Musings and Thoughts from Western Colorado

Should I refinance my mortgage?

Joe Adams (Major Mortgage USA/Branch Manager) — Thu, 17 Sep 2009 22:24:39 -0500

I get this question to many times a day, but the honest answer isn't so easy. A lot of Realtors and others will tell you if you can save 1% off our rate then it is a "no brainer". I will respectfully disagree.

We need to take a hard look at other factors.

How long are you planning to stay in your home?

What type of loan do you have now?

Are you paying MI or PMI?

What is your loan to value?

So let us play 20 answers or so (you get the idea, plus this make you leave comments)

•1) If you say to me that you plan to sell as soon as the market recovers------ Do not refinance

•2) If you say to me that you see 5 to 10 years in this home, then I will say to you that a 3 to 5 year pay back is acceptable.

•3) If you have a subsidize loan, STOP read your prepayment clause. Unless you have had the loan for 10 years you will probably pay through the nose.

•4) If you are at 6% or so and have no MI or PMI STOP. Most of the country is a declining market. So talk to a few appraisers and get their honest opinions.

•5) If you have MI or PMI and your credit score is say under a 680. Stop your payment will go up even if your rate goes down

•6) If you have a FHA loan or a USDA Rural Development loan, ask about a streamline refinance. This might save you if you have had credit issues since the purchase but have been able to keep the house payments current.

•7) Use basic budgeting skills and also look at amortization charts. Determine what is best for you and your family.

•8) Can you use the "savings" to retire higher interest rate debt? Saving $100 a month to pay off a 20% credit card might help you better in your long term financial future.

•9) Are you planning to place the "savings" into your retirement plan? This might be an acceptable plan, depending on how long you plan to stay in the home.

•10) You get the idea. There is no "rule" for refinancing.

AS LONG AS YOU ARE NOT USING YOUR HOME AS AN ATM.

Want to sell more?

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 26 May 2009 14:02:01 -0500

As some of you may know, I just listed my home for sale. I know, there is too much inventory and all the reasons not to list right now since I am not "desperate" to sell. Truth is I don't care if I sell or not right now, but it would make my world a little easier to live in if it would sell before next winter. But, as I was going through the home with my listing agent it struck me that virtually every realtor that will show this home does not know how to sell it.

A few will "pre view" the home, but even then they will not spend the time to get to know the product. What are some of the features in the home? What might be unique to this home that the others they are looking at don't have?

Things like rope lighting in the "toe kicks" of the custom built cabinets. Pull out pot and pan drawers, we have 2 of them in our kitchen. The lighting under the over head cabinets along with power strips. It is the small things like this that help a home stand out from the rest of the competition and it is the good "professional" sales person that will take the time to know this home and the little things that it offers.

I encourage all of you to stop and slow down when you are "pre viewing" or showing a home to potential buyers. Allow the buyer to linger and touch and feel the home. If the listing agent has done their job you should have a list of the extra features. Point them out to the buyer. The energy efficient window tinting that is on the large 8 foot windows over looking the 18th fairway. The pre planning for the out door kitchen, with the gas and water lines plumbed to that spot.

Sales people will tell you all about "FAB" selling. That is Feature and Benefit selling. Find 3 to 5 things in every house that you show to point out. Make a "showing pacakge" that has the listings that you are showing them and a list of the features that you point out and some extra items that you don't point out along with places for them to write notes about what they like and be honest disliked about each and every property.

Granted, not every home has"custom" features; but there are things in every home to point out. Maybe it is the way the natural sunlight comes in that kitchen window that would really show off the buyers stain glass decorations, or maybe you heard the buyers speaking about something they wanted in a potential home. Maybe, it is the route to school that the kids won't have to cross a busy street. The point is use your ears and your mind and you will find 3 to 5 things in every home

Do the small things to earn more sales.

An open letter to Realtors

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 26 May 2009 13:20:48 -0500

On Friday, as you know, my home went into the MLS and I know you saw the listing. But did you really look at it? After all, approximately 45 minutes after it us uploaded into the system you started making comments that it is 20% to high!

