Every week, I talk to loan officers who've been chastised by a customer over the glacial pace of their loan approval process, or because somebody in processing misplaced a document and the customer has been told they need to upload it again, or they have been told that the 27 documents they've already supplied now show that they need to supply a 28th in order to have their loan approved.
 
These same loan officers are quick to point out that the vast majority of their clients are happy with their service and appreciative of their help in getting their mortgage financing approved.
 
But the latest JD Power & Associates survey of mortgage customer satisfaction (the J.D. Power 2016 U.S. Primary Mortgage Origination Satisfaction Study,SM ) shows that:

• 1 out of every 5 customers (21%) who closed on a purchase mortgage last year regretted their choice of lender.
• 27% of first-time homebuyers wished they hadn't picked the lender who handled their mortgage.
• Satisfaction scores from customers who had just gotten a refinance loan were significantly worse than for customers who had completed a purchase transaction.

 
If you work in this industry, you know that documentation requirements are much more stringent than they were before 2009. You also know that these requirements, and new regulations like TRID, have combined to make the loan approval process more complex, lengthier, and more expensive for consumers -- the regulatory costs imposed by Dodd-Frank and TRID alone have added thousands of dollars to the cost of every loan, and that cost is passed on to the consumer, along with most of the additional paperwork burden. And none of these changes have done anything to make it easier for a consumer to compare the costs of competing loan options or competing lenders.
 
But maybe the most frustrating thing for consumers about the post-2009 purchase mortgage lending experience isn't the intrusive documentation requirements, or the fact that they're often being asked to go online and complete their own loan applications, or even having to pay $,2000+ extra for the privilege. Certainly consumers have a valid complaint that the industry has done little or nothing to make loan pricing comprehensible, but maybe the purchase customer's biggest gripe is the stress of never being sure you can trust your lender to do their job in time for you to meet your obligation to close by the contract deadline.
 
Why should we expect our customers to be happy about that?
It's not a question of blame or fault. I'm sure you didn't cause the financial meltdown of 2008 or the ensuing regulatory dystopia, and the company you work for probably didn't cause it either.
 
But neither did your customers!
And that's my point. When originators think about  competing in today's lending environment, they tend to think about ways to generate more leads, or to reduce the time they spend managing their pipeline. Very few originators concentrate first on how to improve their customer's experience. If you can save a half hour of your time by sending a customer to a website to complete an application, that's a win for you even if it means your customers end up spending an hour of their time cussing you out and wondering why they have to do your job for you. Are there customers who would rather fill out their own application? Sure, and we should accommodate them, but not at the expense of the customer who prefers the human touch, or doesn't know whether they want a conventional or FHA loan yet, or doesn't want to have to guess whether the "Monthly income" box is asking for gross or net income.
 
Maybe it would be helpful to do a thought experiment:

• How would you like it if your doctor asked you to conduct your own physical?
• Or if your mechanic handed you a toolbox, pointed to an empty bay, and told you to do your own oil change and tune-up?
• How do you like using those automated self-checkout stations at the grocery stores -- you know, the ones that can only properly scan about 80% of your items? (At least the supermarkets still provide human checkout lanes for those who prefer them -- for now).

A client was telling me about a conversation he had with his company's national sales manager. The sales manager was talking about things that loan officers struggle with. In this case, it was call reluctance, but it could have been almost anything.

And my client was thinking to himself that he really doesn't struggle with that. Then he went on to say to me, "But if you judge me by my actions and my numbers, it would lead people to think that I do have a problem with it. "

So I asked, "Well, what else are they going to judge you by?"

The question you ask yourself is, what is it that not only others but what are you going to judge yourself by in the end, if not by the results that you produce?

I've known originators who felt like they were the best loan officer in their market -- truly, they felt like they knew more than other loan officers, they were smarter, sharper, better, more experienced, more reliable, and so on. But it never showed in their production. There is this aspect of denial sometimes: when you compare what people claim to think about themselves compared to what they're actually producing, you see this gap. If you are letting yourself down, if you're disappointed in your results -- or if other people are expressing disappointment in your results -- then it is human nature for you to want to come up with an explanation or a justification for the gap between expectations and results.

