Mike Mueller, Social Media.ist

It's going to hurt for a long time.

It is with tremendous sadness today that I learned of the death of a good friend.
Dave Hillman was a true inspiration to me.

He was technically minded, he was warm hearted, he was soft and generous.
Dave was a thinker, an intellect. Yet Dave was also an Artist.
He was always there to help anyone and everyone.

He is one of my personal 912 Mentors.
He had started an online message board called Bay912, I had found it early on and joined.
One day I was at EASY talking to my favorite guy behind the counter, Spencer.
Dave was there and heard us talking about 912 this and 912 that.
He came up and introduced himself and gave me a card that simply said www.bay912.org and listed his email.
He was very warm and inviting.
He said if there was anything he could help me with - drop him a line.
That's how I first met Dave. I still remember that smile to this day.

Dave recently took up motorcycling.
Dave and I had many in depth conversations about riding.
In preparation to pass his DMV test Dave asked me how to manage going around the Keyhole (part of the test)
He wanted to know where to look, which foot to weight, should he sit forward or back?
He was that into detail.

I'm sad. I'm very sad. I have no words to express the loss that seem adequate enough.
Nothing seems worthy.

Dave Hillman - I will miss you!

In the last segment I discussed the Power of Blogging as it added to the Agent's Toolbox.
This segment deals with Net Working.
I separated the word to emphasize the Net from the Working.

The internet is a vital part of the complete marketing package.
If N.A.R.'s estimate of almost 80% of buyers starting their search for a home on the internet is accurate (and why would you NOT believe it?), then having a no internet "footprint" would mean you are only trying to reach 20% of the buyers out there.      

You wouldn't do that would you?
Of course you wouldn't!

So you are the "Net" Queen (or King) of your office.

• You list your homes on the MLS,
• You post it also on Craigslist and you post with Postlets or VFlyers so yours really stand out.
• You joined ActiveRain and have a blog here and sometimes even leave a comment or two,
• Somebody told you about Localism so you added a couple of posts there,
• You heard someone report they were "Singing in the Rain", they were referred and sold 3 houses last week via ActiveRain, but you wonder why not a single phone call has come though to you.    
• You have your own website www.SusieSellsHomes.com which is a template site that look very much like every other template site, something your not too thrilled about but what else can you do?
• You "own" 137 Domain Names, and have them all point to your website.
• GoDaddy sends you a birthday card each year.
• You exchanged links by joining that link farm, then you found out that wasn't a good thing so you tried vainly to remove them all.

Sound familiar?    

Net Working is all of that, but you've just scratched the surface. 

Net Working is reading 30 to 40 of the top real estate bloggers each day.  Why?   
Do that and you'll be one of the most informed agents around.
You'll know all about Prop. XYZ  when your new client mentions it because you first read about it two weeks ago.
How do you read 40 blogs and have a normal life? - The RSS feed of course.  Funnel only the best information to a single source.  Skim the stuff you don't need, Read what you do need.

Net Working is about expanding your connections. ActiveRain has 36,000 members.   
With minimal involvement, I have connected to thousands across the country just by participating here.
You don't realize what a tremendous resource this community really is.

Net Working is having a problem with an FHA loan and your buyer.    In seconds you could have a couple of the Nations top FHA experts on the phone, eager and willing to give you advice.   
Tony Gallegos 
Jeff Belonger 

Net Working is needing a good appraiser in a distant area, calling a "friend" on ActiveRain (who happens to be a top producer) and getting the private home phone number of the best appraiser in the area with a personal recomendation from your "A/R Friend".  
Net Working is having that appraiser, someone you never met and will probably never use again treat you like royalty because of who referred you. 

Net Working is having the local news media contact you because they need a knowledgeable local expert for a 1/2 hour special on the local market. 
Net Working is the news producer doing a Google search for "Sunny Acres" and "home sales" and having your blog coming up first.
Net Working is having that producer read 23 pages of your blog, firmly implanting on her, your position and feelings on all things happening in Sunny Acres.
As so many here can testify.  Ask Gena Riede how that might work.

Net Working is showing up seemingly everywhere.
Net Working is guest blogging on other high profile pages. 
    See Brian Brady, He's everywhere!     

Net Working is helping to shine the light on others.
Tony Gallego does this at least once a week on his home blog, the Mortgage Cicerone  
Ann Cummings did it here: Localism Week in Review 
Jason Sardi did it with for the Mortgage Guys: Mortgage Week In Review: June 17th - June 22nd  

Net Working is having a crazy idea burning in the back of your mind of something that's sorely missing in the world.
Net Working is having so many other talented writers and experts want to actively pitch in and contribute articles and help.
It's still in it's infant stage, it was born Sunday June 24th (my 18th Wedding Anniversary), but here's a peek at

The Foreclosure Report   

Net Working is working better, faster, and easier.
Net Working is posting the first of three articles and having someone propose that there should be a 4th.
Net Working is having that person write the 4th article.  See: Cheryl Johnson  The Power of Blogging -  Social Fun 

So Net Working is so much more than just putting up a paragraph of copied market data.   
We can all see that, but hopefully your vision of Net Working just expanded a little bit. 

