A Thought Provoking Week…

A Thought Provoking Week…
There are weeks where issues come up during the loan origination process that makes me think “I have to tell the community about that!” These can be just random speed bumps that can be avoided, or they can be serious potholes that can detour the entire process.
Last week was one of those weeks!
Appraisals, home improvements and permits:
If recent work had been done on a home, appraisers are expected to prove and document that the work had been properly permitted. If the appraiser notes that a bath had been added and does not determine if proper permits were issued, the underwriter will request documentation to determine that the bathroom was installed legally.
Be sure to ask your selling clients if they had executed permits prior to any recent work within the past 5 years. If they didn’t get permits, you may want to try to get an inspector from the city or town to provide permits prior to listing the property. Just last week, we had a situation where a bathroom was added in the basement of a home and now has to be removed prior to closing. Needless to say, a situation that could have been avoided caused stress and frustration for both the buyer and the seller.
Commitment dates and extended closings:
Mortgage Commitment letters have expiration dates. This can create some concerns when a closing is months later than the Mortgage Commitment date. The law states that the following documents expire after 90 days and must be updated:
• Income: Pay Stubs
• Assets: Checking, Savings, Investment, Retirement
• Credit: Must be re-pulled after 90 days but should not be re-pulled early
• Appraisal: Good for 120 days before a new appraisal is required
The timing on these documents can create issues. For example, an investment or retirement account may only send out statements quarterly. Also, borrowers who are paid monthly may have to wait 30 days before they can provide the documentation required to update the Commitment Letter and extend the expiration date.
ALL loan approvals are at risk if the borrower ruins their credit, loses or quits their job or if they spend their down payment money. This is true whether their Commitment Letter is issued 3 weeks prior to the closing or 3 months. It is important to work closely with your lender and your buyer so you fully understand what needs to be done to update the Commitment Letter.
Conversely, we have buyers with extended closing dates who are required to submit an application right away. This is fine as long as there is no requirement to order the appraisal as the buyer would be required to pay for a second appraisal if the first one has expired.
As always – if you have questions, thoughts or concerns about the timing of a transaction, give us a call and we will walk through the scenario with you to find a solution that is beneficial for everyone.

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Solar Panels Are Everywhere. How Do They Impact Mortgage Financing?

I was out and about last week and in just few blocks sighted 6 homes in our neighborhood with solar panels. As the daughter of an early environmentalist, seeing so many houses with solar power supplementation excited me. As a mortgage professional I wondered how having solar power might impact the mortgage qualification process.
While researching this topic, I found there are mortgage rules to keep in mind when investing in solar panels and alternative energy production.
The biggest question to remember when thinking about updating your home to a solar panel system: are the solar panels owned or is the equipment leased or being paid for under an agreement with the solar company?
If you own your solar equipment you will be able to sell your home at any time.Complications can arise when you do not own the equipment. I would suggest that if you consider installing solar power, have a lender review the contract to determine if there could be any issues with future financing.

Complications that can arise with leased solar equipment:

  • The solar panels may not be included in the appraised value of the property
  • The buyer may have to qualify with the solar lease payment included in their ratio
  • Traditional electrical services to the house must be maintained and functional
  • There are insurance requirements, and other issues to address that make financing a property with leased solar equipment more challenging

Agents, if you are listing a property with solar power, call me early on to determine any possible complications to a future buyer. Some solar providers have created contracts and lease agreements that are suitable to lending requirements, but it’s a good idea to know what you are dealing with out of the gate.

Amy Tierce
Regional Vice President
We’re here to help you and your buyers do more, learn more and grow more!amy-tierce-headshot-2012 (2)

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6 Tips For Realtors For Managing the Appraisal Process

In today’s active market it can take time for values to reflect all sales activity. Taking a proactive approach to the appraisal process will help the appraiser when it comes time to execute the report.

