Angelo 's Blog

MEDAL OF HONOR CONVENTION IN CHICAGO

Tue, 15 Sep 2009 14:57:02 -0500

Last night I was priveledged to be at the Union League Club as approximately 50 recipients of America's highest award for valor in combat, the Medal of Honor were welcomed to Chicago for the start of the 51st Annual Congressional medal of Honor Convention.

Recipients that served in WWII, Korea, an Viet Nam were in attendance. As a Viet Nam vet, it was an emotional experience. While they would not speak about the actions that resulted in their being so honored, each of their stories was included in a handout summary and available in more detail in a coffee table book (which I could not pass up).

Those that did speak either last night or in interviews in the Sunday, September 13 newspaper indicated that while they were recognized, they carry this honor for all of those who showed similar bravery, both living and dead - they all showed humilty with pride.

One notable comment when one was asked about today's hot topic - health care was that some of the older recipients of the MofH are unable to receive VA health care because they served before the health care benefit became part of today's benefits. Now isnt't this a slap in the face.

For those of you who have the opportunity, here are some of the events throughout this week.

Wednesday 9/16 - 10AM live webcast from the Pritzker Military Library (pritzkermilitarylibrary.org) 11:30 Constitution Day Ceremony at the Daley Plaza

Thursday 9/17 - 1PM pre-game ceremony honoring recipients at Wrigley Field

Saturday 9/19 - 11AM - 2PM A Day at Cantigny

Have a great day!

DIVORCE - but it looks like a DUCK

Thu, 27 Aug 2009 09:32:32 -0500

"Get it over with!"

Beginning in January, 2009 and continuing until the marital house is sold, spouse #1 will recieve $1000 per month from spouse #2 who also pays housing costs (PITI plus utilities) of $4000 directly to mortgage servicer and utility companies. After sale of marital house, spouse #1 will receive $5000/month for more than three years. Sale of the marital home is taking place in September, 2009. Spouse #1 has no other income except as a result of the divorce and would like to move to a smaller home with the children.

Under this situation, the earliest spouse #1 could use $5000 in income to close on on new purchase would be January 2010.

Mortgage guidelines require evidence of the receipt of income for at least three months prior to closing and evidence that it will continue for at least three years after closing.

NOTICE DIVORCE ATTORNEYs

Even though it looks like a DUCK, mortgage underwriters can not use the "direct payment for the benefit of the spouse" as income to meet this guideline.

With a minor wording change, Spouse #1 could have closed September 2009.

To eliminate the lag in closing, the divorce decree wording only needs to be changed to state that Spouse #2 was responsible for housing payments (PITI + utilities) until the house was sold and she would receive $5000 per month until that time and thereafter for more than three years. While there is some risk to Spouse #2 that Spouse will choose not to pay the mortgage payment, Spouse #2 can check on-line to make sure that timely payment is made and make the payment and readjust the method of paying Spouse #1 in future months. I'm sure the attorneys can eliminate this risk.

Same message, same cash flows but the underwriter is protected - isn't that what it is all about????

Have a great day!

CONDO FINANCING - STILL AVAILABLE FOR SOME

Tue, 18 Aug 2009 15:15:17 -0500

Current guidelines make it very difficult for condo financing. There are however options that may be overlooked.

1) New Construction - it may be that the developer continues to have a construction loan in place. If so, current financing guidelines may make it impossible to sell units with anything other than a cash offer. An alternative would be that consturction lender look longer term and offer buyers creative financing so that the developer is able to sell enough units to allow for FHA, FNMA or Freddie Mac finaning in the future. I have seen some cases where 5/1 and 7/1 ARMs are being offered using this approach. While the lender continues to hold approximately the same amount of debt, the diversification and "look to the future" is in everyones best interest.

2) Existing Condos - some portfolio lenders continue to offer financing for up to 55% loan to value (45% down payment) on 5/1 and 7/1 ARMS with very low interest rates. If you have clients that are downsizing but can not do a cash offer, look for this type of financing option.

Hope these ideas help. Have a great day!

Taylor Bean and Whitaker - update

Tue, 18 Aug 2009 14:55:32 -0500

Don't miss a mortgage payment - make sure you take action to verify this information with TBW and your new servicer. You should receive a good bye letter from TBW and a welcome letter from your new servicer. If not, make a call. There have been scams in the past where a dummy PO box is used to collect payments that then disappeared leaving borrowers with delinquent payments and trashed credit scores. Beware.

Just Released Info on Taylor Bean and Whitaker

Posted by Julie St. Jean

We just received this information from TBW. You probably will have clients that are affected. We had released the attached information last week for what to do with an FHA or Ginnie Mae loan.

NOTICE TO HOME MORTGAGE CUSTOMERS

AT THIS TIME, TAYLOR, BEAN & WHITAKER MORTGAGE CORP. ("TBW") IS UNABLE TO EITHER OFFER AN ONLINE PAYMENT OPTION OR AUTOMATIC PAYMENT DEDUCTIONS FOR ITS HOME MORTGAGE CUSTOMERS. PLEASE NOTE THAT NO AUTOMATIC DEBIT PAYMENTS HAVE BEEN MADE SINCE AUGUST 10, 2009. MOREOVER, TBW IS NO LONGER SERVICING GINNIE MAE AND FREDDIE MAC LOANS.

