Archive for the 'General' Category
Interday Mortgage Rate Pricing for the Worse
July 11th, 2008 Categories: Conforming Wholesale Mortgage Rates, General
Tipped off by my friend Dan Green (via Twitter @lifeinqueencity) about 30 mins ago, there was an inter day pricing for the worse in the mortgage market today:
The bottom fell out of the mortgage market in the past 2 hours. Rates spiked — just in time for all of the weekend house hunters.
This morning I threw a post up showing today’s wholesale direct mortgage rates…below is the screen shot from that post showing where 30 Yr Fixed rates and pricing were at ~9am PST:
After getting Dan’s twit I repriced the identical scenario on RateSpeed at ~12:30pm PST and received the following results:
Boy was Dan right, the bottom did fall out this afternoon!
6.125% was paying 1.256% in YSP this morning, this afternoon it’s only paying .395%. On a $400,000 Loan Amount, that’s a $3444.00 difference! You could have locked 5.875% this morning for almost the same price that 6.125% is going for this afternoon.
It’s a turbulent market folks…the Mortgage Backed Security market is experiencing similar volitility to its equity market counterpart. Fun times.
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Captains Log, Stardate 6272008…
June 27th, 2008 Categories: General
Crazy week meeting and talking to the typical disparity of lovers and haters in the quest for mo-better, accurate access to mortgage information…In any case, I’ve made the acquaintance of some very progressive people in and around this space and looking forward to announcing some affiliations in the coming weeks leading up to Inman Connect San Francisco.
Our beta group is almost full, we’ll be making proper announcements soon.
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Most common question/statement/epiphany of the week: You can provide agency guideline specific pricing????
Yes. While not perfect yet, RateSpeed is the only application of its kind (to our knowledge) that will take into consideration Conforming, Alt-A and Sub Prime (FHA very very soon) agency specific guidelines when returning a rate and pricing quote.
Why is this important? Accuracy and choice. Many other pricing engines only consider a few pieces of criteria when searching for and returning loan quotes, which can be misleading or lead to undeliverable pricing quotes, or they simply return ‘no results’.
Why don’t other applications (pricing engine companies and similar products) provide this level of detail? Not only do rates change daily (as often as 3 times) but program qualification guidelines change very often too. The sheer magnitude of data that needs to be updated and maintained is simply too prohibitive for others to deal with. In other words, they can’t…so don’t settle for a watered down version of a transparent mortgage program, rate and pricing search engine. Remember: You get what you pay for…
Thought for food:
Real estate professionals love the idea that they can feature RateSpeed on their sites too…If you’re a mortgage professionals looking for a way to differentiate yourself in the industry, streamline your business processes and maximize your marketing reach, apply here and we’ll help you spread your seed…
Back to my cave…
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I Submitted My Information, So Whats Next?
June 20th, 2008 Categories: General
We ’soft launched’ a working demonstration of the RateSpeed application late Monday afternoon and it’s created a storm of activity and opinion from those in and outside the industry. If anyone’s interested in reading a mile long comment thread thats far more interesting than the post, click on over to Active Rain.
There is such a love/hate relationship over this little application. While the love is great, its the hate that fascinates me. Hearing the virile comments from those in the mortgage industry reminds me of what happened in the real estate industry when greater access to property listing data was feverishly debated. RateSpeed is similarly akin to cracking open Pandora’s Box in the mortgage industry for consumers and professionals…opening Pandoras Box always sets off fireworks and usually changes how people percieve a given reality…once open, its almost impossible to close.
So what’s next? Well I didn’t plan on such a flurry of activity and interest so quickly. The plan was soft launch, contact some well respected folks in the mortgage industry get their opinion and see if 25 of them would like to take part in a Beta test over the next week to ten days. We would run the beta period for about 4 weeks, collect some invaluable feedback, make some adjustments in how the application worked and then do a formal launch. Well, I’ve been contacted by far more than 25 interested parties, ranging from the individual mortgage broker to technology companies to real estate agencies all inquiring as to how they can get involved with the RateSpeed initiative on too many levels to discuss at this time.
