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Friday, January 22, 2010

Customer Satisfaction Survey - what does it mean for the customer?

There is lots of lip service nearly everywhere you turn regarding customer service, excellence, accountability, integrity, ethics, and nearly every other buzzword being bantered about by the news media and companies who advertise on these platforms. The problem is that by the time you figure out that it's only lip service, you are usually too far along in the process, in many instances anyway, to do anything about it. To make matters worse, many of these companies don't have any legitimate channels for you to communicate your dissatisfaction.

I submit that companies that offer guarantees as to their product or performance are more likely to make good on their promises or at least get closer to their promised level of performance. Companies who care enough to go to the expense of a customer satisfaction survey after the transaction has closed are even more likely to care about getting it right in the first place and making corrections when things don't go right. No person or company is perfect and it is unrealistic to expect perfection. However, we should expect to be treated with respect and with a certain level of competency. The company I work for has set minimum levels of performance for each position and employees who don't meet that minimum standard will be coached to achieve the minimum (preferably higher) or will be asked to leave. We also have standards of excellence where we earn bonuses and certain other benefits if these standards are met. This is putting your money where your mouth is. I can tell you that every employee at every level is more keenly aware of our performance and what we need to do to 1) continue working at the company and 2) earn bonuses and other benefits.

You have probably heard that a person's pay isn't the most important thing when it comes to job satisfaction. The sense of achievement and worth along with a healthy dose of respect usually trump an employee's pay. While we all like to earn a good living, a feeling of accomplishment is something that money just can't buy.

The next time you are shopping for a product or service or referring a friend to someone for a product or service, consider if the company can back up their promises with a guarantee and consider if they really care by following up their service with a customer satisfaction survey.

Feel free to leave your comments, experiences and opinions on the matter. I'd love to hear them. If you like my blog, you can subscribe to my podcast by going to and clicking on the "Podcast" link at the top and then the subscribe icon. See you next time.

Thursday, January 21, 2010

More changes for FHA announced

FHA has announced that a number of changes will be made in an effort to get the insurance fund back up to the level mandated by congress. The changes that were announced will take effect in the summer. The up-front mortgage insurance premium will be increased from 1.75% to 2.25%. The amount sellers can contribute to closing costs will now be capped at 3%, down from 6%. The down payment requirement for people with a credit score of 620 or greater will remain at 3.5% but for those with a credit score of 580 or less, a 10% down payment will be required. The odd thing is that this is how the release was announced - there is a window between 580 and 620 that was not discussed or addressed. Less than 1% of all FHA loans funded last year had a credit score below 580 and there were also very few (relatively speaking) with credit scores between 581 and 619. Studies have shown that FHA loans with credit scores below 620 have significantly higher default rates so many lenders have elected to implement a minimum score of 620.

As for the insurance fund, the current balance is about $3.6 billion which is roughly .5% of the $685 billion in outstanding FHA-insured loans. Congress has mandated long ago that the fund maintain a minimum balance of 2% of the outstanding loans that are insured. This would mean that the fund needs to be around $13.7 billion. Hence, the fund is about $10.1 billion short of the mandate.

I'll post more news as information becomes available.

Have a great day and feel free to comment or contact me if you have questions regarding the new FHA guidelines or mortgage financing.

Tuesday, January 19, 2010

FHA 203(k) and 203(k) Streamline: AKA "The rehab loan."

Many homebuyers are passing up opportunities for homes they would really love simply because they are listed as "Cash- only" or "Conventional financing only." While the standard FHA 203(b) loan does have more stringent property requirements than conventional loans, the 203(k) rehab loan allows for buyers to fix the problems that would have otherwise kept the home from qualifying for FHA financing. In the process, the buyer also gets a more updated house and one more to his or her liking because they have finished things according to their tastes.

The 203(k) streamline loan has a maximum improvement amount of $35,000 and structural repairs are not allowed. This version is for things like new carpet, paint, cabinets, fixtures (toilets, sinks, etc.) and other more minor items. This is a great way for a buyer to update an older home or one that has deferred maintenance.

The full 203(k) loan has a maximum rehabilitation amount up to the loan limit of FHA which means the old house can be torn down and rebuilt if necessary. This is the obvious choice for homes in need of major repair to make it livable.

Key elements of the FHA 203(k) Rehab loan are:
  • bids must be from a licensed contractor
  • all work must be done by a licensed contractor
  • draws are handled by escrow (2 for the streamline and up to 7 for the full 203(k))
  • buyer has more choices and usually less competition on homes that would require these loans
  • buyer can customize the home and make it their own
  • the loan looks and feels just like any other FHA loan to the borrower other than having either a slightly higher rate or cost - depending on how the deal is structured.
Here's how it works: if a buyer agrees to a purchase price of $100,000 and the home needs about $20,000 worth of work based on the bids, then the total cost would be $120,000. The appraiser would appraise the home subject to the work being completed and would have a copy of the bids to complete the appraisal. Assuming the appraisal comes in at $120,000, the down payment requirement would be 3.5% of $120,000 or $4,200. The seller can still contribute up to 6% of the purchase price toward closing costs.

Changing gears: The deadline for the homebuyer tax credit is fast approaching. In order to qualify, a buyer must have a home under contract by April 30th and must close by June 30th. This is free money for those who qualify; first-time home buyers will receive up to $8,000 and current homeowners looking to move can receive up to $6,500. If you are thinking of buying a home, now is the time.