FOR HOME MORTGAGE CUSTOMERS WITH A GINNIE MAE LOAN, YOUR LOAN WILL NOW BE SERVICED BY BANK OF AMERICA. BANK OF AMERICA CAN BE REACHED AT 1-800-669-6607. PAYMENTS SHOULD BE SENT TO:

BANK OF AMERICA HOME LOANS, LP
PAYMENT PROCESSING
P.O. BOX 10334
VAN NUYS, CA 91410-0334

FOR HOME MORTGAGE CUSTOMERS WITH A FREDDIE MAC LOAN, YOUR LOAN WILL NOW BE SERVICED BY ONE OF THE FOLLOWING SERVICERS:

IF YOUR LOAN IS CURRENT, YOUR SERVICER WILL BE CENLAR. CENLAR CAN BE REACHED AT 1-866-430-9689.

IF YOUR LOAN IS NOT CURRENT, YOUR SERVICER WILL EITHER BE SAXON OR OCWEN. SAXON CAN BE REACHED AT 1-888-422-6451. OCWEN CAN BE REACHED AT 1-800-74-OCWEN.

FOR ALL OTHER HOME MORTGAGE CUSTOMERS, PLEASE MAIL YOUR PAYMENT TO THE FOLLOWING ADDRESS:

TAYLOR, BEAN & WHITAKER MORTGAGE CORP.
ATTN: CASHIERING
1417 N. MAGNOLIA AVE.
OCALA, FL 34475

IT IS IMPORTANT FOR ALL CONSUMERS THAT YOUR LOAN NUMBER IS WRITTEN ON YOUR CHECK AND THAT YOU INCLUDE ANY SPECIAL PAYMENT INSTRUCTIONS SUCH AS ADDITIONAL PAYMENTS TO PRINCIPAL OR ESCROW. USE YOUR TBW LOAN NUMBER UNTIL YOU RECEIVE A NEW LOAN NUMBER FROM YOUR NEW SERVICER.

FOR QUESTIONS ABOUT YOUR FHA-INSURED LOAN, CONTACT FHA'S RESOURCE CENTER AT 1-800-CALL-FHA.

FOR QUESTIONS ABOUT YOUR FREDDIE MAC LOAN, GO TO THE FREDDIE MAC WEBSITE AT WWW.FREDDIEMAC.COM OR CONTACT FREDDIE MAC'S HEADQUARTERS AT (703) 903-2000.

FOR OTHER QUESTIONS, PLEASE CONTACT TBW AT 1-888-225-2164 OR 1-800-530-2602.

BANKS TRYING TO ELIMINATE COMPETITION

Wed, 29 Jul 2009 10:25:44 -0500

As Mortgage Experts, I believe we need to continue to hit back at those that are trying to take away our business and eliminate true choice for the consumer. This is not the type of change that is good for our country.

Thanks for the opportunity to "vent".

It is amazing how some people and organizations continue to give lip service to the notion that "service released premiums" are incentives to steer consumers to their detriment. As a mortgage broker, I am required to disclose the fee(SRP) that will be paid to me for delivering a specific loan to the end investor. If I was a mortgage banker, or a bank, I could offer the exact same loan to the same client and this fee (probably larger than the fee that would be paid to the broker) would not be disclosed to the consumer. Does that mean that the bank does not receive compensation for the loan? Of course not.

Most banks operate as mortgage brokers but avoid the disclosure requirement because they are banks.

The APR, note rate and closing costs that are disclosed on the Truth in Lending and Good Faith Estimate are the consumers best source to compare loans programs being offered. Because the lenders have the option to use a service released premium to "buy a loan" from a mortgage broker, the consumer is able to better compare the package offered by a mortgage broker and the package offered by a bank. I believe that the pressure to eliminate the use of service released premiums is an effort by the banks to use their lobbying power to eliminate the mortgage broker competition, not an effort to help the consumer. Over the 25+ years that I have been a mortgage broker, my business has grown because my clients are smart enough to realize a good and fair deal. They come back and refer their friends and family. They are not stupid. They choose not to go to a bank and be forced to take it or leave it. They prefer to deal with someone that is only successful if they do it right.

I guess if I had the advertising budget that some of the banks have (thanks to the bail-out), I would do what I could to undermine my competition....or maybe, if I was smart, I should look at my business model and try to do it better and not unfairly change the rules to kill the competition. Of course the legislators don't have time to really understand the system that they are trying to regulate out of business.

Have a great day!

BANKS TRYING TO ELIMINATE COMPETITION

Wed, 29 Jul 2009 10:18:40 -0500

Thanks for the opportunity to "vent".

