Philadelphia Area Mortgage Blog

Republican Presidential Candidate John McCain along with running mate Sarah Palin visited Media, Pennsylvania this past Monday in a rally in front of the Delaware County Courthouse.   It is estimated that between 10,000 and 15,000 residents of Delaware County and the surrounding areas came out to support (or in some cases protest) the event.  I took my 10 year-old daughter to the event as I thought it would be a good educational experience for her and also a good opportunity to spend some time in seat of Delaware County.

I'm almost embarassed to admit this but although I've lived in Delaware County for the past 6 years I've never really spent any time in Media.  I live in Secane and although it is about 5 miles from downtown Media, I seem to never venture further west than the Springfield Mall.   Ok, I am exagerating slightly as I have attended performances for the past 2 summers at The Media Theatre but still I never really realized all the little shops and restaurants with outdoor seating that Media has to offer until this trip.  No wonder it bills itself as "Everybody's Hometown."

Another thing I noticed is that the Delaware County Courthouse with its clocktower and the Veteran's Square Area around the courthouse reminded me so much of the movie Back to the Future.   I half expected to see the DeLorean drive up to get Marty McFly back to the 80's.  Instead John McCain's tourbus "The Straight Talk Express" drove through the square and let the candidates out into the crowd.   That was almost as exciting.

I will also note that the people at the rally and the people of Delaware County in general are pretty nice ( I grew up in Philadelphia).  Everyone in the crowd was talking and laughing with one another as though they were old friends and several taller members of the crowd offered to take some pictures for me as they could get a better view than I could.  Unfortunately, I don't have the greatest camera and my batteries were dying so my pictures could be better.  After the rally we had dinner at Pinnochio's Pizza on Baltimore Pike which has been in business for over 50 years.  The pizza was pretty good,with a very thin crust, still I'd love to come back to Media someday and check out some of the other restaurant offerings. Maybe for the next political rally...

Written by Michelle Chamberlain of Above All Financial Services, a Delaware County Mortgage Broker. To apply for a Pennsylvania Mortgage loan or to learn more visit www.aboveallmortgage.com.

With lenders tightening guidelines even for well qualified mortgage borrowers, it is now more important than ever for potential mortgage applicants to have good credit.  Part of every consumer's mortgage plan should be checking their credit report for errors and outdated information.  Reviewing your credit report will also give you a snapshot of how the lender will see your finances and show you any outstanding loans, credit card balances and perhaps most importantly your payment history. 

The easiest way for a consumer to get copies of all three credit reports - Equifax, Transunion, and Experian - is to go online to www.annualcreditreport.com, a site set up by the credit bureaus to provide consumers with a copy of their report once per year free of charge.  Since credit can sometimes be a confusing subject for consumers I decided to "test drive" the website to get a better gauge of the experience.  Now keep in mind that I am a mortgage professional, so it is my job to review and to understand credit reports, but this review is written wearing my "consumer hat" and not my "mortgage professional hat" - that is I wanted to see how the site works for someone who may understand little or nothing about credit, credit reports or credit scores.

The site is easy enough to use.  You can select to view your report from one, two or all three of the bureaus.  Though you enter your personal data through the main website, you will then be transferred to each credit bureaus own site to get the individual reports.  (Note - If you've ever ordered your credit report online from the individual bureaus you may have a user name and password already associated with that site and you will need to use than log in information. )  I was able to obtain my reports from Experian and Equifax with no problem.  For some reason I was told I would need to order the Transunion report through the mail.  I used annualcreditreport.com when the site was launched a few years back and had the same problem.  I could not get a clear answer as to why from the Transunion representative I spoke to back then.  Apparently it was just something on my account that still has not been figured out.   No worries for me though, because I receive my Transunion credit score for free each month through my credit card company so I know there is nothing suspicious on that report.

