MortgageSmart Blog

Having fewer qualified loan officers in this country will cost Americans (hundreds of?) millions of dollars.   This is because each time that a loan officer leaves the industry, he leaves his clients and their mortgages behind, too.

Owners of "orphaned" mortgages are at a tremendous cash flow disadvantage versus everyone else:

• When rates fall, there is nobody there to tell them
• When pricing policies change, there is nobody there to advise them
• When mortgage guidelines change, there is nobody there to make a new plan with them

It has been estimated that 90,000 people left the mortgage industry in 2007.  That's a lot of orphaned mortgages and a lot of abandoned homeowners.

And it's not like the "big bank" to which homeowners write their mortgage checks each month is going to proactively call and say "Let's lower that rate for you".  Owners of orphaned mortgages are truly on their own in the mortgage world.

By contrast, an actively managed mortgage can save homeowners money.

As a personal example, when mortgage rates fell in late-November, they fell hard.  It only lasted for about a day-and-a-half.  During that time, I was on the horn with all of my eligible clients and was able to lower some of their mortgage rates from their existing levels to something better.

Owners of orphaned mortgages didn't get calls like this.  They're paying higher rates than the rest of the country.

And the examples aren't just isolated to getting lower rates:

• A real estate investor converted his highly-leveraged ARM to a fixed-rate mortgage before new mortgage guidelines prevented it
• A low-600 FICO homeowner remortgaged her home loan before Fannie 2.000% low-credit-score fee made it cost-prohibitive
• A homeowner in remortgaged his home loan before falling values pushed his loan-to-value above 80% and required PMI.

Owners of orphaned mortgages don't get the advice and end up paying the price.  When their loan officer left the business, they lost their "guy on the inside" and it's turning out to be expensive.

If your mortgage has been orphaned, talk to a friend whose mortgage hasn't.  Get the name and contact information for that loan officer, then call and ask if he's accepting new clients.  If your friend isn't 100 percent sure whether or not he was abandoned, there's a better-than-great chance that he was.

Mortgage rates and mortgage markets change every day.  It's the homeowners with active mortgage managers that will always have the best rates, payment, and mortgage planning guidance.

A professional loan officer will usually offer to review their customers’ financial situation at least annually, free of charge, and make recommendations based upon their current and projected financial situation and changing financial goals and needs. These loan officers are not just trying to get another refinance when rates drop.

So, if you have a mortgage and never hear from your loan officer (except when rates drop and they want to refinance your mortgage) you have an orphaned mortgage.

Q & A

If I don’t hear from my loan officer, how does that cost me money?

Here are a couple ways:

Over the past 3 months there were several times when rates were at or below 5.500% for a fixed rate, 30 year mortgage depending on your credit score and LTV. When this happened, all of my customers were notified and had to opportunity to lock in these rates. After rates had crept back up (these rock-bottom rates were available a very short time) the news started reporting rates at their lowest levels in years. I received several calls from people who read my blog about refinancing. Unfortunately, the rates were long gone by the time they had read about them, which is often the case.

Also, at the end of last year, Fannie Mae and Freddie Mac announced they were introducing delivery fees for mortgage with credit scores below 680 and LTVs over 70%. I contacted my customers that were in this situation and advised them to refinance before these changes took place. I was able to refinance several of them before the changes and saved them a lot of money – most of these customers would not have been able to save s much money on their refinances had they waited due to the increase in rates they would be subject to now.

Lastly, a customer of mine had contacted me in the fall. They had an ARM that adjusted up more than 2.5% in the spring and they had fallen behind on the payments due to the increase in payment. They had called a couple sub-prime lenders and were not going to be able to get a better rate and lower payment with them. They called me and I told them about the FHA Secure Program and refinanced them to a lower rate and better payment. They haven’t been late on a payment since.

So, what do I do if I have an orphaned mortgage?

Find a professional loan officer, such as myself. I am happy to help people with their financial needs and determine what mortgage program is right for them. Even if you are not ready for a new mortgage right now, I will be happy to evaluate the loan you have in light of your needs and goals and make recommendations to you. I talk to many more people who do not need a new mortgage than I do to people that do need a new mortgage now. It is part of my job as a professional loan officer. If you have questions or about your mortgage please don’t hesitate to give me a call or send me an e-mail.