Getting a CPA to say anything helpful? - 01/31/08 10:21 AM
I am having trouble getting CPA's to say anything helpful OR even vague on self employed borrowers.
Do you have any recommendations?
The standard one that I get asked to provide is:
"The borrower having access to his business account for personal reasons does not have an adverse effect on the day to do operations of his business."
I'm not asking the CPA to state income, etc.  Just confirm that it is standard for them to do this based upon review of the previous years P&L's.
I want to pull my hair out.
… (2 comments)

What Kind of Car Does This Mortgage Broker Drive, he's from Wenatchee, WA? - 01/30/08 09:38 AM

 I say it's a 76 Trans-AM!  What do you think?
 
… (3 comments)

Shop rates and lose! - 01/30/08 09:00 AM
I treat friends and referrals from friends with a lot more grace and tolerance, but for rate-shoppers that I don't know (or like) I have little patience.  I don't know if there has been a more volatile 2-week period in the mortgage rate world except for four 2-week periods in the mid-80's.  And it has been a complete joy to tell rate shoppers that for me to guarantee a rate I need a $400 non-refundable deposit and if they want a float-down option, I need a .25% non-refundable deposit.  
When they say, "No one else is requiring that!"  I encourage them to … (0 comments)

At What Cost another 50 basis point Rate Cut? - 01/29/08 09:51 AM
Keeping the Wall Street boys happy with another 50basis point rate cut is next to a done deal... but at what cost?  It's no secret that I am "hawkish" in terms of sound fiscal policy and natural consequences, so take this for what it's worth...
The cost of more rate cuts:
...further weakened dollar:  mortgage rates will rise significantly due to mortgage backed securities devaluation.
...Imported goods will become more expensive:  China and Asia's economy will suffer, fewer dollars to be spent supporting our bond market (once again, not good for our mortgage rates).
...Inflation:  the genie is almost all the way out of the bottle at … (15 comments)

Washington State Mortgage Lending Legislation 2008 - 01/28/08 08:45 AM
http://www.dfi.wa.gov/taskforce/default.htm
I would encourage you to read the entire 88 pages of the report.  24 recommendations.  23 have already bee put in to pending legislation.  Will they help?  Are they over-reaching?  Will the stop retail bank originator fraud? 
The Mortgage Brokers are without a doubt the whipping boy-scapegoat of the Mortgage Meltdown.  Deserved or not, that is the end result.  When I saw who was on the commission when Gov. Gregoire put it together, I knew that is was a "Kangaroo Court."  No significant mortgage broker representation, and the real culprits were all dressed in white representing the retail banks. 
Wholesale lending will … (0 comments)

Who's On First!...illustration of foundational reason for the mortgage mess - 01/28/08 08:33 AM
If there ever was a chart that illustrated how government regulation and oversight leads to disasters...this is it.  As states pass laws regarding mortgage lending...they have no power to deal with the dozens of entities that also originate residential mortgage loans...beautiful!
… (1 comments)

Getting on an "Ethical High Horse" can lead to a nasty fall! - 01/26/08 08:33 AM
Two separate situations have led me to remember the cost of being a self-appointed apostle of ethics.  Both situations were "grey" and as I watched the would-be apostles hold others to impossible standards, I couldn't help but think..."man, it is a long way to the ground from how high you are holding yourself!"
Jesus articulated the concept very simply, "By the measure you judge, you shall be judged."  The scale you make others step on, you have to step on as well.  That is so true, and as I get older, I realize more and more every day that I need to … (3 comments)

Re-education, every day creating more referrals. - 01/26/08 08:25 AM
Every client of mine hears what is mis-reported in the media. 
"The Fed Cuts Rates by .75%" --doesn't help mortgage rates a bit.
"Lowest Mortgage Rates in 5 years!"--that lasted for about 2 hours Wednesday AM.
More and more, I find myself having to untangle and debunk falsely held views by my clients...and these are folks I know!  I willingly do it, but it creates frustration in my clients' minds because the "truth" is not readily accessible.  The benefit for me is that I now become a repository for "straight talk!"   I have been getting calls about appliances, hybrid vehicles, e-trade, etc. etc.  Seriously, … (0 comments)

