Ed has been a mortgage broker for over 20 years and has been an Executive Director for BNI-Business Network International for ten years. He has personally tested all the strategies in this article in the field. The results have been so remarkable that he’s started a sales training program.  Over the past 10 years, Ed and his team have trained several thousand business owners and sales people in the development of their business networking skills. Have a question for Ed? Email it to Ed@brokerbanker.com  and if it's a question we feel others can benefits from reading the answer to, we'll post it below. New questions and answers posted weekly, so check back often!    April 28, 2008   Dear Ed:   I own commercial properties (2 small strip malls) here in San Diego County.  With the economy the way it is, I am concerned about a couple of my tenants being able to stay in business, and keep paying rent.  Any suggestions on steps I can take now to protect myself from them defaulting?  Need The Checks To Keep Coming, San Diego, CA   ------------------------------------------------   Dear Checks: First, congratulations on owning property and investing in yourself.  That’s definitely to be commended. All the same, I hear your concern and it’s warranted; times are tough in retail right now.  To ease your worry, I suggest that you take proactive measures within your rights as a landlord. Start off by asking them how business is going.  Let them know that you’re aware of the struggles facing retailers, and ask if there is any way you can help drive business for them.  Keep in mind that your tenants may be reluctant to fess up to declining sales, so it’s not a bad idea for you to stop by unannounced from time to time  to observe their business if you’re really concerned. Your lease may even allow for you to look at your tenant’s books, but unless you have serious cause for concern this can seem pretty intrusive, so exercise tact with this request. Should you find out that your tenant(s) are struggling, try to see if you can help them by restructuring their rental or lease agreement temporarily.  It might cost you a bit of money in the interim, but it may still save you the headache of having to fill a vacant space later down the line. Here’s to successful sales for your tenants! Ed   April 26, 2008   Dear Ed:   The guidelines for the new conforming loan limits are STRICT!   Do you think they’ll loosen up as the year goes on, or will they remain this stringent for the rest of the year?  The way they are right now it doesn’t seem as if they will really benefit any of my clients.  Let Down, Fountain Valley, CA   ------------------------------------------------   Dear Down: Hear Ye! Hear Ye!  I couldn’t agree more, that they are strict.  My gut tells me they are only going to get stricter too, as evidenced by Fannie and Freddie eliminating stated income, stated asset loans.  I highly doubt that the guidelines will be loosening up anytime in the near future.  In fact, if I were a betting man, I’d bet the house on the fact that they’ll stay this strict for at least a few years.  In spite of this, there are plenty of qualified clients out there; you just need to reach them.  Don’t discount any of your clients without conducting due diligence on their unique situation.  Some of them may surprise you with the amount of equity they’ve amassed, or income increases.  You never know unless you try, right? Chin up, there’s a silver lining to be found somewhere! Ed   April 25, 2008   Dear Ed:   It seems like FHA is the way to go right now.  I remember trying to deal with them years ago, and it took forever to get anything approved with them.  Do you have any inside knowledge as to whether they’ve become more efficient? Can’t Wait Forever, Norco, CA   ------------------------------------------------   Dear Forever: As much as I secretly enjoy pretending that FHA personally contacts me for my advice before they make any decisions, they don’t.  But wouldn’t that be cool?  All joking aside, I don’t have any inside info.  FHA has always been notoriously slow, and I have no indication if that will change.  Slow or not though, the programs they have are awesome.  Remember the tortoise and the hare?  Slow and steady wins more often than we might think.  Considering the market that we’re in, we should be grateful that they raised their limits, and appreciate the doors the limit increases have opened for us.   I think you should give them a shot, and even if they are slow, better to fund a loan late than never, right?  Happy funding, Ed   April 24, 2008   Dear Ed:   I know you’ve been in the business a long time.  I’ve only been originating for about five years.  But do you have any prediction for how long home values will keep declining?  I’m having such a hard time refinancing my clients due to their locations in “declining markets.” I know the industry is cyclical, but do you have any idea how long this down cycle will last? Ready For Another Up Cycle, Visalia, CA   ------------------------------------------------     Dear Up: I consulted with my trusty Magic 8 Ball, and it said “Cannot Predict Now.”   After I threw my Magic 8 Ball in the trash, I decided that I was going to make some predictions on my own even though I’m well aware of the dangers of this.  Here’s what I predict, based on my experience. *Values will fall a bit more throughout 2008.  *By late 2008 or early 2009, I think the market will have begun to stabilize. *Underwriting however, will remain very tight. Hang in there.  Everything comes full circle eventually (except for my Magic 8 Ball which is now in pieces and not coming full circle ever again!). Ride out the storm; what doesn’t kill us (or our businesses) makes us stronger! Ed   April 23, 2008   Dear Ed:   I just read an article in Fortune Magazine where a Princeton Economist predicted that “it's clear we're going to have a commercial real estate crash not too far short of the severity of the housing crash.”  