) and should receive restitution.
RIM, Apple or both?
Im still using Nextels BlackBerry 7520 (their top-o-line), but continued unit failures and the subsequent misery has caused me to say ‘no-mas’. I love the Crackberry UI…been hooked on it for 4 years . I’m in contract with Nextel for another 9 months, however I can move over to Sprint at no penalty and get their BlackBerry 8830, which is very hot cool (love the trackball), for $199.00. Problem solved, right? Nope.
I just got a MacBookPro and love it, so the iPhone caaalls tooo meee. This is the first time another Super-Mobile has caught my eye and down right wooed me to the point of considering leaving Berryland, however the notion of transferring and using AT&T’s service causes enough revulsion to allow the rationalization of not purchasing the stickiest sickest damn mobile device ever…I can live with that (so I tell myself).
Now Apple releases the iTouch iPod, everything cool about the iPhone (pretty much) without the phone part. Shit. So now Jeff is looking at $199.00 for the BlackBerry and $399 for the iPod…too rich for me, can’t justify $600+++ for two devices (so I tell myself). I need a new phone, I’m hooked on CrackBerry, yet can’t get the iTouch out of my head.
Do I stick it out with the 7520 and get the iTouch, only to feel buyers remorse in 9 months when I’m out of contract with Nextel and iPhone adopts more than AT&T as a service provider? Get the new BlackBerry (locked into Sprint for two more years) and ignore the benefits of an iTouch/MBP combo, violating a fiduciary responsibility to myself?
I’m so confused.
More Mortgage Vomit
I’m tired of the ‘Mortgage Meltdown’ news, ad nauseum. So sick in fact, I can’t bring myself to conclude the Great Mortgage Correction series. Worse, the industry is locked up in such analysis paralysis that now very qualified buyers are suffering.
It’s so bad for mortgage bankers that (in Texas at least) if the APR on a loan closed via a correspondent credit line isn’t correct down to one-hundredth of one percent when using the ambiguous (at best) APR formula, the banker must cut the consumer back a check for the difference. While this may sound like a good thing, it’s not. In order to calculate a (semi) correct APR on an Adjustable Rate Mortgage you need to know the interest rates index and margin. The index on many ARM’s can change daily, so bankers would have to be able to see the future to give an accurate APR disclosure for the day of closing. This dumb rule makes good mortgage professionals look bad and hangs them out to dry on something they have no control over. The fact that there is no standard methodology to calculate APR makes this practice even more retarded.
Man I’m glad I don’t own a brokerage anymore. It’s like when you’re out real late and 2-3 drinks past your normal tolerance level, having a great time talking to what you’re sure is some hot girl, then the lights go on and reality sets in (so I hear). Everyone in the industry was high on the atmosphere choosing to ignore the pending…Flood Lights! were turned on and there were more than a few blemishes to see. Since the party lasted for years this hangover is especially bad and probably won’t go away until mid-late 2008 
The Best Mortgage Blog
September 27th, 2007 Categories: Mortgage News, Random, Real Estate News, Real Estate Technology
The best mortgage blog?
It probably isn’t…I really wanted to test out some SEO tactics and the title seemed really SEO friendly.
While I’m here, I might as well ‘talk’ for a bit. I’ve got this reputation as The XBroker, people tend to believe I’m some (wannabe) hard ass, loose cannon who writes with this indiscriminate hand and looks to battle anyone willing to disagree with my perspectives regarding the mortgage and real estate industries, all in the name of self-promotion…but I’m really just misunderstood.
Circumstance would have it that I’m very involved with a Company that is set on providing solutions to the problems and issues I write about. ‘Shut up or do something about it’ is what my grandfather used to tell me when I’d whine about my daily problems as a child…it must have resonated.
Back to the ‘best mortgage blog’ claim…Below are some of the reasons that this blog is far different than most any other blogs about mortgage and/or real estate…I won’t say better because taste is a matter of opinionated preference. How can someone have an objective opinion? Isn’t all opinion subjective on some level?