So, Mr. Realtor did you really look at the listing? I know that you have never been in my home so I am curious as to what makes you say that it is so over priced? Now, I understand that you just "reduced" your listing just across the way by over 20%, but that is what you do when you are about to lose the listing to foreclosure.

Mr. Realtor, I thought I would take the time and tell you a few things about my home, since you have not been in it and I just sent a notice to your managing broker that you will not be allowed to show it. My home was built by the same, yes the SAME builder that built the one you are so desperate to sell. Wait, it gets better. It is actually almost the same floor plan, since I took that plan and "tweaked" it to flow and work better for me. Sure, my home is smaller by about 700 square feet, but it is a single level and since you missed the latest news flash; single level homes are more attractive to an aging population. But back to the home itself. My home has every feature your listing has and a few more. Of course you might have known that had you really looked at the listing.

Finally Mr. Realtor, this is a home that you bragged about having a cash buyer for at more than my asking price only 8 months ago. So, I wonder if it was worth almost 10% more then and now you are saying I am 20% to high; I wonder what you tell your clients?

Really Mr. Realtor, the lack of professionalism that you display is what bothers me the most. Is it really surprising that the public thinks so little of our professions that we rate below USED CAR SALESMEN? Maybe when you start saying the things you say, you should stop and think. After all, you do represent more than just yourself when you make bold statements in public like you made friday afternoon.

The real question for today's fence sitter in this market

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 31 Mar 2009 20:34:48 -0500

Today as I visited with Realtors I was struck my the universal tone of what they tell me the consumer is saying

"How low are rates going to go?"

and

"We are waiting for the market to BOTTOM"

So, my natural question is "how will you know when the market has hit the bottom?" Will the Talking Heads knock on your door and sing to you? Will the news media announce it? Will Obama and his friends deliver your bailout? Will it knock you over as you are peering down and it is coming back at you?

Look, the real answer to all of these things is really simple. Can you the consumer afford to buy right now? Ask yourself this question, what are you paying in rent and what would your house payment be? We have all heard about how the credit market is tight and blah, blah and more blah. But, stop and think! With FHA and USDA loans and the 8 grand tax credit for first time home buyers (those that have not owned a home in 3 years) can you really afford to wait for the so called bottom?

Yes, you need a 620 score for the best rate (FHA is now 620 and it is the banks call not FHA and USDA is still 580 BUT you get tagged hard for under a 620). But at that score and with little to nothing down you are still at 5% or so.

A $150,000 loan at 5% is $805 a month!!!

What are you paying in rent?????

I understand that the world is a terrifying place right now. Will you get your 40 at work? Hell, will your company even be in business in a year? I so do get that, BUT you still have to have a place to live and you will be paying rent and with the affordability index at 176 vs. 106 in 2006 can you rent cheaper that you can own?

That my friends is the real question

Can you rent cheaper than you can own?

Not, when or where the bottom arrives.

FICO 08, an update on Credit Scores

Joe Adams (Major Mortgage USA/Branch Manager) — Thu, 19 Mar 2009 08:33:45 -0500

Just when you thought you had the credit scoring system all figured out along comes FICO 08. Now we all know with all the changes in the lending world that credit socres are so overly important and we are all looking for ways to help our clients maximize their scores and actually FICO 08 just might help some.

Transunion started using it end of January and Equifax is planning a fall launch and Experian, well it is anyones guess when they might roll it out. (Experian and FICO are not very friendly these days)

Some of the changes are

Collections that start under $100 will not have an impact on your score. These are 3rd party collection accounts. You get no love for paying down that $500 collection to $75.
Maxed out credit cards will hurt MORE
An approximate 15% shift in points towards credit use. This will help your score if you care little debt on your credit cards and hurt you if you are maxed out
A single 30 day late will not hurt as bad or one rough spot BUT a pattern of 30 day lates will hurt more
Authorized User accounts will still be scored, BUT there is going to be some sort of "reality test" that FICO isn't sharing with us. The guess is if the consumer has a 2 year credit history and there is a 20 year old authorized user account on that consumers credit they wont be receiving the "points" for that account. In other words does that account make any sense in the consumers credit profile.