I reviewed the two reports I did manage to obtain and they are fairly uneventful- nothing negative and no errors.  But what does this mean to me as a consumer?  It is entirely possible to have an error free and completely positive credit history yet not have a high enough score - generally 720 or better - to qualify for the best mortgage programs.  In fact, as a mortgage professional I was not even sure what my score would be based on the reports I was looking at.  Not a problem, because although annualcreditreport.com is the site for "free" credit reports, it is also an opportunity for all three bureaus to market products that you do have to pay for, like credit scores or credit monitoring.

I ordered by score from Experian for $5.95 since it was $10 cheaper than ordering a score from Equifax.  Here is where things get confusing.  Experian now uses the VantageScore, which was developed as a direct competitor to the more well-known FICO score.   The particular score used doesn't really make a difference (you should have great credit with one model and poor with another), except for the fact that VantageScores can range from 500 -990 while FICO scores range from 300 to 850.  What does this mean?  Well remember that high score of 720+ we all hope to obtain?  That is only for the FICO model.  A 720 on the VantageScore model would be equivalent to a C grade (think school report cards) and you would actually need to have a score of 900 or better to qualify for the best mortgage rates. 

 When you purchase your credit score you will also get a list of factors that are lowering your score - such as having high balances on your revolving accounts (credit cards), recent late payments, or history of collection accounts.  This information can be helpful in determining what a consumer should do to raise his or her score.  For instance if the main factor for the score is high balances on credit accounts, paying down the balances can help to increase scores but if you have a good payment history and use credit wisely, but haven't had credit established for a long period of time, then you will see that noted as well.  Unfortunately, the only fix for that situation is time.

The Bottom Line.

AnnualCreditReport.com is easy enough to use, but the free reports do not contain enough information to understand if your credit is actually great, poor or somewhere in between.   In order to get a true picture of your credit, especially for those who wish to raise their score, you are probably going to need to purchase one or more of the products from the different companies.  This can cost from $5.95 for a VantageScore at Experian to $39.95 for a 3 in 1 credit report and score from all three bureaus available from Equifax.  Transunion also offers unlimited access to your reports and scores from all 3 bureaus for $14.95 a month but this may be overkill unless your reports contain multiple errors or problems. 

I would recommend AnnualCreditReport.com for those consumers who are already aware of the status of their credit and wish to monitor their report yearly for errors or fraudulent activity.  If you truly have no idea what type of credit you have, or you have had some credit problems and wish to bring up your score you are going to want to purchase additional products.  With all this being said, having you credit report and score is useless if you do not actually understand how to build and maintain stellar credit.  Stay tuned, in my next post I will shares tips for cleaning up inaccuracies, building credit, and keeping your report error free.

Credit Information courtesy of Michelle Chamberlain, a Pennsylvania Mortgage Specialist in Delaware County, Pennsylvania.  For mortgage financing needs in Pennsylvania visit www.aboveallmortgage.com.

If you've been following the news, you know that the real estate and financial services market has been pretty unpredictable recently.  If you are a Pennsylvania homeowner who has been thinking about refinancing your current mortgage loan - either to reduce your monthly payments, lower your interest rate, or cash out some of your equity - and you have been waiting for the "right time", there is no time like today!  Sure you may be able to save a little if you happen to catch the right point when interest rates are at their lowest, but since you will never know the exact time, you also risk the fact that rates may climb or that home prices fall and your home is actually worth less than it is today!

Don't delay.  While, it is true that lenders are tightening their guidelines for qualifying for a loan but there are still programs available for refinancing your home.  Have credit problems that would prevent you from qualifying today?   Let's come up with a plan to get you on track for qualifying for that loan in the near future.

Pennsylvania Homeowners, Don't miss the boat!  Contact Above All Mortgage to refinance your Pennsylvania Mortgage loan today!

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Above All Mortgage is a Pennsylvania Mortgage Broker. Visit us online at www.aboveallmortgage.com or call (888) 891-7704.