What will happen to rates next week??? Jan28th-Feb1st - 01/25/08 12:02 PM
There are so many events and reports next week...the Fed meeting (quarter point drop?), housing reports, jobs reports, inflationary reports, yada yada yada...AND Wall Street hasn't fully figured out the implications of the Fed cut or the Stimulus package. 
What has been true time and time again, is that the market is driven be "sentiment" as well as fact.  And Sentiment is a lot more fickle than fact. 
Wild ride?  You bet.  Should you lock or float...don't be greedy--lock and be thankful you aren't paying 9% on your 30 year fixed like I was when I bought my first house in … (1 comments)

Conforming Loan Caps raised to $700k??? - 01/25/08 08:31 AM
If I tree falls in a forest, does it make any noise??? 
I got 6 calls on this topic yesterday.  This article has some good reality points to it.  It's all good in the hood, at least mentally...just like with the FHA secure plan, it was a "mental" boost even though it didn't really help anyone; same thing if the Conforming Loan limit gets jacked to $700-725k-- the question is...will anyone be able to qualify full doc? 
Whether they are OR aren't able to, it still brings at least SOME people back into the market. Greenberg writes for Marketwatch.  He is always … (10 comments)

Conspiracy? - 01/23/08 09:55 AM
I received a text from a kid (now 35) I used to work with in a Young Life last night.  He has been a Wall Street mucky-muck for the last 15 years, all behind the scenes, borderline non-S.E.C. stuff.  We reconnected about 2 years ago and the information he has been passing me would make your wildest financial conspiracy dreams come true.
The picture that has been painted over the past 2 years is one of eccentricity, ancient world money, non-oversight, secrecy, and flat out crazy stuff.
Are national governments just puppets?  After listening what has been shared with me over the past … (0 comments)

Lost In Translation...will low rates motivate buyers.? - 01/22/08 06:21 PM
20 calls today:  "So, the Fed cut rates, that's good right?  My mortgage rates should drop, right?"  AHHHHHHGGGGG.  Calmly, I explained the disconnect between overnight rates that banks use and mortgage backed securities.  Yes, we have low rates right now.  As I have spoken with some of my pre-quals though, they still are very very hesitant about making a move.  Many of them are waiting for the impossible...their house value to rise and the property they want to buy to come down in price. 
Even though I explain the remote possibility of that scenario occurring...they still wait.  On the sidelines possibly … (0 comments)

Bernanke-Panke-Panic .75% CUT - 01/22/08 09:36 AM
I'm sorry, the overnight rate cut of .75% reminds me of the SNL skit where Steve Martin is playing a medieval "BARBER," that back in that time was not a hair-cutter but a surgeon (blood-letting).  Anyway, some villagers  bring to him a man who has been in an accident and is bleeding profusely.  Barber Steve says, "looks like he needs a good "bleeding" ...the villagers respond, "But, he's already bleeding!"  Steve says, "Hey, who's the Barber here anyway!?!" 
Bernanke's action is like giving a man dying of lung cancer a Pall Mall to help him relax!  I know there is an … (0 comments)

Economic Problem (ref: Black Monday, 2008) Is "dookah" a word? - 01/21/08 03:25 PM
Global economic markets are in a tailspin, and they don't have the credit-structures and safeguards that we do.  Our markets have been closed today, thankfully, allowing the powers-that-be to conspire, rig, pull strings, etc. to prevent a economic event of EPIC proportions:
From Marketwatch.
This is going to be a wild ride.  The economic remedies for our national AND global problem, like chemotherapy, have horrible side effects and sometimes patients "die" of the treatment.  Well, we could very well see some economies "die."  Stagflation nationally, credit freeze globally at the minimum. 
Here is a great picture that illustrates HOW tough it will be to … (0 comments)