How to sell that home with the UGLY Kitchen

Joe Adams (Major Mortgage USA/Branch Manager) — Mon, 02 Mar 2009 08:45:15 -0600

You know, that listing of yours that is really not so bad but is so outdated or the kitchen or any part just kills all maybe might have some interest.

If some one could just see all that potential you will have a happy seller and we know the seller doesn't have the money to fix it up or they "don't want to make a decision on what the buyer might want"

So what is a smart Realtor to do?

Call your local professional mortgage professional and ask if they can do a Streamline 203K. Then get a few bids from contractors detailing the work and then add in a nice artist rendering of what it would look like.

WHAT? How does this work?

The 203K Streamline will allow for up to $35,000 of repairs or updates if you will. The home really should be "livable" after all it is the intention of this program that the new homeowner is able to live there and not have to pay rent and update or fix the place.

The home is appraised as the work is already completed
The loan is for the purchase price plus the improvements less the 3.5% down payment
At closing the seller gets their money and the new owner has the improvement money left in escrow and as the work is completed brings in the bill and it gets paid.
All work should be able to be completed in a timely manner (90 days)

Ok so it isn't as easy as having the perfect listing BUT with the amount of homes for sale some good some bad and some just ugly, being able to give your seller and your listing just a little something to make them stand out from the crowd is all you are really after

How about a business fix instead of a Political one?

Joe Adams (Major Mortgage USA/Branch Manager) — Mon, 23 Feb 2009 09:16:22 -0600

Are you much like me and all you hear is political talk on how to do this and how to do that? Has any elected public offical actually put forth a "plan" that actually has details? What about the talk about "temporary nationalization" of the banks?

How about something that doesn't include lower asset values? How about a plan that just might actually stop or at least greatly slow the foreclosure inventory coming on to the market that is keeping the inventory well over demand that is actually the issue here. Supply is grossly over what the demand is at this point. This is after all an economic problem that needs a market answer not a political one.

How about we bring back an old friend, the step rate program otherwise known as the graduated payment loan?

Here is how we do this

No Appraisals. Sorry we don't care what the home might be worth today. I don't care if you are "underwater". Heck you are "underwater" when you drive that brand new Lexus or other car off the lot and you keep making your payments so keep making your payments on your home. If you can afford them then you are alright if not you fall into the next step.
For all those in foreclosure (and no we will not try and pick who gets help and who doesn't, we just do not have time and YES this makes me angry but) Your loan will be rewritten. All that you owe, current balance PLUS all late payments and fees will be what your new loan will become

Example your balance is $200,000 and you have 25,000 in late payments and fees. Your new loan is $225,000.

3. For the next 24 months your interest rate will be 4%, then it will go to 5.25% for 18 months after that and then settle at 6.25% for the balance of the loan. If the market has a lower rate at that time and your home has increased in value to where you could get a lower rate, fine then refinance it at that time.

4. You will get a letter from your lender with your new loan terms via certifed mail. You have 21 days to reply to this offer if you do not then we will resume forclosure proceedings.

WHAT DOES THIS PLAN DO?

No mortgage brokers or anyone will make any money in this plan on these loans. But we put a stop for the time being on the amount of inventory entering the market and we give EVERYONE a chance to start over. Think of this as a big "Do Over". No bank takes a "loss" or write down and with the inventory under somewhat control we all wait for values to rise. (True FTHB's will be allowed to use the step program to enter into the market BUT they will take a FTHB class). We do not have time to decide and debate who is worthy of help and who isn't, we need something to stem the tide of the supply increasing to a point that we can no longer absorb it into the market.

For those "underwater" the market will increase your values again you just have to wait. Juswt like that fancy car you are driving. Values will rise if we get the inventory under control, you just might have to stay in that home for 5 years or more and honestly how bad is that?

Mortgage "Plan" all smoke and mirrors

Joe Adams (Major Mortgage USA/Branch Manager) — Thu, 19 Feb 2009 08:07:37 -0600

I Listen yesterday to Mr. Obama's little speech laying our his "plan" for the housing mess and kept

wondering were the little old lady from the Wendy's ads in the 80's "wheres the beef"

After all, HOW are "WE" going to do this? A little while back when the "sub prime"market was imploding we received this wonderful program called "FHA Secure". This program was to help save homeowners just when the mess was starting with the ARMS adjusting all over the place and house payments going up hundreds of dollars in some places. So what happened? The banks didn't and wouldn't make the loans.