Are you a resident of the Philadelphia area and searching for a mortgage professional to refinance your current loan?  Are you looking to purchase a home in Philadelphia, Delaware, Montgomery, Bucks or Chester Counties?  Before you call that 800 number for that big national mortgage company who advertises on TV or search online for an out of state lender, consider your local mortgage professional.  Above All Mortgage is a full-service mortgage broker located just outside of Philadelphia, Pennsylvania in Delaware County, Pennsylvania.

The benefits of using a local mortgage professional are numerous and are explained in detail here.  Take a minute to find out all the advantages of using a local mortgage broker and how it can help you get the best mortgage loan and best service. Then give us a call or apply online to get started with your new mortgage loan today!

Ok, I know that the editors were not a popular component of the new Localism and many people felt that their content was not being added to the site, either by some fluke or by being deemed "not worthy" by the editors.  ActiveRain members complained, and the rule that posts would only show up in Localism after passing through the screening process was done away with.  Well take a look at Localism now!

Just for the heck of it I decided to check out the state level Localism page for my state Pennsylvania.  Do you know what I found there?  Listings.  Pages and pages of listings.  In fact there are 311 pages of posts on the Pennsylvania State page. Is there any notable state information there?  Who knows?  I stopped looking once I got past the first five or so pages.

Advertising is NOT the point of Localism, which is supposed to feature area information, mainly in the form of neighborhood knowledge, something that the locals know.  In fact, in Rich Jacobson's latest post Localism is described as a place where people "re-establish long lost bonds between neighbors".   I don't know about you, but my neighbors in Secane and I have never, ever discussed that "just reduced for a quick sale listing" some agent in Pittsburgh is marketing when we are outside chatting.  Know a good restaurant where only the locals frequent?  Saw a good show at a local playhouse?  That is the type of information that you post to Localism.  Have a house for sale?  That goes in the MLS.

Also, Localism is also supposed to focus on hyper-local blogging.  This means your audience is not large geographic regions like your city or your state but a smaller more focused area like your neighborhood.  Besides that, if you are selling a home in Delaware County Pennsylvania your target audience is NOT the entire 12 million or so residents of the entire state of PA.  I am a Pennsylvania Mortgage Broker, so it would make more sense for me to post  on the state level because I can service the entire state. (I don't post there as this goes against the point of Localism.) It does not make any sense to post to the entire state when you only work in a specific geographic region, like a local Realtor does, unless you are willing to drive buyers across the state to look for homes.  I know Real Estate Agents are already complaining about the price of gas so I don't think that is an option!

It doesn't work when ActiveRain has one vision for Localism and ActiveRain's members have another.  There is plenty of information out there as to what constitutes approved content for Localism.  Either some members still don't get it, or they are just blatantly choosing to circumvent the guidelines for the sake of SEO or free advertising.  The real problem  is that consumers are never going to get on board with Localism if it resembles nothing more than the Sunday Real Estate Classified Section in the local paper.  And if consumers don't get on board - we all miss the boat.

Just when I think I've seen it all something else comes along to amaze me.  Today's topic: Can a Mortgage Broker give a loan to a Realtor for free or at reduced rates in exchange for the promise of future business?  To myself and some other educated members of ActiveRain this is a clear violation of RESPA Section 8 which prohibits anyone from giving or accepting a fee, kickback or any thing of value in exchange for referrals.  To others, especially those in the state of Texas, this is just smart business.  Well, it may be, but I certainly wouldn't want to chance a $10,000 fine in order to save a 1/2point on my mortgage loan nor would I put this offer out there in writing for the whole world to see.

For those who don't know (which I hope is none of us) RESPA stands for Real Estate Settlement Procedures Act and was first passed in 1974.  The purpose of the law is to help consumers become better shoppers by requiring certain disclosures and forms and to eliminate kickbacks and referrals among those involved in the real estate transaction.  This includes real estate agents, title companies, mortgage brokers, home inspectors and the like.