The Fed Cut Cunundrum - 01/17/08 12:18 PM
The glee being displayed by many lenders / realtors regarding the impending rate cut might be a little short lived.
As the Fed cuts rates, it is further devaluing the US dollar.  40% of mortgage backed securities are purchased by foriegn investors...why would they by a weak instrument with low yields?  They will take they money elsewhere unless yields are offered that are commensurate with the inflationary risks as well as the risks associated with declining house values.
AT SOME POINT, the demand for MBS's will diminish far enough that yields will have to be raised, which translates into higher rates for mortgages.  … (0 comments)

Homes in Foreclosure / Short-Sales - 01/16/08 10:20 AM
"Short Sales" will be more and more commonplace in the next 2 years and the number of Realtors that are qualified and skilled at negotiating with loss mitigation and REO departments of banks will benefit.  Now more than ever, it is imperative that you work with a Realtor who is a career professional and a lender who is well versed in providing financing for these types of transactions.
There is a great deal of "Fiction" regarding short sales out there right now AND many folks running around claiming to be able to handle these scenarios.  It is like someone who found a … (1 comments)

First Time Home Buyer...a Few Mortgage Basics - 01/16/08 10:12 AM
First Time Homebuyer Mortgage Intro
First time homeowners are often shell shocked as they confront terms like PMI and "piggyback loans" in their quest for home ownership.  That's why having a good understanding of the mortgage industry is a good place to start, that the best way to get the information that is valid for the Puget Sound region is by talking to a licensed Mortgage Consultant like Rich Sweum.  http://www.richsweum.com/  So much of what is available in bookstores and on the internet is either "wrong" OR "not applicable."  Speaking to a real mortgage professional is the most important part of starting the … (0 comments)

Improving Your Credit Score - 01/14/08 12:35 PM
Now, more than ever, your credit score (FICO) can impact your ability to buy a home.   It takes work to protect your score and protect yourself from identity theft.  Check your credit at least twice a year and have it analyzed by a mortgage professional, like me.  New changes are on their way, authorized user accounts are going to be scored differently and this was done be many parents in an effort to help their children establish credit.  Having trade-lines that are your own and have been in existence for more than 24 months is going to be critical for first … (1 comments)

Closing Day Headaches to Avoid - 01/14/08 12:30 PM
Closing Day Headaches to Avoid  
Moving into a new home is exciting!  The closing process, however, can be intimidating, especially for first-time buyers.  If you're unprepared, your closing may get delayed or, in the worst-case scenario, your deal may even fall through.  Here are some common closing-day headaches and tips on how you can avoid them.
You bring insufficient funds to cover closing costs.
Before your closing, you will receive a settlement statement that outlines the final costs associated with your mortgage.  It's important to read this over carefully and compare these costs to those listed in the Good Faith Estimate you initially received … (0 comments)

The Right Time To Buy An Expensive House? - 01/14/08 12:27 PM
Keep in mind that, while these products make it easier to buy a more expensive home, they also carry more risk than a traditional 30-year fixed-rate mortgage.  Always "stress test" your mortgage with a worst-case scenario (falling home prices, rising interest rates) to make sure you can afford the home.  Everyone has a different "queezy factor"---financial risk that makes you get sick.  Most marriages that end in divorce are plagued by financial stress.  Some of the happiest people I know are living in modest, well kept homes...conversely, some of the most miserable people I know are living in extravagant homes why … (0 comments)

How Changing Jobs Could Affect Loan Qualification (part 3) - 01/09/08 12:32 PM
Part 3:  How changing jobs could affect loan qualification.
Overtime
Since all employers award overtime hours differently, your overtime income cannot be determined if you change jobs.  If  you stay on your present job, your lender will give you credit for overtime income.  They will determine your overtime earnings over the last two years, then calculate a monthly average.
Self Employment
If you are considering a change to self employment before buying a new home, don't do it!  Buy the home first.
Lenders like to see a two-year track record of self employment income when approving a loan.  Plus, self employed individuals tend to include a … (0 comments)

