Our country’s election is next week, and it has most of us filled with emotion. The emotions & opinions vary but they, like the stakes, are high. I encourage you to get out (or mail in!) to VOTE!
I have a good friend, Justin Raithel, running for Folsom City Council. If you live in Folsom please strongly consider voting for him. He currently serves as Folsom’s Planning Commission Chair and was recently recognized as Folsom’s Volunteer of the Year by the Chamber of Commerce. Justin would be a great addition to Folsom’s City Council!
I’ve been looking for ways to support Justin in his campaign, as I want to honor his tremendous courage to run for public office. Justin will likely need to gain 25% of citizen’s votes in order to secure one of the two open City Council seats. While hitting that mark means Justin will win and earn more votes than the other candidates, it also means 75% of voters didn’t believe in him. Ouch, right??!! Even if he wins the election, 3 out of 4 people didn’t vote for him.
When I have a friend take on a risky endeavor, like running for office or starting a band, I often throw my family’s full support behind them. While I’ve never done either, I too know the reality of winning while not having everyone’s support.
As a small business owner in a very competitive industry, I’m always on the “campaign trail.” A big part of my career is tirelessly showing why folks can trust me as their capable REALTOR or mortgage broker over the countless other “candidates” in our marketplace. Thanks to you, we’ve done more business than ever this year, largely through repeat and referral business. I am forever grateful for the confidence so many of you have in my team and me to help you through your real estate endeavors.
Despite crushing every metric we’ve ever set for The Blue Waters Group, I still feel the sting when realizing we don’t get everyone’s “vote” of confidence. Folks choose to do business with other REALTORS, with the big banks out of state and community credit unions down the street. The old adage says there’s plenty of business for everyone, and that’s true! But, as a small business owner, my goals have always looked beyond the bottom line. I constantly strive to be the professional in my hometown that can be trusted by my neighbors, by the parents of my kids’ friends, by the folks who I run into at the grocery store. If I can’t live up to that measure, then the money doesn’t mean much.
I share this with you to remind you how much it means to me when you refer your friends and family and when you come back for your next transaction. Sure, your business helps me to make payroll with my employees and put food on the table with my family. But you’re also fueling the very ethos of what I’m about, which is “earning your trust is far more important than simply getting your business.” Thank you for how you’ve shown your support over the years.
In similar fashion, I’m showing my support for Justin Raithel because he’s earned my trust. He is not running for City Council for the simple sake of winning an election. Justin wants to serve our city because he has the experience, the smarts and the heart to do it better than anyone else. I’d like to think the same could be said for me as your trusted mortgage and real estate professional.
Times are uncertain, so skipping a few mortgage payments sounds nice, right? Not so fast.
In response to the economic turmoil caused by the Covid-19 pandemic, Congress passed an unprecedented 2.2 TRILLION dollar financial aid package for Americans. Known as The CARES Act, it aims at relieving businesses and individuals from economic hardships, including provisions to allow folks to request mortgage payment forbearance for the next several months. Awesome, right??!! Not so fast.
The intentions of this policy were wise, as a mortgage payment is often the single largest monthly expense for households. But, the unforeseen ripple effects of hundreds of billions of dollars in delayed payments has the potential to cripple the entire mortgage industry, put homeowners in perilous financial positions, cause grave damage to the overall economy.
To explain the economics of this issue, I’ll briefly touch on lessons of history, politics, English, and zoology. I know its long, but please take the time to understand the full story and the negative consequences you and society at large may face if pursuing mortgage payment forbearance.
First, A Bit of History
On March 27th, President Trump signed The CARES Act, a package of profound financial aid to Americans. The last time the federal government swooped in to save the economy, it was 2008 and TARP (“Troubled Asset Relief Program”) was passed to primarily bail out large (ie-“too big to fail”) banks in the midst of the “Mortgage Meltdown.” There was much criticism about how big banks were saved but the “little guy” was left out in the cold, so today’s policy makers didn’t want to repeat that same formula. The CARES Act is more focused on small businesses and individuals, and includes direct cash payments as well as the option to request to defer payments for the next 6-12 months without proof of financial hardship. As long as the mortgage is backed by a government entity, the mortgage servicer must honor the request. But, what the mortgage servicer must also honor is the monthly funds owed to the mortgage bond holders. In a nutshell, mortgage companies have to keep paying money out even though money is not coming in. YIKES!