Here are some FAQ's straight from HUD's website:

Can a lender set up a contest for real estate agents under which the agent who provides the lender with the most business will win a trip to Hawaii?

No. Under RESPA, the trip itself, and even the opportunity to win the trip, would be a thing of value given in exchange for the referral of business.

Can a lender give a borrower an incentive, such as a chance to win a trip or a rebate, for doing business with the lender?

RESPA does not prohibit a lender or other settlement provider from giving the borrower an incentive for doing business with it as long as the incentive is not based on the borrower referring business to the lender.

Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?

Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation

Can a lender give a real estate agent note pads with the lender's name on it?

Yes. Such note pads with the lender's name on it would be allowable as normal promotional items. However, if the lender gives the real estate agent note pads with the real estate agent's name on it for the agent to use to market clients for its real estate business, then the note pads could be a thing of value given for referral of loan business, because it defrays a marketing expense that the real estate agent would otherwise incur.

Now, I know some of you astute observers will correctly point out that HUD doesn't say anything about brokering a loan for free or even less than what the average consumer would pay, but I think if something as minor as notepads with the Realtor's name on it are questionable, and just the opportunity to win a trip and not the trip itself is a violation, then why on earth wouldn't the prospect of saving perhaps thousands of dollars in loan fees in exchange for future referrals not be a violation? After all aren't loan fees something of value?  Personally, losing a license or being fined is not worth it to me, but I guess some people would do anything to make or save a buck. 

I'd wager a free or reduced price home loan that HUD would side that this scenario is indeed a violation.  Any takers?

OK, I'll admit, I am by no means a marketing expert.  I do however, use direct mail to market my business and have been somewhat successful.  While,  I don't feel I am qualified enough to tell you exactly what you should do in order to have a killer direct mail marketing campaign,  I am fairly certain I have enough experience to  tell you what you shouldn't do. 

 Now, some of these things may seem obvious, but these examples are all based on actual direct mail pieces I have received, read, and subsequently trashed.  You know the saying "one man's trash is another man's treasure"?  Well maybe it really is true.  See, I've since found a new use for this "marketing garbage" and have recylced it to help you improve your own marketing campaigns.

   Learn from these examples  and soon you too will be a quasi marketing expert:

1.       Don't Be Deceptive.  Now, I know that deceptiveness and marketing sometimes go hand and hand however if you want to uphold your reputation, it is best to honest.  Sure, obscuring the truth may generate more calls, but when the client finds out what you are really selling, or what you really charge, that call is not going to result in a sale.  I recently wrote about a letter I received from ING Direct, and how they were marketing adjustable rate mortgage loans, which were cleverly disguised as being better alternatives to fixed-rate mortgages.  Sure the real information was included in the fine print on the back, but how many people actually read that?  The low advertised interest rate was sure to generate a ton of calls, but how many people would back out once they found out what kind of loan this really was?  Bottom line.  Honesty is still always the best policy, even in marketing.

2.       Don't Target Your Market if You Don't Target Your Lists.  Marketing experts will tell you it is better to market to a smaller pool of qualified prospects than a larger pool of people you know nothing about.  Previously, I wrote about another mortgage letter I received, this one from Wachovia, which seemed to be targeted to a very specific type of customer.   Among other things, the bank was looking for someone who wanted to purchase a home and offered an incentive of a $500 gift card to those who applied before a certain date.  Now this would have been a perfectly acceptable letter - if they were targeting refinance customers - but searching for a customer who happened to be buying a home, within that particular timeframe, and meets all of the other criteria is like searching for a needle in a haystack. Eventually you may find what you're looking for but it is hardly worth the effort.