One case in point is a client of mine that got hurt on the job and lost 75% of his income for 4 months. Instead of missing a mortgage payment they lived on the credit cards and and ran their debt up. So, now drowning in debt and back to work they are struggling to keep up and yes are missing so payments on the credit cards. Nothing major a 30 day here and 30 day there. With the debt loan maxed to the limit the credit scores are low and now we have missed payments so we dip below 500. BUT the FHA Secure program was designed for these people. They are the "Poster Kids" of FHA Secure. But to keep this post short, lets just say they lost the house because the banks wouldn't, couldn't make the loan.

So, fast forward to now.

We have the government making this wonderful speech and I really loved the line that he want to stay and hang out yesterday but had to get back to work.

And we have the banks tightening the guidelines. Now, we know most of this "plan" will probably fall to FHA insured loans. Why? Because of the mortgage insurance that will be charged on higher loan to value loans. Look, if you bought right with 20% down and are not struggling with your payment and your homes value has dropped you are not a candidate to refinance. Why pay mortgage insurance?

So back to the changes. 580 scores are now 620. So, if you are struggling and have maxed out your debt and maybe missed a payment you will be under 620. Don't believe it, have your credit pulled. Yesterday, got an email from our secondary department that we now longer have any investors that will purchase a loan from us that as a single 30 day late int he last 12 months. That right there just got every one of these loans denied.

So, President Obama tell me this, just how are we going to do this?

Are you sir going to be the underwriter and the bank that makes these loans?

"I knew you would call"

Joe Adams (Major Mortgage USA/Branch Manager) — Thu, 15 Jan 2009 20:16:44 -0600

Yes, that is the response I just received from a Realtor at almost 7 pm local time. This Realtor called me at 4 something when I had a client in my office and as I was walking out the door at 5 for a meeting I was given the message.

Now the question is why that response?

and

Do you get the same?

As we reach the mid way point of the first month of 09Now, is the time to review your business practice and your

CUSTOMER SERVICE BUSINESS MODEL.

Can your clients count on you? In today's world how do you service your client and allow for family time and all the other stressors in our world.

Look I know this is not easy, BUT then again it is. Honestly it is. I will not tell you what time management "guru" or other "self help stud or studette" to look to for help. The honest and easy way is to set limits and to let your clients know your limits. They will respect you and your professionalism if you do.

I wonder (because this profession amazes me) are you taking advantage of the tools that are out there to help you be profitable?

Do you have a contract for you and your clients on what you will do?

Examples:

Do you text?
Is your cell phone a tool you use to say send a picture or email? Can you price out a loan or do a MLS search on your phone?
Do you have limits on when you are available to clients? and do they know it? (hence my title I am available and will return all communication between 7am and 8 pm: email, text or phone and my clients know it)
Do you block out time for you during the day?
Do you schedule "FREE TIME"
Are you using "auto responders" on email? If so stop, this tells me you don't care and are out of touch. I will move to the next person.
Same for "scheduled time" to return calls and messages. I have an associate that every time I send him an email or call him I get " I will return messages between X and Y hours". Now I understand that he got this from a "time management guru" but it screams "I DON"T CARE".

Bottom line

Professionalism

and

Customer Service

Simple my friends. Take care of the basics and the basics will take care of you. Now per my contract with myself and my family. The business day is done. Enjoy your evening and we will engage in debate tomorrow.

Are we really going to get sub 5% mortgages????????

Joe Adams (Major Mortgage USA/Branch Manager) — Thu, 04 Dec 2008 11:25:28 -0600

There are many stories out there this week that we will be at 4.5% soon..... according to an article in the WSJ yesterday. The article goes on about how this will be for "new home loans". Will it happen? No one is really sure and I bet you are getting that question from your buyers...... 5% to 4.5% on a 30 year will equal 30 bucks a month..... but I want to share with you what is actually happening in the market TODAY.....

