California Home Mortgage Loan Rates

Mortgage has become one of the most important elements in modern day living. It is a key concept that might help one to fetch the amount of money one needs to fulfill his or her dream. Most of the time people look forward to mortgages for securing a home or some other real estate. Therefore, it is important to get the most out of the Internet by viewing the best rates on mortgages.

A mortgage for the purpose of building, buying or making a home is the most common phenomenon. Home, as we all know, is one of the most important aspects of life, of establishing the self as a citizen. Making a home is something that is greater than touching the sky, a feeling that cannot be explained, that cannot be explicated. Keeping this in mind, most of the financial companies and banks provide lucrative and low rate mortgage loans for the special purpose of building a home.

Most of the companies and banks in California provide easy loans at low interest rates for the special purposes of homes. These home loans are available from a whole lot of other sources in California, although the State of California has firm control over the whole matter. In California home loans are available from different types of lenders, apart from financial companies and banks. These lenders include thrift institutions, commercial banks, mortgage companies, and credit unions, among others.

Sometimes, the simple interest rates in cases of home loans are very low, as the home itself becomes the ultimate security, the ultimate mortgage. This erases any kind of risk involve on behalf of the lender(s).

10 Steps to Starting a Business in California

Are you contemplating starting a business in California? This is a guide to setting up a business in the sunny paradise of California.

California is a fantastic place to start a business, with several enormous cities like Los Angeles, San Francisco and San Diego.
The population and diversity of the state is enough to begin just about any business you could imagine, and thrive.

Here are a few things you should consider when starting your California business:

Where in the city is your market demographic?
The cities of Los Angeles, San Francisco and San Diego are enormous, with many different pockets of demographics. Even the smaller communities in California like Sacramento, Stockton, Bakersfield and Palm Springs are large communities by any other state standard. You may want to research in what location of the city your particular business would be best suited.
What does business space cost in your desired location?
Different parts of the city will have wildly varied monthly lease costs. For example, in Los Angeles, Melrose Avenue or Downtown LA will have much higher rates than Culver City or North Hollywood would.
What kind of business entity should you form?
Learn how to set up a California Incorporation ([http://california-incorporation.legalspring.com/])
Read about places to form a DBA, or “Doing Business As”.
Get a Federal EIN number
You can file for an EIN as soon as you get your EIN from the IRS ([http://www.irs.gov/businesses/small/article/0],,id=98350,00.html) or you can have your incorporator get it when you file your incorporation.
Get a business license
Get a Los Angeles business license (http://ttax.co.la.ca.us/Proptax/Business_License_FAQ.htm)
Search in Google for the term “(city name) business license” and you will be presented with results for your particular city.
Set up a bank account
You need your EIN and Incorporation (or DBA) paperwork before you can open a bank account and deposit checks made out in your company’s name. Once you have this paperwork, it’s a fairly easy process. You just walk into your local branch, and they should help you get set up. The only bank I don’t recommend is Washington Mutual, who wanted original copies of paperwork that the state of California had kept. I had the certified copies from the state of California, but Wamu would only accept the originals. I’ve had better luck with California National Bank, they have very good customer service.
Find an accountant
Lack of bookkeeping is one of the top reasons new businesses fail. As the owner of the business, you’ll be very business running your operations, and the books will fall behind. Be sure to set up your books, and hire a good accountant at the outset so that this doesn’t become a problem.
Find advertising space
Any good business owner knows that the flow of customers into their store is the lifeblood of their business. But not all business owners know where and how to advertise their services. Here are a few ideas:
Offline
Set up business in a high traffic area
Be sure your signage on the front of your business makes you easy to see. It should be big enough to be easily read from the road, and bright enough to stand out from those around it.
Your signage should make it immediately clear, to someone driving by with only a second to glance at it, exactly what your business does.
Yellow pages
Billboards
Bus benches
Poster boards
Hand out flyers
Host groups and clubs at your business
Attend local business networking functions
Local newspapers like the la times (http://www.latimes.com)
Internet
Los Angeles Citysearch (http://losangeles.citysearch.com)
San Francisco Citysearch (http://sanfrancisco.citysearch.com)
Los Angeles Craigslist (http://losangeles.craigslist.com)
San Francisco Craigslist (http://sanfrancisco.craigslist.com)
You can find a version of the above web sites for almost any of the larger cities in California by putting the city name at the front of the url.
PPC ads on Google (http://adwords.google.com) or Yahoo (http://searchmarketing.yahoo.com/)
Pay-per-click ads can be targeted to a very localized area. You can ensure that only people surfing the internet in the Los Angeles area (for example) will see your ads. They will appear only when they’re actually looking for your product, or reading something similar to what you offer.
Stay current on your California Tax Laws.
One thing that can ruin a new business quickly is falling behind on taxes. Make sure you don’t make that mistake! Make a solid effort to understand what you need to know about California taxes – talk to your accountant about it!
Set up a web site
Customers expect to be able to find you on the Internet.
Without a web site, you take away a potentially lucrative advertising avenue (see the Internet advertising tips above).
Many places like Yahoo (http://store.yahoo.com) make it easy to setup your own website, with your own domain name.
Find a domain name. I always use GoDaddy (http://www.godaddy.com) to register my domain names. I’ve found that DomainsBot (http://www.domainsbot.com) is a great tool to find a cool domain name. Once you find it with DomainsBot, you can register it with GoDaddy.