- There are plenty of mortgage blogs out there today that are based on sound educational content, e.g. 1st time home-buyer mortgage guide (how to swim with sharks), ‘Should I Refinance?’ (probably not), Mortgage Calculators! (Dig into the ‘what if?’ bucket), What is PMI? (a waste of money), Todays Mortgage Rates (probably don’t apply to you, not even close)…God bless the owners of those sites, traditional mortgage content has to be the most boring s^!t in the word to actually sit down and write…although I’m happy to link to these sites.
- I’m very passionate about what I do, working on my business 10-12 hrs a day, not in it…What’s this mean, no one else works hard at what they do? No! Simply pointing out that I’m not just another arm-chair blow hard mortgage originator or Realtor telling you how you need my services, I’m soooo worth it, and change is bad. I used to talk like this in a former life and it bothers me still.
- This blog is rated R. It’s not for the faint of heart or self-righteous type. I write with a satirical hand, tongue in cheek, penning up my dry sense of humor…or as my mother articulately puts it, ‘I’m a real smart ass’. I’ve been told that you can’t tell when I’m joking or serious in person, so I imagine that has to be double true via my writing. Some people take offense to this…well you can’t please everyone, so f*^k em…
- I write like I speak. This isn’t always grammatically beautiful, I know, but it is a unique voice with some personality!
- I write what I want to say rather than what I think people want to hear. Blunt honesty is what I call this. Rude, sensational, high on my own ether/kool-aid/pot, are other perspectives I’ve heard. In any case, blunt honesty or some dude writing while high on something is usually an interesting read.
Most Unique Mortgage Blog seems like the more appropriate claim for this mental therapy of mine. I happen to believe that there are plenty of other blogs out there that are far better than The XBroker when it comes to consistent content, as evidenced by my link love in the sidebar. Social networks may not be the ‘Web 2.0′ play but using social networking principles assuredly is.
I can’t find The XBroker via any relative popular search queries on the major engines (hence the title experiment), yet my traffic metrics tell me I have a pretty robust readership…20k+ unique visitors/month and six figure ‘hits’ (not bragging here, more flattered than anything). Since my SEO blows, (I didn’t even link to anyone in this post, though I usually do) my readership must be straight up viral in nature. This is also a testament that SEO should be part of an overall marketing strategy, not a marketing strategy…IMHO.
Well, thanks for reading…I’ll post something worthy about mortgages, real estate, marketing, or technology next time…
Cheers!
Sphere: Related ContentDarWidgetry…A Strategy for Real Estate to Evolve With Technology
September 22nd, 2007 Categories: Mortgage News, Real Estate News, Real Estate Technology
Zillow, Trulia, Google, Yahoo, and a slew of other real estate listing (and other) information providers out there demonstrate the want/need for alternative ways to locate and act on property listings instead of using a traditional Realtor and their antiquated methods. The genesis can be traced back to Google’s opening of their mapping API, catalyzing the map mash-up based user interfaces that prove to be a more intuitive way to search, find, and see listings. Innovation rarely comes from within, so you can’t fault the NAR and their legion of subscribers for falling asleep at the wheel. Although their strategy of smash and smear these new technology based companies wasn’t pleasant or becoming to watch…
What’s interesting is how each of these companies has gone about trying to fill the gaping void between tradition and innovation. It’s been a mad rush to engage the consumer and/or the professional in the spirit that somebody will come away as the perceived champion of what could be called ‘Project MLS, 2.0’. He who has the most listings wins, right? Kind of…there is a lesson that hasn’t been learned (IMHO) — one that says consumers aren’t looking for a destination site as the end all/ be all place to research real estate. Realtor.com knows this, Microsoft found this out, and the other players seem to now be in a mad scramble to invent and/or implement the next killer application to add to their site - e.g. Trulia Voices, Zillow’s wiki and pending foray into the mortgage arena, syndication tools et - all as a way to set them apart from the competition. In the end consumers will always shop alternatives, trying to be “The Destination Site” in any vertical using the web is a continually expensive process. Big Business died at the end of the Industrial Age, yet there are still businesses trying to practice archaic models and destination sites are in-line with out-of-date. The business of real estate and mortgage services is a cottage industry; new technologies and business models should adapt to this paradigm instead of develop in spite of it. Don’t get me wrong, I think any of the sites mentioned above are better alternatives to what real estate and mortgage search was, even 18 months ago, however they seem to be a new skin to an old cat.
