Lisa and Jim's Northern Nevada Real Estate Blog: October 2007

Mortgage brokers and Broker Banks can enhance their profits by up-selling you on the interest rate you qualify for on your loan.  A loan broker may talk you into taking out a mortgage for 6.5%, but you aren't aware that you actually qualify for a 6% loan and the broker sold you a 6.5% loan.  Lenders pay Yield Spread Premiums to loan brokers when the borrower pays a higher interest rate than the best he could qualify for.  The higher the interest rate, the higher the payment to the loan broker.

You probably pay your broker origination points for a loan in the neighborhood of 1% of the loan amount. Be advised that the broker can get an additional 1-1.5% of your loan amount for each .25% they overcharge you on the interest rate! That bonus is called Yield Spread Premium (YSP) when it's paid to a loan broker and Service Release Premium (SRP) when by a bank.  The Yield Spread Premium can amount to being a payment to the lender for giving the borrower a worse deal.  Note that in some cases, paying a slightly higher rate and allowing the broker to receive a Yield Spread Premium can benefit a cash-strapped borrower who doesn't want to pay an immediate brokerage fee. The Yield Spread Premium can then spread the cost of the broker's service over the life of the loan in the form of higher interest.  Generally speaking, however, the consumer does not know they've been had by the lender.

Senator Dodd has introduced legislation that will prohibit steering borrowers to more expensive loans when they qualify for lower cost ones.  That will eliminate the practice of giving YSP or SRP bonuses to lenders by eliminating the excessive cost to the consumer that results in the broker getting an undisclosed premium.  His bill also provides for: a. Prohibiting prepayment penalties and Yield Spread Premiums in subprime loans., b. Requiring lenders to assess borrowers' ability to pay their mortgage after a rate reset if they are signing up for an adjustable-rate loan., c. Require lenders to verify subprime borrowers' income with documentation., d. Hold lenders liable for appraisals and for brokers' actions when the broker is paid based on Yield Spread Premiums.  The legislation has been proposed, not passed.

Our Advice:  Know what you are really qualifying and paying for with your new loan.  Loan officers are very crafty when explaining away Yield Spread Premium when you question them about it. Yield Spread Premium is wholly unknown to most consumers so the loan originator never has to answer questions about it. When they are questioned about it, they either: 1. Play dumb, 2. Get angry, 3. Attempt to play down or explain away, or 4. are so caught off guard they stammer and sputter.  Ask away and watch the response.  Hopefully, you will have one of the many honest and good loan brokers in our area and can proceed confidently to funding knowing exactly what you are really paying.

Legislation can't always protect you.  Pay attention when you conduct your business, you have a responsibility to yourself and your family to do so.  Don't just be happy to get a loan - find out what you are getting and why.

Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com, 775-781-5472.

In my home state of Nevada a homeowner can file a "Declaration of Homestead" with the county recorder in the county his primary residence is in and receive protection against involuntary liens such as judgments up to a maximum of $500,000 of equity.  I have written about this may time in our local papers and provide these forms free of charge to anyone who calls and asks for them.

I got an inquiry from a person who lives Chaparral, New Mexico about the procedure and laws for Homesteading in that state.  I said I didn't know but ... I knew how to find someone who did know.  So ... let me know who out there has the answer and I'll pass your name and contact info on to this person.

If you are looking for a great prospecting tool that always makes our phone ring, this idea works every time.  Visit our website at www.carsonvalleyland.com and look at how we present the information, just click on "Homestead your Home"  We use the same copy each time we release the story and have a preprinted letter we always send out with the form.  Now we even have the form in PDF Version to email to online inquiries.  It's easy to set up.  This is a great pubic service and an easy way to gather contacts.

Define "Top Producer".  What exactly are you asipring to?  Top Listing agent of the month or 100+ closed sides per year.  Each takes a dfferent level of commitment.

My partner and I were MFO members for many years.  To this day I drive up to my dream home and think,"Thanks Mike!"  We truly would not be the successful agents we are today had we not found the MFO system when we had.

When new agents ask me how I became successful I always recommend Mike Ferry as a good place to start.  I also recommend Matthew Ferry and Tom Ferry, I've personally coached with each of them and they are wonderful.  Other wonderful coaches that I personally would recommend are Tony Dicello, John Alexandrov, Harris Real Estate University, Tim Woods, and John Furber.  Google them and see what they are about.  These are the few that I know of.  I'm certain there are many many others.

Right now my partner and I are coaching very successfully with Harris Real Estate University.  http://www.harrisrealestateuniversity.com/ . They are new to us but very good.  They were recommended to us by John Alexandrov, http://www.themoneychi.com/ .  I met John at a Mike Ferry "One on One" retreat. 

My opinion is that coaching is an evolutional process.  It's not a ... take a two day class and get "IT" thing!  It's an accountability thing that makes you ... "Get up and do the awful terrible thing everyday that you don't want to do but makes you money thing."  Mike calls it repetitious boredom.  This is the key! 

It's true, many trainers weren't successful agents.  "Those that can't teach."  So what?  Don't shoot the messanger.  A great surgeon may not e a good carpenter, doesn't mean he can't operate!

Who one coaches with is almost a matter of finding the system or person you resonate with - like speaking the same language.  I couldn't coach with anyone who speaks Italian - I don't understand it.  Likewise, the coaches that work for me are those that deliver the message and process I need to hear ... not want to, Need To!

I spent this past weekend with our Mastermind Group, C5 Live.  We all started out of MFO. Some members still belong.  These are superstars and all make millions and millions of dollars every year.  Everyone in the group will tell you that coaching and accountability are intergral parts of their success.