They say that 9 out of 10 businesses fail within the first 5 years. Most businesses are not financially or legally ready to succeed. If you follow the simple steps in this article, you’ll be better prepared to run a long-term and profitable business. Los Angeles is ready for you – you need to be ready to handle Los Angeles!

Database Hacks – Are Banks Required To Notify You?

Ever wonder if banks are required to tell customers when
their systems are hacked? You may be shocked to learn that
they are not. The only exception to this standard has been
database hacks that effect California residents. Companies
doing business in California are required to give such
notice under the California Security Breach Information Act.
The situation is changing quickly on the federal level.

Regulations have been issued by federal finance agencies
that now force banks to tell customers when their personal
data has been exposed to unauthorized third parties. The
regulations are issued pursuant to the Gramm-Leach-Bliley
Act, which contains language requiring financial
institutions to prevent unauthorized access and use of
consumer information.

The new regulations appear to be a reaction to several
recent high-profile data leaks. They include incidents such
as Bank of America losing data tapes containing information
for over 1 million government employees and the breach of
databases for LexisNexis and ChoicePoint. It is well known
that numerous other banks have also been hacked over the
years, but the information has been hushed up.

The new regulations require financial institutions to notify
account holders if the institution becomes aware of
unauthorized access to sensitive customer information. The
directives apply to banks and savings and loan companies,
but not credit unions.

There are two serious loopholes in the regulations. First, a
financial institution that discovers a database breach must
only notify account holders if it is “reasonably possible”
that personal details will be misused. Second, the
regulations only apply to personal data, not business or
commercial accounts.

While these new regulations are a positive step, one could
drive a truck through the two loopholes. Determining whether
it is “reasonably possible” that your information will be
misused is a vague standard that many financial institutions
will use to withhold information. Put bluntly, the
notification regulations are gutless.

The best method for keeping an eye on database breaches is
to look for stories in the news. Under California law,
companies are required to give notice to California
residents when breaches occur. If you see a story about your
bank giving notice of a hack to California residents, your
personal information may have also been exposed. Hackers do
not restrict their attacks to California residents.

Buy Land California and Finance by Loan

California Land Financing Budget (Example):

Land Purchase Price $300,000 Land Purchase Price

Soft Cost of Construction $ 40,000 Plans and Permits

Hard Cost of Construction $350,000 Construction Costs

Closing Costs $ 22,000 Fees, Title, and Escrow.

5% Misc. Reserve $ 17,500 5% of Construction Costs

Loan Interest Reserve $ 35,000 Interest On Amount Drawn

Total Building Cost $764,500

Appraised Value $800,000 Estimated Value of Land with Building Completed

Down Payment $191,125 25% of $764,500

Benefits of California Land Lenders

Loan officers dealing with California land should be able to assist you with the following information:

Assessment of the estimated yearly taxes, insurances, and HOA fees.

Approximate interest rate for the loan.

Down payment required.

Interpretation of your personal financial statements, credit scores, and income-to-debt ratios to conclude your eligibility.

Utilities Lead to the Path of Finance

One important thing to consider as you look to buy California land is utilities. When construction developers go into the construction stage to build new homes in Southern California then roads and utilities are built for a large number of homes. When the lender knows that a lot has public road access and utilities nearby they are often more willing to supply financing for the land because there is a foreseeable capacity to build on it which increase the California real estate worth and lowers the risk to the lender. The cost of installing utilities on a lot is not considered part of the hard construction costs for building.

Land Loans from a California Lender’s POV

California land loans are more risky to lenders than residential loans. The reason for this is that normally most people do not live on the land they buy since it’s vacant. As a result it is industry practice to not consider land a primary residence until something is built, and so it follows that vacant land is called investment property even if a person intends to build on it in the near future. Also, vacant land is called commercial property in California, that is property used for an investment purpose, even if the land is zoned residential and there are plans in place to build a primary residence. The importance of this categorization for lenders is that their risk increases on lending for land because a person can walk away from a land loan easier than a loan on a primary residence since the borrower has another place to live hypothetically.

Lenders for land will expect more from a borrow than on a residential home loan. There is a larger down payment expected typically than a California residential house or condo. There is more preparatory work expected also. Lenders may expect the borrower or buyer to bring a variety of items to the lender’s table for a construction loan. Here is a partial list of potential requirements some lender’s stipulate in order to obtain a land loan:

Complete and permissible architectural drawings for what will be built on the land.

Detailed time tables for all aspects of construction.

Finalized realistic budget for the building.

Supervisory chart, including a list of builder contact information for contractors and the architect assigned.

Proof of bonded and insured builders and contractors.

Here is a list of the paperwork required from a borrower to get started on a land loan in California:

Last 2 years of your federal income tax statements.

Last 2 months of pay stubs for both you and your spouse with contact information.

Your property information if you currently own including tax statements, HOA statements, any current mortgage statements, and any other debt statements you currently have.

Any additional proof of income streams, including child support, trust fund, investment income, dividends, interest, rental income, social security or government monies.

A complete list of your bank accounts and documentation, including all your checking, savings, money markets, and banking information.