This makes me nervous, as most of my business is in commercial lending.  Do you agree with his assessment? Jittery, Walnut Creek, CA   ------------------------------------------------   Dear Jittery: Wow, people say the darndest things.  He’s partly right, I suppose.  If the housing market completely bottoms out, and brings on a serious recession, his prediction may pan out.  If not however, I think his statement is a little grandiose.  One thing is for sure, commercial lending is changing, and we’re likely going to have at least a mild decline.   The fact that the commercial mortgage backed securities market has all but disappeared is indicative of this.  In response, I’d recommend that you develop rapport and solid relationships with local and regional banks as well as with other traditional sources such as life companies. Just as an FYI though, there still is a great deal of private money lending taking place currently.  Do with that information what you will. Hope this calms the jitters, Ed   April 22, 2008   Dear Ed:   How many more cuts will the FED make?  It seems like they’re cutting something every other week.  Isn’t this going to have a negative impact on the Bond market?  Even with the new limits, who’s going to want to refinance, or buy when interest rates are in the double digits?  Frustrated with the FED, Agoura Hills, CA   ------------------------------------------------   Dear Frustrated: There’s good news to report.  They are running out of room so they can’t cut too much more now can they?  I’m only half joking, by the way. However, you ask a valid question.  While I agree that some of the cuts may seem hasty to us, the FED is undoubtedly privy to information that we’re not.  My hunch is they made these decisions based on information that the general public is not aware of.  Consider the alternative; that they do nothing.  The Great Depression was at least in part caused by the FED’s inaction, which led to a liquidity crunch.  Given the choice between moderate to high inflation, and another nationwide depression, I’ll take the inflation any day.  Remember too, people will always buy homes, even when rates are high.  The pride of homeownership is an American ideal, as time tested as apple pie. Try to look at the bright side, Ed   March 14, 2008   Dear Ed:   Do you think that people who left the mortgage business when sub-prime went south will start coming back since rates are low?  If so, how should I prepare to make myself stand out from them? Crossed Fingers, Yorba Linda, CA   ------------------------------------------------   Dear Crossed:   I’m hopeful that the ne’er do wells who were only in this business to make a quick buck stay far away from the mortgage industry.  They marred the good names of truly professional mortgage brokers by serving their own best interests above the interests of their clients, and I bid them good riddance.  But, should people return to our industry in droves, again looking to capitalize on a potential boom, I don’t think you have anything to fear.  In fact, you’ll stand apart from them easily, as you’re clearly committed to learning your industry, and doing a job that you love, even when times get tight.  Continue giving your clients great advice; continue to position yourself as an expert, and continue to conduct business with integrity, and you’ll stand miles above your competition. Also, lest we forget, consumers are well aware of the mortgage meltdown that occurred and you can bet that they are not going to fall for any fast talking sales pitch today.  Rest Assured, Ed   March 13, 2008   Dear Ed:   If you could only pick 1 type of investment property to purchase in today’s market, would you invest in commercial, residential, industrial, mixed use? Too Many Choices, San Clemente, CA   ------------------------------------------------     Dear Choices:   Three words.  Residential, residential, residential.  In fact, I’m still kicking myself for not acting quickly enough on a condo purchase opportunity just a few weeks ago.  I had the opportunity to buy a condo (comps in 2005 were 275K) for a little over 100K, and I dragged my heels. I missed out, and I’ve been annoyed with myself ever since. Ok, enough venting about that.  There are several reasons why I’d buy residential property right now, and none of them need much explaining.  Great prices?  Check.  Rental rates going up? Check. Vacancies down? Check. Huge inventory to choose from? Check.  That’s pretty much all I need to know, and believe me when I say, I won’t let a golden opportunity slip by again! Hope this helps, Ed   March 12, 2008   Dear Ed:   How do you find the time to write so many articles?  I see your name in magazine after magazine.  What’s your secret? Writer’s Block, Mammoth Lakes, CA   ------------------------------------------------     Dear Block:   I don’t sleep.  Just kidding.  I make writing a priority.  I happen to love this industry so I don’t view writing as a chore, I view it as –at the risk of sounding like a total nerd- a lot of fun! I have to admit that I’m a high-energy person by nature, so that doesn’t hurt.  However, I also know that people can accomplish a lot more than they think they can.  There are opportunities to jot a few ideas down all of the time.  For example, I travel a lot, so I spend a fair amount of time in airports and in planes.  I do a lot of writing in those places.  I also keep a notebook handy when I’m heading to appointments, or waiting for appointments to come to me.  It’s amazing how many ideas you can come up with in just fifteen minutes.  I also have to remind you that in a down market, it’s important to keep your personal visibility high, so now is a great time to try your hand at writing an article.  Hope you feel inspired! Ed   March 11, 2008   Dear Ed:   The rates have been incredible lately.  