Keep an eye on your credit report

9182720_SImagine that you’ve scrimped and saved for a down payment, worked hard to pay your bills on time, and found the perfect home that’s in your budget. It sounds like the perfect set up for a happy ending.

But then you submit your mortgage application, and the mortgage lender says that you don’t qualify for a mortgage loan with your poor credit. You get a copy of your credit report and realize that someone stole your identity and ruined your credit score with unpaid debts.

Do you think that scenario is far-fetched? Well, the IRS reports 2.7 million people in 2014 had their identities stolen. But if you stay on top of your credit report, you’ll know when something is amiss—before it gets out of hand. The best part is that you can check your credit report for free.

Each of the three national credit-reporting companies—Equifax, Experian and TransUnion—is required by law to provide you with a free copy of your credit report once a year at your request.

How many reports you request and when you make those requests is up to you. If you’re just checking your credit periodically, spacing them out can help you monitor any changes. If you know you’ll be applying for a mortgage loan soon, you might choose to get all three at the same time. Comparing all three can help you look for errors or address problems.

Go to www.annualcreditreport.com. This is the only website authorized by the federal government to provide the reports you’re entitled to receive. You’ll be required to provide some personal information to confirm your identity.

Monitor your credit report to ensure that there aren’t any surprises when you apply for a mortgage loan. It’s a free process that only takes a few minutes.

Unauthorized Email

This morning you may have received an email from me that I had no knowledge about. The list of people who received it came from my contact list off one of my social media pages. Please disregard and delete it, and I am truly sorry if this caused you alarm. My team at PRMI is in contact with the social media site to rectify this “hack” of my contact list so it doesn’t happen again.

The New Era of Marketing and Technology: Looking Ahead

Dave Zitting Future of Marketing

By: Dave Zitting and John Seroka
This was originally published in California Mortgage Finance News, a California Mortgage Bankers Association publication.

Results. We want them quicker now than ever before. There’s an app for just about everything you want to do in your life. Want to get healthy? There’s an app for that – try Fitbit which allows you to control your weight, set goals, monitor your physical activity and calories burned, map your running routes and much more all in one place. No need to build spreadsheets and gather information from a collection of devices. Would you like a personal assistant? There’s an app for that too – try Speaktoit which will search for websites, make calls, get weather data and help you prepare for meetings. Suffice it to say that since the birth of the iPhone, we’ve been conditioned as a society to expect more and more from technology.

It used to be that enterprises (medium to large businesses) were the primary users of technology. Enterprise technology vendors like IBM, Oracle, Salesforce and many others would, and still do in many cases, target the CIO of an organization with their solutions. The focus of the technology was to capture, store, manage and deliver content and documents to eliminate paper, lower costs and create other efficiencies. However, the accelerated growth of content and information, the Cloud, analytics and collaborative technologies at a time when workforces were becoming increasingly mobile started to drive change.

Enterprises are no longer the primary purchasers and users of technology. This change has happened largely over the last decade and arguably started about 20 years ago. Remember the Palm OS released back in 1996? A bit clumsy to use, but early adopters were all over it. It was the first true PDA (personal digital assistant) that allowed for basic functions to organize your day, store contacts and take notes. Then, shortly thereafter, was the introduction of the Nokia phone that came with a game called “Snake” which landed in the pockets of millions. Fast forward to the release of the iPhone in ’07 and about a year later the App Store was launched with 552 apps created by third party alpha “rock star” developers…and life changed as 10 million app downloads were recorded within a week!

Now, Android users have access to over 1.6 million apps. Apple’s App Store gives consumers access to over 1.5 million apps. This kind of rapid innovation makes it so that consumers just want an end result, which is what these apps all do their best to provide – constantly updating to provide the best user experience they can deliver.

Today, the bottom line is that enterprise level technology platforms like IBM, Salesforce and others that you use to manage your business, sales efforts, marketing and more are becoming obsolete. We now live in a world of apps that are designed to provide us with the results we’re looking for in an instant. And, not just any result, but the very end result. For example, if you’re in a rental car travelling to a meeting and want to get a Starbucks coffee on the way, you don’t need to pull over to Google it and then open a separate app to find a location, you just ask Siri and she’ll find it for you and start telling you how to get there in about 5 seconds. This is the level of responsiveness that people expect from technology now. Anything less is too much work and wears quickly on the nerves of a populace accustomed to instant gratification.

What does this mean for the future of marketing?