Some Negatives and Positives

One draw back is that the courts of law in California have less regulations to protect the interests of land buyers than they provide to California residential home buyers since a land purchase is considered an investment. On the positive side, land is like having a clean slate of property. California land buyers have a much easier time when it comes to planning what they want to build, as long as the building plans live up to the regulations and zoning requirements of the city for the land’s location. As a land buyer CA you also have much more flexibility on getting what you want than doing a residential home remodel for example.

The best part of all about obtaining a loan to buy land in California is that it forces you to think through the land buying process ahead of time, talk to the right people which you will need to help you build a new home in Southern California and make a financial budget with sensible deadlines so that ultimately you can become a true player in the future development of a community for all to see. Plus you will have a really cool story about your personal experience in the timeless process of building on California land.

Earthquake Insurance in California

As the water began to drain from New Orleans in 2005, we learned that most of the homeowners in New Orleans did not have flood insurance, since they were supposedly in “low risk” areas. The over 60% of homeowners will need to depend upon their own savings, and limited federal assistance, to rebuild New Orleans – at an uncalculated cost for homeowners and taxpayers.

Could that level of disaster, especially that level of uninsured disaster, happen in California? Less than 15% of California homeowners currently carry earthquake insurance, due to its high cost, the “can’t happen to me or my house” factor, and mortgage providers not requiring coverage. The next big quake will result in billions of uninsured damage – but is earthquake insurance really worth the high cost?

How Did We Get Here?

The state of California requires that all homeowner’s insurance providers to at least offer earthquake insurance (albeit, at a high cost). Until 1994, it was widely available – but the high damage costs of the Northridge earthquake resulted in 97% of homeowner’s insurance providers pulling out of the state the California. In response, the California Earthquake Authority was formed by the California legislator to provide earthquake insurance.

What Is the California Earthquake Authority, and How Does It Work?

The California Earthquake Authority provides two-thirds of the earthquake policies in California, sold through their member providers, like Allstate and State Farm. A homeowner purchases the policy through their regular insurance agent, but the policy is actually a CEA policy.

The CEA currently has about $7.2 billion to pay claims, which it states is enough to pay foreseeable damages (Loma Prieta in 1989 had $6 billion in total damages). If the damage claims are more than $7.2 billion, then each claim would be paid a prorated portion of their losses – unlike a regular insurance company, which promises to pay the actual damages under the insurance policy. The state of California cannot help pay the claims out of general funds.

The policies also have a high deductible – usually 15% of the value of the dwelling. In other words, your home must be damaged more than 15% of its value before the insurance starts paying. So, this insurance is not for cracks in the driveway – it is for significant structural damage to your home. The policy also pays for limited contents (starting at $5K) and loss of use (starting at $1500).

Why Is Earthquake Insurance So Expensive?

Insurance policy premiums are calculated based on probabilities – the probability that a house like yours in a neighborhood like yours will catch fire, or a driver like you will have an accident. With data from millions of homes, these probabilities can be calculated with reasonable accuracy. But, no one can reliably predict the probability that there will be an earthquake strong enough to damage your home.

And, as you can imagine, damages from an earthquake, flood, or hurricane, are widespread, over potentially thousands of square miles – instead of one or a few dozen homes, as in a fire. As such, the insurer would have to pay either zero claims, or billions of dollars of claims – too much variance to reasonably plan for or price accurately.

Are We Really At Risk Here in San Jose?

According to the USGS, there is a 62% probability that there will be an earthquake of 6.7 or greater (like the Northridge quake) in the Bay Area in the next 30 years. In my zip code (San Jose 95126), USGS calculates a 80% chance of a 6.0 earthquake and a 20% chance of a 7.0, in the next 30 years. Whether you consider that to be a high risk depends on your risk tolerance for earthquakes – I consider that a high risk of a moderate earthquake and a somewhat low risk of a terrible earthquake, over the next 30 years.

But like any issue involving real estate – it is all local. Where your home is actually located significantly affects your risk – bedrock, reclaimed land from the bay, soil type, nearby streams, actual distance from the epicenter – all can affect potential damage.

But of course, many earthquakes occur where the USGS was not even aware of a fault line – and we never know when or where it will happen, until it happens.

Should I Obtain Earthquake Insurance?

Factors to Consider:

Could you afford to pay for the rebuilding your home from your own savings & investments?
Can you afford to pay the high cost of insurance, indefinitely?
Could make payments on your current mortgage and on a new loan to rebuild?
Can you mitigate your potential losses by bolting your roof to the walls and the walls to the foundation, for example?
What is your tolerance for the risk of an earthquake?
What is the risks of your current home construction (type, age, foundation)?
What are the risks of your specific location (soil type, distance to known faults)?

Are the Costs Worth It?

Let’s assume that you have a home that would cost $250K to rebuild, you will own the home for the next 30 years, and your earthquake premiums are $1200 per year. Over the next 30 years, that would be a total of $36,000 in premiums (assuming your premiums do not increase, to simplify calculations).

Instead of purchasing insurance, you invest the premiums in a diversified mutual fund. With an 8% annual return, you would have $135,000 (pre-tax) in year 30.* But of course, you only have that total in year 30, not in year one – meaning that if the earthquake happens tomorrow, you don’t have the money.