#1) I have a client looking to pull cash out to consolidate some bills on a manufactured home. They are at 6.375 on a loan I did for them a year ago..... today with their score high 500's their rate will be 7.5%...... not so good

#2) Another refi with approximately 620 scores..... rate on the loan I did almost 1.5 years ago 6.375 today.... 6.875% if the scores go over 680 we can get them at 6% Moral of the story.....

YES rates are low and anyone can quote you and your buyers ANYTHING, but be careful..... now more than ever it is important to know and understand what your mortgage banker is quoting to you and your clients. Sure I can quote you 4.875% BUT did I find out what your credit score is? Did I find ouut what type of home you are living in or looking at? DID I ASK YOU ANY THING ABOUT YOUR STATUS????

A professional will find that out so you have no suprises in the future.

The new virtual me---- aint he cute (LMAO)

Joe Adams (Major Mortgage USA/Branch Manager) — Mon, 20 Oct 2008 15:52:04 -0500

Greetings and welcome to my new virtual me!!!! Please say HI to MoJoe and yes he is my new logo. Why a new logo???? Well in these times as tough as the competation is I thought something a little different to help set me apart. So, since I am an avid golfer and scuba diver and I have lenders with MONEY to lend and well we all need some positive MoJoe..... therefore WELCOME MoJoe. Bought the domain and the email addresses and the web page will be up and running by the end of the week. We can all use some good MoJoe.

Where did you prospect today?

Joe Adams (Major Mortgage USA/Branch Manager) — Wed, 15 Oct 2008 17:14:01 -0500

Well? Where? or did you sit on your arse all day waiting for the phone to ring? Yesterday I recieved a call from a gentleman 5 hours away that has read my blog here and had some questions about manufactured homes and yes I can do the loans for him..... But what did I do today?

Let me tell you, I need a local source for some rehab/construction loans; so I bounce on in to one of the local credit unions and visited with the real estate specialist there and walked out with 3 referrals. Turns out this local credit union is not set up on USDA Rural and that led to a question about manufactured homes. Which I can do FHA and Conventional, but she can only do on a 5 year balloon and only double wides.

What began as my looking for a new outlet for construction loans, bridge loans and other short term loans to help my clients might turn out to be a mutually beneficial relationship.

I am troubled (an open letter to professionals)

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 14 Oct 2008 19:58:33 -0500

The state of our profession troubles me. I have stewed on this for many, sleepless nights; but I am troubled by our lack of knowledge,caring and compassion. If you add on top of these things the so far out of touch most in this business are; well I am deeply troubled.

Lets start with the out of touch professional. Sort of like a pirate that doesn't understand that the world has changed in the last 10 to 30 years. I received (actually was cc'ed) on an email yesterday that was a forward of a NY Times article from 1999 about the loosening of credit and the Clinton administration's desire to advance home ownership. I asked this person (with 30 years of experience) if they had read what they sent on to the management of the company. I was told yes. I asked do you understand that this is OLD news and even if you didn't read it 8 years ago you should have heard about this at least in the last oh say 2 weeks or so......... I was called, well never mind. The point is how can you claim to be a professional, if you are out of touch and not up to date on what is happening around you.

How about being knowledgeable about your market and product offerings? There are loans available to purchase homes!!!! Mortgage Professionals should make it their duty to help Realtors understand the programs more than enough to speak to the client. After all the Realtor is in many cases the first contact with the home buyer and the home buyer looks to the Realtor to guide them and help them navigate this emotionally charged time. Remember this, one of the 3 most stressful things in life is PURCHASING A HOME. If I as a lender do not help my Realtors understand the loan programs, then how can my Realtors help their buyers and sellers? Also, to the Realtor that may actually read this.... seek out a mortgage pro, you will be surprised that yes I would love to tour homes with you some day when you are previewing homes..... we just might come up with a plan to market it that might help us both!!!!

Seek out a mentor or a sounding board, not just here in the rain;but someone you can see and have coffee with and share stories. Listen to this person's words and advice. Do not just blow them off or they will fire you as an associate.

Seek other ways to grow your business. I have received many calls from across this land from my blog. I have referred a few to other professionals, some I have helped and some I can not;but they found me from this blog and the ones that got referred where from professionals I came to know and respect here.