How Changing Jobs Could Affect Loan Qualification (part 2) - 01/09/08 12:30 PM
 
Part 2--How changing Jobs Could Affect Loan Qualification
Bonuses
If a substantial portion of your income on the new job will come from bonuses, you may want to consider delaying an employment change.  Mortgage lenders will rarely consider future bonuses as income unless you have been on the same job for two years and have a track record of receiving those bonuses.  Then they will average your bonuses over the last two years in calculating your income.  Changing employers means that you do not have the two year track record necessary to count bonuses as income.
Part-time Employees
If you earn an hourly income but … (0 comments)

How Changing Jobs Could Affect Loan Qualification (part 1) - 01/09/08 12:15 PM
For most people, changing employers will not really affect your ability to qualify for a mortgage loan.  For some homebuyers, however, the effects of changing jobs can be disastrous to your loan application.
Salaried Employees
If you are a salaried employee who does not earn additional income from commissions, bonuses, or overtime, switching employers should not create a problem.  Just make sure to remain in the same line of work.  Hopefully, you will be earning a higher salary, which will help you better qualify for a mortgage.
Hourly Employees
If your income is based on hourly wages and you work a straight forty hours a … (0 comments)

A Refi Boom In Any Other Market - 01/08/08 11:05 AM
Our refinance activity has signficantly in the past 45 days, but it should be a lot higher.  What many of us are grappling with is the reality that the equity that was so easy to tap into via appreciating home values has shrunk. 
5.25% Doesn't Matter to Most Homeowners
A few years ago refinance activity was through the roof as rates dropped in to (and below) this neighborhood.  This time?  Refinance applications are falling 11.6%.  The problem is not the low rates?  It's the lack of capacity via income documentation requirements.  It's the lack of equity in homes as people have filled up their HELOCs.  … (1 comments)

Countrywide "Arts & Crafts" Activities: Update: Trading Below $5.15 - 01/08/08 10:35 AM
Countrywide (CFC) draws judges rebuke. Court records show the firm fabricated documents supposedly sent to a homeowner in a bankruptcy case. Countrywide's lawyer called the letters "recreated." The bankruptcy judge overseeing the case disagreed: "These letters are a smoking gun that something is not right in Denmark."   Stock prices of CFC ticked below $7 per share.  The next shoe to drop will be when the rating agencies down grade CFC's bond rating, currently just above "junk" levels.  Many pension funds will have to sell CFC when this occurs and create another opportunity for the share price to go even further towards the … (0 comments)

Snohomish County Home sales, down 40% in December MOM - 01/08/08 10:18 AM
Sales being down 40% in Snohomish County from the previous December is really no big surprise. What is interesting is that Condo prices were up...and there was a significant amount of "conflicting" data in December's report that came out this week.
What is important to keep in mind is that when you have "small amounts of data," statistics are often skewed...1 condo sale that is a six figure unit can throw things off considerably. 
Our month-over-month (MOM) stats will likely be disappointing until July, because the first half of 2007 was strong in comparison to the 2nd half.
… (0 comments)

Dilenquency Rates on Mortgages 2007 - 01/07/08 12:38 PM
Interesting, Subprime loan performance from 2000 to 2003 was just as bad. 
Fannie Mae Mortgage Origination Projections From Their Website:
Mortgage market. The projected decline in home sales and prices will likely lead to a 14-percent decline in purchase originations in 2007 (from the estimated level of activity in 2006) and an additional 20-percent drop in 2008 (to $1.2 and $1.0 trillion, respectively). Refinance originations are projected to slip modestly to $1.2 trillion in 2007 (compared with $1.3 trillion in 2006) and increase to $1.4 trillion in 2008 as many borrowers (especially those with upwardly-adjusting ARMs) take advantage of the recent decline … (0 comments)