It is amazing how some people and organizations continue to give lip service to the notion that "service released premiums" are incentives to steer consumers to their detriment. THIS IS WRONG AND ANYONE WHO UNDERSTANDS THE SYSTEM WOULD KNOW THIS! As a mortgage broker, I am required to disclose the fee(SRP) that will be paid to me for delivering a specific loan to the end investor. If I was a mortgage banker, or a bank, I could offer the exact same loan to the same client and this fee (probably larger than the fee that would be paid to the broker) would not be disclosed to the consumer. Does that mean that the bank does not receive compensation for the loan? Of course not.

Most banks operate as mortgage brokers but avoid the disclosure requirement because they are banks.

The APR, note rate and closing costs that are disclosed on the Truth in Lending and Good Faith Estimate are the consumers best source to compare loans programs being offered. Because the lenders have the option to use a service released premium to "buy a loan" from a mortgage broker, the consumer is able to better compare the package offered by a mortgage broker and the package offered by a bank. I believe that the pressure to eliminate the use of service released premiums is an effort by the banks to use their lobbying power to eliminate the mortgage broker competition, not an effort to help the consumer. Over the 25+ years that I have been a mortgage broker, my business has grown because my clients are smart enough to realize a good and fair deal. They come back and refer their friends and family. They are not stupid. They choose not to go to a bank and be forced to take it or leave it. They prefer to deal with someone that is only successful if they do it right.

Have a great day!

Water Cooler Mortgage Experts Strike Again

Mon, 27 Jul 2009 17:47:04 -0500

Everyone is an expert. Interest rates are moving - up? down? sideways? So much depends on who you ask. I recently spoke with a client who told me that someone he works with said rates dropped. He asked how much and was told at least 1 percent. My client was excited because he had been quoted 6% and was looking forward to hearing from me that his new rate was 5%. When I told him it wasn't, he was upset.

"Water Cooler" mortgage rate quotes are given by the uninformed to the unknowing and most importantly without the facts. Since the unwinding of the mortgage mess, FICO scores (640), purpose (cash out), type of property (2-4 unit), lock period (45 days) impact the final interest rate/fee package more than ever before. Many of those attempting to obtain financing were refinancing or purchasing during the "go-go" low-doc, who cares mortgage period. I showed him a detailed rate quote to support my comments.

I suggested that he obtain a copy of either the Good Faith estimate or the closing statement from the Water Cooler expert so we can compare. I also asked him to see if he could find out the borrower's credit score, the type of property being financed as well as if it was a cash out refinance, and what the loan to value was if it was a refianance. The good faith or closing statement would answer those questions if it was a purchase.

While I was surprised when he told me that his research showed that the other guy's profile was similar to his, my review of the good faith estimate showed that the client was being charged points. I was not and the bottom line was that the rate didn't change but the points and fees dropped and I had already reduced my clients fees by over 1%.

Usually, when the facts are presented, the differences can be explained and clients feel better about the package that they are being offered. Now the satisfied and educated client is ready for the next "Water Cooler" session.

Have a great day!

Higher taxes - who's guarding the henhouse?

Mon, 27 Jul 2009 17:14:02 -0500

If only those that increase taxes would be accountable and pay their taxes. A recent article in the Wall Street Journal points out that the Chairman of the Houes Ways and Means committee, Representative Charles Rangel has been causual about his tax liability for years. Read the article at http://online.wsj.com/article/SB10001424052970203946904574300013592601036.htm.

No wonder taxes must go up, there is no effort to make sure our legislators pay there share.

Do you think this qualifies Charlie to be nominated by Obama to fill a cabinet seat?

Have a great day!

APPRAISAL PROBLEMS - HVCC STRIKES AGAIN AND AGAIN

Mon, 27 Jul 2009 15:58:14 -0500

Andrew Cuomo, in his quest to become Senator has settled for KING by putting the HVCC system in place. He didn't care about consumers. He didn't care about small business. He didn't care about punishing the criminals. All he wanted was publicity and he continues to get that - and perhaps the expectation of contributions to his future election from those that are making the big bucks from this system? The American Way!

Here are another two examples of problems this "independent appraisal system" has created.

1) Appraisal in January 2009 = $600,000. Same property appraised six months later for $470,000. When the first appraisal was completed, the lender wented to the MLS, found a lower value sale and asked the appraiser why the sale was excluded in determining value. The appraiser showed evidence that the lower sale was >75 years old and basically had not been updated. The subject had been updated to the tune of $250,000 with plumbing, electrical, kitchen and bathes being brought up to code and today's life style. The lender was satified and accepted the $600,000 appriasal. When the new appraisal was prepared that same low value sale was used as a comparable contributing to a 22% value reduction in one of the most stable areas in the Northwest side of Chicago. No adjustment was made and there is no effective way to challenge the $410 appraisal. Too bad - so sad!

2) Appraisal was ordered and completed in a timely basis. Estate sale, priced to move quickly, as is. This time the appraiser came in at the purchase price even though the buyer is confident that they got a steal. Isn't amazing how the appraiser came in at the price he needed for a buy-sell? Now the problem. The appraiser put down an incomplete address. This was noticed on July 14 and now 7 days later, the lender is still trying to get the appraiser to correct the appraisal. No change in value, no change in adjustments, just get the address right. Count down to closing - 4 days. Wish me luck.

