I was just getting my nightly dose of online news when I saw the following on MSN.com's homepage:

Offer: $425k Loan for $1,417/mo. Refi and lower payments by $400/mo. NO SSN REQUIRED!

Now, what really got me was the claim that you can refi and lower payments without providing your social security number...really? Know what happened when I clicked on the link? You guessed it...LendingTree and their QuickMatch program. They advertise that this quick process will allow you to compare up to 5 loan offers from hundreds of lenders nationwide...without providing your social security number!

Now I guess I know why people keep holding onto the idea that lenders don't need a social in order to quote a rate. It never fails to amaze me when people call and want a rate quote/loan proposal but they don't want to tell you their social, credit score, income, assets, liabilities...nothing. They say "I have good credit and make good money. I pay $1,500 a month for my mortgage now - what rate and payment can you offer me?" I guess since the world at large thinks LendingTree is God's gift to the mortgage borrower they must believe everything they see online (or on TV or hear on the radio or...).

I won't even get started on the percentage of borrowers that would qualify for this loan (um, like, none) or the fact that even at a 5.5% rate (yeah, right!) you would be looking at serious negative amortization with this loan (interest only on that scenario is over $1700, but of course they don't mention that!). I find it appalling that such a "respected" institution as LendingTree is still advertising these high-risk loan programs while appreciation is plummeting and lending guidelines are tightening by the hour. Sure, its great for now but what happens when you need to refinance out of that teaser rate and you realize that not only have rates gone up and your home has barely appreciated, but that you haven't paid a dime to lower your principle...or worse, that you've acutally increased your balance? Consumers are always looking for a way to get more house for less money or a lower payment on their existing mortgage, and ads like these are sooooo misleading and it really gets under my skin! 

Sorry...just had to vent a little about the advertising that I think walks the very fine line of false advertising. I suppose with the proper disclosures and fine print, you can say anything you want, huh?

You've seen those signs, I know you have. And if you are one of the millions of people across the country having trouble making the payments on your home or are already facing foreclosure, these signs can seem like the answer to all of your prayers.

But people in this situation tend to be very vunerable to shady characters that don't care at all about the homeowner...they only care about their own bottom line.

I totally understand the real estate investor's bottom-line mentality. They invest money to make a profit and that's fine. What I have a serious problem with is the tricky language, complicated contracts and unrealistic terms that some of these investors layout for uneducated homeowners that find themselves in a tight spot.

I have seen too many people lose all of the equity in their home and end up with no place to go because they made a deal to "save" their home and credit with one of these foreclosure bailout investors. They sign a contract where the investor will catch them up on payments and put the deed to the house in the investor's name while allowing the homeowner to stay in the house and pay rent to the investor. The endgame is supposed to be that the homeowner pays their rent on time for 12 months and then refinances the home back into their name after they can reflect a year of on-time payments. The investor and the homeowner agree up-front on the amount of money the homeowner will give the investor when they refinance the house. Sounds good, right? It can be...and there are some scrupulous investors out there who know that this is a great way to make money and be able to sleep at night.

But, there are a lot of investors out there that glaze over the fact that one missed payment means immediate eviction for the homeowner. And if the homeowner gets evicted they lose ALL of the equity that may be in their homes...every dime. The investor has the house, has usually made a very small investment to bring the homeowner current on their mortgage and now has a vacant property that they can sell below market value and still turn a tremendous profit.

It breaks my heart to see this happening, especially when many of these homeowners do have other options that could be much better alternatives. If you know someone who is having trouble and is considering calling on one of these "prayer-answering" signs, please talk to them and make sure that they read EVERY SINGLE document carefully, get an attorney if necessary and just watch out for themselves and make sure everything is on the up and up before they sign anything.

Just like during the real estate boom of the last few years when borrowers were taken advantage of left and right by shady lenders who were willing to slam anyone into a loan, regardless of the risks...now many of those same borrowers are being taken advantage of by shady investors who are only interested in taking the house and walking away with as much money as possible...they have no interest in the homeowner or their future. Beware, that's all I'm saying.