The deductible is another big turn off for many homeowners. The insurance pays only for large structural damage, not broken dishes or cracked driveways – meaning that it is less likely you will use it. However, be aware that you will not need to come up with the cash for the deductible – you may either opt to not undertake those repair or rebuilding costs, or you can apply for an SBA loan to pay for the deductible (assuming a federal disaster area is declared).

Why Not Just Get Federal Aid, or “Walk Away” and Let the Bank Have the Property?

The federal government would probably provide access to SBA loans, if the area is declared a federal disaster area (no small business required). However, the $200K maximum SBA loan may not be enough to rebuild your home – and, it is a loan that you need to pay back (in addition to your current mortgage).

If you have refinanced your mortgage, you have a recourse mortgage – which means that not only can the bank foreclose on the property in case of non-payment, the bank can also come after your personal assets and future income in case of non-payment. So you cannot just walk away, especially if you have a good income and some personal assets. The bank may help out by deferring payments for a few months, but you still must pay back the loan.

Last Thoughts

We have earthquake insurance on our home. Our home was not yet built in the 1906 earthquake (so who knows if it would stand), it is 75+ years old and is not bolted to the foundation, and we have a refinanced mortgage. For my family, the insurance premiums are worth peace of mind in case of a major earthquake disaster. That’s exactly what insurance is for – the “you never know.”

A Bank Levy Checklist

This article discusses the paperwork needed to levy (garnish) a judgment debtor’s bank or checking account at a bank or credit union in California, as per the laws CCP 699.080, CCP 700.110, CCP 700.140, CCP 700.160, and Government Code 26720.9. Other states have different laws, however the paperwork and procedures to levy a judgment debtor’s bank account should be similar.

This article is my opinion, and not legal advice. I am a judgment broker, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.

The first step is to get a writ of execution (in California, EJ-130) from the court for the county where your judgment debtor’s bank account is. The Sheriff always needs the original writ copy.

A notice of levy form will also be required, in California this is Form EJ-150. Make at least three copies of all pages of the original court-stamped writ of execution. Also make three copies of the EJ-150, and all the other paperwork and forms needed for a bank levy.

Within the state of California, each of the 58 counties and their civil Sheriff departments have different policies. In some counties, the Sheriff serves bank levies, in other counties you must hire a Registered Process Server (RPS) to serve bank levies. Usually, less copies of paperwork, and sometimes even less forms are required, when the Sheriff serves bank levies themselves.

What the Sheriff or a Registered Process Server needs:

1) The original writ of execution, and several copies of it.

2) A check for $35 payable to the Sheriff, so they will open a Sheriff levy file.

3) A letter of instruction to the Sheriff, specifying what you want done. You want the Sheriff to levy your judgment debtor’s bank account to satisfy your judgment. Be sure to include information about your debtor’s bank name and location, the court case number, the creditor (you), and the judgment debtor. The Sheriff instructions must be signed by the creditor, and I recommend signing with a pen having blue ink. If a RPS is used, they should get a copy of the signed Sheriff letter, which they can get “date stamped” so they can prove they opened the Sheriff levy file before they performed the bank levy.

The judgment debtor’s bank is served with:

1) The original writ of execution, or a copy of it.

2) The original notice of levy form (EJ-150). The Sheriff or RPS serves the bank with this notice of levy, and it is signed at the time of service.

3) The original memorandum of garnishee form.

The judgment debtor (after the levy is completed) is mailed:

1) A copy of the writ of execution.

2) A copy of the notice of levy.

3) Forms EJ-155 and EJ-160, which informs the judgment debtor of their possible right to claim exemptions in dollar amounts. If exemptions are claimed and granted, they may defeat the creditor’s levy attempt.

The Sheriff (after the levy is completed) is sent (within five days of the levy):

1) The original writ of execution.

2) The original notice of levy, dated and signed. Note that there seems to be no law requiring this, however most Sheriffs require it.

3) A copy of the memorandum of garnishee.

4) The proof of the service on the bank (which should include the individual’s name and position at the bank).

5) The proof of service by mail on the judgment debtor.

After the bank levy, the bank sends the judgment debtor’s money to the Sheriff, and the Sheriff then holds the money for sufficient time to insure that no claims of exemptions have been filed. Then, the Sheriff pays the creditor (deducting their small fee to write a check) and eventually returns the original writ to the court, showing their accounting of any money levied and paid to the creditor.

Spank the Bank! Confronting the Biggest Bully in the Neighborhood!

It is an unspoken reality that for those of us making our living in the real estate industry, we unfortunately continue to have to work in the “short sale” arena. I say unfortunately for a number of reasons, but first and foremost is the fact that as realtors we see firsthand how traumatic it is for the homeowner and the buyer when a short sale transaction becomes a casualty of disorganized corporate banking staff and understaffed bank short sale offices.

The issues of the short sale “nightmare” were, and continue to be, promulgated almost specifically by the banks themselves. It has created a growing and aggressive stealth movement towards forcing the banks to start being good neighbors with the real estate industry.

