I have struggled with the idea of writing this down. I certainly do not want to come off as some guy that has all the answers but maybe what I relate here could help you in your career and maybe I can learn something from you. If you are already a top producer then this may be something that you don’t need to read. But if not, then something here might make sense.

I have been in some type of sales position most of my adult career. I have sold everything from welding supplies to, obviously, mortgages. For a long time I thought that the successful people were lucky and got their success from others. In the back of my mind, I was always hoping that the top producer in my company would somehow take a liking to me and help me by just handing some (or all) of their business to me and I would be all set after that. Imagine my continued disappointment when that did not happen. Maybe a new product would come along that would jump start my career and I would make millions. Again, disappointment. I learned to admire the people who seemed to make it big but I just thought that somehow they were just luckier then me. I started reading all kinds of books from the people that seemed to know how to make it big and there were some great ideas in those books but it still did not make my career take off.

So what happened? Again I am not trying to say that I am the most successful lender around but in the last few years I picked up on something my Dad told me years before. (Remember it takes me awhile to learn things.) He told me that no one will make it for you except you. None of the people that I admire and have been a success in business ever gave me a book of business that I was able to rest on. None of them ever gave me any money. They were willing to share some good ideas but unless I was willing to do the work myself, I was not going to make it. Most of these people, by the way, ever had an easy way of it either, They made it despite difficult markets and their own mistakes. You have to be confident in your abilities even if you are new to the sales. You have to be humble enough to learn from those who know how to make it in your business. You have to be open to new ideas and be innovative. Some of the most successful business people have had to completely re-invent themselves when the market changed. You have to be willing to try something, knowing it might fail. You have to be willing to offer yourself to your clients without, necessarily, expecting anything in return. You have to be willing to give back through volunteering and offering your experience to others that are willing to learn from you.

So who’s in charge here? As corny as this sounds, you are. Or if you are like me, God is, but then you are. It took me awhile to learn that but now it seems to have stuck.

By the way, rates are ridiculous right now. Maybe you can’t have the tax credit anymore but an FHA loan is as low as 4.25% and that savings will ad up to $8,000 real quick.

It used to be that banks would only lend to people with a down payment of 20% or more of the purchase price of the house. As you can imagine that left out a pretty big percentage of the population. So the government came up with an idea. If the lenders would loan more then 80% of the value of a home, they would be protected from the additional risk by taking out an insurance policy that would protect them in case the loan went bad. The down side is that the premium on this insurance had to be paid by the home buyer. At first this insurance was provided by the federal government and was done through the Federal Housing Administration and is the same basic package today through FHA loans.

Later on when Fannie and Freddie came into being and were separate from FHA, they had to have some way of protecting the lenders from the possible loss of loans that were not paid back. They went to private financial companies to get the same thing and Private Mortgage Insurance (PMI) was born. PMI is provided by such companies as RMIC, AIG, and MGIC. These companies have suffered with the whole “mortgage meltdown”. You may remember that AIG was the subject of quite a bit of bad press when they needed to be bailed out but then paid out some big bonuses to some of their employees.

A few details to be aware of is that FHA MI and Conventional PMI do basically the same thing but there are a few differences. FHA MI is paid by the borrower in 2 different ways. Part of it is paid as a one time ”up front” mortgage insurance premium that is (at least right now) equal to 2.25% of the loan amount. This one time premium is allowed to be rolled into the loan. The rest of it is paid in the monthly MI premium that is equal to .55% of the loan per year and that is divided by 12. PMI does not have any “up front”portion so all of it is paid in the monthly premium. The PMI amount varies based on the risk. The more you put down and the better your credit is, the lower your PMI will be. The other difference is that FHA will charge their MI for a minimum of 5 years no matter how much money is put down. So even if someone put 20% down but needed an FHA loan, they would pay that MI for the 1st 5 years. PMI is only charged if the borrower does not have 20% or more to put down.

Another thing to be aware of with PMI companies is that since they went through the troubles of the last couple of years, most of them require that they underwrite the loan in addition to the lenders underwriting. They want to make sure that the loan is a good loan so they don’t have to pay out any insurance claims. The bottom line is that without MI or PMI, most people could not get a loan so it seems evil but it’s kind of the price you have to pay for not being able to save up a big down payment.

If you have any questions on this please feel free to contact me

This is also the weekend of the Capitol Hill Peoples Fair in Downtown Denver at the Civic Center. Lots of good food, crafts, causes, and music performances. One of Universal Lending’s own will be the drummer performing on the main stage at 10:40am on Sunday.

One last idea. You may have seen the story of Lee Shayler on some of the local media outlets. Lee recently lost his sight due to desiease and is raising funds to benefit vision related charities by walking 1000 miles in 1000 hours. He will be finishing his heroic efforts this Saturday. Go see him cap off his 1000 miles and donate to the cause. Get more info at www.meyewalk.com

So since I just can’t help myself. Here is a little insight on appraisals. You may have heard that FHA appraisals are much tougher on properties that need some work. So if you switch to a conventional loan, you’re OK right? Not anymore. Underwriters are going to be picking apart any appraisal. If there are pictures of missing shingles, foundation cracks, or peeling paint, the underwriter will most likely condition for those kind of items to be fixed, regardless of what kind of loan if being done. There now I’m done with talking shop. Go have fun this weekend.