IMHO: The future of real estate search and marketing (as well as other info based industries) does not lie in the realm of destination sites, it lies in the widgets, or small snippets of code that can be plugged into a greater platform. Today, widgets typically offer incremental improvements to a web-blogsite, tomorrow’s versions (by their very Darwinian nature) will be larger more robust chunks of code that can be plugged into the same (or evolved) web platform. Because widgets are typically developed in an open source type environment, their advances and improvements comes from the minds of many, not just a few. Technology that once required $10M in development costs can now be developed and implemented at pennies on the dollar. To date, I have only seen a (very) few widgets that actually cost money e.g. Inman Innovation Award Winner Altos Research…this is going to change. When it does, a new sub-industry of progressive, easily adoptable, easily implementable technologies that get to market in a fraction of the time will seem to manifest itself almost overnight. What’s available today are first generation, embryonic versions of what they can be. As enough of them permeate the market, it’s not difficult to imagine people will start mashing them up to create new widgets all together for a second generation and on from there…
For those not familiar with what a widget is in practice: Meebo, MyBlogLog, Deans FCK word processing editor, even Truia and Zillow provide widgets. They even have frontend and backend functionality, e.g. Deans FCKEditor adds backend functionality while Meebo adds to the consumer facing front side of a web site. The difference between what is popular widget functionality today and what it is tomorrow can be seen by comparing Altos to MyBlogLog. MBL adds an innovative way to add a social networking aspect to your site, allowing everyone to see who (from MBL community) is reading your blog…randoms, inter-industry professionals, highly respected pundits..Altos’ widget adds a property valuation tool to a blog-site using an innovative system to aggregate, crunch, and redisplay local housing valuation trends. It’s a great marketing and analytical tool Realtors, and the info can be used in potent off line material like charts and spreadsheets.
So, if this ‘theory’ could be construed as possible, which it assuredly is…How long will it be before a map mash-up or intuitive UI of similar ilk to the big Z, Trulia, et.al finds its way into a widgetized format for real estate professionals to host within their own domain? Real estate professionals already have access to unadulterated MLS data, precluding said sites single largest hurdle to obtaining good current listing (and sold) data. WordPress is open source that allows collective brain power to develop at the speed of light compared to even the most well funded companies. The aggregate independent talent pool is far greater than any one company…not to repeat myself but, innovation rarely comes from within. The analogy’s are already out there as to this strategy’s viability.
The advent of the open web-logging platforms (blogs) like WordPress and TypePad represent an evolution of the web, allowing it to get much smaller, smarter, and more personal, if you will. In one sense or another when your hear ‘Web 2.0′, which sounds like fingernails across a chalk board to some people, this is pretty much what it means. Due to these platforms open nature, programmers of all skill levels have developed widgets (or gadgets if your Google) that add incremental functionality for anyone with a small bit of technology acumen. Facebook has become the rage of general social networking by walking down this path of communal development, growing at a rate that now far exceeds MySpace. Their product is much better because of it…MySpace has the putrid petri dish of web-cams and pedophiles stigma, while I actively engage my Facebook account. One tried to become an Empire, was first to market, and is now succumbing to someone that does it a little better and alot faster.