That's one little piece of it. Another part of your problem may be that you're not proactively scheduling specific tasks that you plan to do at specific times in your calendar. You're way too busy to keep all that stuff in your head, or on post-it notes, or on a to-do list.

You want to plan every day -- let's say Monday is a really busy day, where you've got a lot of stuff that you're already committed to like your coaching session and your mandatory sales meeting, and a couple of loan applications and submissions. All those things go in your calendar and you don't schedule anything else for those times. Whatever remaining time is available Monday, make sure you schedule the things that are important to get done that day.

Things that can wait until Tuesday, you schedule for Tuesday -- but you schedule specific tasks -- like  specific Realtors that you plan to call on Tuesday morning at 10 o'clock, and you've got a list of realtors that you're going to call between  10:00 and 11:00, and they are right there in your calendar, because you consciously & deliberately put them there.

Bear in mind that it's one thing to put things in your calendar and it's  another thing to run your day by the plan that you made for your day.

It doesn't do any good to make a plan and not follow it, so you open up the calendar, and you start at the beginning of the day, and you to make it like a game you're playing, to try to do everything that you have scheduled for yourself to do on that calendar.  

And so, it's 10:00, and it's time to make the Realtor calls, and then the idea pops in your head, "Well you know, maybe I should do that prequal first, or maybe I should work on this other file first, right, instead of making these calls."

At that point, in real time, you are making a decision -- you're making a choice between doing what you told yourself -- promised yourself that you were going to do at 10:00, and what some other part of you (let's call it your Slacker Self) is telling you that you should be doing instead. And that's when it's time to have a conversation with yourself. If your Slacker Self is telling you to do something other than the calls,  the question to ask your Slacker Self is, "Why?"

We human beings, we're just not introspective enough, and so we go through our lives kind of half-awake. We end up doing things that later look like they were kind of dumb things to do, and then we say, "Well, I don't know why I did that."

The reason  you don't know why you did it is because you weren't paying attention when you made the decision!

So if you find that you consistently fail to do high-priority things that you believe you really want to do, I suggest you focus on those moments when you have to make the choice about whether to do one of those high-priority things: just pay attention and that if your Slacker Self wants you to do something other than the high-priority thing you planned & scheduled, then pay attention to the reasons it gives for blowing odd the high-priority task.

Then make your choice, but make it consciously & deliberately, so that later, when you or someone else (like your coach) asks you why you made the choice you made, you'll have a better answer than "I don't know."

At least then, you (we) will have something to work with.

If you're like just about every other loan officer I've met, you believe you have unique qualities that would appeal to potential clients (or Realtors or other referral sources) – qualities these people could only discover by getting to know you. If that Realtor or that person shopping for a loan really got to know you, you're confident they would choose you to be their lender, right?

But if they haven't had the opportunity or taken the time to get to know you, there's no way they would know about these unique and attractive qualities of yours, and as a result, they are likely to see you as pretty much like any other loan officer. Which is why everybody is always asking you about your "rates".

This is a problem for you, because if you don't stand out in the crowd, you'll never get the chance to show them all the really important reasons why you would be the "right" loan officer for a potential client or Realtor partner.

Most loan originators try to solve this problem by using e-mail marketing, developing a website, and/or using social media or other types of marketing in order to build name recognition and a reputation in their local markets. The various technologies involved can seem somewhat daunting at first, but for most of us, the learning curve is not that difficult. So you can set up an e-mail marketing account, a website, Facebook and LinkedIn and Twitter accounts, and so forth, with a little bit of time and not too much trouble.

The hard part is coming up with things to say that people would actually want to read, or listen to, or watch.

Many loan officers would rather spend the afternoon in a dentist's chair than sitting in front of their computer writing something for other people to read. Once you get something down on paper (or pixels), your Inner Critic takes one look at it and tells you it's complete rubbish.

Other loan officers don't even get that far – writing anything, let alone something that would be informative, useful, and interesting, just seems like way too much trouble.