Blog On, you Fabulous                Net     Worker!

• The Power of Blogging - SER
• The Power of Blogging  - Net-Working        
  
• The Power of Blogging -  Social Fun (The Team Blogger project)
  
• The Power of Blogging  - Sticky-ness (coming Soon)

This is a "sidebar" to " Of Puddles and Pools... "

Good or bad.
Right or wrong.
Black or white.

I know what your thinking,

"There's no black or white about it. A pre-pay is a pre-pay!"

Ask a room full of consumers, "Why do some loans have a PrePay?" and they'll pretty much all agree.

"Pre-Pays are for suckers. Those Lenders just want to make extra cash from us!"

Go ahead and tell someone at a BBQ that your loan has a Pre-Pay, I dare you!
You fear being an outcast right?
Visions of your own brother in law, Bradley "The Know It All" pelting you from 25 feet with overcooked hamburger patties?
Owwww!

Take a step back from the consumers point of view.
Then another and another. Keep going....
Far enough back yet?

Where does mortgage money come from?

"Duh Mike, the Lender."

Ok, I'll play... Where does the Lender get the money?

"Uhhh, their vault?"

No, and not to get too technical, let's just say the money comes from Wall Street. (those big guys)

Mortgage money mostly comes from large institutional investors that buy large pools of loans from lenders, warehouses, and pooling institutions.

As an investor, with the choice of two almost identical pools of loans to buy, let's play the game...

"Which one would you buy?"

• Pool A - is a billion dollars worth of 680+ credit score, full doc, 80% or less CLTV, Single Family Residences all with 30 yr fixed notes at 6.5%

• Pool B - is a billion dollars worth of 680+ credit score, full doc, 80% or less CLTV, Single Family Residences all with 30 yr fixed notes at 6.5% - and each one has committed to keeping the loan for at least 3 years (Pre-Pay).

Which one has more value to you the investor? The ones with the pre-pay right? - That was easy, eh?
Why? Because the investor has confidence the Pool Dwellers in B are going to keep on sending them checks for a long time to come.
If they decide to sell or refi - they'll still get a check (the pre-pay).
That makes for a better Return on their Investment (ROI)

To even things up, what if now Pool B was at a slightly lower interest rate than Pool A?
You could see there would be a point when both Pools might have the same value to the investor but carry different interest rates.

Now let's switch back to the role of the consumer.
You just asked for a 30 year fixed loan because you said you wanted stability and were going to live in this house forever.

Your mortgage professional presented you with two almost identical 30 yr fixed programs, except one has a pre-pay and a better rate.
(This isn't always the case. Sometimes their isn't the ability to accept a commitment period in lieu of a better rate.)
But let's just say that this time there was.

A couple of years from now did it matter that you had a pre-pay?
Did it cost you any more to have a pre-pay?
Actually not, it probably saved you money!

It's all about perspective.

Stepping back and seeing the big picture.
Or stepping back and letting a 2 lb. Braut fly across the lawn,
beaning poor Bradley in the back of the head,
knowing your rate is lower than his,
and knowing why!

Perspective.

 * The addition of a prepayment penalty on a loan does not automatically mean that you are getting a better rate, only by working with ethical, trusted mortgage professionals can you make an informed decision. 

Or is it just another CYA form from one of my Lenders?

NEW STATED INCOME BORROWER DISCLOSURE REQUIREMENT

Beginning July 2, 2007, a new disclosure requirement will be added on all stated income documentation loans for applications received and loan documents drawn. The disclosure, titled Loan Applicant's Certification for Stated Income Loans, contains the following borrower agreement:

By signing below, I agree to the following:

I have submitted a loan application under the Lender's Stated Income Program.

1. I understand that loans made under this program generally cost more than loans made under "full documentation" programs (i.e., programs in which I provide documentation of my income and Lender verifies my income), and the Broker or Lender has offered to quote me a price for a loan of the same or similar type made under a "full documentation" program;

2. The income I have stated for qualifying purposes that appears on my loan application is $________________ per month; and

3. I further acknowledge that I understand that this information will be used by the Lender to determine my qualifications for the requested loan.

 __________________________________________________________________________________________________________

Stated Income Loans have their place in the world.  They are the right loan for the right person. They were horribly abused and misused by unprofessionals. But when this new disclosure popped up in my email today I have to wonder...