The other source of information came to me from Lon Welsh. Lon, as you may know, is one of the principals of Your Castle Real Estate. He is notorious for researching and analyzing the sales stats of the metro area. He contacted me the other day and sent a great chart of his analysis of sales through 5/5/2010. He analyzed REO’s, Short Sales, and Regular Sales (I did not know any of these so called regular sales still existed) Sorry bad attempt at humor. Anyway, He analysed the market in Metrolist from Q1 to Q3 in 2009 and came to the following conclusions. REO’s are the most likely to sell, Short Sales are the least likely to sell and Regular Sales are somewhere in-between. The low end market is selling faster then the high end market. Now that last statement will not surprise anyone. It’s kind of an obvious conclusion, however going into the future will that continue to be where the market goes? I think that the emphasis on first time buyers, brought on by the tax credit, has brought the home buying bug to a larger number of people and even if they did not get it done in time for the credit, they still want to buy a house. My activity has remained steady for the last 2 weeks and I still think (or maybe Hope is a better word) that this is going to continue. As the economy gets stronger overall, lending institutions will loosen their grip on credit and higher end loans will hopefully be easier to obtain. But for now the market below $300,000 will still be the hottest sale,

If you want a copy of Lon’s chart, let me know and I can email it to you.

You are welcome to visit my blog at www.markafman.com, visit me on my facebook page called Afman Home Loans, or visit me on twitter at www.twitter.com/afmanhomeloans

The concept of taking the “undue influence” out of the Lender/Appraiser relationship is a good thing. I had a conversation recently with the highly respected member of the Denver Lending community and he said that HVCC is one of the best things that the government has done. The idea that an LO could influence the value of a property for his or her own financial gain is a problem and HVCC fixes that problem. However, the implementation of HVCC has created unitended consequenses. With HVCC in place appraisals have to be ordered through an independent agency, outside of the infulence of the LO. So this outside agency gets a lineup of appraisers and whoever is next in line for an order, is the appraiser that gets the next appraisal. Many Realtors and Lenders feel that this takes away the quality of the appraisal. An appraisal is not a comodity. It needs to be done by someone who really knows what they are doing and many feel that HVCC turns appraising into a comodity. The other problem is that these independent agencies can now be a profit center. They still charge around $400 for an appraisal but the appraiser that used to be able to make the $400 themselves, is now being paid say $275 or $300 and the balance of that $400 goes to the independent agency. Therefore, it is argued, the quality of an appraisal is going down. The appraiser has to do more appraisals to make their income and so they can’t spend as much time on the appaisal and the quality goes down. Another complaint is that due to the “next in line” concept, appraisers who are very familiar with one region are getting orders to do an appraisl in an area that they are not very familiar with. There have been times when an appraiser from Ft Collins will be asked to do an appraisal in Denver becase he was next in line.

There is a movement in congress to have a law passed to repeal HVCC. It will be interesting to see how this shakes out. I do believe the concept of HVCC is a good one but, again, the implementation of it is causing some issues that need to be addressed.

Let me know what you think and let me know when I can help. Mark Afman

This Saturday, however, the half hour show will cover all things related to mortgages. We will talk about the “mortgage meltdown” and where the industry is now, FHA and the 203K rehab loan, CHFA, the tax credit, interest rates, and much more. So please listen at am760 or streaming on am760.net and call in with your questions.

Also, if you are attending the Realtor Rally on April 13th and want a more in depth and expanded discussion of many of the same topics and the lending industry in general, I am teaching 2 classes. The first is a panel discussion on the state of the lending industry called Lender Hot Topics. This starts at 11:15 and will feature Pete Lansing the president of Universal Lending, Jim Kaiser of Advantage Credit and yours truly. Pete will discuss the macro issues surrounding our industry. Jim will talk about the credit side of our business. I will be there to talk about the underwriting and policy changes that affect your day to day business.
The second class is at 12:30 and will cover the new issues and updates regarding FHA loans, CHFA, and more. I hope to see you there.

Visit me on my facebook page called Afman Home Loans, or visit me on twitter at www.twitter.com/afmanhomeloans

This area of town still has several Church’s many of which came from the Dutch Reformed background. In fact this area used to be called Little Holland because so many Dutch immigrants settled there. On one block alone there are still two Church’s that come from this background. The 1st and 2nd Chrstian Reformed Churchs (no one ever said the Dutch were real imaginative in naming their Church’s) are on the block that is bordered by Emerson, Ogden, Jewell, and Colorado ave. These Christian Reformed Church’s, or CRC’s for short, still serve their congregations very well even after 100 years. 1st CRC just celebrated it’s 100th anniversary and 2nd CRC will celebrate it’s 75th anniversary this fall.

My Father grew up on the 1800 block of South Ogden. His parents were both Dutch immigrants. Before 1st CRC was built the congregation used to meet in the upper floor of the building on the northeast corner of Pearl and Iowa. My Grandparents were married up there. So if you are looking to buy a home in a nice neighborhood that is still a reasonably good value, consider Platt Park and I encourage you to learn about the history of this vibrant area.