Neg Am...WE ARE FUBAR! - 01/07/08 12:00 AM

It is no secret where I stand on Neg Am, Pay Option Loans.  I have been an outspoken critic of these debt bombs for a long time.  If people would have had to qualify for these loans at the fully amortized, fully indexed payments on 115% of the original balances and 2nd mortgages behind them prohibited...I would have been less of a vocal opponent. 
I remember hearing the phrase, "easy 3"...an origination fee of 1%, 1% by slapping a pre-pay on it, and 1% from giving the client a higher margin.  Suspect were many of the purveyors of these loans under the … (10 comments)

Relocating to the Northwest...don't make these mistakes! - 01/05/08 10:22 PM
Top 10 Mistakes
Moving is difficult enough when things go smoothly. Moving can be a nightmare when things go wrong. Fortunately, you have the opportunity to learn from others' mistakes, and avoid repeating them. Here are a few tips to make your moving experience a little easier. Canceling your existing lease too soon.In a perfect world, all real estate transactions close on time. In the world we live in, transactions are often delayed a week or more. Suppose you asked your landlord to terminate your lease the day your purchase transaction was scheduled to close. A day or two before your scheduled closing date, you discover … (0 comments)

Seahawks are coming Larry Bettag...watch out! - 01/05/08 10:18 PM
The Seahawks showed the steel they possess in their 35 / 14 drubbing of the Redskins.  Next week, the Packers meet their match.
Yes, Hasselbeck soiled the bed the last time we traveled to GB for a playoff game, but he is older, wiser, and has a defense supporting him that will bring Favre to his knees.
My ears are still ringing from the noise at the game today...
...Larry, wanna put a Lincoln on the game?
… (1 comments)

Everett Condo Development "Frenzy" cools... - 01/04/08 10:00 AM
This time last year, (Jan 2007) Everett was abuzz with condo development frenzy...million dollar units of the Colby Tower, sold out reservations on the Everett Wharf Condo project, Rockefeller plaza, etc al.  Ground was supposed to be broken already on many of these projects but there have been some snags.  Developer financing began evaporating last August, in the same way that many condo projects began to fold a year earlier in other parts of the country.  Merrill Lynch's investment into the Everett Waterfront Condo project will not easily be replaced.  I predict it will take 4 years, not 9-12 months to … (0 comments)

The Wave of Governmental Broker Regulation - 01/03/08 10:33 AM
This article from the LA Times grom the Los Angeles Times / Associated press is nothing new but highlights a trend of reform and regulation that in my opinion does not go far enough.  It demonstrates that when an industry fails to adequately self-regulate, the government will.  The test that Washington State came up with for wholesale loan originators that are under brokers was a complete joke.  The ongoing educational requirements (6 hours per year) are also a very low standard.  The most troubling part of this reform is that it doesn't apply to all loan originators.  Retail banks and mortgage … (2 comments)

4506T...the future of all stated income loan audits - 01/02/08 12:30 PM
I spoke with a secondary marketing big-wig of a not-so-small national lender prior to Christmas.  As part of their commitment to their primary buyers of all their mortgage backed securities, they are committed to auditing 25% of all their stated income loans prior to sale.  The key component of this audit is utilizing the 4506 authorization form that allows the lender to pull the filled tax return information from the IRS.  If the information on the 1003 (loan application) shows a variance, the loan will not be included in the bundle and the correspondent lender will be forced to buy back the … (0 comments)

Predictions and Hopes for Snohomish County Real Estate 2008 - 01/02/08 12:20 AM
Here are my predictions and corresponding hopes for 2008 relating to Snohomish County Real Estate
1) Sellers will continue to "hold firm" to 2006 price expectations and refuse to price their homes appropriately for 2007.
***Hope:  That professional realtors will be able to convince builders and home owners that 2006 prices won't get their homes sold and they will list their homes at appropriate prices.
2) Builders will continue to build as fast as their financing will allow them and will not be able to price their homes at value because they paid too much for lots in 2005 and 2006.
***Hope:  That builders will … (2 comments)

 
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Richard Sweum

Everett, WA

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Sterling Bank

Address: 2917 Pacific Ave., Everett, WA, 98201

Office Phone: (425) 212-1865

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