• Does this "Disclosure" really address the problem?
• Or does it just cover their corporate behinds when bad loans go bad?
• And even if it did does it fix the wrongs of the past?
• Or how about the present?

I don't read a single word in here that does anything to protect the consumer, to help rectify the problem, or to keep an unprofessional loan officer from "Stating" that the burger flipping employee makes $10,000 a month (yeah right) to qualify to buy the home. 

This isn't even a case of closing the barn door after the cows are gone. This is CYA all the way.

Long term mortgages and the rates and terms they carry are determined by a couple of different factors.

While many people mistakenly think the Fed's control mortgage rates they are in fact determined by Mortgage-backed securities (M.B.S.).

M.B.S.'s are created by pooling loans and selling bonds with coupons based on the mortgage rates. 60% of the mortgage bonds in the U.S. are guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. We've all heard of them before - right?

Yields, or rates on 10-year Treasury securities are typically used to track long term mortgage rates. Investors typically use Treasury yields as a benchmark for value, but it's the M.B.S.'s that create the actual interest rates. Factors such as supply and demand are always important.

When we talk about these large pools of money, we're talking about really large pools.
(imagine Trillions of Dollars).
Large pools of anything tend to move slow and steady.

Fannie, Freddie and Ginnie are not the only players in the 30 yr. fixed game.
There are significantly smaller "puddles" of money that need to be diversified and invested in real estate.
(now imagine just Billions or Millions)

These "puddles" may be controlled by large insurance companies, investment funds, pension funds and so on.

Every now and then one of these companies has a "puddle" they desperately need to have invested.

Rule Number One of "Pools & Puddles" is...
Like water, always keep the money moving - stagnant money earns nothing.
This applies to big business and small.



Two months ago, I was approached by a representative who had a "Puddle".
He needed to move this "puddle".
To entice the rapid deployment of this "puddle" they reduced the rate.
Once again, supply and demand.

Now since they didn't want to compete head to head with F & F, that would be bad business.
They went outside of F & F's sandbox. They went "Jumbo".
(a Jumbo loan is anything above the limits of F & F, currently $417,000)

Surprisingly, the rate at which this "puddle" was offered was a full 1% lower than other Jumbo rates and even below F & F rates! -

Wow!

I told everyone of my prior clients.
Needless to say, that "puddle" dried up pretty quick. It's now gone.

I don't think I've ever seen this before in my 14 years.
They have a new "puddle".

This one's just about the same.

• It's a 30 Yr. Fixed Jumbo.
• Fully lockable.
• No tricks, no gimmicks, simple stuff.
• Purchase or Refinance.
• Owner Occupied Only.

Yes, you don't have to have a Jumbo to use it, and there is an Interest Only option.

Hands down there may not be a better loan out there for the long term owner right now.
But is it right for you? Perhaps. Only by running the numbers can anyone really say.

Remember, it's a puddle not a Pool - Not available at you local bank - and it's first come first served.

There's only so much room in a Puddle - jump in while the Puddling is good.

Last week I taught a beginning blog class to local agents.
It was held at a local title company's conference room.
Any and all were invited to attend.
My one request is that we collect an entry fee as a donation to local charity.
The charity?  I leave it up to the host. 

In this case it was once again for the Contra Costa Association of Realtors Scholarship Fund.

The room holds a max of 30 people so we had them RSVP to my office so that we didn't over book.

The day came, the class went great, and quite a few agents went away knowing what a blog was, why they wanted to blog, and most importantly how to blog.
We did have some no shows, and a few people called to say they wouldn't be able to make it. 
I'm very ok with that.  It is after all just a blog class, it's not a dinner party at the White House.

But I want to give a special shout out to Ken Sorenson of Zip Realty.
http://www.ziprealty.com/agent/ksorenson
ken.sorenson@ziprealty.com

• No, Ken wasn't the superstar pupil.
• No, Ken isn't my Sister's, Husband's, Cousin's Best Friend.
• No, Ken isn't someone who has referred a multi million dollar client to me.

In fact Ken and I had never talked, we've never met, and he couldn't make it to the class.

But when I opened up my mail today and found a letter from Ken apologizing for not attending AND a check for $10 Donation to the CCAR Scholarship Fund for a class he didn't make, Ken Sorenson has earned my deepest respect as a human being.

So Ken Sorenson, or anyone like Ken Sorenson, I tip my hat to you, Sir!
If there is anything I can ever do for you - just ask!

I read an article the other day and was struck by the following quote.