At this time on Friday, June 20th the plan moving forward is to go through the database of interested parties over the weekend and begin to select our 25 beta testers. I’ve already got a few hand selected with verbal commitments and will announce who they are starting Tuesday of next week. If you’ve submitted your information via the site or email, thank you, I’ll be reaching out to each one of you very soon. If you are not selected as a beta tester please don’t take it wrong, this wont be an easy process for me with so many quality mortgage professionals expressing interest, I just ask that you be a little patient and welcome the chance to be amongst the early adopters when we hard launch.
On a different level, a very common question I get is: What happens when I provide my (email) information to RateSpeed?
It’s privately filed away on our secure servers, so don’t expect a call from a mortgage professional or anyone else for that matter. We do not, will not sell or disclose your information to anyone. The application running on the www.ratespeed.com site is redisplaying rates and pricing available on the wholesale market so consumers, mortgage professionals and real estate pro’s can get a feel for it’s accuracy. It’s basically out there so everyone can put it and the quality of information it returns to the litmus test. So far, so good. I’ve had dozens of licensed mortgage professionals contact me and verify that what is being displayed is exactly the same information they receive from their wholesale or correspondent relationships and can deliver. Huzzah!
Anyways, its been a long week. I need a beer.
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Release Early and Often
June 17th, 2008 Categories: General
I’m a serial entrepreneur, afflicted in worst and best of ways. One of the issues I’ve struggled with through my ‘career’ with is exactly when to roll out a business service or product. ‘It’ (whatever ‘it’ may have happened to be) is never ready in my head, there’s always something that can be done to improve or refine for the better. With the RateSpeed application, never have I been more conflicted in these terms.
Part of the problem when you are so passionately attached to something…working, living, breathing it day in and day out…is that after a awhile eveything begins to run together, it all looks the same and decision making can become very difficult. ‘Do we roll it out now, or after XYZ are done??’ While it’s a little unnerving, our plan is to release early and often.
RateSpeed is very ‘alpha’, if you will, compared to what the User Interface (UI) will look and act like in the near future, but it does the one thing that it’s supposed to do very well; Searches and returns best case mortgage rates and pricing direct from the wholesale lender market without any ability for inflated margins or otherwise manipulated information. The data flow is pure, transparent and therefore extremely credible. This is the most valuable and important aspect for consumers and mortgage professionals given the current state of affairs in the maligned mortgage industry.
Everything from look and feel to functionality and expanded integration of 3rd party data, RateSpeed will consistently evolve and improve with each iteration. I’ve received a considerable amount of great feedback from well respected professionals and am already in the process of implementing some of the viable suggestions. Offering a wide variety of program types (50-40-30-20-15-10 Yr Fixed, 3-5-7-10 Yr ARM’s and an interest only options) to choose from on the submission page is one of the first functionality updates you’re likely to see. A consumer will be able to select up to four program types per search.
To further this dynamic, in the coming days we’ll be launching our campaign to enroll 25 beta testers in the RateSpeed program. They will be hand selected and offered a considerable amount influence as to how the application evolves; I really believe in the wisdom of (wise) crowds. If you would like to be considered for a beta license click here.
For anyone who is submitting their information to RateSpeed and requesting their rates be emailed, hitting the ‘Im Interested’ or Buy Now tabs, your information falls into my inbox, to which I share with no one. We uphold the strictest of privacy standards. I’ll keep it this way unless you expressly state you want me to refer you to a mortgage professional, which I shall do gratis.
Neither I nor this company charges for leads or referrals and we do not originate loans. This allows us to stay extremely objective in our approach to providing the information that we do, on behalf of the transparent mortgage professional and for the consumer. Once we have our beta group in place, consumers will be directed to the websites of RateSpeed licensed mortgage professionals running the application and servicing their local area.
Thanks to everyone who has submitted feedback, offered support and kind words of encouragement towards changing the mortgage industry for the better, for everyone.
JeffX
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RateSpeed Beta Version 1.0 Asset Field
June 16th, 2008 Categories: General
Releasing applications in versions is common in the world of software and RateSpeed is no exception.
While RateSpeed v1.0 does what it’s intended to do, very accurately redisplay 100% transparent wholesale mortgage interest rates, there are a few aspects of the application worth noting that will be updated in subsequent releases, which will come early and often.