Anecdotally, in two very recent short sale transactions with major banks, (the lien-holders of the respective properties), none of the professionals on the realty side involved with the transaction, (realtors, title agents or closing coordinators), could get anyone at the bank’s short sales offices to respond to communications or queries of any sort. Phone calls, emails, faxes, and even an outreach by courier… “Holy Foreclosure Batman, I smell a rat!”

In one case the short sale price had been approved by the bank, the buyer had made a full price offer, the contract was fully executed, the home was vacant, (on a very short leash for foreclosure), and we still could not get the bank to respond! For two months we could get no answer of any sort from the bank or their representatives! It is an extremely unfortunate, but well known issue, (there is no doubt that all of the realtors out there are shaking their heads with the same nightmare stories of their own)… it’s got to stop!

Approaching the point at which this particular home was about to go on the chopping block at the county courthouse, the selling agent, (and myself on the buyers side), decided to take matters into our own hands and become more “proactive” at getting the bank’s reps to respond. We made a very aggressive effort to reach out to the people at the bank’s senior management level who COULD make a decision, while also convincing them of the need to respond.

Drafting an email to the CEO of the bank, along with a number of members of his board of Directors, VP of Short Sales, and numerous other banking officials, we started moving forward in short order to alert these officers to the shenanigans of their local office. After looking over that email with a fine tooth comb and making a number of changes, the email was sent to all of the bank officials and board members, copying the local bank short sale reps, (remember, the ones who refused to respond to our queries).

In a matter of hours, literally, after sending that email, we had numerous calls from the bank CEO’s office wondering why we were having problems and what they could do to help. Due to this “re-energized” focus on this case we ended up closing the sale only days later… after two months of senseless inactivity and non-response on the part of the bank office assigned to handle the case.

This particular situation ended up working out for the buyer and seller, but unfortunately it was just one of thousands of these cases occurring daily nationwide. The big banks and their short sales offices literally BULLY everyone involved in a short sale transaction, from realtors to title and closing agents, to the homeowners themselves! Why?… well, for the same reason a dog chases its tail, because they can! They know they can just refuse to answer any queries in reference to a particular transaction, and there is very little, if anything, that anyone in the real estate industry could do about it, (up till now). Think about it. What other phone numbers would you call? What other fax number would you use? What other contact point do you have? You all know the drill, and it’s not pretty.

Remember how we hated bullies in grade school? To be more specific, who do you know that doesn’t hate a bully? I always have and always will. Realtors and others in industries dependent on real estate sales must come together as a group to put pressure on our elected representatives to create better legislation to force banks to behave! We cannot continue to allow the biggest bullies on the real estate block to continue making their own rules to the detriment of the rest of the country and entire industries.

Obviously, the banking industry hasn’t received the message loud and clear that the citizens of this country are sick and tired of the crass, unresponsive way in which banks are handling their affairs… and specifically in this case, the administrative issues and transactions with short sales.

Short sale homeowners are certainly not happy that big corporate banks earning billions of net profit per quarter, are having their homes foreclosed on, in many cases, due to the shoddy, unprofessional work ethic, and haughty bank employees simply refusing to respond to realtors, title agents, closing coordinators and homeowners.

Obviously not all bank employees are “haughty” and / or have a poor work ethic. Unfortunately, I haven’t worked a short sale yet, nor have I spoken with a realtor who doesn’t agree that in almost every case at some point in the game one of those “special” bank employees ends up being an integral part of why the transaction is not moving forward.

Referencing the aforementioned net profits of the banks, and for some speculative insight, here are the 3Q 2011 net earnings for three of the major banks, Bank of America – $6.2 Billion, Chase – $3.1 Billion, Wells Fargo – $4.1 Billion. (These banks, just coincidentally, also have huge numbers of short sale properties on their books).

That’s just three months earnings folks. Think about it.

Why do we allow banks to bully the parties involved in a real estate transaction? Individual realtors and brokerage firms are just the tip of the iceberg. All of the tangential businesses that revolve around a real estate sale realize a huge negative impact from laggardly bank employees just simply refusing to do their job professionally and in a timely manner.

Contrary to some populist belief patterns, the men and women of senior management running large corporate banks are not stupid! Neither are our elected representatives, (although some of you may disagree with that latter point). Why is it then, seemingly, that none of those individuals can see what we in the real estate industry see on a daily basis.

For instance, if a particular short sale is neglected by the bank and continues to be denied any attention for months, the buyers in the transaction most probably walk from the contract. The home then ends up being put back on the market, forced to continually lower its sale price to sell, or the bank moves in to foreclose on it.

Due to the recalcitrant bank staff, not only does that particular home’s price get lower and lower, (in order to sell prior to foreclosure), so then do the values of the homes around it become diluted. Previously where there were only one or two homes in a sub-division that were possible short sale candidates, the callous, maybe even devious inattention of bank “professionals” has diluted the equity in the surrounding homes so much, they now become short sales themselves. It’s a virus and this never ending idiocy goes on and on, simply because bank employees refuse to do their jobs! Any suggestion that this was bordering on criminal… would be an understatement.

Everyone in this country took a tremendous negative impact to their financial health over the last five years, and it is becoming tiresome to continue to listen to bank CEO’s whining responses to congressional queries with, “we just don’t have the manpower to handle all of those cases”. Really? A reasonable person would submit that if your corporation earns $6.2 Billion in net profit in just three months, you might be able to hire the staff necessary to process those short sales, or at the very least answer your phones.