The strategy of controlling and confining information in the Information Age is futile, even the most staunch advocates of the NAR recognize this, proven by their strong turn out at this past August’s Inman Connect San Francisco. Realtors and mortgage professionals who less than a year ago told me (and many others) that ‘they’ve seen these fads come and go, no technology is going to replace us!’, are now doing an about face…putting down the Kool-Aid and paying attention to how their respective industry is going through a dramatic paradigm shift, as well as learning how to adopt and adapt. These industries are being blown to bits, very small ones…I believe it is Seth Godin that wrote, ‘Small is the new big’. I didn’t read the book, but the title sure does resonate…A ‘Blog-Site’ isn’t just a blog anymore…it’s an open platform that can be easily configured to help the real estate and mortgage professional grow in harmony with technology, instead of moving against it.
*Disclaimer* I’m currently only involved with one company, called Realespace,that looks to promote advanced widgetry specifically for the real estate and mortgage verticals.
This post was originally submitted to Geek Estate and Drew Myers, who rightfully saw a conflict between my post and Geek Estates philosophy: Objective Opinion. My subjective involvement in a company that will become sqaurely involved in the opinions of this post, pretty much disqualifies it. Regardless, the Geek Estate Blog has some great writers and content…it’s made my RSS Feed Top 20 
The Fed Lowers Mortgage Rates by .5%!
September 19th, 2007 Categories: Mortgage News, Random
Many people equate this news as a prerequisite to relief for the housing/credit/sub-prime-crunch. In reality, the only mortgage loans directly effected by this cut are home Equity Lines of Credit since they are tied to PRIME, which is tied to the Fed Funds Rate.
Last week (or so) the jobs report came in below analysts expectations which does directly effect mortgage rates (for the better in this case). Click here for the other major mortgage rate adjusters.
My stock portfolio (and the general markets fragile emotional psyche) really appreciated the move Mr. Bernanke…hopefully Jim Cramer’s blood pressure has dropped a notch or three too…
As the title satirically points out, newspapers can make the genuinely uninformed, straight up ignorant.
Here’s a sample of comments or opinions i’ve heard from other people in the past few weeks:
- ‘The government dropped mortgage rates by half a percent’. One guy yelling to another as he reads from a newspaper…Also the inspiration for the title to this post.
- ‘Petraeus rhymes with betray us, ya know…I don’t trust him’ This must have originated from the New York Times advertisement that was taken out by MoveOn.org (at 36% of the normal advertising rate).
- ‘President Bush sucks, I can’t wait for him to get out of the White House, he will go down as one of the worst President’s in history’. I asked this person why he felt this way (my opinion of the President is irrelevant). He said ‘Because he’s stupid and screwed this country up’. I asked him to elaborate. ‘Well in the paper they said…’. Enough said.
- ‘The Housing Bubble has officially popped and it’s going to drag our entire economy into a recession.’ I was in downtown Charlotte North Carolina, the banking capital of the east, and two guys in suits were having this conversation over lunch which got more specifically grim as their prognosis went on. Once they left their table I noticed a copy of the New York Post on their table opened to an op-ed piece about the rapid depreciation of real estate. Maybe they forgot they were in Charlotte where population and appreciation are both still on a very healthy upward tick..?
- After telling a banker that ‘I worked in real estate and mortgage’, he professed to me that this is the worst time to buy real estate and that he is ’selling his real estate and buying stocks’ as he pointed to the financial section of the paper showing the Dow up 113 points. I simply asked him ‘So what you’re saying is buy high and sell low?’ He started no nod his head yes, then he thought…
The moral of the story is find the truth yourself, don’t let anyone else tell you what your truths are or should be.
Sphere: Related ContentThe Great Mortgage Correction III
September 19th, 2007 Categories: Mortgage News
The Credit Crunch…another new politically correct term being thrown around like a baseball nowadays in the mortgage news.
