Home Radio Segments Real Estate Round-up Don’t Let Popular Mortgage Scams Fool You

Don’t Let Popular Mortgage Scams Fool You

1409
SHARE
Terry Story, Mortgage Scams

With Terry Story, 29-year veteran Real Estate Agent with Keller Williams in Boca Raton, FL

Good Credit Scores Help Renters Too

For this Real Estate Round-Up, Terry Story is “in the house”, in person with Steve, and kicks off the conversation with how good credit can help you, even as a renter.  When Terry does a rental, the first thing she looks at is the tenant’s credit score.

As Terry puts it, a landlord’s major goal is to get paid every month and to make sure that his property does not get trashed.  A good credit score demonstrates that the tenant has managed finances responsibly and makes it easier to forgive other things, such as the desire to have a pet because there is a correlation between a good credit score and the way that people keep up a house.

When we went through the recession, a lot of people lost their jobs and credit scores were dinged, but outside of that, being able to demonstrate your creditworthiness is really important.

A higher credit score also gives the tenant greater bargaining power and more access to the things that you want in life.

Mortgage Trigger Leads

Next, Steve moves to mortgage trigger leads, a topic that potentially impacts us all.  When you apply for a home mortgage, to get pre-approved, credit bureaus sell your name to mortgage originators so they can reach out and sell you a mortgage.

But, oftentimes, bad people get a hold of this information and start calling you to steal your financial information, potentially resulting in thousands of lost dollars if you get taken in by a scammer.

This problem is so widespread that Congress is trying to rein it in.  In one sample modus operandi, a potential home buyer got a voicemail where the caller misrepresented who he was, identifying himself as an underwriter rather than a telemarketer, and made the false claim that he was calling from Fannie Mae, the government-backed agency.  But Fannie Mae, or the IRS, would never directly call you.

Additionally, the caller said he was following up on a loan application made to the agency, falsely implying that he already had the borrower’s basic information and simply needed to follow up with additional questions.

Terry says this is a definite red flag for borrowers, who should never respond to telemarketers.  Instead, she recommends working directly with mortgage lenders, such as banks, and having them compete for your business with the best rate.

Small Houses

With the shortage of housing inventory, buyers are increasingly turning to small houses of a 1,000 to 1,200 square-feet—compact units with one or two bedrooms and bathrooms.  While such apartments are popular with young renters, other age groups are now keen to buy them as their homes.

Terry attributes this trend to the ease of living in a smaller house because you accumulate less if you’re in a smaller house and also spend less on maintenance.

Recent Housing Data

Switching gears, the conversation turns to new data that reviews housing boom and bust cycles from 2006 through 2017.  It shows that residential home prices began to peak in some parts of the country as early as 2005.  Terry relates this to her last transaction in December 2005 which was when her Florida market was at its peak—and then things went south.

Steve connects this to psychological investing behavior called anchoring where people anchor the value of their home at its peak and don’t want to sell for less.

The report further shows that after falling 33% during the recession, prices in most markets returned to their peak levels, growing 51% nationally since bottoming out in March 2011.  However, the average home price is now only 1% higher than it was at its peak in 2006.  Anchored sellers waited 12 years to get back to peak home values but could’ve done a lot better had they sold for less and deployed their money elsewhere.

Nevada suffered the biggest drop during the recession, with prices down 60% at their lowest, and are still 23% below their peak.  In closing, Terry half-jokingly believes this has something to do with Nevada’s penchant for gambling.


Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

Read The Entire Transcript Here

Steve Pomeranz: Here we go. It’s time for Real Estate Roundup. This is the time every single week we get together with noted real estate agent, Terry Story. Terry is a 29-year veteran with Keller Williams, located in Boca Raton, Florida.

Welcome back to the show, Terry.

Terry Story: Thanks for having me, Steve.

Steve Pomeranz: I love having you in studio with me today. This is so much fun.

Terry Story: Terry’s in the house.

Steve Pomeranz: She’s in the house. All right. Let’s talk about the degree to which good credit can help you, even as a renter.

Terry Story: Oh, absolutely, Steve. You know, when I do a rental, the first thing we look at is credit score, and we go, “Yippee” when we see somebody that has a good credit score. You’re almost willing to forgive a lot of other things, like their pet and everything else just because they have a good credit score.

Steve Pomeranz: Why do you think the credit score is so important? What does the landlord see when they look at that?

Terry Story: It demonstrates responsibility. It demonstrates they’ve been able to manage their finances. I feel bad. When we went through the recession, a lot of people lost their jobs, credit scores were dinged, but outside of that, being able to demonstrate your creditworthiness is really important.

Steve Pomeranz: Yeah. Well, the credit bureaus use these filters and these algorithms to figure out what would constitute someone with good or bad credit. So, a landlord seeing that, there’s … The credit bureaus are doing all the work for them.

Terry Story: Right.

Steve Pomeranz: So, I think a landlord’s major goal in life is to get paid every month and to make sure that the place isn’t trashed.

Terry Story: That’s right.

Steve Pomeranz: Okay?

Terry Story: I hate to say, but there is a correlation in, a lot of times, good credit score and the way that people will keep up a house. Or, at least that’s the perception and that’s what a lot of landlords are looking at.

Steve Pomeranz: Yeah. So, you, as a person with a higher credit score, whether you take out credit or not, in this world that we live in today, gives you more bargaining power and it gives you more access to the things that you want in life.

Terry Story: That’s right.

Steve Pomeranz: Okay. Cool. Very good. There’s another aspect that I want to discuss with you today, and I’m pretty disturbed by this. That is something called mortgage-trigger leads.

Terry Story: Yeah.