Whichever group you happen to belong to, you might end up buying canned content from one of the many providers out there -- people who know that there are a lot of you will pay good money to get something – anything – that you can use to feed your e-mail campaigns, website pages and blogs, and so forth.

The only problem with this approach is that it brings you right back to the problem you started with: you started with a desire to show potential clients and referral sources that you have unique qualities that would make you a better choice than any of your competitors. But now, because you're using the same content everyone else is using, you still sound just like everyone else.

And you have blown your chance to distinguish yourself in your market as someone unique and worth getting to know.


How to Solve This Problem

As you know, I coach mortgage professionals exclusively. I also limit the number of people I work with to no more than 20 full-time clients at a time. Among other services, I help my loan originator clients create their own unique content that they can use in their local markets to reach out to consumer (home buyer) leads, existing clients, Realtors, and other referral sources. We start with material I have written for this purpose, and then we work to personalize it for you and your market. And because I never work with more than 20 clients at a time, you can be confident that the content we create together will not only be interesting to your readers, it will be new to them.

If you'd like to find out more about how I can help you build your reputation in your local market, and if you've never had a free coaching session with me, please go here and request a free, personal, one-hour coaching session at no obligation.

In future posts, I will be sharing some of the things I've learned about creating content that is interesting, useful, and builds your reputation as a trusted expert in your field. Stay tuned.

It may seem like a flash of the blindingly obvious, but it's interesting and potentially useful information for loan originators who focus on building purchase business in their local markets: Inside Mortgage Finance recently commissioned a national survey of real estate agents, and found that Realtors express a clear preference for local lenders over call centers.

Why Do Realtors Prefer Local Lenders?

Delayed Closings. According to the survey, delayed closings are much more common when the buyer is not using a lender with a local office. You know from your own experience that Realtors get very nervous when it begins to look like the closing may be delayed because the lender has not obtained a final approval from underwriting. 

Lack of Accountability. A home sale with a $250,000 purchase price is worth $7500 commissions to each of the Realtors in the transaction. With that much money on the line, they don't like surprises, and they especially don't like having to deal with a contact person in a faraway city that doesn't rely on the Realtor for their business and is in no way beholden to the Realtor for the current transaction. It is almost impossible for a Realtor in this situation to get a straight answer from anyone in authority at the out-of-town mortgage center. And if there is a problem at the closing table after office hours, there is no one the Realtor can call to get the problem resolved.

Lack of Experience with Local Lending Laws. You know your state's laws as they apply to mortgage lending. According to the Realtors who were surveyed, Call Center companies that loan in all 50 states make more mistakes that can lead to delays or worse.

The Inside Mortgage Finance survey (conducted by Campbell Research) was apparently focused only on Call Center lenders, but many of the complaints voiced by Realtors about the call centers also apply to the nationwide megabanks. My coaching clients have frequently told me that Realtors are constantly complaining about the big banks, as well as the call centers, but they are often reluctant to say anything about it to their buyer clients. They don't want to appear to be trying to influence the client as to their choice of lender, and ultimately they're afraid of losing the client altogether. In many cases, the Buyer has already gotten "preapproved" online by the call center or the big bank before they even approach a Realtor. From the Realtor's point of view, it's hard to un-ring that bell.

Suggested Action Step: Every time a Realtor tells you about a negative experience with a Call Center or mega-bank, take down enough information from the Realtor so that you can construct a narrative of what happened. Collect as many of these as you can, and put them together into a report that you can circulate directly to your own clients and prospects. You can also make these reports available to your Realtor Partners for distribution to their clients and prospects. Remember: nothing beats evidence. (In assembling the stories for your report, be sure to quote the Realtor who is telling the story, and get permission to use their name. Avoid directly naming the call center lender or the mega-bank in question. Use as much detail as possible, including dates, numbers, specifics of the transaction – especially specifics on why the loan was held up or declined – but don't name the consumers involved unless they have given their permission.)

foreclose on the property – a process that both delays and raises the cost of obtaining a foreclosure). Because so much of this low-priced shadow inventory is now found in judicial states, fewer of these homes are coming to market.