What is it? A few things…One, it constitutes a stricter consideration to whats actually reporting on a consumers credit bureau, rather than just the score (not all 650’s are equal). Debt to high credit ratios, aging of accounts, type of accounts all figure into a comprehensive review of a credit bureau. Two, a raising of the bar so to speak, one that requires higher scores (than before) to access certain mortgage programs.
Why is it happening? Banks have less money to lend. Wall Street has alot to do with this in the sense that if say (arbitrarily) CountryWide had it’s portfolio downgraded/devalued, they would lose some ability to lend out money. (The amount of money a bank lends is related to how much depositor money they currently have). This is why BofA invested $2B in CWBC…its not that Countrywide wouldn’t lend out additional money, it really couldn’t under banking regulations.
Credit scoring is based on an specific algorithm that crunches a bunch of numbers and factors them into an equation that yields a number between ~350-~850 (both numbers are theoretical). Whats interesting is that (not so) Fair Isaac won’t tell anyone what the secret formula is. They give general clues and nice pie-charts so sound assumptions can be made, but what is the down low dirty-dirty?
There is plenty of material out there regarding how credit scoring models work, e.g. to close or not to close an account, high credit limits vs current balances, length of time accounts are open, etc etc…Here’s where we deviate from the norm with some thoughtful questions…
What credit score is most appealing to a bank (not a mortgage broker/banker) from a business standpoint? A) 640 B) 680 or C) 710
If you said A, pat yourself on the back. I imagine most would guess C, after all don’t lenders look for good credit borrowers? Well, yes and no. The 710 borrower is likely to be someone with a high personal finance IQ, these people often demand and receive the lowest rate and cost. The 640 borrower will have to accept a higher rate and cost ‘because their score is only a 640′. Higher rate and cost equals higher profits for the bank. Mainstream media has engorged the airwaves with news of lenders pushing borrowers into higher cost products, so this theory isn’t too hard to digest.
Would it be wrong to suggest that lenders would rather see someones FICO score drop rather than rise…further, would it be below them to engage in practices that insured this happend? I don’t think so, but thats just me.
Consider for a moment though, credit card companies have the right to reduce your available high-credit limits for (almost) any reason under the sun…For example:
Most credit cards have in their policy docs (the fine, fine print) that they have the right to ‘adjust’ your account if you are one (1) day late, not 31 days, 1 day. Lets say you receive your bill and send off the payment but the credit card company has changed their mailing address, which happens with greater frequency than you may believe. By the time your payment is rerouted and processed it is officially over 1 day late. Bingo, they can adjust your account. If you happen to be 30 days late on any other account reporting to the bureaus, they can ‘adjust’ your account. An erroneous medical (or other) collection pops up, a creditor mis-reports the status of an account, you change your address, your profession, close out an account…any of the above can trigger the loss of FICO points. When (not if) this happens your are subject to a whacking.
Consider the Census data that states the average credit score for someone with 0 late automobile payments is a 703, those with 1 late payment have an avg score of 605…98 points. Thats the difference between A+ and sub-prime in todays mortgage world. It could be the difference between approved and denied.
What happens to your 660 credit score if you have a credit card where you owe $3000 and has $7000 high credit limit ‘adjusted’ to $4000? Yup, it sinks, which is bad enough until you consider the domino effect.
Since your score has dropped (say 10 pts), your other credit sources are very likely to do something similar, to which they’ll then politely tell you that your rate has gone up too (since your score dropped, dummy), causing an overall score drop of ~30 pts, down to a 630 Let’s take it one step further and say you’re four years and nine months into a 5.25% 5-Yr ARM…
The dilemma is glaringly obvious and you’re about to pay through the nose for it, the scary part is you may have had no control over the circumstances, and even worse you probably wouldn’t find out until it’s too late.
It’s more like a credit punch than a crunch.
Well, I was going to go into some long term suggestions to make sure this type of correction doesn’t catch consumers off guard again, but this post has run long enough. So I guess it’s now officially a 4 part series…
Sphere: Related Content