After discussing these issues with a number of colleagues concerning some method with which to reconcile the plethora of problems manifest in a short sale transaction, we all came to the same conclusion. Banks will not start to be professional business partners until they have some reason to be.

Discipline is a necessary element of any behavior modification program, and the type of discipline needed now is parent-to-child type of discipline! Ipso-Facto – if you act like a child, you should be disciplined like a child… until you start to behave appropriately.

Not being a fan of “big government”, I would submit in this case, that our government is going to have to oversee some parenting responsibilities and to that end, a number of proposals surfaced that we believe will work.

First, a bank has to be held accountable for its inactivity in a transaction. In other words we’re going to have to “Spank the Bank” if they don’t behave. This disciplinary action should have some monetary impact on the bank’s bottom line attached to the individual transaction. For instance, if the bank is supposed to get back to you, the realtor, in ten days on a decision to accept or deny an offer, or send you an approval letter to sell, then they should take a hit on a daily basis for that refusal to respond by perhaps a fine of $250 per day, (taken off their bottom line from the sale).

Second, the bank’s team, office, or group handling that transaction, should receive some internal disciplinary financial action for their substandard time and resource management, that would come from that team or group’s budget,… $100 per day?, ( added to the upcoming total).

Third, the individual(s) working for the bank, assigned to work directly with that particular case should receive job or financial action for their delay and inaction… $50 per transaction per person?

Those three financial deductions would be totaled and taken off the bank’s bottom line for that short sale.

Here’s the best part, 90% of whatever money the bank ends up being fined on a daily basis due to its inattentive, slovenly attitude and unprofessional response time goes straight to the closing costs of that transaction, (taken off the final number of the HUD), to be split evenly between buyer and seller! The other 10% could go to fund short sale and foreclosure counseling programs. Let’s see how THAT sits with the bank. I would suggest that with those legislative requirements in place, all “short sales” would become “instant sales” overnight.

We could see bank employees finally start to answer their phones, respond to homeowners, get the right file to the right person, and finally “find” the financial packet that had been sent in months ago, THREE separate times!

The bottom line is that until this country’s legislators create some very strong language to actually hold the banking industry accountable, and we in the real estate industry along with other concerned groups and citizens make our voices heard forcing the banks to comply and cooperate, we will not realize any positive movement towards ending the short sale fiasco with the large corporate banks and their callous, haughty, unresponsive short sale departments.

Do NOT allow yourself to be bullied by a bank’s financial legerdemain and lack of professionalism! Think outside the box!

Let’s not watch our country continue to dig the “short sale” hole for another decade. For many people, doing nothing is doing something! In this case doing nothing is an invitation for the bullies to become even more aggressive.

Agile Banking – Managing the Challenge of Change

Business Agility

Business agility is the ability of a business to adapt rapidly and cost efficiently in response to changes in the business environment. Business agility can be attained by maintaining and adapting goods and services to meet customer demands, adjusting to the changes in a business environment and taking advantage of human resources.

Agility in Banking

Agility in the context of banking doesn’t mean just speed in execution; it also means that the bank is nimble and flexible. Agility helps the bank to win a marathon, as opposed to a hundred meter dash.

A bank, which is agile, will be able to roll out new products at a much more rapid pace to meet the target of treating each customer as a segment of one. This rapid product development and rollout can be managed only if the bank is backed by a clear process strategy to handle product complexity and accompanying growth. This combination of product and process in an agile bank is expected to increase the quality of customer experience, which can be benchmarked using a metric of growth combined with stickiness. By growth, we mean that a bank is able to attract new customers as well as more business from existing customers. High stickiness means low customer attrition.

Hence, agility helps a bank to streamline its process such that it can roll out newer products at a rapid pace to increase the quality of customer experience, and thereby retain existing customers and attract new ones.

Types of Agility

Agility can be classified in two ways. A bank can be either Range Agile or Time Agile.

Range Agility defines the ability of the bank to broaden or shrink specific aspects of its capabilities. This also implies that the bank is able to increase or decrease the portfolio of its products and services. This can happen by simultaneously expanding or shrinking the bank’s processes and the capabilities of its people. A range agile bank will also be able to tap new and emerging platforms and channels like Social Media, which can be used to crowd source the development of products that can cater to the needs of a particular segment.

Time Agility defines the speed with which a bank can roll out new products and services to take care of the varying needs of customers. For a bank to be time agile, the processes and systems that underlie operations should be capable of handling the frequent changes in the bank’s offerings. The use of state-of-the-art banking solutions will enable the bank to turn around newer products quickly and manage diverse products and services as time progresses.

Challenge of Change

Hence, an agile bank is one that is on the move and constantly undergoing change. An agile bank will also have a large number of alliances with partners who contribute to various parts of the product and service offering. The way the change is managed will determine whether the bank succeeds at increasing customer satisfaction and profitability or ends up with a large number of offerings that add to the chaos, but not to customer satisfaction.