The Asset field on the Submission page will soon be broken down into:
- Checking/Savings
- Stocks/Bonds/401(k)
- IRA/Retirement
Currently the Asset field is static and any subsequent quotes assume assets in the above accounts equal at least:
- 2X Mortgage Payment for a Primary Residence.
- 6X Mortgage Payment for a Second Home or Investment Property.
All RateSpeed version releases will be announced here on the blog so be sure to subscribe to the RSS Feed.
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RateSpeed, The Mortgage Rate Search Engine
June 13th, 2008 Categories: General
As a company RateSpeed probably looks like another mortgage interest rate quote internet site, proposing some grand solution thats ultimately a new skin on an old cat.
I imagine most brokers and bankers also smell another company looking to carve out a pound of flesh for itself, cut out the individual professional, or sell ‘leads’. For anyone that isn’t in the know, LendingTree charges used to charge $10,000-$25,000 just to sign up for the privilege to then pay for their leads plus additional fees if the loan closes. When broker/bankers ‘compete’ on Lending Tree, they must pass on these costs to the consumer. Similar things can be said about most all other Lead-Gen companies. It’s a fledgling (at best) and increasingly cost prohibitive business for mortgage professionals to use and subsequently consumers to pay for. As the saying goes, Shi* runs downhill 
Quite simply RateSpeed is a rate.bot that can crawl and extract best case interest rate pricing results from a mortgage professionals existing broker/banker relationships.
More specifically, the software can crawl multiple disparate feeds provided by any number of wholesale mortgage providers, essentially allowing a broker/banker to submit a borrowers qualifying and anonymous risk-based criteria to a single point of entry, yielding best case results. Broker/bankers are often ‘approved’ with dozens of lenders, actually ’shopping’ an individual borrower to this many resources is time and cost prohibitive. RateSpeed prices every lender in seconds, insuring all resources are considered and transparently displayed.
Consumers shall have access to the exact same RateSpeed interface and information that our affiliated broker/banker does. No more bait and switch, smoke and mirrors, or wondering if one really got the best deal they could. Par rates and yield spread premiums will be there for all to see. As is often said in the mortgage world, ‘we all have access to the exact same rates and programs’, its how well one can sell themselves or their company. Mortgage professionals that utilize our RateSpeed enabled sites will be looked at as transparent service providers, instead of Salesman.
RateSpeed will not be cost prohibitive. We shall not charge a per deal or referral fee. Any ethical, transparent broker/banker should be able to afford our products.
With great power comes great responsibility (Thx uncle Ben). By providing the mortgage professional community with a powerful and time saving tool we are mandating they share it with their potential clients. Consumers will see exactly what the professional sees, total unabated transparency. Our subscribing broker/bankers will have no ability to manipulate the information before a consumer sees it and they adhere to a flat fee cost for services policy, disclosed up front, and verified via the funding lender.
We hope to raise the baseline of what constitutes a good mortgage away from interest rates and cost (since ‘we’ all have access to the same candy bag) and more towards qualified, efficient service. Alas, the technology won’t be for everyone, i.e. many broker/bankers will condemn it as some sort of heresy, while others will tell their clients that they already practice such ethical standards. At the end of the day, there’s really only one way to know.
Who will the increasingly discerning and educated consumer trust? The broker/banker who must say ‘Trust Me’, or the one who doesn’t need to blow such smoke?
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The RateSpeed Lender Stable
June 13th, 2008 Categories: General, Mortgage Professionals
Although RateSpeed has the unique ability to configure most any wholesale lenders rate pricing feeds into the application, below is a list of quality lenders currently in our ’stable’ and available for immediate implementation:
1st Advantage Mortgage Wholesale
Alternative Mortgage Express (AMX)
Astoria
Cendant/PHH
CitiMortgage
Coastal Funding
Columbia Bank
Everbank
Fifth Third Bank
First Advantage
First Horizon
Flagstar
Franklin American
HSBC
ING Mortgage
Investor Savings Bank (ISB)
JP Morgan Chase
Liberty Mortgage
MSI 3
Provident Funding
RMC Funding
Senderra
Sovereign
Taylor Bean & Whittaker
The Provident Bank
Valley National Bank
Wells Fargo
Updated 9/8/2008…
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RateSpeed, The Automated Transparent Anonymous Mortgage Rate Pricing Widget
May 13th, 2008 Categories: General
“In a time of universal deceit, telling the truth is a revolutionary act.”-George OrwellWhen it launches in May of 2008, RateSpeed‚ will give consumers their first glimpse at wholesale mortgage rate and pricing information without broker/banker manipulation. The information will be free; the application anonymous.