1. Schedule the appraisal as soon as possible. If you are going to be away, make sure you have coverage for the appraisal appointment. Keeping the process flowing helps avoid delays in the loan approval process.
2. Stage the home as though you are conducting an open house. Now that the property is under agreement, don’t let your seller get too relaxed. Make sure that the house looks as good as it did the day the buyer first saw the property. First impressions do matter, so keep the property showing well!
3. Make sure you get the fully executed Purchase and Sales agreement (P&S) to the lender right away. Appraisers are now charged with reviewing the purchase contract to determine that the property as appraised matches the property represented in the agreement. The appraiser is required to review the P&S before they can release the appraisal report. It is vital that the lender receives the agreement on time.
4. Always be prepared to support the sales price by bringing a folder that contains the comparable sold properties that you and the seller used to determine the list price of the property.
5. List any improvements made to the property since last sold. Especially those changes that are not so readily visible such as electrical, plumbing or roofing work. List all improvements made since the last recorded sale of the property.
6. If the appraisal on a purchase comes in low, keep an open mind and don’t panic. There can be ways to manage this situation that keeps both the buyer and seller in the transaction. It is important to work directly with your loan originator and together you may find solutions that work for all involved.
About Wintrust Mortgage: Wintrust Mortgage was created to assist in the realization of the American dream of home ownership. Our large volume and the ability to lend in all 50 states make us one of the largest mortgage bankers in the country. In 2015 alone, we originated $4.3 billion in loans. Wintrust Mortgage hosts over 190 retail, operations and bank locations across the country. Wintrust Mortgage is a division of Barrington Bank & Trust Company, N.A., a Wintrust Community Bank, NMLS# 449042. Equal Housing Lender. For more information visit the company website at www.WintrustMortgage.com, “Like” us on Facebook by visiting www.facebook.com/WintrustMortgage and follow us on Twitter @WinMortgage.


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If It Sounds Too Good to be True…

I am constantly amazed at the various techniques created to target vulnerable people out of their money or identities.  Yet, we are all susceptible to these destructive activities.
In the world of big data, we can be easy targets.  Consider this, on Facebook you can purchase targeted ads called sponsored posts.  For example, you can target your post to homeowners, over 50, within a specific geographical area.  Targeting allows you to market directly to a specific audience.
Someone who I trust and respect recently shared a “sponsored” Facebook post about discounted sunglasses being offered by a famous eyewear designer for one day only, as a fundraiser.  The post claimed that this is the year-end clear out and that all glasses normally priced over $100.00 would be $25.00 for one day only, and all sales would go to charity.  I was fascinated and decided to dig in and see if this offer could possibly be true.
I clicked through to the web site and it all looked to be in order, the logo looked legitimate, the site functioned well, the designs and names of the sunglasses were familiar.  The web site looked genuine to me yet there was something about it all that just felt off to me.  So I decided to invest the $25.00 to get to the truth.
Three weeks later my husband asked me what I ordered from over-seas, confused I found the box and remembered my sunglasses.  They looked like the ones on the site but they were definitely a counterfeit product.  I know because I actually own the same pair that I ordered, you can tell simply by the weight, quality of the materials and the slightly blurry logo on the frame!
Mystery solved, yes it was fraudulent, I think just to sell fake sunglasses, but I am keeping an eye on the credit card statement as well to be sure that there isn’t anything more nefarious going on!
As part of the banking industry we are required to take multiple, annual training classes on many subjects and one of those is social engineering or the types of attacks that can hit you through email, fake phone calls or other communication that comes with a request for a password, or other identifiers.  I am pretty good at spotting a fake, it has become a bit of a game for me.
How do you know when you are looking at the real deal as opposed to a decoy designed to cheat you in some way?
In today’s world of constant non-verbal communication, we think that we are talking with our friends and family when we are posting on social media, and we are.  But when it comes to sourcing a reference for an important transaction, do not believe what you read, even if posted by a trusted friend.  Pick up the phone and have a conversation.  In the end human connection is fulfilling and you can cover more ground and gather more information when talking through a situation with your friends, rather than relying on a social media post for your solution.

We’re here to help you and your buyers do more, learn more and grow more!

