Phil Grossfield's Blog

Reinvent and Distinguish Yourself.  As rates go up you have to reinvent and distinguish yourself from other Loan Officers. Is this a surprise to you? Does this make you uncomfortable? Does that sound like too much work? Do you feel like finding new business is impossible? Do you feel like it’s too late? Well, do you?!  Well, I’m here to tell you it’s not too late…but you should start now…right now.

Step 1.  Reinvent Yourself. Find new referral sources to feed your business.  If you’ve been riding the QE train then you’ve had enough refinances to keep your pipeline full and your days busy. But are they still coming in?  Have you lost a bunch of business because rates have increased?  Well, now its time to get more referral sources to keep refinances coming in. More importantly, it’s time to think about ways to get your purchase business going.

Step 2.  Distinguish Yourself.  How are you different from other LOs?  Why should a referral source send you business?  What do you offer that every other LO in Southern CA doesn’t?  Can you name 1 thing?  3 things?  5 things? No?  Then you have no way to convince a referral source to send you business. Let me ask you this…do you think I do a good job of distinguishing myself from other AE’s?

I am setting up appointments for the next couple of months to discuss these topics. Let me know if you’re interested in a presentation….

My Market Watch:  Bonds Flat – Rates Worse…So Far.  Fed Meets To Discuss QE 

The 30-year bond is flat but rates/pricing is worse this morning. The good news is the bond is doing well this morning up +22bps since Interbank’s rates were published. This is not enough just yet to warrant a reprice improvement…but it’s close…if it  ticks up another 5-10bps we might see a price improvement.

Today and tomorrow the Fed meets to discuss monetary policy and this is where its going to get very interesting. If you recall, Ben Bernanke, the Fed Chairman, was steadfast in his decision to continue Quantitative Easing.  QE is monetary policy the Fed employs to purchase a large amount of mortgage-backed securities (MBS). This policy is what has kept rates so low for so long. As long as the Fed buys bonds, traders will feel comfortable investing in bonds and when that happens rates stay low and pricing stays high. For many months there has been dissent in the public and government regarding that policy. That is, some believe QE has created an artificial market of low rates for too long. Others believe we need to continue the policy to keep rates low to encourage investment in the economy. Whatever side you’re on I can tell you this…when the government backs off of QE, our rates/pricing will get worse…that’s a fact Jack.

Which gets me back to my point…last month Bernanke backed off his long-standing position of maintaining QE. Essentially he said it was time to taper QE…this means he intends to slow down the buying of bonds.  It does not mean eliminate QE, but just the mere suggestion that he was changing his tune was enough for traders to start selling off bonds in droves. As a result, pricing/rates have steadily worsened…now over a month of decline. This is why rates/pricing have gotten so much worse, close to -500bps, in just over a month.

Personally I feel conflicted.  On the one hand I agree we need to slow down QE (lessen the buying of bonds) to get our economy back on track. But on the other hand I selfishly want rates/pricing to stay low…it keeps my pipeline full.  It hurts my head to think about it.  I predicted that at some point Bernanke would make a strong statement reaffirming QE, even if the quantity of the bonds being bought would lessen. I was hoping such a statement would stop the bleeding and hopefully get some basis points back. But now I’m not so sure.  Like I said, it’s going to be an interesting couple of days…let me know if you want to discuss….

My Schedule:  Available all day until 4p, then done.