Mortgage servicers will be facing incredible cash crunches and have repeatedly asked policy makers to establish a lifeline allowing mortgage servicers to borrow money from The Federal Reserve Bank to keep money flowing through the system. Without this form of aid, the mortgage industry as we know it could die.
Next, A Little Politics
As of this writing, the most influential politician on this matter insists that government intervention is not yet needed. Mark Calabria, the appointed director of Federal Housing Finance Agency (FHFA) who directs Fannie Mae & Freddie Mac, has a track record of disfavoring the government coming to the rescue in turbulent times. In fact, he’s gone on record to say if he were in charge during the Mortgage Meltdown of 2008 he would have let the very institutions he currently leads fail! Moreover, Mr. Calabria recently estimated “2 million borrowers would seek forbearance requests by May” and suggested if mortgage servicers get in trouble they could always sell their mortgage accounts to the larger mortgage servicers. Mr Calabria is either tragically miscalculating or misinformed on both fronts.
According to the Mortgage Bankers Association, the industry already processed well over 2 million requests by early April, and this number will only increase as our economy struggles to fully bounce back from shutdowns. Furthermore, the two largest mortgage servicers in the country, Wells Fargo & Chase Bank, have established policies in the last week to drastically reduce the amount and types of new mortgage
s they are willing to take on. There is no way the larger mortgage outfits will be a backstop to these new kinds of toxic mortgages with payment forbearance. Since the payment forbearance phenomenon was not created by the free markets, the free markets are not able to be the solution. Government intervention is essential, and at this time support to mortgage companies is only being offered to loans related to VA & FHA, which is a very small minority of the overall mortgage market.
Siri, What Does Forbearance Mean?
Unless you have a Jeopardy-sized vocabulary, forbearance is not a word you use often. Oxford dictionary says its “the action of refraining from exercising a legal right, especially enforcing the payment of a debt.” Simply put, forbearance does not mean forgiveness. Mortgage companies may temporarily refrain from collecting your payments, but they won’t hold back any longer than legally necessary, and likely won’t play nice when that time comes.
Survival Instincts Will Take Over
With inevitable liquidity issues and no sign of an immediate parachute from the federal government, mortgage servicers have impossible decisions ahead of them. Sadly, I believe this will force mortgage servicers to avoid favorable forbearance agreements at all costs. They will only play as nice as necessary to follow the law, but be ruthless otherwise. If you went through a short-sale or loan-modification process during the last housing recession, you know exactly what I’m talking about.
For example, there are no rules that govern when these deferred mortgage payments are re-paid. Even this video from the Consumer Finance Protection Bureau is vague. Potential options your mortgage servicer may offer: 1.) tack the payments on at the end of the loan; 2.) spread the missed payments over a period of time; or 3.) demand the payments be made in a lump sum.
What would you do if you ran out of cash and someone was overdue on a loan due to you? You’d force them to play catch up ASAP, right??!! Its not greed. Its not nasty. Its survival.
Mortgage servicers will do the same thing, forcing a homeowner who skipped payments at, say, $2000/month for 3 months & now pay $8000 in a lump sum in the 4th month. Obviously, most folks who truly need the payment relief in the coming months likely won’t be in a position to make a single catch-up payment, but tragically mortgage servicers are not in a position to float millions of skipped payments over the next few months and then patiently wait for reimbursement at the end of a 30-year loan. They have been backed into a corner, and will use any means necessary to try and survive.
I remain optimistic that policy intervention and clarity will eventually calm this situation down, but until it does every mortgage servicer is in a choke hold.
What Should I Do?