Some of the key steps on the journey towards agility, which will help in managing the challenge of change, are as follows:

Identify the Change Driver

The need for agility in a bank can arise from a change driver. This change driver can be internal or external. External change drivers arise from factors over which the bank has almost no control, like a reduction in margin because of a hike in interest rates, or an increased regulatory compliance burden on account of heightened Central Bank norms. Internal change drivers can arise from factors such as merger and acquisition or a reduction in workforce. The driver of agility needs to be identified and communicated clearly within the bank and to all its stakeholders.

Identify the Agility Enablers

After identifying the change drivers, the bank needs to identify the agility enablers against each. The current and target states need to be identified for each of these drivers as well as the enablers that will take the bank to its target. For instance, the loss of customers due to the unavailability of mobile banking, can be a change driver. The agility enabler in this case could be the adoption of a new technology solution for Mobile Banking. Another driver could be the need to reduce the waiting time at the teller window. The agility enabler in this case could be service automation through an ATM or kiosk, supported by IT infrastructure at the backend.

Strategy Formulation and People Management

The top management of the bank needs to identify the strategy for each of these enablers and communicate the same to the unit or department concerned. In each unit, a core team must be formed to manage the transition, as well as communicate with the people within. More often, the strategy formulated by the bank must encompass the change in its technology landscape. The bank might replace the legacy systems with the latest Banking system to cover its end to end operations. This might necessitate developing the skills of the bank’s employees. Hence, every strategy formulated to reach the target state of an agility enabler must consider the people dimension, especially from the standpoint of minimizing chaos.

Effective Business Process Management

The business processes needs to be clearly documented; in the case of an agile bank, Business Process Management (BPM) needs to be constantly updated, preferably by the people who carry out the business processes. The business rules, constraints, processes and policies need to be documented as part of BPM. The generation of business process maps is not a one-time activity and will constantly undergo change as the bank changes its products and processes to become more range agile. Hence, it is prudent to identify the owners for each business process, who will be responsible for keeping the process documentation up to date. An enterprise BPM solution will help the bank in managing business processes and also making them accessible to all their respective stakeholders.

Effective Decision Making

An agile bank, working in a dynamic business environment, needs to respond to change to tap growth opportunities. The effectiveness of decision-making will determine the quality of the response. The performance metrics and data relevant to the bank need to be extracted and presented within the shortest possible lead time for agile decision making. The best-in-class IT solutions for banks come with their own analytics solutions, capable of generating the data required for analysis, at a click. If there are multiple enterprise systems and multiple subsidiaries operating within the bank, it is worth exploring an Enterprise Decision Dashboard (EDD). An EDD will have the data extraction and presentation capabilities to take the output from multiple systems and present it to the decision makers.

Review and Monitoring

A steering committee consisting of the CXOs of the bank needs to be formed, and charged with conducting periodic review and directing course correction if required, in the journey towards agility. Under the steering committee, a core team comprising members from each concerned SBU or department must be formed that will drive and monitor the progress made in their respective departments.

Conclusion

The journey towards making a bank agile involves changes, which affect its people, processes and products. This is accompanied by a change in its technology landscape to facilitate rapid innovation and transformation. These changes needs to be carefully calibrated and managed so that the bank’s existing customers do not feel any adverse impact and the bank also attains a larger market share and higher customer satisfaction at the end of the journey.

An Overview of Multi-Channel Banking

Banking Turns Increasingly Digital

It is not an exaggeration to say that digital consumers are like no other. They belong to a generation that is more educated, more technology savvy and better connected socially than any other that came before. If they need information, they will research it on the Internet; if they want advice about a particular purchase, they will ask their social network. Their demands fuel innovation in the technology and communications space, giving rise to new, better products that they can’t get enough of. They seek convenience, reach, availability and instant gratification.

These expectations have split over to their banking activities too. Now, digital consumers want their banks to acknowledge these needs and fulfill them, just like other retail businesses are doing. Banks are responding by delivering their services over a range of digital channels including the mobile and the Internet.

Digitization in Africa and the Middle East

Today, digitization is a worldwide phenomenon. The following data indicates how it has pervaded banking in this part of the world.

Banks in Africa and the Middle East record the highest number of average monthly ATM cash withdrawals. In 2009, this figure was 3,914 compared to 1,631 in North America, 2,797 in Western Europe and 2,789 in the Asia Pacific region.

In the Middle East, Internet penetration is 33.5% which is 3.3% of the world’s Internet penetration. Mobile penetration in the UAE is already in excess of 200% and broadband penetration is expected to reach 100% by 2012. On the African continent, mobile adoption has crossed 50% in 26 nations; South Africa achieved twice that number at the end of last year. As a natural progression, this region will surely see high rates of adoption of these media as banking channels in the Middle East and African regions.

What is Multi-channel Banking?

With the availability of alternative modes of banking, consumers started to use more than one channel. They went to the ATM to withdraw cash and enquire about their account balance. Then they started to use Internet banking, first to monitor their accounts, and then to make payments and transfer funds. At the same time, they also made visits to the branch. This was the time when consumers “banked on multiple channels”.

The drawback of this kind of banking was that each channel was isolated from the other. Data generated on one was not visible on another, which meant that if a consumer initiated a transaction at the call center, but resumed it at a branch, he would have to explain the entire situation all over again to the staff. Banks too lost the opportunity to render efficient service or cross-sell, to these channel siloes.