Another constriction on inventory is being caused by what has been called the "interest rate lockout effect." Almost half of all homeowners with mortgages have loans with rates of 4.5% or lower. There is a well-founded and widespread belief that interest rates will be rising in the near future. As a result, these homeowners with low fixed rate mortgages have much less incentive to sell and buy another home if that would mean taking on a mortgage with a higher rate than the one they have now.

There is also a high percentage of mortgaged homes with an effective LTV of more than 80%. This doesn't prevent people from selling their home and buying another, but it would likely mean that they would be required to purchase mortgage insurance – thus making their payment higher and the mortgage more expensive.

These 3 factors have all contributed to the perceived lack of inventory.

There are also Constraints on the Demand Side
Historically, while first-time buyers represent a significant percentage of all buyers, the majority of homebuyers are also sellers of an existing home. But because of the supply-side constraints outlined above, we are not seeing as many "move-up buyers" in the mix. Many of the people who might otherwise be thinking of selling their home and buying another have decided to stay in their current homes and wait for conditions to get better. Until these people decide to sell, they won't be in the market to buy either, and that reduces demand.

Demand has also been reduced by the fact that institutional investors have lost much of their appetite for buying homes – largely because home prices have continued to rise (a 7.5% year over year increase in the Home Price Index just reported for June).

Furthermore, the significantly reduced number of loans being originated with credit scores below 640 today, compared to before the bubble burst, means that about 25% of the traditionally credit-eligible population is having a difficult time getting mortgage financing to purchase a home.

And finally, the decline in the national homeownership rate (currently at 64.8% -- its lowest point since 1995) shows a shift from owning to renting. This is particularly true of the Millennial generation. The home ownership rate for 25 to 34-year-old Baby Boomers was 51.6% in 1980. The homeownership rate for 25 to 34-year-old Millennials in 2012 was only 37.9%. (Millennials are also waiting longer to get married, which may be related, and many of them have much higher student loan debt than Baby Boomers did at the same age.)

How Loan Originators Can Proactively Respond to These Conditions 
On the supply (inventory) side of the equation, you can work with your Realtor partners to identify homeowners who might benefit from selling their current home.

Begin by identifying neighborhoods where prices are good (from a seller's perspective), and demand is good – as indicated by relatively short "days on market" before a sale, and by relatively high ratios (over 30%) of monthly sales numbers compared to the number of homes for sale.

We know that mortgage interest rates are still relatively low (about 4.25% as I write this for a 30 year fixed rate mortgage). If sellers can make a relatively quick sale of their current home, chances are good they will be able to purchase, and if necessary, finance their next home purchase fairly quickly, and before any significant increase in interest rates.

You also know that every situation is unique. The seller, for example, may have significant equity that can be applied toward the purchase of a next home. Even if the interest rate would be higher than their current rate, the larger down payment and the relatively small mortgage could make a higher interest rate a moot point for the client.

Your strategy would be to put together, with your Realtor Partner, a series of targeted, co-branded postcard mailings to the kinds of neighborhoods I have described. You and your Realtor Partner would be offering a free Market Analysis of the prospect's home (done by the Realtor), combined with a free Financial Analysis (conducted by you). The Realtor helps the potential Seller get a sense of what their house would sell for. Your job would be to interview the potential Sellers to understand what their goals would be, and what they would be looking to accomplish if they were to sell their home and buy another (or simply sell their home). With that information, you could put together a financial analysis that shows the prospective Sellers how likely it would be that they could accomplish their financial and personal objectives by putting your home on the market.

On the demand side, you would also want to work with your Realtor partners. They get leads every day from people who are basically dipping their toes in the water to see what's out there. These people are legitimate buyer prospects. They would not put themselves in the position of having to talk to a salesperson (the Realtor) unless they had a genuine desire to buy a home. But their skepticism and sales resistance is high – as evidenced by the typically very low rates of conversion that Realtors experience.