You can bet that the appraisers that I used in the past would have done the research to provide a more accurate value in #1 - probable a value drop of < 10% and would have made the address change within the hour.

Hope you are having a better day than I am. And I hope Andrew Cuomo is not Italian.

OBAMA ECONOMICS

Tue, 09 Jun 2009 11:17:18 -0500

LESSON #1

Yesterday OBAMA said that the stimulus package was working! The reason that was given is that the new claims for unemployment was down. After giving that some serious analytical thought (maybe 10 seconds), I found that I was getting dizzy from the SPIN. Here is why I don't see it that way.

Consider a company that once had 1000 employees. As they viewed their future, they are forced to cut back hours and product lines and put on a hiring freeze. As a result, they cut back 300 jobs(30%x 1000). Next, they realize that business is still bad, they close manufacturing plants, other product lines, consolidate jobs, start using unpaid days off and cut back another 300 jobs(43% x 700) leaving their workforce at 400. Finally, they are forced to lay off 250 (62.5% x 400) - all except those essential to providing security, those that are used to moth ball the manufacturing plants and those that will file for bankruptcy. In two months 125 (83% x 150) will be released.

But the stimulus is working! The number that filed for unemployment benefits this week (250) was down from last week (300) and in two months, the number filing will be only 125 - half of this week! Obama signs of success!

Will the last one with a job please turn out the lights!

LESSON #2

Does anyone really believe that if the Treasury floods the market with debt to buy Mortgage Backed Securities then the mortgage rates will drop?

If you do, please look at the mortgage rates. Buyers of MBS will only buy those securities if the return makes sense (higher than treasuries). As the treasury increases the supply of treasury securities, the yield must go up to balance the demand. With the yield on treasuries going up, the yield on MBS must go up to get investors other than the FED to buy them. Many of us learned this DAY 1 in economics class.

Will the constitutional lawyer please not insult us any more with SPIN - Do you think he actually believes what he is dumping on us?

Have a nice day!

Drag Me to Hell!

Fri, 15 May 2009 11:00:35 -0500

FIVE STARS!

Trouble making your mortgage payment? Lost your job? Payment going up? Banks keep passing you from idiot to idiot - no one seems to care? No modification is being offered?

Well, there is a solution! A new movie is coming out May 29 that answers the question "what can a homeowner do?" when they have trouble making their mortgage payments. Cordell Eddings from Bloomberg, included comments from yours truely and other mortgage industry experts in his review. This review can be viewed at

www.bloomberg.com/apps/news?pid=20601088&sid=ay6ecNhApoMU&refer=muse

For those of you that have read my blog in the past, you probably can guess that several of my comments during a half hour phone call ended up on the edit room floor (thanks Sharon Lynch). I guess after 25 years as a mortgage broker, I am finally considered an "expert witness". See the last paragraph of Cordell's review.

Have a GREAT DAY!

REFI PLUS A BUST!

Thu, 23 Apr 2009 12:48:55 -0500

If you haven't noticed, homeowner's with second mortgage financing are again being taken advantage of!

Example - Home value of $300,000 and you have $300,000 in mortgage debt. If you have one loan for $300,000, you will get a rate that is 1/2 - 3/4% lower than if your first mortgage was only $285,000 and your second mortgage was $15,000. Same borrower, same collateral property, same credit scores, same closing costs yet the lower loan (and I would argue lower risk loan) is assessed an interest rate that is 1/2 - 3/4% higher. In fact, if the rate selected for the larger loan ($300,000) was 5% then the larger loan payment of $1610 would be higher than for the lower loan ($285,000) payment of $1618 @5.5% or $1663 @ 5.75% without any costs for the second mortgage.

What am I missing? I would expect that the lower risk lloan would have the lower interest rate not the other way around. Is this bait and switch or are is this another way to tax those with second mortgages because the lenders that are on the hook for second mortgage products need more money to bail them out?

Have a nice day!

STRAW BUYERS STIMULUS PACKAGE - Banks win, YOU loose

Tue, 31 Mar 2009 15:04:52 -0500

Treasury secretary Tim Geitner has just released the details of a program that will allow banks to make money on the TOXIC ASSETS.

Step 1 - Bank writee down assets to a level that the accountants can live with (say $60 million) but still overstates their value buy at least $10 million.

Step 2 - Bank finds a STRAW BUYER that is willing to overpay for the TOXIC ASSET pool.

Step 3 - Bank lends $5 million to STRAW BUYER who proceeds to receive $5 million from FED and $50 million from FDIC. Togeter they buy the pool for $60 million

Step 4 - STAW BUYER only generates $45 million from the sale of the TOXIC ASSETS.

Step 5 - Bank writes off the STRAW BUYER $5 million loan (instead of $15 million that would have been written off if they would have sold the pool direct, FED LOOSES $5 MILLION and the FDIC looses $5 million.

Now change the numbers so that the bank has already written down the pool to $55 million and the STRAW BUYER still pays $60 million for the pool. Now the bank picks up the initial $5 million profit to offset the later $5 million loss on the STRAW BUYER loan. The FED and FDIC each loose $5 million.