If you have suffered a big economic loss and cannot make your mortgage payment, by all means call your mortgage company and request payment forbearance. Yes, this may mean you are forced into a lump sum payment at some point, but that is tomorrow’s problem. You have bigger problems today; take the payment relief and hope repayment options are more favorable when you’re back on your feet.
BUT, if you are still able to make your mortgage payments, please continue to do so. Consider taking advantage of the delayed tax filing deadline (extended 90 days to July 15th!), but don’t delay making your mortgage payments unless absolutely necessary. Staying out of forbearance will allow you to keep your options open for refinancing if rates slip down (forbearance generally disqualifies you from getting a new mortgage) & will help you avoid a build-up of payments that will likely need to be paid all at once in the future. It is not only in your best interest, but also in the best interest of the mortgage industry and our country at large. If too many borrowers utilize payment forbearance, the mortgage system could face catastrophic failure that would result in a housing crash worse than the Mortgage Meltdown of the late 2000s.
Spread The Word, Not The Virus
Please pass this post along to as many friends and family as possible, and do your part to encourage folks who have been considering mortgage forbearance to know the full story. In the meantime, stay safe, stay inside, and stay sane!
2019 was a remarkable year for our firm. We exceeded every prior record our team set, from loans closed to homes sold. We added three new team members, taking our total to over 10 for the first time ever. We increased our office space. And we achieved all of this while I was gone for over half of the year.
For eight months I was on a sabbatical out of the country with my family. We sold our house and cars and lived on a sailboat in the Caribbean! It was an incredible chapter in our lives, but this post is not about our adventures (visit @SV_Storymaker for that) .
This is about the amazing team here at the office who made it all possible by caring for my clients while I was away.
Its not easy for a small-business owner to take time away from their company. If you ask other entrepreneurs, most would tell you they’ve never left for more than a couple of weeks, and even then were handcuffed to their cell phone just in case they were needed. Its common for an owner to be needed; after all its their company! Who else is going to handle the emergencies and tough decisions?
So how was I able to do it? Preparation of and trust in our team. This sabbatical was calculated for nearly a decade (watch this video for the backstory I shared prior to last year’s departure).
Every major life and business decision revolved around this singular goal of taking some extended time away with my family. As such, we were building a business that could survive without me. My business partner of 8 years, Lisa Ferro, has built The Blue Waters Group with me and has the same principles instilled in her approach to our company and clients. My support team of Donna Adams and Jennifer Perry have learned to do most facets of our job better than me, so I knew you were in safe hands. And my wingman, Chris McGann, the one who was recruited in 2013 to fill my role during this eventual sabbatical, became an All-Star mortgage and real estate consultant proficient at replacing me to care for you.
Sure, there were marketing pieces that were sent to you on my behalf while I was away, but I was removed from the day-to-day operations. I trusted my team because we prepared for this. My cell phone stayed with my team while I was gone; I did not check my work email from remote locations. I was not called upon when a transaction became complicated. I was not needed.
I am forever grateful for my team who not only kept the business alive in 2019, but who made it thrive as never before. I’m sharing this with you to remind you that what we do does not begin and end with me; the team approach to our services is what makes us great. Take comfort in knowing there is a team behind me who is caring, capable, and committed to serving you in my absence, whether for a single phone call or an entire sailing season!
As a referral-based business, we let others do the bragging for us. Our reputation has grown over the years through the praises of previous clients. We are constantly in gratitude for the referrals that fuel our firm’s very existence. Every now and then, however, we have to toot our own horn, if for no other reason to give you more reason to keep bragging about us to your friends, family & co-workers!
For the ninth year in a row, I have been recognized in February’s issue of Sacramento Magazine as a Five-Star Professional. Moreover, I am the only person in the entire region who received the award as both a mortgage professional and real estate agent.
To give these awards credence, they are given by a research firm based in Minnesota called Five-Star Professional who conducts annual research on our market’s practitioners. You can read about their methodology here. Unlike the many “Best Of” voting contests where customers are encouraged to vote (often repeatedly!) for their favorites, the Five-Star awards are determined by third-party research, peer evaluations, and objective criteria.