I received a call from a new lead today who needs some help with his credit. Actually , scratch that, he just needs credit. He hasn't opened a single new tradeline since he got divorced 7 years ago and the only things on his report are some old, paid collections and some old, paid judgments. So, he has no scores. He can't go FHA due to a late on a child support payment in the last 12 months (also paid and current now).

His first question is "Can you refer me to a credit repair agency?". Seriously? No, but I can tell you what you need to do in order to put yourself in the position to buy a home. Really? Yes, but it will take some work on your part. "OK, no problem". Done.

This man actually thought that it was worth his hard-earned money to pay someone to tell him to dispute the incorrect items on his report (which he has documentation on) with the bureaus and open a few tradelines! Credit repair? No, how about a little education for a future client. I am asked so often about credit repair agencies and whether they are worth it. I'm sure there will be some upset members, but unless someone needs instant score improvement, I don't think it is worth it. I haven't seen a single thing that a credit repair agency does that someone can't do, for free, on their own. Disputes? No sweat, do them online. And I've just seen too many people scammed and taken advantage of to run the risk of that happening to my clients.

Credit repair may have been a big deal before the internet explosion when you didn't have access to your report 24/7 and you had to track down all sorts of contact information for the credit bureaus. Now, you can have your tri-merge report and websites for all 3 bureaus in like 10 minutes!

I have forged some of the strongest bonds with my clients over their credit. Having only been in the industry for a couple of years, many of my clients are not the "cream of the crop" when it comes to credit scores. But I am ready, willing and able to help them clean up their reports so that they can qualify for the loan that they want...and they send me referrals like mad as soon as we close! Because not only did I improve their credit (which everyone loves), but I worked with them day in and day out to make their lives better and that makes all the difference. Would it be less time consuming to give them someone's card and tell them to call me when their score is a 620? Sure. Would they? Who knows. Do they call me back when I raise their scores and give them a great deal on their mortgage? They sure do...and so do their friends and family. Its a win-win and I love win-win.

I had the most awe-inspiring experience with a local Realtor recently...and not awe-inspiring in a good way. I had a buyer, represented by a very close Realtor friend of mine, who put in an offer on a condo for sale by an owner/agent...who just happened to be the mananging broker of his office and a 3rd generation Realtor. My client submitted my pre-approval letter with her offer. My letter was contingent on:

1. No change in her employment prior to closing

2. Clear title to the property

3. An acceptable appraisal on the property

Now, these are pretty standard conditions and should not have been an issue. But I got a call from the listing agent/owner asking me to remove all of the conditions before he would ratify the offer. What???!!! In shock and trying to recover before I called him a lot of unpleasant names, I addressed the appraisal first. Did he have a cash buyer? No. Then how did he expect me to get around the appraisal condition? He didn't care, but he didn't want the loan contingent upon an appraisal. Hmmm? (What I didn't know is that he had left this same message for my Realtor about the contract...wanted the appraisal and title contingencies removed from the offer as well). And what exactly was the problem with the contingency requiring clear title? Nothing specific, he just didn't want it as a condition of the loan. And the employment...was he aware that underwriters for A-paper loans typically do a telephone verification of employment just prior to issuing a clear to close? Yes, but he wanted it off the letter.

Well, what was I to do? Tell him to go get bent? That's what I wanted to do, but I calmly explained to him that these conditions were not negotiable and that, unless he had a cash buyer with no contingencies waiting in the wings, he would be well advised to let these requests go and evaluate the offer carefully (it was a good offer). The offer got ratified, the title and appraisal were fine, my buyer kept her job and we all closed happily.

I just can't understand what would possess an agent to request such things. Was he just trying to test me? Was he just trying to freak us out? What was the point? He's been in this business all his life, as were his dad and grandfather...surely he had to know that what he was asking for was not only ridiculous but impossible, right?

So, I have some friends in Northern Virginia that bought their new construction condo in September 2005. They paid $373K (full appraised value) and got a 2 year, interest-only ARM (I did NOT do their original loan...I was new in the business and they got a "better deal" with the builder's lender). Well, as those of you up in NOVA no doubt know, the condo market up there sucks right now.

My friends need to refinance to get out of their ARM, which will start to adjust later this year. Of course, they haven't done great things w/ their credit since they bought, so I've been working with them since November to repair their credit and get their scores up so they could get a decent fixed rate.