Is there any way to know how long they’ll stay this low?  I want to buy my first house soon, but am trying to decide how long I have with these rates.  Should I buy now, or wait just a bit longer in case prices keep dropping?  Still on the Fence, Salinas, CA   ------------------------------------------------     Dear Fence:   If I knew what the rates were going to do, I’d be living high on the hog in Tahiti, as I’d be rich beyond my wildest dreams!  There’s just no way to know what the rates will do.  In fact, the only thing that is constant in the mortgage industry is that it’s constantly changing.   Case in point; in the midst of replying to questions, the rates have changed numerous times within just a few hours.  By the way, don’t get me wrong and think it’s okay to be clueless about rates and what moves them. To the contrary, I believe it’s important to be well informed so that you can make the best informed business decisions. The problem I have is this: if we could predict rates so easily, why would any of us work? We’d be independently wealthy because we’d always know what’s going to happen and make the perfect decision. I challenge you instead to think of your purchase in these terms:  When does the discount become great enough?  Home prices are down significantly in many areas.  Rates are near historic lows.  The inventory of homes for sale is incredible.  It’s true that you may get lucky and both price and rate will continue to decline, but there are really some incredible opportunities TODAY.  There’s a risk in buying, and a risk in waiting.  If you wait you run the risk of the prices and/or the rates going up.  If you buy you run the risk of missing out on perhaps a fraction of a percentage on your interest rate, or a few thousand on the home price.  All things considered, I’d buy now.  Happy Shopping, Ed   March 10, 2008   Dear Ed:   I left the mortgage industry a couple of months ago and took a new sales job in a different field.  Now I’m thinking of going back to originating, because I don’t like my job.  My only concern is that things have changed so much that I feel like I’m going to have to start over again.  Do you think it would take me a long time to get back up to speed? Toe in the Water, Palm Springs, CA   ------------------------------------------------     Dear Toe:   Do you have commitment issues?  Just teasing, but it does sound like you may jump around a lot in your career?  Be careful of that.  But that aside, I have to say that your ability to jump back into originating will depend upon what types of loans you are used to originating.  If you primarily originated A Paper or Jumbo Loans, you should be fine.  Unfortunately, if the bulk of your business was in Alt-A or sub-prime; good luck.  It’s going to be difficult to catch up with all of the changes.  Hope this helps, Ed   March 9, 2008   Dear Ed:   Do you think we’re going to see a refi boom if the conforming limits go up?  Everyone in my office is saying we will, but I’m not convinced.  What are your thoughts? Ready for the Big Boom, Redlands, CA   ------------------------------------------------     Dear Boom:   The short answer is….maybe.  The long (but honest) answer is that the potential for a boom is predicated on a couple of unresolved issues.  First, we don’t have any way of knowing what the rate structure for borrowers in this newly formed demographic will be.  Investors have already expressed concerns about risks associated with this group of borrowers, (due in part to declining home values.)  That has led to speculation that rates for borrowers between $417K and $729,500 will be higher than traditional conforming rates, though still lower than jumbo rates.  So, it remains to be seen whether this will cause a “boom” or whether it will be more of a “mini-boom,” (to put it scientifically.) Secondly, there is no telling what the rate environment is going to be like when all is said and done, and we can finally begin originating these loans.  The FED is hinting at another rate cut, and the bond market generally doesn’t react too favorably to repeated cuts, so mortgage interest rates may climb.  My basic thoughts:  it’s anyone’s guess what kind of boom we may see, but we ought to be prepared just in case.  Now Get Ready,   Best, Ed   January  30, 2008   Dear Ed:   My husband is determined to wait out the market because he’s convinced that in six months we will save even more on buying a house.  I think he’s crazy, we have our loan approved and I’ve fallen in love with a house that has already dropped $60K.  Can you help me convince him that it’s ok to buy now?   Tired of Waiting, Seal Beach, CA   ------------------------------------------------     Dear Tired:   Oh boy, just what I need, to become a marriage counselor!  Just kidding.  But, you might try this approach, which is what I tell my clients in similar situations.  Your primary residence is first and foremost your home.  You’ll live in it.  You’ll sleep in it and you will make memories in it. It’s more of a lifestyle investment, than a financial investment, if you will.  Lifestyle considerations should supersede financial ones.  Don't completely disregard the financial implications of becoming a homeowner, but don't try to time the market either.    Trying to time the market pays off for “fence sitters” less often than some might lead you to believe.  Also, lest you forget, interest rates are at an all-time low.  Add it all up and you have, in my opinion, a good time to buy.  Don't worry about the bottom of the market; it will just drive you crazy.   Good Luck!   Best, Ed       January  29, 2008   Dear Ed:   What do you think about these new mortgage accelerator programs?  Something about them doesn’t ring true to me.  Aren’t they based on the Prime Rate?  What if that skyrockets?  Forever A Skeptic, Sherman Oaks, CA