For the 2020 Class in Sacramento, 1% of the professionals in each researched category were selected. It is an esteemed award to receive, as only 135 real estate agents and 27 mortgage professionals were recognized in Sacramento. To set me apart, I was the only person recognized in both categories.
To compare it to an athletic feat, winning both Five-Star awards is like a baseball player winning both the Triple Crown and Gold Glove awards, suggesting they are equally great at offense and defense (no one has done this since 1967; can you guess who it was?). The skills needed to hit and field a baseball are distinct, but both are crucial to winning the game.
The dichotomy yet synergy of my combined careers are similar. The talents needed to be an effective real estate agent are different than those of a mortgage professional, yet for my business both are essential to helping my clients through successful transactions. It has been my career’s mission to excel at both disciplines. I’ve had doubters & “haters” who claimed it couldn’t, or shouldn’t, be done. Receiving these awards is a gratifying milestone at quieting the skeptics.
Historically, offering both services was a rare model but is now becoming a fad in our industry. Big real estate firms such as ReMax and Redfin have branched out into offering mortgage services. I’ve had years of honing our multi-disciplined craft; they have some catching up to do on the little yet mighty Blue Waters Group!
Thank you for your support and validation of our business model. We look forward to building on these latest accolades, and continuing to be the trusted team you turn to for your mortgage AND real estate needs!
PS – I’m not done bragging! In next week’s post, I need to tell you about some pretty awesome things about my team. Until then, GO NINERS!!!
Building a trustworthy team at The Blue Waters Group has been one of the most gratifying accomplishments in my life. Each team member brings something unique when serving our clients. They are all special people, and I truly could not care for you and those you refer without them.
We’ve recently created a team video that tells the story of our team and our collective ability to help you. You may already know the names of our teammates, but we want you to see their faces and feel their personalities; to have a connection with them. We thought it a little cumbersome to go knocking on each of your front doors & introduce them in person, so making a team video was the next-best thing!
Over the years, you’ve trusted me to help you in your mortgage and real estate affairs. As such, you’ve also placed your trust in our team. They do more than support me behind the scenes; each one of them in their areas of strength are able to fill my shoes when necessary. Its time I bring them into the spotlight and show them off to you.
In addition to monthly spotlights on our group, our team video (click video below) will surely further your understanding and appreciation of our team’s talents, and ultimately compel you to return & refer us for mortgage and real estate needs.
We are so fortunate Jennifer is a part of our team. You’ve likely worked with her during a recent transaction, as she acts as both a Loan Processor & Transaction Coordinator.
She’s sweet as can be with all of our clients, and is also incredibly determined with underwriters and other vendors when going to bat for you during transactions.
Below is her bio so you can get to know our Jennifer a bit more.
Senior Loan Processor & Transaction Coordinator
I have had the pleasure of working in this industry for many years, and have always loved the fast pace and unpredictability of this chosen career. I have been a Mortgage Loan Processor for more than 12 years and have become a certified Transaction Coordinator for Real Estate since joining The Blue Waters Group almost 2 years ago.
I have a wonderful husband, Trevor and two amazing boys, Bryce and Chad. After having the opportunity to work from home while I raised my sweet sons, I was anxious to get back to the work place. I was patiently searching for the perfect work family, and have been blessed to have found that with Matt and Lisa. The “Team” environment that they have created, is such a peaceful, supportive, and wonderful place to be and I could not be happier.
Currently I am studying to obtain my Real Estate and Loan Originator’s license in order to further advance my career and continue my passion in helping current homeowner’s and future homeowners with obtaining their financial dreams!
We were honored to recently list and sell this incredible home in the Auburn foothills. Special properties deserve special marketing; here is a video we shot, edited, and produced all in-house. Check it out; and remember we can offer this level of professional marketing when helping you sell your home.
Energy efficient upgrades to a home can add value, lower your utility bills, and make you a “greener” citizen of the Earth. There are now a number of finance alternatives that have made these updates more accessible than ever before.