You (and not the Realtor) are in the best position to speak to these buyer prospects so that you can interview them and discover their reasons for wanting to buy a home – and just as importantly, their fears, obstacles, and concerns about whether this is the right time for them to do so. You can position yourself and act as a home buying coach. You place yourself on their side, and you help them understand and sort through all of the pros and cons of buying a home in today's market. Every situation is different. Whether you're talking to Baby Boomers, Generation Xers, or Millennials, you will find people who have been hesitant to move forward with the homebuying process because they have been misinformed or have been made fearful because of something they've heard from a friend or in the media that in their case, at least, does not apply.

In this way, you are able to help people who really would benefit from buying a home, and at the same time, you will be providing your Realtor partners with transactions they would never have gotten otherwise.

A New Seminar That Addresses This Solution
On Wednesday, August 13th, I will be presenting a new, free online seminar: The Home Buyer Strategy Session -- Your Key to More Originations. You may already be registered for this seminar. If you are, you received an e-mail yesterday with full instructions for joining the seminar. If you're not registered and would like to attend, go here.

You can also watch the latest seminar in the series, "How to Do an Effective Home Buyer Interview" by clicking here. You can access all of the previous seminars in this series by clicking here.

When you talk to Realtors in your market these days, you'll often hear the following:

• We just don't have enough inventory.
  
• Buyers are on the fence; they look at homes, but they're not making offers.
  
• Buyers are too picky.
  
• Buyers are unrealistic – they want everything, but they don't want to pay for it.
  

Corelogic reported in early May that there are currently about 2 million existing homes for sale nationally. This is very similar to the inventory levels we saw between 2000 and 2003.

But there's an important difference. From 2000 to 2003, we saw an average of 5.7 million existing home sales per year. But in 2013, there were only 5.1 million existing home sales, and so far this year, we are on target to see only 4.7 million homes sold – a 7.5% drop in sales from last year. And the decline in new home sales this year so far is even greater – 13.3%.

If we have the same level of inventory now as we did 10 years ago, why are there about 1 million fewer homes being sold?

An important part of the reason, according to the CoreLogic report, is that about half the current inventory of existing homes is obsolete: 

• "... properties that are no longer desirable because their characteristics do not match what buyers are looking for in a home. For example, homes that are located in once, but no longer, popular locations, or homes that are lacking in local amenities sought by today's buyers."
  

A lot of this "obsolete" inventory consists of foreclosed/REO properties, many of them located in areas that are no longer considered desirable. And location, as any Realtor will tell you, is everything.

At least some of those properties could sell (to first-time buyers, for example) if they are not located in blighted neighborhoods, and if those buyers are working with lenders who have the expertise to arrange 203K or conventional rehab financing.

But there is also something else going on here: 

The New Shadow Demand
The Corelogic article refers to a large number of consumers who are looking for a home, are qualified to buy a home, and are waiting because they can't find the "right home". Corelogic refers to these potential buyers as the new "shadow demand".

These potential buyers are in the shadows only in the sense that they haven't bought a home yet. They have, however, taken one or more of the following steps in that direction: they've looked at properties online, they've visited open houses, they've talked to Realtors and been shown properties on the market, and they've talked to lenders and/or have gotten prequalified or preapproved for financing. These are the buyers that Realtors believe are "too picky", "on the fence", or "unrealistic".

But I don't know, they seem pretty realistic to me.

Look at it from their point of view. Within recent memory (6 years), the entire housing market collapsed, decimating home values, sending reverberations throughout financial markets worldwide, and causing massive layoffs. Although the official unemployment rate is now "only" 6.3%, that's only because we're not counting people who are underemployed, or who have given up all hope of finding a job. Every one of these prospective home buyers personally knows people who lost their homes in the crash, lost significant equity in their homes, lost their jobs, or all three.

Would they like to own a home? Yes, absolutely. 

But that doesn't mean they're willing to gamble their financial future and their current quality of life just to be able to say they own a home. These homebuyers who are seen by Realtors (and by many loan originators) as being "too picky" are, in many cases, looking at the available inventory in their area, are comparing it to their current living situation, are doing the math, and deciding that, for now at least, the price isn't worth the risk.

It is certainly possible, and even likely, that these consumers are seeing an incomplete picture. It's possible they're being influenced too heavily by their fears – fears of another housing crash that would destroy any equity they may have built in their home, fears of losing their jobs, and fears of another economic downturn – or just a continuation of the economic stagnation we've seen for the last 7 years.