With the integration of channels on a single platform, multi-channel banking became reality. Today, banking is integrated across devices, channels, products, and functions to provide seamless experience to customers across all touch points. Accordingly, banks have a 360-degree view of customer activity on every channel at any point of time. Customers enjoy similar visibility, and are also able to seamlessly transition from one channel to another, even during the course of a single transaction.

What Multi-channel Banking brings to Banks

A recent report by a research firm indicates that although branch investment still tops the list of a bank’s spending, investment in other channels like Internet and mobile banking is on the increase. In Middle East and Africa, spending on online banking channels is expected to touch US$ 50 million in 2012.

Banks stand to gain substantial benefits by investing in integrated multi-channel banking.

• Cost reduction

Multi-channel banking helps banks optimize operating costs and resources. For instance, branch staff engaged in routine operations such as cash disbursement may be deployed in other, more critical functions. With fewer customers walking in, branches can be smaller, and more cost effective to establish and maintain. Channel integration reduces data duplication. Overall, it is estimated that the cost of serving a customer or transaction through Internet and mobile banking is a fraction of that incurred at a branch.

• Customer satisfaction

Seamless multi-channel banking makes banking convenient for customers as it allows them to transact from anywhere, at any time. Since transactions and data are updated in real time, customers have access to the latest information irrespective of the channel. Integration also provides customers a single view of all the accounts held by them at the same bank. These facilities improve customer satisfaction and with time, loyalty.

• Customer acquisition

Banks with an advanced multi-channel banking system can attract customers of other banks, which are lagging in channel integration. They can also use channels – such as mobile banking – to make in roads into markets where they have insufficient branch presence.

• Revenue enhancement

By providing a unified view of customers and enabling tracking of their channel usage, integrated multi-channel banking improves banks’ cross-selling efficiency to bring them more business from existing customers. By reducing cost per transaction as mentioned earlier, and improving sales, multi-channel banking can make a reasonable impact on banks’ top and bottom lines.

The Profile of an Ideal Multi-channel Banking System

A multi-channel banking system should be simple, convenient, affordable and anytime anywhere accessible, providing a unified view of customer’s banking relationships for customers as well as for relationship managers. True multi-channel banking extends beyond the provision of banking access over multiple channels, to add value through:

• Superior user experience

Seamless customer experience is the essence of multi-channel banking. A customer should be able to use a bank’s service on any of its channels. Also, having initiated a transaction, he should be able to continue it on another channel without obstruction. For instance, if he receives an offer about a new high interest deposit on SMS, he should be able to buy into it using his mobile, but send all the supporting documentation via the Internet banking channel.

• Personalized banking

Today’s consumer has a strong sense of uniqueness that he would like service providers to acknowledge with personalized products and services. He desires personalized banking facilities that enable him to set reminders, quickly access links and”favorite activities”, and choose the channels on which the bank must send alerts or initiate contact. Not only that, he may also want to personalize each channel separately. Multi-channel banking must be able to fulfill all these expectations.

• Interactivity

While customers are happy to conduct routine transactions on self-service channels, they invariably seek human assistance when faced with a problem. If ready help is not available at that time, they may give up the channel altogether. Banks can prevent this eventuality by making help available to customers on every channel, at the touch of a button. This can be achieved with a text chat facility – already provided by many – or an audio/video help service, or even co-browsing, whereby a customer care representative can remotely see the customer’s desktop and walk him through the solution. What’s more, using social media, banks can not only make these situations more interactive but also enable a customer to seek assistance from other customers who have had similar issues.

Washington Mutual Card’s Commendable Customer Service

The Washington Mutual Card services have been made much easier! The bank’s online banking system is especially intended for busy people who are in need of useful assistance and shortcuts for their banking needs. Through this service, customers need not go to any bank branch to accomplish their transactions.

This enhanced service for Washington Mutual Card customers provide them with an online registration and a free of charge telephone conversation with a certified bank teller. These dealings are done conveniently with online services.

To access your Washington Mutual Card online, you need to sign up using the bank’s online site. Upon signing up, both checking and savings account may be accessed expediently. Additionally, by transacting online, you will also be allowed to communicate with your credit union about Washington Mutual Card accounts funding. Depositing can be done through mails. Simply authorize an electronic transfer of mails and the deposit is sure to be transferred safely to a branch.

Customers can freely use the online services for their checking account. By using this online banking system from WaMu, a checking account holder may instantly view and analyze his or her account. He or she may arrange for funds transfer and may be able to contact a particular banker. Customers who so choose to deal online is provided with considerable ease in placing direct deposits or even stop and discontinue a particular check payment. In addition, security and safety in transaction is made possible by first asking for personalized PIN when accessing accounts and also in speaking with a live banker.

This live telephone banker will instantly speak with you as soon as you open your account, one for excellent customer service. If you happen to make a mistake or is worried about anything negative that may occur with your account, the friendly customer service agents are always ready to assist you.

One example for this is when you have to transfer funds from Washington Mutual Card account to any other bank or financial institution accounts, there might be some confusions or unclear options that prompted you to choose an inappropriate selection, you may simply give a call to Washington Mutual Customer service hotline which is up and running all hours all days a week to inquire and require urgent assistance for your concern. Free checks plus a debit card are sent by Washington Mutual Bank two weeks after you sign up.