About Wintrust Mortgage: Wintrust Mortgage was created to assist in the realization of the American dream of home ownership. Our large volume and the ability to lend in all 50 states make us one of the largest mortgage bankers in the country. In 2015 alone, we originated $4.3 billion in loans. Wintrust Mortgage hosts over 190 retail, operations and bank locations across the country. Wintrust Mortgage is a division of Barrington Bank & Trust Company, N.A., a Wintrust Community Bank, NMLS# 449042. Equal Housing Lender. For more information visit the company website at www.WintrustMortgage.com, “Like” us on Facebook by visiting www.facebook.com/WintrustMortgage and follow us on Twitter @WinMortgage.

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An Offer Is a Contract – All Parties Have To Take It Seriously!

It’s silly season in real estate and that means spring!  Another year of low inventory with many motivated buyers who will seemingly do anything to get their offer accepted on the house of their dreams.  Buyers are signing all kinds of offers.  Some will waive their mortgage and other contingencies, while others may have escalation clauses built.  Such clauses dictate that the seller can accept a higher offer if one is presented.  Some buyers are simply jumping in to compete and then finding themselves in a regrettable situation later.
Recently, we saw all three of these scenarios come up.  This makes me wonder how buyers are being advised and counseled when they are making their offers.
For example, we have a loan approved with just a few final and minor conditions to be met by the buyer.  However, the buyer has gotten cold feet and no longer wants to buy the house.  They ask us if we could decline their loan so that they may get their deposit back.  This is not something we can do.  We have to report to our regulators our pre-qualification process, decline rates and any and all reasons for any decline.  We cannot simply decline a loan because the borrower changes their mind.  “What if I just don’t send in the documents you requested?” the buyer asks.  When you sign a contract with a mortgage contingency you agree to meet all conditions of the mortgage process.  If the borrower never sends in the required documents, we can withdraw the loan after we send out a ‘notice of incomplete’.  This notice gives the borrower a specific amount of time to respond before their loan is cancelled.
The standard mortgage contingency has an ‘apply by date’ to insure that the buyers perform in a timely manner.  This contingency forbids them from saying that they are unable to get their loan approved by the commitment date as a result of them not getting their information to the mortgage company by the dates in the original contract.
The time to make sure that buyers fully understand their contractual obligations is before the offer is made.  An offer is a contract and the purchase and sales agreement is a secondary contract, however once the offer is signed there is no guarantee that you can change the terms when you get to the purchase and sales agreement.
In another situation, we have a set of buyers approved to close on their new home.  There is an escalation agreement in their offer stating that the seller could continue showing the property.  If the sellers get an offer higher than the agreed upon price our borrowers would then have 48 hours to meet the new offer.  So, lo and behold, a higher offer comes in!  The agent negotiates the seller down a bit to keep the current buyers on track, but of course the current buyers are upset about having to pay more.  However, they did sign the offer and the worst-case scenario as outlined in that offer materialized.  Their only choice was to meet the higher price or start their home search all over again.
This same scenario also played out in a precedent setting lawsuit.  In this case, a seller accepted an offer but the buyers didn’t sign the purchase and sales agreement on the date specified in the offer, the seller then accepted a higher offer from another party and the first buyer filed suit and won.  The court determined that the original offer was a contract and had to be honored.
The bottom line is to not take any risks; make sure all parties fully understand what they are getting into when they make an agreement to purchase a piece of real estate.  Be certain that they know what they can and cannot expect as the transaction moves forward and they fully understand their legal obligations in the event they get cold feet.

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Extraordinary Customer Relationships Grow When You Provide Knowledge!


I read recently that the recent drop in interest rates has bumped up the “re-fi population” to 6.7 million borrowers from 5.2 million last month, according to a report put out by Black Knight Financial Services.
How many of those homeowners did you sell a home to in the last 8–10 years? You now have a very good reason to reach out to your successful homebuyers and provide them with this news. For many homeowners, the barrier to refinancing was inadequate equity, a disruption in employment or simply bad timing in the interest rate markets. When rates were lower people were not in a financial position to refinance for many reasons. Still for others, it could simply be a lack of awareness of the financial markets and the current interest rate environment.