"The Federal Reserve Board is considering potential revisions to Reg Z, including: (a) simplifying and clarifying Regulation Z's adjustable rate mortgage disclosures, to make them easier for consumers to understand and use; (b) requiring a "worst-case" payment disclosure; (c) requiring additional disclosures in connection with negatively amortizing loans; and (d) changing Regulation Z's timing requirements for transaction-specific, non-purchase loan disclosures."

The upcoming boom in foreclosures is, and has been forecasted by many professionals.
Nothing new there.
But as I have said before, the underlying reasons for this upcoming boom is largely due to good people who were sold bad loans for all the wrong reasons by unscrupulous loan originators.

It's a industry wide problem.

Everyday I get countless mail and spam advertising rates as low as 1%. I'll bet you do too.

The problem is that so many bay area homeowners have bought into loans like these or similar. They may have refinanced a couple of years ago into an adjustable rate mortgage with a 2 or 3 year fixed rate period. But that was a couple of years ago and now those fixed periods are running out and these same owners will now see there monthly payments rise incredibly.

When that happens the first thing they will do is seek another refi. This time though they'll have a harder time qualifying. Many factors go into a qualification. Income, Debts, Debt Ratios, Loan to Value Ratios, and so on. If their house has declined in value, what was a good enough debt ratio and loan to value ratio may not be good enough this time.

In the last refi they may have had enough equity to pay off all their consumer debt.
This time they might not have the equity yet have run the credit card balances back up again.

They might be left with no choice but to sell or continue on paying their new much higher monthly payment. That's when we'll see the foreclosures really start!

So now that the cows have left the barn...
The fed's is thinking maybe the consumer should have a little more disclosure?

I'm all for that, but aren't they a little late?

        One of my favorite Real Estate Jokes from days gone by.

A mortgage company was staffing up, crunched for time, and HR director devised a “one-minute interview” for prospective employees. The first candidate was an accountant, and the head of HR asked, “What is one plus one?” The accountant says, “Well, if you are talking about the value of one in the current year, and the second value of one also being in the same calendar year, then the answer would be two.” The HR chief says, “Well done, we’ll get back to you.”

 

The second candidate is an underwriter, and when asked the same question replies, “I am assuming that this is similar to other numbers, and therefore based on common methods of evaluating the equation the answer would be two.” The head of HR says, “Well done, we’ll get back to you.”

The third candidate is an appraiser, and HR asks, “What is one plus one?”

The appraiser replies, “What number did you have in mind?”

“You’re hired.”

 

Like I said,

From days gone by!

Have a great Friday!

Mike "Always used an independent 3rd party appraiser" Mueller

Ok, maybe it's more like 47.
I am not a speed reader.
I wanted to share with you how I read that many blogs each and every day. 
(Remember too, these blogs are outside of ActiveRain)

It's called the RRS Feed.  
RSS stands for Real Simple Syndication 
When I find a blog I like I will "capture" it's RSS Feed.

For those of you that know all about RSS Feeds and are ready to click to the next post STOP!  This is not another RSS Feed Story.

This is more about what to do with those feeds and how to manipulate them to fit your liking.

Okay, Read on... 

Jeff Turner turned me on to a wonderfully active post going on in ActiveRain started by ARDELL.  I say "active" as it's at almost 200 comments and is just picking up steam!

It's about having your reader go somewhere else to finish the story. 

You've seen the posts.
A couple of paragraphs is all you get, to read more you'll have to click on a link.
That link leads you to their "Home" blog. 
Is that a good thing? or is it a bad thing?  You decide.

I posted the same question here a month ago but didn't get an answer.

In following the lively discussion, I mentioned how I read many outside blogs.
That led to a question as to how this was done.
RSS is the short and simple answer - but let me show you the full way.
I am a Googlehead.  I use Google products as much as I can.

Google has something called Google Reader
It will take the RSS feeds of all those blogs you like and put them all on one site.
So you can grab the feed from Mike's Mortgage Minute, and Brian Brady's Blog, and The Mortgage Cicerone, and have them ALL on one single page!
How cool is that?

I've got better.

Google also has iGoogle,
I can customize my Google homepage and add the RSS Feeds to it as well.
I've added tabs and get 30 or so Real Estate News Feeds on one.
On another tab, I have 40 or so RSS Blog Feeds. (no, really!)

I control how many posts I grab for each Blog (I like 3)
By clicking on the Blog Title once I can see the last three post titles.
If there is something that grabs my attention I click on the Post Title and now I can read the post content.
If the post content grabs me, I can then click on it again and read the post as it was written by the author at their blog.

So with iGoogle, I can

• read hit 40+ blogs on a daily basis,
  
• see what's new,
  
• see if I like it,
  
• all in a matter of minutes,
• and on one screen! 
  

Try iGoogle yourself and see how it works for you!