When it comes to marketing, businesses are demanding the same thing – just bring me the end result. They don’t care what steps you took to get there, they just want to have the customer materialize in front of them. So, much like their alpha developer counterparts, enterprise developers are creating apps that businesses and business people can use with the goal of delivering the end result to replace older platforms still in broad use today that enable users to simply “do a lot of marketing.” Newer platforms, however, focus on smarter, data-driven marketing to help businesses find only their most valuable prospects.

So, where does this data come from and how is it used?

Frequently, companies will turn to 3rd party data sources like BlueKai or eXelerate which are data aggregators. For the most part, they pay publishers to let them collect information on site visitors and then segment the data into various user profiles. Then, this data gets sold to advertisers who use it to develop highly targeted online ad campaigns, called “programmatic display.” The data they sell is great for demographic, behavioral and contextual targeting of online ads. These online ads are programmed to reach the specific people that fit the correct profile when they visit particular websites. These people are targeted according to their behavior, demographic makeup and context…the closest you can get to PII (personally identifiable information) without actually having it.

Here’s one example of how all of this comes together to the benefit of all parties in a real estate transaction…

Not long ago, Nationstar launched an end-to-end real estate platform called “Xome,” giving homebuyers a better alternative to Zillow, Trulia and other apps with far less functionality. Once in the Xome app, users can search homes, place offers, sell a home, arrange inspections, arrange appraisals, become prequalified by a Nationstar MLO, receive and e-sign most mortgage documents and more. Users also receive a minimum 1% savings on the transaction if they close through Xome which also means using a Xome-approved Realtor®. Accordingly, this app provides a win-win-win situation for the consumer, Xome and the Realtor®.

From what we can see, Xome has a site retargeting strategy (based upon ads that we’ve seen after visiting their site) and likely has a programmatic display strategy in place as well that leverages third party data sources. That’s just a guess, but probably accurate and would make sense since it was just launched and they surely want to build their brand awareness and drive users.

In an interview with investors, Jay Bray, Nationstar CEO, states “Today, real estate search engines allow you to search for homes, find the estimated property value of your home and, somewhat realistically, those of your neighbors.” He goes on to say, “However, these search engines are not currently designed to allow consumers to transact.”

The future of marketing is upon us and it’s all about obtaining real results. We’re quickly moving away from a long era of enterprise technology solutions that capture, store and manage data and into an era where data is analyzed, correlations are made and real results can be instantly provided. In fact, right now, there are new technologies that we’re either aware of or directly participate in, that will change the game for real estate professionals and consumers alike – all with the end result as the top priority!

Stay tuned…

Tackling Common Home Buying Myths

Last month, PRMI was invited to participate in Lifetime Television’s “Designing Spaces.” The episode featured some of our top Loan Originators and was dedicated to helping homebuyers with “Navigating the Home Loan Process”. During the episode, PRMI advised a young couple who was purchasing their first home. Our objective was to help them feel more empowered and knowledgeable by clearing up some common home buying myths and misconceptions.

We were honored to have this opportunity and enjoyed being a part of this important conversation. However, it also turned out to be a learning experience for us. As lenders, the ins and outs of the mortgage industry are an everyday reality. It is easy to forget that many of our consumers don’t have the same knowledge that we do and there are some things that we take for granted.

Unfortunately, the media sensationalized much of the housing market crises and, as a result, some people are hesitant to become homeowners. This has also lead to misconceptions about buying a new home and qualifying for a mortgage.

It is important for us to help our consumers separate fact from fiction. Here are a few common home buying myths that could serve as road blocks to homeownership.

You need 20% down to buy a home

As lenders, we know there are many great loan programs available. We can inform our consumers about options with lower down payments such as FHA, VA and state housing programs.

Interest rate qualification

There is a surprising amount of confusion when it comes to interest rates. Borrowers sometimes think that everyone qualifies for the lowest published rate. Lenders can help them understand the different factors that help determine the interest rate for which they will qualify and which monthly payment will fit best their budget.

Fear of judgment

I have found that some borrowers are afraid that a lender will judge them. Perhaps this is because they don’t fully understand the qualification process. We can reassure our customers by letting them know that our goal is to educate borrowers and empower them to make the best decisions.

Prequalification versus preapproval

Lenders know the difference between being pre-qualified and being pre-approved, but consumers may not. It is important to help them understand the difference.

Income determines the loan amount

Many consumers believe that their monthly or annual income will determine the amount of money that they can borrow to purchase a home. Borrowers might not know that debt load is also an important factor.

