I am embarrassed to admit that JVM has gone all in on some really stupid business ideas – and I’ve listed a few of them below.
There was that time we set up a snow cone stand in northern Alaska in January. We thought we’d kill it because there was no competition, but we didn’t sell one.
We also started “Shellfish and Pork R Us” in downtown Jerusalem. Again – no competition, but not one buyer (despite the catchy name).
And this is the one that really upset my wife: The furnace showroom and repair business we set up in Dubai. Nothing!
Then there was the raincoat store in Death Valley, and the ski and snowboard rental business in Miami.
I would feel really stupid about starting these businesses if not for these guys:
The many mortgage banks trying to survive by focusing on refinances when rates are pushing 7%.
There are entire operations that focus solely on refinances.
It is a great business as long as rates fall every single year and/or values climb every single year.
But alas, rates can’t necessarily fall every single year – as we have seen since 2022.
So – can the refi shops just switch to purchases?
No. Not even close, as purchase financing is night and day different from refis.
Building agent relationships and understanding the myriad complexities purchase shops need to know can take years.
Buy-before-sell options, cash-to-close, airtight pre-approvals, down payment assistance options, fast closings, purchase appraisal shortfalls, condition/inspection issues, third-party delays, and housing authority grants are all things refi guys never have to deal with.
A buyer recently came to us after getting a $420,000 pre-approval from a refi shop/call center. The problem? The buyer only qualified for $320,000. It was just plain negligence by a loan officer who had likely never pre-approved anyone.
Anyway – I share all this because the refi guys are now getting more and more desperate in light of today’s long period of much higher-than-expected interest rates.
A Particularly Slimy Offer
And – it was a particularly slimy refi offer that one of our clients received over the weekend that prompted this blog.
Our borrower was offered a “no cost” refi that cost $26,000 in points.
It was presented as “no cost” because all closing costs were rolled into the loan (which was increased by $35,000 to cover closing costs, prepaid insurance, interest, and property taxes).
So – the borrowers did not have to bring in any money to closing. So – what our borrower was really being offered was a “No Out-of-Pocket Cost” loan – NOT a “No Cost” loan.
Here are the worst parts though: (1) it would take over 13 years to make up the closing costs with the cumulative payment savings; and (2) we could offer a refi into the same rate with far lower fees; we just don’t because we don’t think it is prudent for the borrower to pay fees to refinance at this point and because we are not a refi shop trying to mislead borrowers.
Here is my point to agents reading this blog: They might remind their clients that refi offers from online call center refi shops are often too good to be true.
Second, they might remind their clients that call-center pre-approvals aren’t particularly trustworthy (and yes, that’s self-serving for me to say, but I have more than enough horror stories to back my statement).
And lastly – they might ask their clients if they need a raincoat, some skis, some pork, or a furnace, as we have plenty (the snow cones melted though).
