Tag: prioritylending

Let me tell you a little story.  The subject of this story was a college athlete.  Specifically, he was a swimmer, and a darn good one at that.  He and his relay team had won a lot of competitions and accolades, and they made it all the way to the Olympic trials . . .  only to miss making the summer games by .07 seconds.  A sneeze lasts longer than that.

Because of his unique set of skills, he has been hired by the United States government to train Navy SEALs in endurance swimming.  Most of his training takes place in San Diego where the Pacific waters are rather chilly.

Unlike some of the PE coaches I had back in high school who “trained” me in physical fitness but hadn’t run or done anything physical since the Nixon administration, this SEAL trainer does everything he requires of his students.  When they swim five miles in the open ocean, he swims five miles with them.  When they swim at night, he swims with them.  And each time he does this, he beats them.  (I mean he reaches the end of the swim before they do; he doesn’t take a large stick and start whacking them with it.)

The average age of someone going through the SEAL training is early/mid 20s.  Our intrepid instructor is 51 years old.  (You didn’t see that one coming, did you?) Recently, someone asked him how he’ll know when it’s time to throw in the towel (or wrap up in a towel and stay on the beach), and his answer was simple and succinct: “when one of them beats me.”  He went on to explain that there’s one major factor he has playing in his favor that gives him an edge over  these “boys” who weren’t even born when he was vying for a spot in the Olympics: the unknown.

When they start their five-, seven-, or ten-mile swim, he knows all the checkpoints and markers that tell him how far he’s gone and how far he has to go; the students have no idea.  Further, the unknown plays into the students’ heads.  Are there sharks out there?  When do they get to eat next?  When will they be able to take a rest?  Our instructor doesn’t have any of these questions bouncing around in his head; he can focus solely on the task at hand.

We, as real estate and mortgage professionals, are very similar to this instructor (or we should be): we know the checkpoints and the markers.  The difference, of course, is that we’re not training Navy SEALs; we’re helping people realize their dreams, build their portfolios, and giving them peace of mind. This means we should let absolutely nothing unknown linger in our clients’ heads.  If it means taking an extra five minutes to ask and answer a few more questions to assure our clients are fully apprised of what’s next and what’s coming up, they won’t lose their energy or resolve before we get them to the finish line.

In light of recent events, I was really going back and forth on whether I should use this title for this week’s edition of Priority Pulse, but I believe once you’ve read it, you’ll agree the title is fitting.  Are we good?

Recently, an agent came to me with a very young borrower who wanted to buy a new house.  Before I could ask the usual questions about income, credit, etc., the agent told me that they had tried another lender who told them she couldn’t qualify the borrower for the amount needed to purchase the house based solely on his income.  We quickly determined that he regularly works overtime, and he gets quite a good amount of it each week, but he’s only been at his current employer for 14 months; his previous employer didn’t give him any overtime.  We need two years of employment during which the borrower receives overtime to be able to count it, right?  (That’s where the first lender stopped.)  Actually, that’s not the way the FHA rule is written regarding overtime –it actually leaves it up to the underwriter to determine if overtime can be counted.

When I called the agent back to let her know I was reasonably confident we could qualify her client to purchase the house without having to add another borrower to the mix, she was ready (and I definitely applaud this) to write the offer at that very moment.  Fortunately, though, I was able to keep her on the line and explain the matter regarding overtime.  Further, I recommended that before writing an offer, we should submit a full file to the underwriter for approval.  This way, if we get the approval, we’re aces; if the overtime is the sticking point, we can still work on finding ways to get it approved or adding another borrower without the clock ticking on a contract.  She agreed.

A few days later, I had the privilege of calling the agent back and letting her know she was now able –nay, expected –to do the happy dance: the underwriter, in her discretion, counted the overtime so the borrower has more than enough income to qualify, and the agent needs to do her thing.  Even though the days between when I first explained the strategy to the agent and when I had her release the hounds and get the house were filled with text messages with funny images displaying her desire for everything to happen yesterday, we maintained a calm –a calm that could be maintained because we knew that whatever came out of our submission to the underwriter, we still had options, and we hadn’t put ourselves against the clock.  Further, we brought the agent into our “war room” meeting so she didn’t see any need to put us up against the clock either.  A storm is now being unleashed: a storm of excitement for a very young man to buy his first home: the American Dream!  Come on, if you’re not hearing patriotic music in your head or shedding a small tear of happiness for this guy, I don’t know who you are!

Tomorrow (Tuesday, November 6th) will be the culmination of a lot of building uncertainty for us all, regardless of our political stripe, but it will also be the beginning of new uncertainties.  Today is the calm before the storm.  Whether the results of tomorrow cause hyperventilation from panic or excitement, please remember the words of Paul Harvey: “In times like these, it helps to recall that there have always been times like these.”

This week’s topic is taken from an experience one of our newer loan originators recently had, and I thought it might be useful to some of you.  Many of you will probably say, “I already knew all that,” but I’m hoping that some of you will walk away feeling enlightened and educated.  (Some may say that last sentence is my passive-aggressive challenge to get everyone to read this article to the very end.  No comment.)

So, here’s the deal: after the borrowers were approved, made their offer, and the house went under contract, the underwriter came back to us and indicated that the home was in a flood plain so flood insurance was required.  Here’s the reason I mentioned that the loan originator was of the less-than-veteran status: when qualifying the borrowers, he did not take the possibility of a flood insurance requirement into account so the debt-to-income ratios were dangerously close to being out of whack.  Someone sneezing on the loan application or looking at it wrong could have sent it over the edge.  When he was discussing this with some of the other loan originators in the office, each one sort of smiled and told him that the area in which this house was located almost always required flood insurance.  Lesson learned by the rookie.

When the flood insurance requirement was mentioned to the seller’s agent, she acted like the deal was dead by making a comment that it would be next to impossible for the borrowers to get a flood insurance policy both in a timely manner and at an affordable price.  The loan originator had already done his homework and informed the seller’s agent that the existing policy held by the current home owners could be transferred to the new buyers.  She laughed and said that she’d been selling homes in that area for over twenty years, and she knew that wasn’t possible.  Our loan originator wasn’t deterred, and he called the buyers’ agent to give him an update on the loan’s progress.

The buyers’ agent and our loan originator, after discussing all of this, agreed that it was odd that the listing agent would act this way.  If she KNEW that getting flood insurance was difficult and expensive in an area KNOWN for requiring flood insurance, wouldn’t it be in her best interest to address that elephant in the room at the very beginning?  Sure, it might turn off some buyers, but if she’s so confident in her knowledge of the area and what it required, she wouldn’t have to waste here time going under contract and waiting for the underwriter to be the bearer of bad tidings.

The existing flood insurance policy WAS transferable to the buyers at the same premium rate that the sellers were paying per month, so everyone lived happily ever after.  It was an educational experience all around: (1) the rookie loan originator learned to research the area better to anticipate costs; (2) the sellers’ agent learned that flood insurance was transferable, which kept it affordable; and (3) YOU learned that whenever a client of yours buys a house in a flood plain, they should keep the flood insurance current at all times because when they go to sell, that home is more attractive to buyers because the flood policy can be transferred at the same premium rate.  If you already knew #3, good on you.  If you didn’t, though, I’m glad you made it to the end.  Have a great week!