One of the most important things we can do as lenders is to help homebuyers feel empowered and confident. They need to feel in control of the home buying process and comfortable that they are making the right decisions for themselves and their future. Purchasing a home is a big decision and a mortgage lender should be a partner and a teacher.

Navigating the New World Of Qualified Mortgages

At PRMI, we are excited about the long-awaited arrival of the Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage/Ability-to-Repay rules (QM). We believe these new rules will allow us to help even more Americans pursue the dream of home ownership now that we have a clear line drawn in the sand of what is considered a quality (QM) and non-quality (non-QM) mortgage based on CFPB interpretation of the Dodd-Frank Financial Reform Act. By distinctly separating the two categories of mortgage-transactions based on consumer borrowing criteria, the new Qualified Mortgage rules will play a significant role in the interest rates and fees a consumer will recognize in the mortgage shopping process.

Most mortgage lenders will largely focus on serving QM borrowers, or only those who meet the more stringent government lending criteria. At PRMI, we see an opportunity to better serve all customer needs by providing products to consumers who don’t necessarily meet the QM standards, but who may still be able to demonstrate the ability to perform and repay a mortgage utilizing a Non-QM solution that properly considers their unique circumstances.

The QM rules were put into effect as a preventative action to protect against another housing finance crisis like the one that began in 2008. It also provides mortgage lenders legal protections from being sued by the consumer for extending a loan on which they are not performing when QM standards are met. Although the QM rules will have an impact on the industry by tightening the loan restrictions, it is my belief that Non-QM products will play an important role in the strengthening of the broader housing market, as new products allow for a greater number of consumers to access credit. In fact, the lack of mortgage-credit options today has been one of the major roadblocks preventing the housing market from a achieving a complete recovery.

Allow me to illustrate the limitations created by QM with a real example. After the housing meltdown, the loan qualification requirements tightened to the point where some well-deserving consumers were completely unable to qualify for a housing loan. For example, a consumer with a 760 credit-score, 30 percent down and seven years of successfully running a business found it much more difficult to get a loan than a consumer with a 600 credit score, 3.5 percent down and twelve months on the job. What’s the reason behind this discrepancy? The first consumer had written off too much of his/her income as a self-employed borrower (depreciation, investment in equipment, thus bettering the business, etc.), and in doing so reduced their adjusted gross income (AGI) to a point at which they don’t meet new income qualification requirements. But where did all of the money for such a large down-payment come from in the first place? Their hard work in operating a successful business! We can clearly see that a more in-depth investigation of the first consumer’s financial characteristics may very well prove him/her to be a less risky borrower. It certainly seems reasonable that this consumer shouldn’t be prevented from accessing mortgage credit.

With Non-QM, lenders will now have the ability to build new products to better serve their customer’s specific and unique needs. We will be able to offer more loan options to those who fall outside the stringent criteria of the QM realm (Although, Non-QM loans are still evaluated to ensure that the borrower has the ability to repay).

Living in a QM world does not necessarily limit the lending options as much as some naysayers have feared. The new rules do not condemn the mortgage industry to an atmosphere of negative growth and minimal risk-adjusted profitability. On the contrary! Regulators have afforded us the opportunity to establish a robust lending business in a significant part of the market—one that has been undeserved in recent years. If implemented responsibly, judiciously and with the protection of the consumer and the U.S. taxpayer in mind, I believe lenders can both properly serve credit-worthy consumers, and in so doing, restore the strength of the housing market that is critical to overall economic growth.

PRMI is gearing up to provide more options for consumers, including private mortgages that fall outside the QM definition. Although 98 percent of the loans prepared by PRMI fall into the QM category, the Non-QM loans offer exciting possibilities. In time, I believe the Non-QM loans will be as relevant and common as the FHA, VA, Freddie Mac and Fannie Mae. Regardless, I feel that these changes will inspire exciting debates among mortgage professionals and consumer advocacy groups over the next few years.

I remain positive and optimistic regarding the future of the mortgage and real estate industry, and the opportunities that these new rules bring. It is time that we put the consumer first. In achieving that, we need to deploy new ways to safely provide financing options that fit the broader market and the many unique needs of the individual home buyer.

Winter: A Great Time to Buy a Home

In today’s fickle real estate market, it can be intimidating to approach home ownership. As trends come and go in real estate, there have been many changes to the industry. However, one thing has remained true—winter is a great time to buy a home!

