Wednesday, April 6th, 2011, 4:33 pm

Four fair housing organizations released findings Wednesday from a yearlong undercover investigation uncovering loan modification scammer-tactics victimizing homeowners.

The report, issued by The National Fair Housing Alliance, The Connecticut Fair Housing Center, Housing Opportunities Made Equal of Virginia, and the Miami Valley Fair Housing Center, was compiled after 80 loan modification companies were investigated.

"This is shameful abuse by loan modification scammers to take advantage of desperate homeowners," said Shanna Smith, NFHA president and CEO. "We and our partner organizations will work to see to it that these companies are prosecuted by the Federal Trade Commission and other federal and state enforcement agencies."

With one in nine homeowners nationwide more than 90 days behind on their mortgage payments, mortgage modification and foreclosure prevention is a lucrative industry, according to the release.

According to the report, investigators working on behalf of the fair housing organizations captured scammers saying, "I’d be breaking the law if I told you to stop paying your mortgage, but friend-to-friend, you won’t get a loan modification until you are behind on your mortgage."

Another scammer was caught saying if the buyer doesn’t qualify, they would modify expenses for them.

"They [the lenders] don’t check it," one scammer said. "No one knows what you spend on groceries.  We make you qualify by playing with the numbers."

Some of the common scammer tactics revealed in the report include:
• 55% required an upfront fee to start work or required a low initial fee to conduct minimal work on behalf of distressed homeowners, such as reviewing loan documents;
• 43% guaranteed or promised they could secure a loan modification even before learning about the homeowners’ financial limitations;
• 24% advised or encouraged homeowners to stop making their mortgage payments or to stop contacting their lenders;
• 16% guaranteed a new, much lower interest rate ranging between two and 6 percent on modified loans;
• 12% discouraged homeowners from seeking free help from government-approved housing counseling agencies;
• 8% encouraged homeowners to provide fraudulent information to their lenders.

Write to Shaina Zucker.

The most frequent first contact with a prospect is experienced over the phone. If an agent is contacted directly via sign call, ad call, or even floor time, they are likely to be working or focused on something else when the opportunity to interact with a prospect arrives.

We can’t lose sight of the objective of that prospect encounter. It’s to set a face-to-face appointment. That objective is primary to the selling process in real estate. The fall back position is a phone appointment for a specific day and time in the future. The concern and hesitation on the prospect’s part can increase the longer we manipulate to keep them on the phone. This is especially true if they feel there is a verbal judo match going on between you and them.

Their mind begins to think you are asking questions because you are trying to make a “quick” sale; that you are just trying to acquire information that you will use against them in the future. The more they feel this way, the greater the resistance you will feel from them.

Once you secure the appointment, you have been granted permission by the prospect to ask qualifying and service expectation questions. Most trainers in real estate will teach you to ask a litany of questions prior to booking an appointment. These questions will, however, raise the resistance on the part of the prospect. The best approach is to secure the appointment and then ask the questions. Unfortunately, you can’t always select the best approach. We will often have to ask a few questions to keep the dialogue flowing long enough to ask for the appointment a 2nd, 3rd, 4th, or even 5th time.

Having a solid set of qualifying questions is essential when faced with a prospect over the phone, and taking notes right on the qualifying questions page for each prospect is paramount. You want to record their responses accurately. Remember, however, the true objective isn’t to get all the questions answered but to secure an appointment. I can never say that enough.

I have included a complete set of qualifying questions in script form for your use.

Qualifying Questions

Hi, this is _____ with _____. My desire for each of my clients is to provide them with outstanding service and counsel. For me to achieve that I need a few minutes of your time to understand your goals and objectives for your family.

Where are you hoping to move to?

How soon are you hoping to be there?

So, if you could design the ideal moving situation for your family, what would it look like?

Timeframe?

Why are you moving at this time?

_____, please tell me what is wrong with your present home?

What is right about your present home?

May I ask, how long have you been looking?

Describe to me the home you are looking for?

_______ Bedrooms

_________ Square feet

_______ Bathrooms

_________ Style of home

Type/Style:
Why?

How Important?

Specific Features:
Why?

How Important?

Location/Area
Why?

How Important?

Price Range Expected?
Why?

How Important?
Yard
Landscape
Condition of property
Neighborhood

Have you met with a lender yet?

Have you seen anything you really like?

Do you own or are you renting?

Do you need to sell before you purchase?

Is your home currently on the market?

Are you currently committed to another agent?

What are the best days for us to meet and see the property?