It's also possible that there are homes for sale in their area that would, in fact, represent an improvement in both their quality of life and their family's financial strength, but they lack the imagination or the information to be able to see it.

But who is going to help them see it? If they're working with a Realtor, they may like their Realtor, but they are also fully aware that the Realtor wants to sell them a home. They may be working with a lender, but in the vast majority of cases, their lender has focused exclusively on their ability to qualify for a particular loan product.

What they don't realize (because their loan officer hasn't taken the time and trouble to explain it to them) is that the lender has the same interests, and is on the same side of the negotiating table as they are. No responsible lender wants to loan them money to buy a house they cannot afford. No lender wants to loan them money to buy a house that the market (as determined by an appraisal) says is not worth what they are being asked to pay for it.

Loan officers who have the vision and the courage to position themselves and serve as "Home Buyer Coaches" are in a unique position to help their home buyer clients arrive at a strategy for finding and buying the right home at the right price. Such loan officers are also in a position simultaneously to be of service to their Realtor Partners in helping them move non-obsolete inventory.

And it is only when we begin to see more of this inventory moving that the market will create the conditions necessary to motivate "shadow sellers" – whether they be homeowners who are hesitant to sell now, or builders who are cautious about building now – to put more inventory on the market.

The first step forward is for loan originators to learn how to talk to prospective homebuyers in a way that helps them feel safe and comfortable in confiding their fears and concerns about buying in today's market. That will lead to opportunities for originator/homebuyer coaches to provide objective information and coaching that will help these consumers make the right decisions to fit their goals and situations – decisions that clients will be able to look back on with satisfaction and pride in the years to come -- whether they decide to buy, or to wait.

I will show you how you can take that first step forward in my next (free) online seminar, How to Do an Effective Home Buyer Prospect Interview, on Wednesday, June 11th at 3:00 PM Eastern time. If you have already registered for my "Who's Got Time for That?" Seminar series, you will receive instructions for joining the seminar in your e-mail beginning Monday. If you haven't registered or want more information, go here:

http://www.coachbobwilliamson.com/seminars.html

It's likely (and appropriate) that 90% of your professional attention is on originating loans. But federal regulatory oversight has already significantly altered the mortgage marketplace, and you would ignore its potential to threaten your  livelihood at your own peril.

In this new article, I attempt to provide some perspective on how much more complex mortgage lending has become since the enactment of Dodd-Frank, and why loan originators  need to stay informed about this particular elephant in the room.

I think you'll find that much of the information in this article can be shared with your colleagues, clients, and Realtor partners, and that doing so will help them all better understand why the job of helping people finance their home purchase has gotten so much more frustrating and difficult in recent years.
You can read the full article here.

Almost any loan officer can get a Realtor to give them a buyer lead as a way of seeing what the LO can do with it, expanding the Realtor's financing options, or maybe because the Realtor's current lender just blew a deal.

Of course, it's not my approach to suggest you go around to Realtors asking for charity, or even "a chance" -- my approach is to come to Relators with a very solid value proposition that offers them significant benefits they're probably not getting from their current lenders.

In previous seminars, I showed you how to raise your visibility with the Realtors in your market through the use of content marketing that is both relevant and useful to agents. I showed you how, with patience, good content, and appropriate calls to action, you can get Realtors to reach out to you (rather than you being one of many loan officers chasing after them). I showed you how to do an interview in which Realtors come face to face with the statistical evidence in their business that shows them the true cost of the opportunities they are missing every day.

In September's seminar, I showed you how to follow that interview with a presentation that shows them exactly why they're experiencing the problems they are, and shows them how you can make an enormous difference for them by making a couple of simple changes in the way they handle the leads they are already generating.

When loan officers follow the process  I laid out in these 4 previous seminars, they are able to break through the barriers Realtors have erected (especially since refis went away and every Realtor is now getting bombarded by LOs who didn't pay much attention to the purchase market until there were no more refis to do). When you give the presentation I shared with you in the September seminar, you will make a very strong impression, and Realtors will be enthusiastic about working with you.