For example, you can lease solar systems and offset the monthly lease payment with the energy savings produced. You can also borrow money to install energy saving appliances, and have the loan payments added to your property tax bill. With all of these new finance alternatives, it has helped many homeowners who otherwise wouldn’t have been able to install these updates with their own savings.
But are these new finance options truly helping homeowners? We have spoken to a number of clients who weren’t aware of some of the fine print of these finance schemes, specifically how these lease and loan options create a lien on their property that make it difficult or even impossible to refinance their homes. Furthermore, changing income tax laws impact many of these finance alternatives. PACE loans, for example, are liens buried into the property’s tax bill, but many California homeowners may find their property taxes not as tax-deductible as in years past.
Most folks recognize that they are going to pay interest if they borrow money from a solar or utility company, but what does not appear to be commonly understood is that these loans and leases are recorded against the property.
We have worked to help several clients refinance to a lower interest rate and save money on their mortgage payment. During the underwriting process, we discover an additional lien resulting from a solar, window, HVAC, or other energy efficiency update. This secondary lien must either be paid off or give permission for the mortgage to be refinanced. Many times, the client either doesn’t want to or can’t pay off the loan, and the energy efficiency loan won’t allow the refinance to proceed. The refinance attempt ultimately fails. Ironically, the act to save money through energy efficient updates ends up handcuffing the client to a higher mortgage interest rate loan, thus losing more money to interest than what is being saved in lower utility costs.
Not all loan and lease terms are the same amongst the various options and vendors. And in some cases it probably makes sense to obtain one of these loans and live with the potential down sides. Simply be sure you know the fine print. Solar and other outfits are pushing these available financing options hard on homeowners, but there are more traditional finance options available that you may want to consider as well. A cash-out refinance, home equity line of credit, home improvement loan, or other form of traditional mortgage financing may make sense as well. As always, we are happy to discuss what options you may have and objectively point out the pros and cons of each.
Last week I helped sell a home down the street from my own for a price never seen before in our neighborhood’s 24-year history. Obviously, home prices are soaring and certain pockets, like mine, are setting new price records.
In fact, most of the country’s regions have fully recovered from the housing crash. Most of California, including the Sacramento area, still has a bit more ground to cover before getting back to pre-crash levels. Some communities, such as East Sacramento, have recovered better than others. This chart shows how current median home prices compare to the previous peaks seen in certain markets.
Don’t see your town? Want to know how your city has fared? Complete this quick survey and I’ll send you your community statistics (greater Sacramento area zip codes only).
Tune in to next month’s blog post for my 2018 Market Forecast and which locations may see home prices continuing to soar to new heights.
I’ve previously written about my love for the game of Monopoly. Ever since I have been old enough to count, its been one of my favorite games. Whenever my buddies and I played I wanted to be both the banker and the property card-keeper; an ironic foreshadowing of my career as a combined mortgage broker and REALTOR. As it turns out, I’ve been playing banker and property card-keeper my entire life!
Love for Monopoly is hereditary
I was playing Monopoly Jr. with my son this week, and it reminded me of this 2011 blog post. Back then, I was helping a few brave clients purchase investment properties despite the bleak economic outlook. Things worked out quite well for that group of investors, as their investments have doubled in value over the last 5 years.
This summer, half of my team’s home buying clients were investors as expectations of Sacramento home prices are high. Combined with low levels of new home building, a flood of Bay Area money (check this article out) and some of the country’s fastest rising rental rates, Sacramento is an area many investors have honed in on.
Clients with the courage to own rental properties over the long-term amass great wealth as home prices rise, particularly in hot spot markets like Sacramento. My team has become experienced in helping clients make the leap to real estate investor. From hosting info seminars (remember this one!!??) to illustrating cash-flow analysis to having trustworthy connections with property managers and licensed contractors, we are a valuable resource to those looking to play real-life Monopoly.
As I said earlier, I’ve been doing this my entire life!