Would this _____ or next _____ be better for you?

What can I do to make it easier for you to get the kind of real estate information you are looking for?

Tell me the process you typically use to make decisions like this?

What price range are you considering?

What is the most important service you want from a real estate agent like myself?

Besides that, what’s next? (Go 3 deep)

So if I provide ____ and ______ and _____, we would have a basis for doing business together?

______, I really believe we can help you achieve your list of goals. To really do the job for you we need to meet. Would ______ or _______ be better for you?

I look forward to our meeting at ______. Our office address is ________.

Filed under Housing, Mortgages, Real estate

Nearly 25% of mortgage applications rejected

By CNN
Posted yesterday at 6:01 a.m.

During the housing boom, anyone who could fog a mirror could get a mortgage. Today, only highly qualified borrowers can get financing — let alone the best rates. The latest data from the Federal Reserve shows that nearly a quarter of people who apply for loans are turned down.

“Good borrowers with one or two blemishes on their credit are being denied credit,“ said Lawrence Yun, chief economist for the National Association of Realtors.

The denial rates tell only half the story. Many potential buyers aren’t even applying for loans because they assume they can’t get one — even with good credit.

“A lot of people know it’s very difficult to get a mortgage and they’re not even trying,“ said Alan Rosenbaum, CEO of GuardHill Financial, a New York-based mortgage broker.

That shows up in statistics on credit scores for loans financed with backing from Fannie Mae and Freddie Mac. The average credit score has risen to 760 from 720 a few years ago. For FHA loans, the average score has gone to 700 from 660. Loans made to borrowers with sub-620 scores are almost nonexistent.

Another factor keeping people out of the mortgage market is that lenders now require much more up-front cash. The median down payment for purchase is about 15 percent. During the boom, it approached zero.

On most loans, banks want 20 percent down. On $200,000 purchases, that’s $40,000, an insurmountable obstacle for many young house hunters. Or, in New York City, where the median home price is $800,000, buyers need $160,000 up front.

Industry insiders say all these factors have reduced the pool of buyers, lowering demand for homes and hurting prices.

“We feel it really reduces the demand for houses,“ said Mike D’Alonzo, president of the National Association of Mortgage Brokers. “It’s an unbelievable buyer’s market, but there hasn’t been as much activity as you would expect because not as many people qualify for loans.“

Jerry Howard, CEO of the National Association of Home Builders said, “You only have to look at the recent sales reports to see what the impact of the credit crunch has had. The statistics speak for themselves.“

New home sales in February were at an annualized rate of $250,000, a 40-year low; sales of existing homes, despite very affordable prices, were 30% off their peak; and home prices fell for the sixth consecutive month in January.

Anthony Sanders, director of Real Estate Entrepreneurship at George Mason University, speculates the tougher credit standards may have stripped as much as 30 percent of the buyers — or more — off the market, compared with normal times.

And it’s about to get harder for buyers. Federal regulators proposed rules last week that are designed to discourage risky lending but that will also likely further restrict lending.

Banks would be required to keep 5 percent of some loans, specifically those with less than 20 percent down payments, on their books rather than selling them all off as securities. As a result, banks make be unlikely to issue loans where less than 20 percent is put down. So much for first-time buyers.

“We think the new rules are appalling,“ said the NAHB’s Howard. “Only the wealthy will be able to buy homes at low interest cost.“

It could also further erode consumer demand for homes.

“It’s disturbing,“ said Lennox Scott, head of John LA. Scott Real estate in the Pacific Northwest. “We’re just starting to feel healthier in inventory levels and prices and this is a potential headwind.“

The immediate impact, should the new regulations get adopted, should be minor, according to Steve O’Connor, spokesman for the Mortgage Bankers Association. That’s because Fannie, Freddie and FHA loans are all exempt from the requirements and they represent more than 90 percent of the market right now.

The government, however, wants to reduce the presence of all three agencies in favor of private lenders, and banking experts fears the long-term impact of abandoning the field to mostly private companies.

“For the first time in 100 years,“ said Howard, “the government is discouraging you. It’s saying ‘We intend to make it more difficult for you and your kids to buy homes.’“

Read more about the topics in this post: Mortgage applications, Mortgage Bankers Association, National Association of Home Builders, National Association of Mortgage Brokers, National Association of Realtors

Related

• Americans put credit card bill ahead of mortgage
• New mortgage-backed securities rules unveiled
• Mortgage applications fall as rates rise
• JPMorgan’s Dimon: No mortgage writedowns
• Risky subprime bonds making a comeback
• Fannie, Freddie execs paid $35M in last 2 years
• Turn your house into a billboard, get free mortgage

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Real estate agents: Plug in to Gen X, Gen Y buyers' preferences

Adopt a new approach as 'conduit of information'

By Bernice Ross, Thursday, April 7, 2011.