Winter, particularly December and January, can be a less than ideal time for house hunting. There are fewer houses on the market, the days are short and the outdoor temperatures are cold and unpleasant. However, homebuyers will find many benefits during the winter that they will not find during the busy spring months.

Fewer offers are made on homes during the winter months. When selling a home during the winter, one must consider either letting the home sit on the market until spring (which can seem really far away) or doing what it takes to sell now. Therefore, incoming offers can be more aggressive in the winter. Sellers who keep their homes on the market during the holidays are incredibly motivated.

You will also find less competition from other buyers in the winter. That can make a big difference when it comes to getting a home that you truly want at a price that you are willing to pay.

Another bonus to buying in December is the tax savings. Closing on your new home by Dec. 31 means that you can deduct mortgage interest, property taxes and points on your loan from your income tax return. These deductions can be significant. This is especially true in the early years of your loan when you are paying off a large amount of interest.

Winter also brings perks when it comes to working with a lender. Although lenders work diligently year around to provide the best service, fewer contracts are issued during this time of year. Therefore, it is possible to speed up the process during the winter and help clients cross the finish line to home ownership faster. Speed can work to your advantage when making an offer. In some cases, the speed at which one acquires financing can make the difference between an offer being accepted and an offer being declined.

The New Year is approaching fast and this is a great time to consider home ownership in 2014. There is no reason to wait and begin your search in the spring. Purchasing a new home could be the best holiday present for yourself and your family. It is definitely a great investment in your future.

Renting versus Buying

How does one know when it is time to stop renting and purchase your first home? There are many advantages to owning a home, but there are advantages to renting as well. In many cases, the question of renting versus buying comes down to lifestyle choice.

Renters have the freedom to move quickly and make impulsive lifestyle choices. If you aren’t sure you want to stay in the city where you currently live having the freedom to move when opportunity strikes is an advantage. Another consideration is job stability. Could you be relocated with little notice? Could you suddenly find yourself back on the job market? If so, renting makes sense.

But for many people, buying is a better choice. Although mortgage interest rates are no longer in the record lows, it is still cheaper to buy than rent in most parts of the country. For a comparison by area, visit the U.S. Department of Housing and Urban Development website.

When considering the advantages of buying a home, often the first things that come to mind are tax savings and investment. Homeowners can write-off property taxes and interest paid on a home loan. Renters have no similar tax write-off unless the rental home also serves as a place of business. Purchasing a home is also an investment in your future and a good first step toward retirement.

Additionally, buying a home brings a sense of stability that renting does not. Renters are not in control of their own housing destiny. Landlords can choose to raise the rent once a lease is up and there is little a renter can do besides agree to pay more or move. If you buy a home with a fixed mortgage rate your payment will only increase if property taxes or homeowner’s insurance increases. Landlords can also decide to sell the property with little warning or simply decide to no longer rent to you. Having to continuously move is expensive and exhausting.

Homeowners also have the ease of mind that comes with taking charge of your home environment. You can plant a garden or redesign the yard if you wish. You can paint the walls any shade that you desire and no one can dictate whether or not you can adopt a pet.

Despite the desire to own a home, the question of renting versus buying can be decided by factors outside one’s control. The tightened credit standards are challenging for young, first time buyers who have had little time to build a solid credit history and overcome credit mistakes. Entry level wages and student loan debt can also affect a first-time homebuyer’s ability to get a loan.

But, don’t be discouraged. First time homebuyers should meet with a financial planner or professional mortgage loan officer to discuss options. Approval is often easier to obtain than people think. With a little financial discipline and planning you can definitely reach your homeownership goals.

Plus, if you are secure in your job and you do not plan to move within the next five years, buying can save you money in the long run. Owning a home for five years or more is a solid investment. Just remember to prepare for additional costs beyond the monthly payments. If something breaks, there is no landlord to fix it.

Gen Y Homebuyers Focus on Smart Growth

As the next generation of consumers, Millennials (also known as Generation Y and the New Boomers) have become a driving force in the housing market. It has been interesting for me to discover that this rising generation is driven by a different set of values and priorities than we have seen with Gen X homebuyers and Baby Boomers.

Gen Y (typically categorized as born between 1980 and 2001) is truly a product of their environment. Because Millennials came of age during turbulent economic times, they saw the values of family homes plummet. It is also significant that Millennials grew up with the Internet. They crave information and are deeply in tune with the many options available to them. They are open to diversity and have the tendency to evaluate decisions through social media. Millennials also seem to have an almost universal green streak. Having a healthy work/life balance is a big priority.