Why would a mortgage pro want anything to do with this?
RateSpeed‚ is based on a proven, robust, real-time mortgage data exchange platform. It will be offered as a widget mortgage professionals can embed on their own websites so professionals and businesses may maintain 100% of their brand identity. Using the 12 most common credit and financial risk factors that influence mortgage rates, RateSpeed‚ will Search a broker/banker‚ personal wholesale lender database and return the most favorably priced loan programs, automatically. Think of RateSpeed as a front end pre qualification Underwriting Engine.
Give consumers what they want, easy access to accurate mortgage rates without having to directly engage you…and you don’t have to waste time selling yourself to a guarded consumer before you can get enough information to do the same, only manually. Follow up with the exclsuive leads RateSpeed provides via validated email, credit and financial data as well as the specific pricing results they’ve already received from your wholesale lenders.
The efficiency RateSpeed stands to bring your business allows you to establish a logical fixed fee for services, based on loan criteria, consumer and process needs. The fee a mortgage professional chooses to set is entirely their choice. As consumers understand that rates change daily, sometimes twice, compensation shouldn’t change, as it often can due to inefficiencies within the current mortgage Matrix.
RateSpeed is scalable to accommodate any individual broker or bankers existing wholesale lender relationships personal pricing feeds. The application offers unlimited consumer ‘pricing pulls’, no ‘cost per use’ fee structure.
Why would consumers want anything to do with this?
Real Rates In Real Time. Imagine calling a mortgage professional and anonymously giving them the infomation they need to accurately quote you an interest rate, and having them disclose exactly how much in cash rebate that accepting a higher rate qualifies you to receive. Imagine the mortgage professional doing this in 15 seconds. Dream with me cause dreams come true. Want to check wholesale rates from your local mortgage professional everyday, twice, five times per day? Have at it. Watch the market in real time.
We hope RateSpeed‚ spawns a national network of transparent mortgage professionals who not only disclose true par rates (the rates the banks actually approve you for), but offer flat-fee loan services as well. Under this model, consumers can expect a fixed-fee negotiated up-front that never changes, determined not by the amount of the loan, but the level of service required to close it. 100% of Yield Spread Premiums are disclosed and credited towards a borrowers closing costs, as is their black letter law intent.
To qualify as a RateSpeed‚ affiliate, a mortgage professional must apply for a license, which will require a cursory level background check and abide by its terms of use, which will include adoption of a transparent flat-fee model like the one described above.
Built out by a mortgage industry veteran and acclaimed pioneer in the transparency movement, RateSpeed is designed to be the most robust application of it’s kind. The XBroker is partnering with a nationally acclaimed mortgage technology platform so professionals and consumers may access the largest and most reputable selection of lenders and programs in todays market.
Don’t settle for someone else’s watered down version of a mortgage transparency widget.
There is only one RateSpeedTM‚Real Rates in Real Time. Transparency in its truest form.
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Yield Spread Premium. A Consumers Option to Finance Mortgage Closing Costs for Accepting a Higher Interest Rate
May 2nd, 2008 Categories: General
Originally Posted on The XBroker November 9, 2006
Yield Spread Premium. A Consumers Option to Finance Mortgage Closing Costs for Accepting a Higher Interest Rate.
Yield Spread Premiums (YSP’s) have gradually made their way into the American homeowners conscious, rising from relative obscurity.
While this is progress, their use in relation to their intent is still misunderstood, manipulated, and maligned. Although more consumers are now aware that YSP‚ are cash rebates Lenders pay for a borrower to accept a higher interest rate than they qualify for‚this hasn‚t stopped Brokers and Bankers from misusing them as a tool to subjectively and unjustly enrich themselves.