Steve Pomeranz: What is that?

Terry Story: Well, basically, what happens is, when you apply for home mortgage to get pre-approved, it triggers. What’s happening is the credit bureaus are taking your name and selling the list of people that have applied for a mortgage or have gotten pre-approved. Then what happens is these bad people get ahold of this information and then start calling you. One, they’re trying to potentially solicit your business to them. Or, B, steal from you, get information from you because they’re calling you asking you financial information.

Steve Pomeranz: Well, one of the credit bureaus actually advertises the fact that they get those names out within 24 hours.

Terry Story: Right.

Steve Pomeranz: So, you can get a call from someone and says, “You know, we have you down here that you applied for a mortgage yesterday,” and you’re like, “Yeah. Well, that’s pretty legitimate. How would this person know?”

Terry Story: Right.

Steve Pomeranz: And now you know.

Terry Story: Now you know. You heard it here.

Steve Pomeranz: Yeah. So, they’ll take you down the garden path, here, all with the idea of trying to get something out of you, and in the meantime, they don’t really know anything other than here’s a lead, and here’s a person that may be looking.

Terry Story: That’s right.

Steve Pomeranz: Yeah. It’s terrible stuff. I know that Congress is trying to do something about it. I hope they do. Actually, there was one recorded voicemail and it basically stated that the person on the phone misrepresented who he was. He said where he was calling from and the purpose of the call. He said he identified himself as an underwriter rather than a telemarketer. He made false claims that he was calling from Fanny Mae, the government-backed agency.

Terry Story: Fanny Mae is never calling you.

Steve Pomeranz: They’re never … The IRS is never calling you.

Terry Story: That’s right.

Steve Pomeranz: Fanny Mae is not calling you, and finally, the caller said he was following up on a loan application made to the agency yesterday, implying falsely that he already had the borrower’s basic information and simply needs to follow up with some additional questions. Ain’t no additional questions. You call a bank. They call you back. You’re working with them. You call another bank. You get banks competing with each other, that’s fine. You’re putting it out there. Don’t respond to these telemarketers because that’s what they are.

Terry Story: Exactly.

Steve Pomeranz: Okay. So, I want to talk about small houses. I don’t really understand them, but there’s houses that are 1,000 square-feet, and look, I remember living in an apartment for years and years and years that had 1,175 square-feet … Two bedrooms, two and a half baths? One and a half baths. We did what we did. Okay? We lived the way we had to live, but to actually go out and desire a small house as a trend. Tell me.

Terry Story: Well, it is a trend. People are actually looking for smaller homes. They’re talking about 1,000 square feet. This could be going from maybe, say, a 5,000 square-foot house down to a 2,500 square-foot. So, it’s all relative, but the bottom line and idea behind it all is it’s just easy living in a smaller house. You accumulate and acquire less stuff if you’re in a smaller house. Bigger house, you fill it up. You fill up your space.

Steve Pomeranz: I think that’s a natural law. It’s a law of nature, that nature abhors a vacuum. Right? So, if you’ve got extra space, you’re going to have to fill it with something, right?

Terry Story: Fill it.

Steve Pomeranz: Now we got stuff under the bed. We don’t know what to do with anything, and the truth is, I want to buy more stuff, but I got no place to put it.

Terry Story: When my husband said we needed a bigger house, I’m like, “No. It’s time to get rid of stuff.”

Steve Pomeranz: Now, okay. Okay. “I get rid of you.”

Terry Story: “Get rid of you.”

Steve Pomeranz: All right. We got some information here about the housing market and evaluating it since The Great Recession. There was a review of the 11-year economic cycle surrounding the last U.S. housing market downturn, and then the boom and bust years between 2006, 2011, the ensuing recovery. This data goes through December 2017, so it’s very current. Number one. Residential home prices began to peak in some parts of the country as early as 2005, according to the report. Do you think that was the same, in your experience, in Florida?

Terry Story: Oh. Absolutely. I remember my last transaction, December of 2005, and that was the last high and it went … Yeah.

Steve Pomeranz: Yeah. You know, it’s funny because there is a psychological investing behavior. It’s called anchoring.

Terry Story: Right.

Steve Pomeranz: Everybody knows what the value of their house was worth at the peak. They don’t want to sell until they get back to that number. Okay. After falling 33% during the recession, prices in most markets have returned to their peak levels, growing 51% nationally since bottoming out in March of 2011. However, the average home price is now only 1% higher than it was at the peak in 2006. So, those people who said, “I only want the value of that house when it was at 2006,” they had to wait quite a … they had to wait 12 years, basically, to get back to even. They could’ve done a lot better with their money somewhere else, figured out something else.

Terry Story: That’s right. Sometimes, you just have to take your losses.

Steve Pomeranz: You really do.
All right. What state suffered the biggest drop during the recession?

Terry Story: Actually, it was Nevada, with a 60% peak to the bottom.

Steve Pomeranz: That’s a lot. 60%. That’s a wipeout, basically. Now, has that come back to its level?

Terry Story: No, unfortunately, it hasn’t. It’s still about 23% below the pre-recession peak.

Steve Pomeranz: So, actually, prices got ridiculously high then, then crashed, and they haven’t even gotten back to [crosstalk 00:08:20] –

Terry Story: It has something to do with Las Vegas and gambling, I’m sure.

Steve Pomeranz: Yeah. I think so. Okay.

Unfortunately, we’re out of time, but that’s interesting stuff. My guest, as always, is Terry Story, a 29-year veteran with Keller Williams, located in Boca Raton, and she can be found at TerryStory.com.

Thanks, Terry.

Terry Story: Thanks for having me, Steve.