July 2008

Wine Dog has the scoop.

Mercury was reportedly FATIC’s largest agent.

Much of what I do these days focuses on networking with web savvy real estate agents across the country. So when Inman Connect, real estate’s Mecca of geekdom comes along, it’s a slam dunk for me to go. This year I was lucky enough meet up with three of lenderama’s contributors. Mike Mueller, Matt Bowe and Daniel Martin. Pictured below.

We also took advantage of this gather to form an ad hoc Morgage 2.0 session at RE Bar Camp. There were about a dozen of us, including Jeff Corbett, Rhonda Porter, George Favvas, and David Gibbons. The discussion only lasted an hour, but could have gone all day. That one session, justified the whole week’s trip for me. It was unbelievable.

There is no Inman Connect type event for the mortgage industry. Something I plan on changing. For now, here’s my case for why you should come to REBlogWorld, my real estate and mortgage focused new media marketing conference on September 19th, at the Las Vegas convention center.

New media marketing works in any vertical.

I went to Blog World last year in spite of the fact that there was no representation from our industry. I really never thought twice about it because I started blogging before just about anyone else in Real Estate and had to learn from the tech, marketing, and political bloggers in the first place. These are the people at the cutting edge of new media. REBlogWorld is co-located at Blog World. When you buy a ticket for REBlogWorld on the 19th, you get to go to the full conference on the 20th and 21st as well. This is the LARGEST blogging and new media conference in the world. If you want to learn how to market in a web2.0 world, there is no other event that can even hold a candle to it.

REBlogWorld is being organized by two mortgage guys.

Every session we built has been designed to accommodate the mortgage professional. Some are primarily focused on mortgage pro’s. Dan Green, the best mortgage blogger in the business will be speaking on how to create credibility through your blog. I will show you how I use blogging to meet real estate agents, and Mike Mueller will lead a session on the latest Mortgage 2.0 marketing opportunities, featuring companies like Rate Speed, Zillow Mortgage Marketplace, Smart Hippo and Bring The Blog.

It’s in Vegas, do I really need to say anymore?

I did a ton of business last week at Inman. But I still considered it a vacation. Anyone following me on twitter probably already knows that. REBlogWorld is your chance to network and party with other web savvy loan originators. This is your chance to connect with real estate geeks. This is your opportunity to learn hard, and party harder.

Who should attend REBlogWorld?

Anyone who sells their professional services, and wants to learn how to market them online should attend. We have 12 sessions on Friday to choose from, and around 70 more over the weekend. After almost three years of blogging, I attended Blog world last year to find I have far more to learn. If you’re just dipping your toes in the pool, there’s and entire track dedicated to beginners. There’s something for everyone.

Nobody’s going to try to get you to sign up for their exclusive marketing system, or contribute to some lobby. Just three days of content coming at you like a fire hose while sin city tries to sweep you off your feet.

I want to change the mortgage marketing game.

Now for the purely self-serving motive. Organizing this conference is my job. You coming effects my wallet, but I have an even more self-indulging motivation. With all due respect, I believe their should be a lot more Dan Green’s out there than Todd Duncan’s. I look forward to the day the Super Influencers go the way of the Dodo. The natural transparency of new media marketing enables the good guys to succeed. Nobody is more discouraged than me at the state of the mortgage industry’s reputation. I want to look back at that Mortgage 2.0 session we held last week, and mark it as the genesis of collaboration between mortgage professionals that will change the game forever.

Mortgage marketing through blogs and new media is still very much in it’s infancy. But there are already professionals out there doing big business through these tools. If you want in, now is the time to act. REBlogWorld pricing goes up on August 22, hotels are filling up, and jet fuel isn’t getting any cheaper.

Make your plans for REBlogWorld today.

(At the end of this post, I ask for your participation in this conversation.  Please add your comments!)

Ok, I teased y’all in my last post and got a few complaints comments about leaving you hanging.  That was on purpose.  It’s a way to keep the story going from one chapter to the next and keep the conversation developing.  And that is what this meant to be, a conversation.  Heads up.

Here is “The Question.”

“What do you need to do to be absolutely certain you will thrive in the current and continuing Mortgage Crisis?”

That’s the question.  That’s the ultimate question right now and for the next 18-36 months.  You must become brutally honest with yourself if you expect to survive the next several years.  If you don’t aim to thrive, you will likely not survive.  The market is that brutal.  I am talking every day to loan officers that have 6+ years in the industry who are gasping for air.  Last week I met a 14 year veteran who is considering other careers because the combination of the factors listed below have taken a massive toll on his income.  This market shows no mercy.  Just look at the facts:

• HOME VALUES HAVEN’T HIT BOTTOM: According to Bank of America CEO, prices are predicted to decline another 15% nationally and 20% in CA and FL.  This further compounds LTV/Value issues in funding loans.  What’s your market like?
• THE SUBPRIME DEBACLE ISN’T THE ONLY LOAN CRISIS: Accelerated Option ARM recasts due to minimum payment induced negative amortization, combined with decreased values is another pot soon to boil over.  This chart and this article are one view of this story.  There are a myriad problems this will lead to; more foreclosures, credit constraints, further industry reputation backlash, and etc.  In addition, many agency and Alt-A arms will start to recast as well which could simply extend the crisis through 2010 or increase the crisis.  Either way, it makes sense to pay attention to the data.  What do you think is the best way for your business to respond to this?
• WE’VE CREATED SQUARE PEG BORROWERS BUT ARE BACK TO ROUND HOLES: The expansion of mortgage products and loosening of guidelines has created borrowers that are square pegs… which in itself is ok.  Making home ownership easier is a good idea.  But, now with most “creative” loan programs going away and guidelines tightening, we have round holes that don’t fit the legacy of borrowers that are left behind.  Just recently, the mainstream media has begun to report on this.  What are you doing today to make sure your borrowers become fundable prospects in the future?
• MARGINS JUST AIN’T WHAT THEY USE TO BE: Most of my evidence regarding this fact is anecdotal, but my friends who originate tell me that the days of 2 points in margin are long gone… it’s more like .75bps or 1 point if you are lucky.  Cutting prices by 50% is brutal on any business.  Maybe you are different… if so, let us know how you are creating magic!
• “REAL ESTATE IS LOCAL” HAS NEVER BEEN MORE TRUE: Last week I met some people from Stockton, CA who have seen their home’s value drop by 40%.  40% isn’t massive, it’s CRAZY massive. I even talked to a young lady who’s Condo in Florida, purchased at the top of the market, has lost 50% of it’s value.  Then, I look at my neighborhood in Colorado.  We’ve maybe dropped 5%-7% in the last 2 years. This means that a market strategy that works in Colorado won’t necessarily work in Chicago or California.  What’s your neighborhood experiencing?  How are you adjusting your strategy?

The bottom line is that finding fundable loan opportunities will likely get harder, not easier.  So, if you think it’s hard now, then you best prepare for even harder times.  And if you thought you had made it through the worst, you might want to recheck your fuel gauge as there are steeper hills ahead which will consume more gas during the climb.

Stop for a moment and think about this and respond.  Did I cover all the problems or are there more?  What do you need to do to be absolutely certain you will not just survive, but thrive?  I could have easily posted “Matt Bowe’s 5 easy answers to prospering your mortgage practice.”  But let’s get real.  The easy answers are gone.  Thoughtful discussion and critical conversations are what we need.  And finding what is working for others and seeing if the shoe fits in your market is more important than ever.  This is a conversation, so I’m going to stop here and listen.  Hint… class participation time.

Do you have the answer?  If so, share it by leaving a comment.  If not, then post a comment about what’s on your mind and why you feel uncertain and how your experience compares.  Did I miss something?  Do you want to add something?  It’s a conversation I’m trying to start with y’all.  Time to talk!  The more comments and information we share the more we’ll all benefit.

In my next post, we’ll explore the online and offline answers (that everyone wants to have) on how to get certainty so you thrive in these brutal and unforgiving times.

I am writing this week’s update Sunday since I will be a little busy tomorrow.  A lot of things happened this last week, some good, and much bad, starting with the whole housing bill that is going to be crammed down our throats.  More in that later this week, if I can find the time.  I mentioned that bonds needed a “correction” and we may have just gotten all we are going to get.

As for last week, we saw many big name lending institutions coming forth with huge losses and CEOs claiming “adequate capital”.  That alone should scare you because that is what Bear Stearns, IndyMac Bancorp, Fannie Mae and Freddie Mac all said and we know where they are today.  So, Wachovia, which announced its exit from wholesaling, along with Washington Mutual, are worth keeping a close eye on.  Add the fact the the FDIC took over two more banks Friday, exactly two weeks after IndyMac’s takeover, and things look a little dicey.

Despite all of the institutional news, bonds had a very up and down week controlled by economic data, again sending mixed signals.  First off, we had Plosser talking up inflation, but also said the Fed should act sooner, rather than later, to raise rates (hurrah, Plosser!).  Homes data was mixed with Existing Home Sales worse than expectations, but New Home Sales were better.  When you look at housing on a local scale, some that have been beat down, like South Florida, are showing signs of improvement, but are too early to tell if we reached bottom.

Along came Initial Jobless Claims much higher than expected, but Friday beat bonds back down with a better than expected Durable Goods Orders release and better than expected Consumer Sentiment.  Data is rather skewed again in some arenas, but the data did move mortgage bonds nonetheless and they ended the week slightly higher and mortgage rates notched down a bit.

This week will be a major player in the direction mortgage backed securities move with the week ending with a bang, the Jobs Jamboree.  We have several other big players in the week, bringing most of the attention onto “recession” (or not), which may be a boost to bonds.  here is the break down:

• Monday:  No data
• Tuesday:  Consumer Confidence (10:00)
• Wednesday:  ADP Report (8:15), Crude Inventories (10:30)
• Thursday:  Initial Jobless Claims (8:30), Chicago PMI (8:30), Employment Cost Index (8:30), GDP (8:30), Chain Deflator (8:30)
• Friday:  Nonfarm Payrolls (8:30), Unemployment Rate (8:30), Hourly Earnings (8:30), Average Work Week (8:30), ISM Index (10:00)

As you can see, there will be plenty of “action” to move bonds, with the only question being…in what direction?  Looking at the technical side of things, bonds are still very much locked in the downtrend.  With a 50% retracement having taken place last week, they may very well keep going down, but with some weak economic news, they could buck the trend, at least near term.  Stochastics lean more towards oversold, but are not truly there again yet.

As we move through this week, locking is most likely the better choice, at least as the week starts.  If enough data comes in negative regarding the economy, you may want to switch stances, but watch out for volatility and “the big picture”, as they both could bite you.