BANKS WIN - FED AND FDIC GET HOOD WINKED - TAXPAYERS GET SMOKE MIRRORS AND HIGHER TAXES!

Have a nice day!

STAW BUYERS - get ready for a windfall! Meet The Press 3/29/09

Sun, 29 Mar 2009 11:02:13 -0500

I just could not believe that the question has not been asked!

TOXIC ASSET SOLUTION discussed on Meet the Press with Tim Geitner

$100 million in toxic assets. Bank reserve against this pool of $30 million = net value of $70 million - with possible additional writedowns needed in the furture.

The proposal - Auction for this pool - assume it sells for $60 million

Results - Bank has $10 million write down + $5 million from and investor + $5 million from the Fed and $50 million from the FDIC = $70 million.

If the investor selles the pool for >$60 million, say $70 million, Then the investor wins and the Fed and Treasury get the money back.

If the investor selles for <$60 million say $50 million, the investor looses his $5 million first followed by $5 million in losses by the Fed and FDIC.

What if, the Pool which is on the books for a net for the bank is $70 million is sold at auction to the highest bidder for $70 million??? OK, now the bank looks wise since it appears that they properly adjusted the value of the pool.

But the Smart investor realizes only $55 million from the sale. The $15 million in losses are split with the investor loosing his investmemt of approx $5.5 million and the fed and FDIC (that's you and me and our kids) loosing the remaining $9.5 million.

But the invesor should be WISER and that should not happen. But what if the bank that had the Toxic assets was lending the money (fronting the money) to the investor? The bank avoided the eventual loaa of $15 million on the final sale. If I was a bank and believed I could pull this off, I would lend the money to an investor ($5.5 million) knowing that it would be a loss in the future to avoid a $15 million loss on the assets if I kept them on my books and sold them in the future. Does this sound like a STRAW BUYER to you? This is something that has been around for a long time and I don't see any protection from it happening in this program. Or, am I too pessimistic?

Another case of our leaders being over-matched by the crooks. Have a great day!

Half Marathon comes back to Cary, IL

Fri, 13 Mar 2009 14:04:37 -0500

The Ides of March are being celebrated with the annual March Madness Half Marathon tomorrow, March 15 in Cary, IL. The race begins and ends at the Cary-Grove High School on Three Oaks Road. The route is 13.1 miles long and is organized by the Hill Striders Running Club of Crystal Lake. Last year 981 finishers!

More information ? Just google March Madness Half Marathon in Cary IL for more details.

See you there! No I am not running, I will be taking pictures and sitting in a lawn chair along the route at the Hickory Nut Grove road entrance of the Harvest Glen Subdivision by Verseman. Have a great day!

CONDO FINANCING - MORE PROBLEMS - EFFECTIVE MARCH 1, 2009

Fri, 13 Mar 2009 12:46:05 -0500

Another example of -

* one hand ($8000 stimulus) not knowing what the other hand (tigher lending)is doing or

* the government "giveith" and the government "taketh away" but it is certain that

>>>>> the $8000 is in the news to get support while the harsher standard are buried so no one sees it.

THE FOLLOWING IS A SUMMARY OF THE FANNIE MAE CHANGES THAT IMACT ANY CONDO APPLICATIONS TAKEN ON OR AFTER MARCH 1, 2009.

*70% Presale to owner occupied or second home clients is now required for new or newly converted condo projects.

*Delinquent HOA fees on all types of projects cannot have more than 15% of the units 30 days past due on their fees

*Fidelity Insurance required for attached condo projects (over 20 units).

*"Walls-in" hazard insurance (HO-6) required on all condos including 2-4 units unless this coverage is included in the master policy. This coverage must include replacement coverage to include owner improvements made to the interior of the unit since purchase.

This announcement also knocks out the following:

*Mixed use projects where more than 20% of the project is non-residential.

*Projects where more than 10% of the total number of units is owned by a single entity; individual, investor group, partnership, or corporation.

*New projects where the seller/developer offers consessions in excess of Fannie Mae's guidelines. It appears that any interest rate subsidies that relate to the project may be included in this restriction even if the cost of such a buy-down does not show up on the individual HUD-1.

CRAM DOWN - More relief for liars!

Thu, 26 Feb 2009 12:20:38 -0600

Consider this -

As has always been the case, people try to hide income from the IRS. Liar loans became the mortgage of choice for these homeowners. They claimed an income that was higher than they reported on their tax returns. Yet, somehow they were able to make the payments for years - probably from those under-reported income dollars that they hid from the IRS. Today, there is talk about forcing lenders to modify loans where the mortgage payment exceeds a Magic Ratio of their income. But what income are they looking at to make this determination?

My questions is - if LIAR felt that they had sufficient income (higher than their reported income) when the obtained the loan and were successful in making payments for a period of time, then why should we use their (under-reported) tax return income for a calculation that would reduce their mortgage payment now?

