Dan Titcomb Looks Ahead To The Second Half Of 2010

[u]PERSON OF THE WEEK:[/u][/i] We've come to the second half of 2010, but where does the industry stand at this midway point of the year?[/b] This week, MortgageOrb chats with Dan Titcomb, senior loan originator for Seattle-based Arboretum Mortgage, on where he sees the industry heading. [b]Q: [/b]What is your opinion on the current state of residential housing – both on a national level and in your market – and where do you see it heading in the near future? [b]Titcomb: [/b]The residential housing market is still going to suffer in the short term. We have recently seen a small positive spike in new purchases. However, this was artificially fueled by low interest rates, government tax incentives and the usual spike that we see during the spring and summer months. I believe that we have many obstacles ahead of a full-on recovery. These obstacles include unpredictable interest rates, mortgage recasts or loans that are to hit their ‘adjustable period,’ and the fall and winter cyclical down-cycles. I would expect to see stable sales throughout this summer, slump in the last quarter of this year and into 2011, and I would hope to see moderate appreciation become consistent in 2012. [b]Q:[/b] The federal home buyer tax credit recently expired. Do you think that the current level of origination will be maintained or exceeded without having the tax credit available? [b]Titcomb:[/b] In April, the rising demand for purchases, was due to buyers' rushing to sign contracts by the end of April and fund before the end of June. The April ‘boom’ was essentially the effect of the tax credit moving sales forward in time. Home sales otherwise would have been spread across the summer months and is the main reason why May housing indexes suffered so greatly. We should see housing indexes come back a bit in the summer months – maybe similar to last summer. You could expect that origination will be maintained, but it will be, due to historically low interest rates and a continued influx of refinance transactions. [b]Q: [/b]Your company's website puts an emphasis on encouraging Realtors to use single property websites as a means to increase visibility and traffic to their individual listings. How can this strategy work? [b]Titcomb:[/b] Effective real estate marketing revolves around two main objectives: to acquire new listings and to sell existing listings. To achieve these objectives, it is important to properly display your inventory and prove to prospective sellers that your marketing efforts are second to none. With a property website, you can direct print advertising, sign riders, etc. to one online location with a unique name. Ninety percent of today's buyers start their search online. Property websites are not only submitted to Google, but they are also syndicated to the top real estate search sites. They show up on the multiple listing services, come with Craigslist flyers, use lead generators, but – most importantly – educate buyers faster and get them in the door more quickly. Websites are also a great way for agents to stand out from their competition. I've seen many agents get referrals and more listings just from using property websites. [b]Q: [/b]Your website also states that your goal is ‘to make the refinance process as stress-free as possible.’ At the risk of giving away trade secrets, how can you make this admittedly stressful process ‘stress-free’? [b]Titcomb:[/b] Refinancing is not fun. It is a cumbersome process that involves many people and many moving parts. I have no problem admitting that. It is, however, a financial necessity, and there is no better time to explore your options than today. This means educating your clients on the potential issues within a deal before they occur. If you prepare your clients for what could happen, and then have to jump through what I call ‘refinancing hoops,’ it doesn't come as a surprise. Every deal is different. Having the ability to foresee potential issues, and solving those problems ahead of time is the best way to make a purchase or refinance go smoothly. Some ways that an originator can do include the following: [list]Experience and education. Education and staying current on underwriting guidelines is your job, and education is power.[/list] [list]Form relationships with your underwriters, because each underwriter could view a loan slightly differently.[/list] [list]Ask questions of your peers. Again, each loan is different, and even someone with 20 years of experience may not always know the answer – online mortgage forums are great resources. [/list] The bottom line is this: Set clear and realistic expectations, communicate with your clients on a regular basis and follow through on what you say. [b]Q:[/b] What is your opinion on strategic defaulting, and what can be done to prevent this from spreading? [b]Titcomb:[/b] A strategic default is a complicated subject. Some see this as a business decision where some would argue there is a moral obligation to pay your bills. A mortgage loan is collateralized, which is the main reason why the terms are more favorable than, for instance, unsecured credit card debt. If the bank is unwilling to modify your loan, generally, the reason is because they think that you can afford to pay your agreed-upon terms. In this case, I feel it is your moral obligation to do just that – pay your bills. If you cannot afford your payment – meaning your debt-to-income ratio is much higher than traditional underwriting guidelines of, say, 45%, then a strategic default may seem like your best option. Your equity position is obviously an important component to this question, as well. I would seek the advice of a mortgage professional that can carefully analyze your situation and help you make this incredibly important decision before you stop making any payments. Servicers are modifying an unprecedented number of loans to make the payment affordable, and to keep borrowers from wal


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