Delivering valuable and timely information to your clients is one of the best ways to grow extraordinary customer relationships. In these times of extremely low inventory, the agent with the listing wins every time. Connecting with your homeowners consistently is the best way to stay top of mind when they are considering a move.

However, this information regarding declining rates and rising values could also spark a conversation about listings. Research and anecdotal evidence shows that many homeowners do not have any idea what refinancing options are available to them. They are often unaware of the amount of equity in their home and of their personal buying power. There continues to be so much negative press about the availability of mortgage credit that people who are well qualified to move up don’t believe that they may qualify. You have an opportunity to raise awareness and in the process, generate a couple of listing possibilities!

Timely and value-added communication with customers is key. This simple act of service could help them save money today or on future mortgage payments, which could put them on a path to new housing opportunities. Ongoing conversations with customers bring more value than any recipe card or sports team event calendar ever will.

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Speed = Sloppy = More Work for all in the process chain.

It is busy in the mortgage world.  Rates have dropped enough to spur a refinance boomlet, and the spring market has opened early due to fair weather and The New England Patriots loss. 

As frequently referenced in this post, the mortgage process is exacting.  It requires that all documents match and that the mortgage application is bolstered by the supporting documents.  The appraised value must be supported by the report and the comparable properties and the title commitment should be clear.

When business ramps up everyone gets busy and when everyone gets busy mistakes get made.  Those mistakes require extra work for all involved because there is zero tolerance for sloppiness in the mortgage process.

Recently an appraisal report was submitted for a second home on Cape Cod.  The report was written subject to the utilities being on and verification that those utilities work.  We went to the client on this refinance and they stated to us, “that does not make sense, we use the house year round, while the appraiser was there the heat was on, the lights were on and I gave the appraiser a glass of water out of the tap!”

Apparently there was an error on this report.  It can be a common practice for an appraiser to simply open their software and copy over an old report.  It is not uncommon to see erroneous data on an appraisal report due to this practice.  Now everyone in this transaction is impacted, our processor had to drop everything to call the borrower.  Then the processor had to reach out to the appraisal management company to get the report repaired to contain the correct information.  The appraisal management company had to connect with the appraiser who then had to fix the report and re-upload it into the system to be reviewed yet again.

These types of situations are experienced daily in the mortgage business, from incorrect condo questionnaires to incorrect listing data.  Remember that we in lending are held to a very high standard by our regulators.  We are supposed to have all information 100% perfect, yet we are only humans, dealing with other humans who we depend upon in this process.

In a tightly timed process with penalties that hit if the timing is not met, data has to be right the first time.  Take a few extra minutes up front before you fill in the blank.  Make sure that you have the right data going into the right box.  Rushing through this process increases the likelihood of errors and can create a chain reaction of more work for all in the process chain.  Speeding can cause accidents not only on the road, but also in mortgage transactions.

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Still Decluttering? How about decluttering your relationships!

Two Facebook posts that I read the other day caught my attention; one right after the other, and the theme was easy to spot.

“Show me your friends and I will show you your future.” Then, “Don’t waste time on people that don’t sharpen you. You need to evaluate who’s on your team? Who’s speaking into your life? Who are you giving your time and attention to? Are they building you up or tearing you down?”

In the same spirit, Marie Kondo’s book, “The Life Changing Magic of Tidying Up,” suggests that one way to determine whether to keep or let go of an item, be it clothing, housewares or collectibles, is to consider, “Does This Spark Joy?”

Can we use this same approach in our relationships? Clearly my Facebook friends were talking about the people that we surround ourselves with, and how much our associations contribute to our lives and to our personal and professional successes.

I’ve thought about this subject long and hard. Jim Collins’ book, “Good to Great,” is one of my defining business reads. There are many terrific business concepts discussed in this book. One concept that I think about frequently is, “get the right people on the bus and get the wrong people off the bus quickly”. Meaning, hire talent when you discover it and swiftly release people who do not fit with your culture or are not working out for other reasons.

Where does the concept of, “sparking joy,” fit in to whom we hire, whom we work with, or who we let into our lives?