Seek out different ways to do business. Ways that make you happy and fulfill you. Seek out someone like Jennifer Allan. Learn to enjoy and embrace what we do for a living, besides no one said you can not have fun and make a paycheck.

Caring and compassion...... Well, look times are crap everywhere and we need to keep our negative thoughts to ourselves. We need to be understanding that people are scared and unsure of things, but if we are up to date on the news (not the headlines) and can discuss things with clients and we can assure them that; yes there are loans out there to help them reach their dreams and goals,

then we are good professionals.

Why every deal should be old school

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 14 Oct 2008 09:28:23 -0500

Even more so now than ever, we as professionals need to go

"Old School" and by that I mean, we need to know and understand what program when, why and where!

We must be careful as loan professionals and to some extent Realtors to not fall in love with just one program. Right now, there is a ground swell, if you will that USDA Rural is the be all and end all of our problems for the home buying crowd. But, there is ONE RATHER LARGE CATCH in this program, the client MUST NOT BE ABLE TO QUALIFY FOR AN FHA OR CONVENTIONAL LOAN.**

*****EDIT*****

My guideline book uses the terms "at reasonable rates and terms" I will leave that up for your own interpreting

*****EDIT*****

That means that if the client has the money for the 3.5% FHA or the 5% down conventional and the fit the other guidelines, they DO NOT QUALIFY for USDA. Now this is where "Old School" become part of the equation. With the other programs there will be a monthly "mortgage insurance payment" and depending on the credit scores the rate will adjust; meaning that the ratios will adjust and may or may not disqualify the client for the FHA or Conventional loan. We as the professionals better know this and work all options to find out exactly which program will work for the client. Jeff Belonger, is correct in another post of mine when he caution another loan professional that putting a client in a loan that was easy for the loan officer and not the best for the client is part of why we have the issues we have today.

We as a profession, on both sides, need to know our product and when each loan is right and why it is the right one and to not get in such a hurry to "pigeon hole" every client into the "one size fits all" thinking that unfortunately has become all to common in this business. We need to go "old school" and stop and ask the client

"How can I best help you"

I AM A MORTGAGE BANKER/BROKER, PLEASE SAVE YOUR PITY FOR SOMEONE THAT NEEDS IT!

Joe Adams (Major Mortgage USA/Branch Manager) — Wed, 08 Oct 2008 18:08:58 -0500

I will be honest, well because it is a lot easier than anything else. I am sick and tried and just plain fed up with the pity looks on peoples faces when I meet them and the find out what I do for a living.

They look at you with this sad face and say something like..... "and how is that going for you"........ And I can not tell you HOW SHOCKED THEY ARE TO HEAR THAT MY BUSINESS IS UP OVER LAST YEAR!! Here it is October 8 and we still have 2 months left in our company's fiscal year and I have already surpassed last years production and the office has surpassed the total for the office.

The other thing that pisses me off is listening to the talking heads on the news telling John Q. Public that there is no money for mortgages and blah blah blah. Cry me a freaking river You would have thought that someone stole their pacifier! Look, lets make this very simple so those in the national media can understand. There are loans being made. Yeppers, every day. As I wrote here and here there are loans being made. Yes things are not as EASY as they were. I used the term "slutty loose" yesterday, to describe the guidelines and what they were. So lets bring it even more home to you..... just because you can fog a mirror doesn't mean you deserve to get a loan. Look, since when did it become a constitutional right to own a home? But that is close to what we had and you know what, we all made money. Did I make some of those loans...... of course I did, hell I have bills to pay and if the banks are giving away monopoly money to people then yes we did them. And you know what Mr./Mrs. Realtor you loved it just as much as the DOW and the adoring public. That is why there are so many in the business now..... IT WAS TO EASY.

So, please stop the pity and don't be afraid of us. We just might be the profession that has the number 1 costume for Halloween again this year, but business is good!

No BULL SH!* Business is good...... THIS IS NOT A RAH RAH post

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 07 Oct 2008 20:02:20 -0500

I just spent an hour with a Realtor that was crying and moaning the "ain't got no buyer blues" and they are thinking about getting out of the business.......... My response...... GET THE F*&^ OUT!!!! The last thing the public needs is a crying, whining Realtor or Loan Officer!