3.     Don't Forget Your Message.  The other day I received a postcard which I am assuming was a joint market effort between a Realtor and a Mortgage Company.  I'm not certain because although the Realtor's information was on one side and the Mortgage Company' s on the other, there was really no indication that these people even knew each other, let alone worked together.  Now joint marketing can be effective, and it can certain reduce costs but it has to look like collaboration and not like you were too cheap to pay for your own postcards.  Not only that, but on the mortgage side it only had pictures of the two loan officers along with their names and telephone numbers and some silly slogan about "doing what's right".  Were they selling mortgages or looking for volunteers for charitable causes?  I don't know.  The message was lost and I couldn't help but wonder why they wasted that space with a cliché instead of using those lines to sell their products or services.  Which brings us to the other side of the postcard...

4.       Don't Forget Your Customer.  The Realtor actually had a message on her side of the card (she got the side without the address and postage) but the message was WRONG.  She wanted to let me know that she sold a house in my neighborhood, she has no more inventory left, and that I should contact her if I wanted to list a house or if I knew anyone else who did.  She included a picture and the address of the house she sold but that was about it, no sales price, no days on the market, no boast about selling in one day, nothing else that would have made someone say "Wow! What an Impressive Agent!" and give her a call.  You sold a house?  Congratulations, but I thought that was your job?  You're low on inventory?  Not my problem.  Think the customer really cares that now that you were finally able to make a sale you are wondering where your next paycheck is going to come from?   Marketing should focus on the customer, not the commission.

5.       Don't Forget to Follow Up.  This is for those who follow the rest of the rules and actually send out a good direct mail marketing piece, only to manage not to lose the sale in the process.   A few months ago I received a different postcard, this time from a contractor.  Now this was a nice postcard and a costly one - jumbo sized, glossy, color printing on both sides.   I liked the message that the contractor was sending, something along the lines of us being neighbors which implied some sort of reliability- you wouldn't screw over a customer that lived down the street right? 

I've dealt with contractors before who have been less than reliable and not very professional and this guy seemed just the opposite.  I decided to give him a call to get some work done and left a message on his voicemail.  It took him almost a week to return my call.  Now I know that contractors often cherry pick jobs but this guy had no idea whether I needed a whole house remodeled or a nail hammered into the wall.  When he finally did call, he agreed to come over and give me an estimate but never showed up.   For some reason, I called him yet again.  He apologized, sounded sincere, and tells me he'll come out the next day, only to not show up again.  Why bother to solicit new business if you are never going to follow through with any leads generated?  Kind of defeats the purpose doesn't it?  Guess he really wasn't neighborly after all, or interested in growing his business.

Let's be honest, direct mail has a pretty low response rate compared to other types of marketing.  Sometimes, you simply cannot get people to respond, even if they are interested.  But, if you sabotage your efforts by making mistakes like the ones mentioned above, you don't stand a chance of making any new sales.  Direct mail can be effective, and it can be successful, if implemented correctly.

(Another customer,... another sale...)

 So now that you've learned What Not to Do, you just need to get out there and not do it!

After writing previously about a direct mail marketing piece I received from ING Bank, and how they were trying to market adjustable rate mortgages (ARMs) to unsuspecting borrowers, I decided to check out the web to see what the general perception of ING's Orange Mortgage was.  I came across this review, on epinions.com, and was quite shocked to say the least.  The review was written in June 2006, by a consumer who gave their experience with ING a one-star rating.  What's interesting here is we all know that hindsight is 20/20, and I wonder if that same consumer would say the same today.

The reviewer states "My recent experience with the ING Direct mortgage process was a complete disaster and it was almost pushing me to the point where I was unable to purchase my property."   Why, you many wonder?  Well, it seems that while the consumer was in the process for obtaining of loan from ING in order to purchase a new home, things were going smoothly (although a little slow for the consumer's liking)  until the appraisal came back "with a value that was more than 10% below purchase price, which was unheard of in this area."  Now he doesn't state in  which area he lives,  but having purchased a new home in that exact same time period, I feel confident to say that this was  just about the time where the market was starting to turn in some if not most parts of the country.  Perhaps, not to the point where home values were declining, but certainly at the point where homes were taking longer to sell and sellers may not have been getting their asking price, especially if the home was overpriced. 