Definition.
Even well educated broker/bankers can‚t properly define YSP‚ intended purpose per RESPA letter law. As explained in the RESPA Policy Statement, yield spread premiums should be proposed “as a valuable option that permits home buyers to pay some or all of the up front settlement costs over the life of the mortgage through a higher interest rate.‚
In reality, YSP’s are shrouded within the complex structure of real estate settlement procedures to principally allow mortgage brokers and bankers the ability to impose higher prices on borrowers for their direct benefit.
Disclosure.
Many broker/bankers will disclose YSP’s in a range of fashions, which may appear to protect the borrower, but appearances are deceiving. A prevailing practice among brokers is to enter a range of 0% to 5%, which leaves the broker with complete freedom of action, while providing the borrower with no usable information.
Other brokers won’t disclose YSP’s until closing, misleading borrowers to believe that the suddenly apparent dollar amount on the HUD-1 ‚is a fee paid by the Lender to the broker/banker for ‘delivering the borrower’. Under this explanation, payment of Yield Spread Premiums would run afoul of the first step of HUD’s test of whether YSP’s could be considered illegal kickbacks or rebates.
If the dollar value of YSP‚ that end up in the broker/bankers pocket exceeds a fair value for services baseline, the transaction violates HUD‚ test. What is this baseline amount? I don‚t know‚$3000, $5000, $10,000+ ? How could one justify $5000 in additional undisclosed compensation?
Charging broker compensation fees up-front and via improperly disclosed YSP can be viewed as a violation of TILA.
Depth.
85-90% of all mortgage transactions contain YSP‚.
In almost all cases, they are never presented as an option, according to true definition.
They represent the largest source of compensation for mortgage brokers.
overwhelming majority of borrowers do not need YSP‚ to pay up-front settlement costs but are never offered otherwise.
‘This abusive form of price discrimination substantially increases the overall costs to borrowers, imposing a “hidden tax” on home ownership. Unfortunately, individuals who are less educated and less sophisticated about financial matters end up overpaying the most. The misuse of yield spread premiums affects prime borrowers, FHA borrowers, VA borrowers’**…all the way down the line. Even for those with the best credit, yield spread premiums can cost many thousands of dollars in increased financing costs.
The oft-maligned broker segment of the mortgage origination industry bears the brunt of these facts, while bankers can maneuver with perceived impunity, since they ‚are not required‚ to disclose YSP. It would be interesting to see bankers held to black letter law and operate under more transparent conditions‚rather it would be interesting to see how quickly they changed their business practices. Many in the industry don‚t believe it‚ anyone‚ business what they make via YSP incentives. Their definition states otherwise. YSP‚ belong to the borrower, not the 3rd party service provider.
The mortgage industry as a whole is a baseball toss away from moving to an overall transparent policy platform, via legislation, technology, or both. My $.02 says technology starts it and the legislators play pile on. At the end of the day, to not disclose has been rendered deceptive and predatory‚words that have a clearly deleterious effect on doing business, whether they are legally reprimanded or not. If you think about it…to speak out against transparency in this marketplace is not the type of opinion consumers or legislators will come to appreciate.
The opening salvos have begun. There will be momentous battles with new weapons and strategies, but like most wars, no one comes out the clear winner, but the landscape will be changed forever.
**Proper Thanks to:
Kickbacks or Compensation: The Case of Yield Spread Premiums By Howell E. Jackson and Jeremy Berry U.S. Senate Committee on Banking Housing and Urban Affairs.
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The Effect of Transparency on the Mortgage and Real Estate Industry’s
May 2nd, 2008 Categories: General
Originally posted on The XBroker November 7, 2006
Few people like to entertain the guy who trashes their business model as antiquated, especially those within the industry who currently enjoy a comfortable margin of success doing business under the self-prescribed ‘right way’.
So, let me simply say that I am here to help, not just pee in your Cheerios. Maybe I’m guilty of a little too much self-promotion, but you can’t get mad at the kid who tries to answer the tough questions, whether invited or not, and offers a solution for everyone else to openly poke holes in/at/through.