Therefore, it is no surprise that Millennials prefer to purchase homes in city centers and urban neighborhoods. Cookie-cutter suburbs hold little appeal. Millennials refuse to waste valuable time commuting. They have a desire to live in walkable neighborhoods, with access to public transportation, near work, friends and entertainment.

City living feeds the Millennial’s desire for an urban lifestyle, but it also provides peace of mind. Homes in city centers consistently hold better value than homes in the suburbs. Additionally, the lessening demand for suburban living will help decrease urban sprawl and reduce the strain that commuting places on the environment. These factors feed the Millennials’ desire for “green living.”

This is why industry experts have come to call Millennials the first Smart Growth Generation in America. The goal of Smart Growth is to build communities with access to public transportation and reduce the distance between housing, jobs, shops and schools. Smart Growth has led to the transformation of cities across the nation.

Leading the charge is Smart Growth America, an organization responsible for building accessibility, sustainability and livability into city policies. Efforts include increasing bike lanes, building walkable communities and increasing public transportation. If this trend continues we should see the revitalization of city centers across the nation. The home buying habits of Gen Y continues to drive this movement.

Utah Business CEO of the Year Award

It is with great appreciation and humility that I recognize I have been awarded the CEO of the Year award by Utah Business Magazine for 2013. This prestigious award is given out to only a handful of CEOs each year from a pool of many. I am honored that, through me, the entire team at Primary Residential Mortgage, Inc. can be recognized for the tireless and Excellent Teamwork they display each day.

Our organization–like many good mortgage bankers–made it through the storm, strengthened by our experience, and smarter and better because of it. The fluid movements of this organization continues to impress me each day, and I’m both anxious and excited to chart the course ahead–a course based on Stability, Advocacy, and most importantly, Integrity.

On behalf of myself and the entire Executive team at Primary Residential Mortgage, Inc., I congratulate our team members–both here in Utah and the entire United States–without whom none of this would be possible.

Reference Link: http://dev.utahbusiness.com/articles/view/ceo_of_the_year_5/?pg=1

2013: My Predictions

I was recently asked by a reporter what the current mortgage interest rates suggest about the outlook for mortgage activity in 2013. To be fair, there are many contributing factors. There are those things that influence the interest rates themselves, and then there are the effects of low interest rates on consumers looking to either purchase or refinance.

It’s interesting; the current historically-low interest rates aren’t garnering the consumer participation one might expect, suggesting that housing is still on the mend in many markets. But, most markets are stabilizing with appreciation levels increasing, and it appears consumers are starting to feel more comfortable with the idea of buying and building homes.

Why not more activity, though? In past post-recession housing market recoveries, we witnessed much more robust market uptrends than we are in this post ‘great-recession’ cycle. Much of this can be attributed to consumer confidence still not being exactly what it has in the past – even with current home prices and interest rates being more advantageous than they have been in decades. Another factor is credit-qualifying-criteria and regulatory changes that are obstructing some home buyers who would have otherwise bought and participated in this cyclical trend upward.

More directly: a slight increase in interest rates, which is expected, will curb refinancing activity measurably in 2013. Not all, but part of this reduction in mortgage volumes will be replaced with some increase in ‘purchase-transaction’ activity (either new construction or existing home sales activity). The net-net of these two major mortgage-volume types should result in a reduction in overall mortgage-volumes by 15 percent to 20 percent in 2013.

Two other factors to consider are the falling unemployment rates and the increase in new single-family home construction, which will both certainly help replace some of the potential reduction in refinance activity. But still, overall volumes will more than likely be down net-net.

Now, there is one last potential wildcard that could provide a jump in mortgage-volumes for 2013: the various and inevitable economic headwinds created by increased taxes, the Affordable Care Act, deployment of regulatory rulings, the economic stall-factor from the fiscal-cliff issues taking so long to rectify, and additional European Union issues, which could drive interest rates even lower due to continued ‘safe-haven’ positioning by global investors. And although the Fed is willing to support the housing market by keeping interest rates low, even a very small increase in rates will measurably reduce mortgage-volumes. And on the flip-side, it would take a larger decrease in interest rates to actually increase mortgage-volumes. Thus, there is actually a better forecast and argument to be made that mortgage-volumes will decrease or stay flat at best in 2013.

At least that’s my take on it. Time will tell.