The story gets better.  He goes on to say "My realtor was completely shocked and she suggested that the appraiser did apparently not know the local area very well. She is a realtor for more than 30 years in that town."  The reviewer then states that he went on to contact the local mortgage company, suggested by the agent and surprise, surprise the local mortgage company turns the appraisal around in two days for a value of 10% OVER purchase price!  He sums up his experience stating that although ING is "cheap" they are also "unreliable, slow, use bad appraisers, no one feels responsible, don't care about their customers".   His bottom line reads: "Do not apply for a mortgage at ING Direct. Don't be fooled by the cheap rates and the 0$ closing cost, since they may ruin your purchase."

Now hopefully in 2008 with the so-called mortgage mess and decline in home values we are experiencing, you see how this review is flawed.  If you don't, allow me to fill in the blanks of what is likely to have occurred:

Joe Homebuyer: Hello, Big Time Experienced Realtor, I got a problem here.  You know the house I'm purchasing for $250,000?  The one you advised me to make a full price offer on since you said it wouldn't last and other homes in the area were listed higher?  Well, I got the appraisal back and it says the home is only worth $224,900.  What gives?

Big Time Experienced Realtor: Are you kidding me?!  I've been in the business for 30 years and I KNOW how much the house is worth.  Obviously the appraiser doesn't know the area or how to do his job. Didn't you my local lender for your mortgage like I told you?

Joe: Well, actually I used a Big National Lender, because they seemed like they were going to give me the best deal.  I know buying this big of a home is a stretch for my income so I needed to get the lowest rates possible.

Realtor:  See what happens when you don't listen to me, Joe?  I have 30 years in this business and I always tell my buyers to talk to me first before they go to the mortgage company.  That appraiser doesn't know what he's talking about. That home is worth at least $275,000.  You're walking into the deal with equity and of course we all know that real estate is just going to keep going up and up forever. It'll probably be worth double that in the next 2 years.  Call my lender now, Joe.  He can get the deal done.

 Then the Realtor will give the lender a quick call, fill him in on what just transpired and tell him that he BETTER get the deal done, or she'll refer all of her business to the guy who can.  The lender, in turn will call his appraiser and tell him what's going on stressing that he needs the appraisal to come in at $250,000 or better.  The appraiser, not wanting to lose his referral source, values the house at $275,000.  The consumer in all likelihood gets sold on a non-conventional loan product, like an ARM or Interest Only Mortgage but he doesn't care because he can now buy his dream home.   Everyone is happy and after the homeowner gets settled he writes this negative online review of ING Direct who, in his opinion, almost ruined his chance to buy a home.

Fast forward back to the present... Joe probably needs to refinance, or sell, his payments may have increased  or something else happened to cause him to be unable to afford his current mortgage payments.  The only problem is that now he owes way more than his home is currently worth and there is little that he can do.  This situation is typical and unfortunately, there are millions of Joes out there facing the same type of situation today.

The lesson for anyone in the market to buy a home is to do your homework before selecting a Real Estate Agent or a Mortgage Lender.  The big national lender may seem to be trustworthy, yet none of the loan officers at this company took the time to educate the consumer on appraisals and the home buying process and no one cared when that client's business was lost.  The Real Estate agent's credentials and years of experience may have seemed impressive, yet she was clearly more interested in closing the deal than looking out for the consumer's best interest and finding a him a home that was not overpriced.  As for the original online review, it is clear that ING's one-star rating was unwarranted.  Their customer service may not have been up to par, their process may have been slow, but in retrospective they were faulted mostly for... BEING HONEST.

Written by Michelle Chamberlain of Above All Financial Services, a Delaware County Mortgage Broker. To apply for a Pennsylvania Mortgage loan or to learn more visit www.aboveallmortgage.com.