Recommendation: Borrower should be required to release tax returns from the year before and the year that their existing loan closed. if the income they claimed was __x___% higher than they reported, then assume that their current actual income is also ____x______% higher than they report. Use this higher income to determine any qualification for CRAM down of the existing loan. Otherwise, the LIARS who understated their income, will have the more honest (or less creative) taxpayers subsidising their mortgage payments.

The bottom line is any alteration of the mortgage note that reduces its value will increase the risk for future investors in mortgage backed securities. This risk will result in higher mortgage rates in the future.

Have a great day!

Stimulus Highlights - SMOKE AND MIRRORS

Mon, 23 Feb 2009 12:31:06 -0600

1600 Colonial Parkway Iverness, IL 60067 Phone: (847) 359-5300 www.resourceplusmortgage.com

As you read this remember that every dollar that will be spent needs to be repaid. The question you need to ask is will the dollars be spent in a way that will provide long term benefits that will in turn generate the tax dollars that will pay back these dollars? If not, we will have to be taxed, our kids and grand kids will have to be taxed either in dollars or with a lower standard of living. Another question should be "why has no one been dragged into court to pay for the greed and misrepresentation that contributed to this? Are the politicians afraid that they will be blamed? If not, let's have another ENRON crucifiction and send a signal that criminal action will not be "bailed out"!

New Housing Plan Released:
On Tuesday, President Obama released his administration's new housing plan. The plan is designed to slow foreclosures in an effort to stabilize the housing industry. The following are the key points of this far reaching plan:

•- It aims to help 4 to 5 million responsible homeowners to refinance and to lower the risk of imminent default of another 3 million homeowners with $75 Billion Dollars.

•o Encourage mortgage holders to accept loan modifications to get the housing ratio for the borrower down to 38% through lowering the principal and or lowering their current rate.

•o The government will then use tax payer's money to buy the loan down from a 38% debt ratio to a 31% debt ratio. (Dollars spent in this way will put pressure on interest rates in the future.)

•- They will invest another $100 Billion Dollars each in additional preferred stock purchases of Fannie and Freddie to bring the total preferred stock owned at $200 Billion Dollars each. (Perhaps this will be worth money in the future?)

•- They will increase the amount of portfolio loans (the cap) with Fannie and Freddie by another $50 billion. (More risk - PORTFOLIO? Does that mean bad loans?)

•- Servicers will receive $1000 upfront for loan modification fees. (Where do I sign up for this handout?)

•- Borrower's to receive incentives for keeping their mortgage current. (How about me? ( How about YOU!)

•- $10 Billion Dollar fund to insure lenders against further declines in home values. (Who is helping me? My value is dropping as well!)

•- Only provides help for owner-occupied properties.

•- Will support lower rates for Fannie and Freddie (no specifics how) -(BECAUSE THEY CAN NOT DO IT IF THEY KEEP BORROWING TO FUND EVERYTHING ELSE!)

•- Allows Fannie and Freddie to refinance loans that they already own or guarantee by removing the provision that limits them to lending only up to 80% (Fannie and Freddie has never been allowed to lend over 80% LTV...that is why PMI exists to get around that). This will remove the impediment of tougher PMI restrictions. (Instead, they will charge higher fees to self-insure and be subsidized by us instead of letting the market price this coverage.)

•- If you are financial institution that has received TARP funds or any other tax payer funds (hint almost every major bank) then you must adhere to this plan.

•- No help for Jumbos - "help for middle class families"

•- Treasury and Federal Reserve will continue to purchase MBSs based on ALREADY approved numbers. It is unclear if any significant purchases will be made over and above what has already been announced - this is important because this is one item that can actually cause rates to decrease. I will be watching this for you.

What happened to rates last week?

We gained a modest 9BPS in pricing (rates got better) from last week.

Tuesday was our best rates of the week in anticipation of the housing plan that is outlined above.

However once the market realized that the mortgage holders have a lot to lose with this plan, we gave up all of gains to close almost even with rates from last week.

What to watch out for this week:

The following are the major economic reports that will hit the market this week. They each have the ability to affect mortgage rates. I will watch these reports closely for you and let you know if there are any big surprises.

I know you are busy and it is virtually impossible for you to keep track of what is going on in the economy. I monitor the trading of Mortgage Backed Securities; the only thing conventional mortgage rates are based upon. So I know if there is going to be a trend reversal in mortgage rates.

Have agreat day!

Respectfully,

Angelo Cusinato

Resource Plus Mortgage

847-359-5300

To Unsubscribe please email me at: angelo@resourceplusmortgage.com

Housing Bill Details - Not!

Fri, 13 Feb 2009 13:31:51 -0600

Special Report
02/12/2009

The financial markets have had a lot to digest in the last two days:

- Treasury Secretary Geithner announced an all-encompassing plan that had the complete opposite effect on Wall Street and was bereft of any real details. This is already being used as a case study by universities on how not to make a public policy statement. We have already issued a Special Report on the broad strokes of this "policy".

- The Senate finally passed their version of the "stimulus" bill and late on Thursday a compromise was reached between the Senate and House on the largest social grab-bag spending package in history.

- The Obama administration continues to leak details about their housing plan without officially releasing the details of the plan.