But how do you follow through, and how do you get the Realtor to follow through? Because Realtors will begin to forget how excited they were as soon as you leave. Unless you keep the momentum going, they will forget most of what you told them within a week.

In the most recent seminar (held on November 14th), I show you how to systematically build your Realtor relationships, and solidify your gains.

The video of that seminar is now posted on the site, and you can view it here.

As you probably know, I've been presenting a series of free monthly online seminars on how to develop your purchase market business.

The latest of these seminars, How to Give Effective Presentations to Realtors, presented on Sept. 19th, is now available for you to view on the website here. You can also access previous seminar videos here

I will be traveling some in October, so the next online seminar -- How to Develop Solid Realtor Partnerships -- will be on Thursday, November 14th at 11:00 Eastern Time (12 Noon Pacific). If you were registered for the last seminar, you're automatically enrolled in all future seminars in this series. But if you haven't registered yet, you can do that here.

For a preview of what will be covered in the new seminar, please go to the Seminars page

The June existing home sales report came in about a week ago, and the bottom line is that it's too early to break out the champagne and party hats, but neither is it time to climb out on the ledge and think about jumping.

Sales in June fell a little more than 1% from the previous month, but they were about 15% higher than in June 2012. Based on the data so far this year, I would expect the total number of existing home sales for 2013 to be somewhere in the range of 4.5 million to 5 million homes. This appears to be the "new normal". One positive note for the mortgage industry is that the percentage of homes sold to investors has dropped to 20%, meaning that the share of cash sales is declining.

The National Association of Realtors also reported that inventory levels improved slightly, to a 5.2 month supply. They also said that the median price of homes sold in June was $214,200 – a 13.5% increase from the previous year. The NAR is very concerned about inventory levels, and is afraid that a continued short supply of homes for sale will cause "unsustainable" price increases that, combined with rising mortgage interest rates, could cause the housing recovery to stall.

New housing starts, according to the Commerce Department, also fell – by 10% in June from the previous month. (Much of that, but not all, was due to a fall in multifamily housing starts.)

The percentage of existing homes sold that were distressed – foreclosures or short sales – fell to 15% of total homes sold. This is good news, but we should also be aware that, according to CoreLogic, we continue to see about 50,000 new foreclosures every month. (The number was 55,000 in June.) This is much better than it was during the bust, of course, but is still significantly higher than what would be considered normal. The foreclosures we are seeing today are not a result of irresponsible lending practices, but rather are a reflection of a troubled economy in general.

My Take.
The recent rise in mortgage interest rates does not seem to have scared people away from buying homes; in fact, it looks like the rise in rates has moved many homebuyers off the fence.

If rates continue to rise (and I think that's a good bet, particularly toward the end of this year or the beginning of next year), I would expect rising rates to put downward pressure on home prices – especially if inventory levels go higher.

There are 2 things that will affect inventory levels, in terms of the number of months of supply. One of those things is whether we begin to see more people putting their homes on the market. If you owned a $350,000 home in 2007, and saw the value of that home drop to $250,000 or lower, you took a $100,000 hit to your net worth.

For most people, that's pretty hard to get over. Multiply by millions of homes, and you begin to get a sense of the scope of the financial disaster created by politicians' search for that utopia of "affordable housing". So as a result, we have millions of homeowners who would otherwise have sold by now for one reason or another, who are standing pat and waiting for the value of their home to at least reach the level it was at in 2007. More than anything else, this is the reason we don't have more inventory.

The other thing that would encourage homeowners to put their homes on the market would be in increase in the number of buyers actively looking to buy.

Forward-looking loan originators can help with both: they can help educate potential buyers to recognize that, if they're qualified to buy today, waiting is not in their best interests. And they can help potential sellers do a rational analysis of the pros and cons of putting their homes on the market today -- rather than waiting for home prices to reach the peak boom levels of 2007 -- something that (especially corrected for inflation) may not happen for a long time.

My next free online seminar for loan originators: "How to Get Appointments with Realtors" will be on Thursday, August 15th at 3 PM Eastern time (12 Noon Pacific). Go here for information, and to register.