I think that requiring all your relationships, whether professional or personal, to spark joy is a good qualifier among a list of many. I also want my personal and professional relationships to challenge me, spar with me, need me, make demands of me, argue with me, contribute to and support me, and allow me to do the same for them. When relationships are balanced, productive and supportive they will demand a lot from us, and that, in the end, is joy.

What sparks joy for you in your professional or personal relationships? When you have identified this for yourself, you can declutter your relationships, and build a community of joy and stimulation to help take you into your future.

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Keep your buyers warm and toasty during the long winter months!

By all account this is going to be another strong real estate year. Buyers are active and open houses are busy. This is a great time to reconnect with all of the buyers who were not successful in obtaining a property in 2015.

When connecting with your buyers make sure to discuss the following topics to tee them up for a purchase in 2016: Have they updated their pre-qualification and have they taken higher rates into account?

Has anything affecting their financial profile changed?

Will they consider an ARM mortgage? Suggest that they talk about this option with their mortgage lender.

Is there anything that they can do financially to make their pre-qualification stronger?
Will they consider expanding the area of their real estate search? Can you take them on a tour of alternative communities?

This could also be a good time to connect them with a different lender if they are not satisfied with their current service experience.

This is also a time when I would connect with any potential sellers, not aggressively to list their property, but to gently ask if there is a number where they would sell today. Many sellers have no idea what their property is potentially worth in this market. Who knows how many frustrated buyers might meet a seller’s dream number if the opportunity presents itself. As Rosemary Kelleher from Elevate Coaching likes to say, “Everyone is a seller at the right price, don’t worry about the timing”. Find out the right price for all of those sellers sitting on the sidelines and see if you can find the right buyer at the right price for them.

There is lots of heat in our real estate economy, stay on top of buyers, communicate the truth with potential sellers and you will enjoy a warm winter and a sizzling spring!

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Great Service Never Goes On Sale Or Out Of Style!

I have a hard time understanding holiday shopping trends. For example, how is it that a product costs less from 7am to 10am than it does later in the day? The product has not changed, so what has impacted the value so suddenly and why do we, as consumers, buy into these games? Do we ever know what anything really costs these days? I’ve read articles extoling the virtues of bargaining and negotiating purchases, not just for cars and real estate but also major department stores and other retail situations. I guess best prices are available to those who haggle the most.

The mortgage business never goes on sale. At the end of the day we do not control interest rates or the costs associated with providing a mortgage. There are too many factors that control those figures; from our service providers, such as appraisers and attorneys, to regulators whose requirements have increased costs to consumers across the board, to the bond and financial markets which influence interest rates and more.
As consumers, we can shop and compare prices. In fact the CFPB’s “Know Before You Owe,” or TRID regulation is designed to educate consumers on how to shop for and how to compare mortgage offerings.

However, no one talks about shopping for service! From the numerous commercials shouting from the TV, to the pile of circulars in the Sunday paper, price is what it’s all about. Yet we are used to hearing the tales of woe and disappointment from friends and associates when a product they purchased does not deliver, or the savings did not make up for the lack of quality.

I love working in a service industry. Service never goes on sale. Service is what makes the difference in the home buying and home financing experience. Service cannot be negotiated; service delivery should be in the heart and culture of every organization that you transact business with.

What good service means can be different for each of us. As an organization or an individual providing service, the experience you provide can vary from your competitors along with how you define your offerings. What is important is to have a clear vision of your service delivery. Everyone in your organization should be able to define it, create it and deliver it to your consumers. They should consistently ask the consumer how their experience was and continue to improve based upon their feedback. On the surface it appears easy, but defining and delivering good service is always a challenge. It is this challenge that keeps so many of us in the mortgage and real estate industries engaged and energized.

“The bitterness of poor quality remains long after the sweetness of low price is forgotten.” Ben Franklin

Service never goes on sale or out of style. The challenge is to continue to define service by insuring that you are always exceeding the expectations of the experience of working with you.

We’re here to help you and your buyers do more, learn more and grow more!

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