Information has been very fluid on the last two items and there has been a lot of speculation on what this means to the housing industry. We will continue to give you updates as real, confirmed details emerge.

First, the stimulus package (officially known as the "American Recovery and Reinvestment Act") will not do anything to materially help the housing market. If any modicum of stimulus is actually achieved it will not occur for some time. The following is a link to a report of how the ARARA will help each state...it is a very big file:http://www.isysholdings.com/mbsratewatch/ARRAStateByState.pdf

Secondly, the Obama housing plan is still not for real yet....when it has a fancy name like the "American Recovery and Reinvestment Act" then you know it is official. Maybe they could call it the "Rewarding Americans for Screwing their Mortgage Servicers Act". Reuters has been the principal source quoted by the major media outlets for the limited details that we have.

Based upon the very limited information that we have it appears to be a friendly version of the cram down (see the Cram Down Special Report in our Resources section). Certain borrowers that meet a supposedly strict test for debt ratios will be able to get a new appraisal to prove their house is worth less and then obtain help from the government in the form of a principal reduction and or a reduced monthly payment with the government covering the difference between the actual contractual payment and the reduced monthly payment. Both of these options would be paid for by the tax payers and the creation of even more deficit spending that can only be filled with the additional sale of massive amounts of Treasury bills which in turn compete against MBSs for foreign investment.

Mortgage holders would be encouraged to participate by a combination of incentives and "persuasion" by our government.

We are also aware that foreclosure moratoriums have been quietly negotiated between the government and the major mortgage holders such as Wells Fargo. While this might make sense as a solution, servicers and mortgage-backed-security holders are not a fan of this as it alters their investments.

It is very difficult to gauge the affects of these policies on mortgage-backed-securities and on rates. Traders are very confused and concerned due to the huge lack of details. This is hurting MBS prices and your rates at this point. For an administration that is championing transparency, we certainly have a lack of it. The market is forced to trade conservatively until details emerge.

How many new MBSs will be purchased? We do not know. What are the details on the housing bill? We do not know. Will anyone actually qualify for it?

These are certainly unusual circumstances. MBSs are not trading on market fundamentals which is a cause for concern.

Bryan S. McNee
Sr. Bond Analyst
MBSRateWatch.com

WHAT IS MY HOME WORTH?

Fri, 06 Feb 2009 16:30:23 -0600

If you have applied for a mortgage recently, you have probably found that your appraised value is lower than you hoped it would be. If you have applied for a mortage refinance you may have found that the appraised value is lower than it needed to be for you to refinance. If you are an appraiser, you may have found that it did not matter what level of documentation you provided, the underwriter wanted more before they would accept your appraised value. And, if you are a mortage broker you are probably wondering why the hell you are still fighting this system.

Here is an example of what we, as mortgage brokers are going through.

Lower capacity - Everyone knows that appraisers have left the industry due to the decline in business. You would expect that those who survived, would be a higher quality of appraiser with a track record of professionalism and excellent quality of work. That plus $4.00 might get you a Latte!

I am finding that appraisals resulting in combined loan to values of as low as 50% & 60% are not acceptable as submitted. Additional comparables meeting more stringent guidelines or that make the underwritere "feel good" are being requested which in turn takes away appraisal resources that could be doing other appraisals and takes away underwriter resources from looking at more risky loan applications. It would seem that automation and technology have come far enough to allow an underwriter to request an AVM appraisal and if that value was consistent with the initial appraisal, then further documentation would no longer be needed. If the AVM appraisal came in 10%, 20%, or 30% lower than the appraisal, then ask the appraiser to reconcile the differences - if they could not, then use then offer the AVM value for the refinance. Instead, every appraisal submitted results in additional questions that extend the time line and restrict the capacity to complete additional refinances. Stimulus for my ulcer!

Paraphrasing Robert DiNiro - I would like to ask the underwriting companies to look at this problem and "Analyse This" to see if they can come up with a way to stop wasting time and money, our economy can not wait for another buerocratic system to fix itself. Or if that is not possible, explain why the underwriters that used to be able to use compensating factors no longer are able to consider 800 FICO, 12 months reserves, 60% CLTV as good enough risks to take it easier on an appraisal.

4% Mortgage Rates - Don't Hold Your Breath!

Fri, 06 Feb 2009 15:51:09 -0600

For those of you that hear that mortgage rates will be dropping again and turned down a 5.5% rate, please read this - Special Report -

02/06/2009

The number one topic of conversation among borrowers and loan officers right now is: We hear that the government is working on a program that will make rates 4%. Is this true and should I wait to lock in my loan?

The constant barrage of media coverage on this topic has only made it even more confusing for consumers.

So what is going on?

We have called our inside sources and our Washington D.C. contacts and have confirmed the following:

•1) There are no provisions in the proposed stimulus bill that addresses mortgage rates

•2) There is no official plan that has been put forth by the Obama administration or by any other government agency that addresses mortgage rates.

Talks have been started with the Federal Reserve and the Treasury to discuss the possibility of potential further purchases of GSE mortgage backed securities in an effort to artificially stimulate demand for the MBSs which may temporarily help rates.