‘Disintermediation’ is an act of progressive business practices that are more debated by the day in this ‘underground’ real estate related community. As these industry’s move towards the path of greater transparency, outsourcing for less expensive products and labor is becoming a required task more than an option or debatable topic. Globalization hit the mortgage service industries a few years ago, if you hadn’t noticed. Anyone can outsource file processing (from Indiana to India) at far less expense than employing an in-house processor, with less errors 
This is only the tip of the iceberg, the risk (or opportunity) is far greater.
Much like the traditional stock broker middleman, the mortgage broker/banker and real estate professional middleman is a species who is facing a slaughtering wave of attrition, and for very similar reasons. The mortgage bubble has popped, and as the market scales from historical demand back into some balance with supply, only the strong and/or adoptive will survive…specifically…those who can do more for less, in less time. In the case of the mortgage industry, new and inexpensive technology is mandating transparency and forcing disintermediation from traditional ways. Instead of looking over the entire landscape, many within the industry refuse to look further than past what they can currently see.
Too often I hear comments like:
‘No piece of technology is going to replace me!’, ‘I’ve been very successful for years, why would I change?’ ‘It’s not practical to do business like you suggest’, ‘My customers love the way I do business’, ‘People don’t mind paying my fee.’
The internet has only been around for apprx 11 years, it is still in it’s infancy. There were plenty of people 10 years ago that dismissed Information Technology in a similar fashion, and PC cynics before them.
The demographic that has grown up online is just now entering the mortgage marketplace. They don’t value the traditional relationship as much as information. It, not you, is recognized as the most valuable resource. If they can get around you on the cheap, they will, and someone will be there to sell it to them for less than you’re capable of. Think of it this way, fathom doing business without the net and still being as efficient and effective as you are today? Impossible.
Dot com era businesses (and their plans) blew up at the introduction of transparency into it’s inflated numbers and projections. Company’s with P/E ratios and other fundamental baseline measurements that made 0 economic sense imploded.
The stock brokers who were making huge rips under cloak were exposed and marginalized or eliminated from the industry. I got along great with my stock broker, that didn’t mean I felt obligated to pay him 2-3 times the amount I now pay to buy and sell my securities. I found a way to do it faster and cheaper. His job and fees were marginalized to the point he joined the mortgage industry. Now he’s looking at me like, ‘What’s next?’.
Quid pro-quo; What is the benefit of changing how you do business now? Market share, and alot of it. However, early adoption of disruptive technologies that promote transparency and as a result, increased loan volume, requires disintermediation from current mortgage broker labor compensation models and business processes.
The new mortgage market consumer will demand more efficient, less expensive, point and click, intuitive interfaces to gain their business. If your cost per loan acquisition is $1,200+, you have a shelf life of about 1 year. Insist on continuing to charge points instead of a fixed fee for (multiple) services? Get relegated to fighting for ‘whats left’. Own or working for a brokerage that pays some type of 30%-70% split? You’re pricing yourself out of competition.
Seth Godin postulates that integration of new technologies, business ideas, products, and paradigms generally move into general usage/acceptance along a traditional bell curve, which seems more than reasonable to believe.
Lets put the transparent, efficient, cost effective, and intuitive mortgage business model into the curve as a whole, assuming that what I have laid out becomes remotely true.
Where will you or your Company be in this curve? Among the late majority, or cynical laggards who die a slow death or play perpetual catch-up?…or among the innovators and early adopters who are positioned to capture significant market share….a market that is primed for a huge correction, the beginning of which we are just now seeing.
The e-myth demonstrates that a business owner, and thats all of us in mortgage services nowadays, must work on his/her business, not in it, to become successful. The Innovators Dilemma discusses the dangers of getting too comfortable in your current success model, and why the big traditional players in the market fail to innovate, recognize, or implement disruptive technologies, to their detriment. The dot bomb explosion has demonstrated what happens to those pimping overvalued products, impractical revenue models, and non-transparent policies.
Disintermediation and/or transparency aren’t nouveau business process concepts whose effects have never been studied, they can be seen in a number of recent events . Considering the mortgage market is many times the size in volume over it’s equities counterpart, totaling some $8+ Trillion dollars, the overall effects and shift of wealth will be proportionately huge.
Which side of the wave will you be on?
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