Once I got their scores up, I started talking to my NOVA appraisers...only to find out that none of them see the condo appraising for more than about $320K! My borrowers, of course, think that's crazy..."how could we have lost value..we have the biggest unit in the neighborhood w/ all the upgrades and there's no way our value has gone down!"...you know the drill.

What can I do? I feel terrible for them - they could barely afford the ARM interest-only payment and there is no way they will be able to afford their payment once the ARM starts to adjust. Does anyone have any suggestions on options for them? The only thing I can think is to have them get in touch w/ their current mortgage company and talk to them about the possibility of restructuring their deal before the adjustment starts. I mean, the bank will lose a ton of money if they foreclose on that condo, so you'd think they might be willing to deal, right?

I really hate going up against other, unscrupulous lenders who will quote someone a ridiculous rate just to keep them on the phone. It is so frustrating to be on the other end of this conversation:

Borrower: My score is a 600 and another lender told me they could give me a 5.75% rate.

Me: That is certainly possible, depending on your credit history and the current value of your home.

Borrower: The other lender told me that was my rate, period.

Me: Mr. Borrower, with a 600 credit score and no idea of the details of your credit history or the value of your home, there is no way to pinpoint a concrete rate for you.

Borrower: That's not what the last lender said.

Me: I could tell you that too, but I might not be able to deliver that rate after I know all the facts and I prefer to be honest with you from the beginning.

Blah, blah, blah. Sure, certain credit scores just scream "Quote me a rate! Close my loan!". But middle of the road scores and a borrower with "no idea" of the current value of their home...I just can't bring myself to lie to them or give them the old bait and switch! Sometimes I think I might be too honest for this business, but how do some of these lenders sleep at night knowing that the likelihood of their borrowers getting what they were quoted is slim to none?

I feel really good about something I worked on this week. Really, really good.

A woman called my office last week after getting my number from a past client that she works with. This woman was nearly desperate to refinance because she and her husband were beginning to get behind on their credit card payments. They had recently signed up with a debt-settlement service that said they would be able to help them settle with their creditors for less than the balances due. Unfortunately, the woman and her husband didn't really understand at the time that, not only did they have to be late on their payments before the creditors would discuss settlement, but that the company would not even approach the creditors about settlement until this woman and her husband had a lump sum, in cash, with which to pay the creditors. Now, I don't know about you, but I think if I were behind on my payments, I would have a pretty hard time coming up with a lump sum of cash. Really, if I had a chunk of change laying around, I would probably just go ahead and make my payments on time.

So, they are behind on 4 or 5 of their credit card payments, both of their credit scores are below 550, they have less than $1,000 in the bank, the wife is working 2 jobs and the husband owns his own business. This sounds like a refinance nightmare, right? Not at all. This couple bought their home in the late 90s and have not touched their equity since then. After getting all of their information, I began looking at ways to consolidate all, not some but all, of their current debt (mortgage, car, credit cars, credit union loans, employer loans, the works), save them money on their monthly payments and leave them equity in their home. Piece of cake. The loan program I laid out for them saves them a total of $952 per month, allows them to write just one check for debt each month and pays off and brings current all of their loans and credit cards while leaving them a little over $60,000 in equity in their home! Oh, I almost forgot...they are also getting almost $20,000 in cash at closing to put away for a rainy day.

Their loan-to-value ratio is less than 70%, giving them access to a very competitive FIXED rate despite their low credit scores and allowing them to avoid paying mortgage insurance.

I am so proud of what I was able to offer this couple. They were on the verge of financial ruin, considering bankruptcy, and in a week or so they will be paying $952 less in debt payments each month and they will have nearly $20,000 in their savings account.

You know what the most intriguing part of this story is for me? This couple had talked to a lender about refinancing several months ago and walked away from the table! Know why? The lender failed to explain to them what was happening! I spent about 2 hours with this couple one morning going over all the different aspects of their loan options and helping them to understand how the different options would affect their rate, monthly payments, closing costs and cash at closing. That's all it really took for them to open up about their goals, fears and needs.

Education - that was the big difference. I educate my clients, some lenders just throw numbers at them and expect them to understand and sign.