Some talks...and I repeat the word SOME...involve purchasing large blocks of the 30 year fixed 4.00% coupon. This of course does not mean that 30 year fixed rates will be 4.00%. Currently 4.5% Coupons are being purchased and 30 year fixed rates are closer to 5.25%.

Also, the current plan that we are in the middle of ($500 Billion MBS purchases) hasn't been executed in a way that would maximize the affect and cause any meaningful reduction in rates.

The bottom line is there is no official (or unofficial) plan to make rates 4% at this point in time. And there is no silver bullet that can be used to make rates instantly lower.

Also any further action to purchase additional mortgage backed securities (if it ever occurs) may be negated by other potential legislation such as a Foreclosure Moratorium or a Federal Bankruptcy Cram Down.

You may print this out and give to your consumers.

Bryan S. McNee
Sr. Bond Analyst
MBSRateWatch.com
2401 Regency Road
Suite 302A
Lexington, KY 40503
800-264-7135

Condo mortgages become more expensive

Sat, 31 Jan 2009 10:38:49 -0600

If you are buying or refinancing a condo with less than 25% equity, you may have already felt the pain. Lenders have created another way of covering their backs. Condo mortgages carry at least a 3/4% penalty in closing costs. Borrowing $200,000 and you will pay an extra $1500.

If you know this going into the buying negotiations, make sure you negotiate that the seller will have to pay this amount toward your closing costs. It should not matter if you are putting down over 25% or under 25%, this is a lenders estimate of the additional risk that a condo carries. If you don't pay it now, you may have to pay it when you sell.

If you are refinancing, factor this costs into the breakeven analysis you use to decide if a refinance is worth it.

Have a nice day!

HELP HOMEOWNERS NOW - Where is the WIND OF CHANGE?

Sat, 31 Jan 2009 10:28:28 -0600

I have read stories where tornadoes have hurled pieces of wood so fast that they have penetrated concrete walls. Too bad the wind coming out of Washington is focused on PORK and RHETORIC and can not focus their energies on making mortgage lending more helpful.

There are thousands of homeowners that are unable to take advantage of lower mortgage rates. Not because they are unemployed. Not because they are not managing their credit. Not because they do not have savings. It is because the lenders are looking at the value of their current home and saying that they do not have enough equity for a lower rate refinance.

Talk about short sighted. We have borrowers that have seen their equity drop from 20% - 35% or more to under 20%. They believe that this is a short term loss and plan to stay in their homes. But because of the current market, they are faced with coming up with funds to buy down their mortgage, paying for privat mortgage insurance or keeping the higher interest rate. Instead of increasing family cash flows, the lenders are trying to improve their collateral risk while taking Billions to cover their mistakes.

With all the money flowing out of Washington and all the talk about helping homeowners, I propose the following:

Let the government allocate some of the Billions to create a fund to protect lenders due to future losses resulting from collateral risk.

if a borrower meets CREDIT and INCOME requirements, then lenders should be able to allow a rate/term refinance. This would improve the family's cash flow and make it more likely that the loan would not go into default and take away some of the paid of knowing that their equity has dropped. If needed, the government can allocate some of the Billions to a default fund that would offset losses to this pool of loans. The need for the fund would decrease over time as loan balances are paid down or as homes are sold.

What am I missing? How many stories are there out there of homeowners that have faced this problem?

How many refinances have been taken by loan officers that died because of low appraisals?

Where is the CHANGE for the BETTER?

DISCLOSURE TO THE BLIND, MORTGAGE FOR THE BLIND

Tue, 27 Jan 2009 16:03:27 -0600

Any suggestions? Any "watch out for this"?

I am meeting with someone that is legally blind and wants to apply for a mortgage. The borrower does not read Braile so this is not an option. The borrower has the income and the assets to close. The spouse can see and claims to have a financial power of attorney.

Questions:

1) Should I have a notary present to witness signatures after I read the forms to the borrower?

2) Does the financial power of attorney need to specify "for the purpose of entering into a financial obligation?"

The borrower has asked many of the right questions but I want to make sure that I have covered my bases if there ever is a question that the purchase and the resulting mortgage were not in the borrower's best interest or that he was not fully aware of the terms of the mortgage.

Did I forget to mention that the borrower is married to a much younger spouse for less than one year and that the borrower has significant net worth?

Economic solution - eliminate the problem

Thu, 04 Dec 2008 13:18:50 -0600

As we hear the latest layoff news, has anyone asked why we still have not seen any layoffsnotices coming from Congress? With the internet efficiencies, I would think tht cutting back our representation to one Senator per state and half the number of Congressmen would cut significant costs from our budget.
Think of the number of staff that would cut and the number of local offices that would no longer be needed. After all, does anyone believe that the survivors would not do just as good a job at twice the nmber are doing today.

Now we should not let the individual states off the hook either. Cut the bodies that were incharge and don't replace them.

I know, their jobs are critical. __ _ _ _ _ _ _ _! Fill in the blanks and have a great day!