Inman News™

Flickr image courtesy of jean hambourg.

Are you still marketing your business with personal brochures, glamour shots of yourself taken more than a decade ago, and other agent-centric approaches? If so, it’s time to shift gears to fit the demands of the next generation of buyers and sellers.

Real estate has evolved over the last several decades from being broker-centric to being agent centric, and then to being client-centric. In the client-centric model, the agent was seen as a "trusted adviser" who guided clients through the buying or selling process. The question is: What model is best suited for today’s clients?

The "Trusted Adviser Model" (as well as the agent-centric "me-me-me" models) is still common in real estate. If you’re still marketing using the "we’re No. 1 approach" or plastering your face all over postcards, bus benches and billboards, your money and time are better spent making your materials more client-centric.

Different generations require different approaches

Today, agents must modify their marketing and negotiation strategies to adapt to four different generations. For those born before 1965 (boomers and their ilk), the trusted adviser model is still important since they value expertise.

They expect their Realtor to know more than they do. This includes having a strong knowledge of the inventory, strong negotiation skills, and a mastery of the best technology.

In contrast, those in Gen X and Gen Y (born after 1964), don’t value expertise in the same way. A major source of friction between older agents and younger clients has to do with how older agents approach this important issue.

The older agents understand the value of their knowledge and how it can help younger clients achieve their real estate goals, and it can be particularly frustrating for them when younger clients seem to ignore what they have to say.

The model for 2011: The Trusted Resource Model

The new model for 2011 is what I call "The Trusted Resource Model." Most agents would agree that the deals that go the most smoothly are those in which everyone works together. This team approach creates a win-win environment for virtually everyone involved. This model is neither agent-centric nor client-centric.

In the more traditional Trusted Adviser Model, the agent often tells the client what to do. The challenge is that most people want to be in charge of their own decision-making.

The Trusted Resource Model establishes the agent as a conduit of information. The agent’s role is to provide the best information possible so that the buyer or seller can make the best decision possible.

To illustrate, it’s common for agents to recommend list prices on a listing appointment. The strongest agents will also outline a 90-day marketing plan that they will use to sell the property. This approach falls into the The rusted adviser model.

In the Trusted Resource Model, the agent outlines a 90-day marketing plan and then asks the seller for input about which services the seller would like to use in marketing the property. The agent also provides the comparable sales information. The key point of differentiation here, however, is how this is handled.

In the Trusted Resource Model, instead of telling the seller, "You should list your property at $244,500," the agent would say the following: "As you can see from comparable sales, the properties in this area are selling from $120 to $150 per square foot. The properties that have sold for $140 to $150 per square foot were all built in the last five years.

"Properties with amenities similar to yours that were built in the 1960s, are well-maintained, and have not been updated, have been selling for $120 to $135 per square foot. Based upon these numbers, where would you like to position your house in the marketplace?"

The power of this trusted resource approach is that it works with all generations. While the boomers may appreciate the fact that an agent has searched out and compiled the information they need, Gen Xers may appreciate being directed to where they can find the information. Those from Gen Y may prefer to do their own research, but they tend to check with their friends rather than searching exclusively on their own.

The Trusted Resource Model puts the agent in the position to provide access to the information and knowledge needed to close the deal. The client determines what and how to use that information.

In fact, the most important thing for real estate agents to keep in mind in almost any aspect of the real estate transaction is: "It’s not your house, it’s not your mortgage, and it’s not your decision."

The script that illustrates this and that is a great way to end almost any close is this:

"It’s your house. It’s your decision. What would you like to do?"

If you’re looking for a way to work with all generations that really works, make yourself into your clients’ most trusted resource.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of the National Association of Realtors’ No. 1 best-seller, "Real Estate Dough: Your Recipe for Real Estate Success." Hear Bernice’s five-minute daily real estate show, just named "new and notable" by iTunes, at www.RealEstateCoachRadio.com. You can contact her at Bernice@RealEstateCoach.com or @BRoss on Twitter.

Contact Bernice Ross:
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Copyright 2011 RealEstateCoach.com

All rights reserved. This article may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this article without permission is a violation of federal copyright law.

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