Look, I am the first to tell you that things are tough. But they are not that tough! There is money for loans. I don't care what the media tells you. We have money to lend!!!! So does every good, capable loan officer on the rain. Don't believe me???? Call any of them. Here try Jason or Eleanor or any one you want.

Granted, things are not slutty loose like they use to be for stated income, but if you can document your income and have actually attempted to pay your bills, then yes you can buy a home!!!!! Down to a 580 credit score, you can own a home!!!! USDA Rural Development, FHA have money to lend..... Look don't comment that both just insure the loan.... without them there is no loan. Conventional loans to 95%....... yep still there! You might not like the payments, but so be it!

Bottom line......... GET OVER IT

I agree we need to let up on the self employed and bring back stated income, BUT you know what, no one held a gun to John Q Public's head to buy homes, most thought that the boom would go for ever (such fools) and you won't get it so easy again. But there is business and smart professionals are getting it done.

ARE YOU ONE?

When did this profession become so LAZY??????

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 07 Oct 2008 16:20:52 -0500

I mean honest, when did this profession become so complacent and just sitting back and waiting for clients to walk in the door? When did we get so reliant on computers and Automated Underwriting that we forgot how to work a deal? I got 2 different calls from loan officers that work in one of our offices last week about the "new USDA Rural" program (ok it is not new, just new to them) and they both were moaning about these loans being "manual" underwrites. They are not, but this office has not been trained yet, so we will let that part slide, NOT.

USDA Rural Development loans are some of the easiest to do if you can think and are willing to look at the actual file. There are 4 steps to these loans and they follow the basic FHA guidelines. So my non lazy friends here are the 4 steps to these loans.

First, does the property qualify? How do you know? Check the map! Now I am lucky in my 3 counties that I draw 90% of my business from, they all qualify. But some of you will have to check your maps and you can find them on line. Existing manufactured homes do not qualify, but new from the dealer does. If your property does not qualify STOP and go FHA.

Second, Does the client meet the income limits? In Montrose County the income limit for a family of 4 is $70,750. If my client is close or slightly over I ask questions like how old are the kids? Day care expense? Fully documented daycare expenses can be deducted from income. Make to much money, STOP and go FHA. This is really the only hard and fast thing with Rural.

Third, How are the ratios? 29 housing and 41 total debt are the ones we like to see, but maybe we are at say 32 and 45? if we have good credit we can get a waiver on ratios and that will bring us to

Fourth, Hows the credit? I will give you 3 credit score ranges and what we look for in those ranges. If your client is between 580 and 619 you need to document why they have adverse credit, if any and your ratios are non negotiable. If you are between 620 and 659 we can get a ratio wavier and we are not to worried about past credit issues. How do we get this wavier? Easy, we need 2 compensating factors. Things like potential for increase earnings, stable employment (same job for 2 years), been paying rent that is close to the propose house payment. Fairly simple things. Now if your client is over 660 and the spouse is over 620 (if there is a spouse) You just hit the mother load, since that score may be used by itself as a compensating factor.

That my non lazy friends is the underwriting of USDA Rural Development loans in 4 easy steps...... Now who needs an Automated Underwriting System????

Question: Why do you leave a non-working spouse off the credit application??

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 30 Sep 2008 19:45:07 -0500

As I sat with a young couple today watching them sign the papers to purchase their first home, the husband said "this feels like Christmas when I was a kid". I looked at him and he went on.... ."for both of us, I mean I woke up at 4 in the morning and the clock just went so slow.... waiting....... and IT IS FINALLY HERE".

What he left unspoken was the question I posed at the top of this.... Why do you leave a non-working spouse off the credit application???? Just because the spouse is not receiving income does not mean they can not be on the credit application. In this case the non working spouse is the primary care giver to the couples lovely daughter and just because there is no financial pay in that role does not mean they can not be on the loan. This spouse happens to have a better credit score, so it is not like the credit would be a negative.

Now, I understand if you leave the non working spouse off due to past credit difficulties. Heck, I have done that. But, have you offered to help them work through those issues so the can be added later? Think of it as "value added services".

Bottom lines (yes there are 2)

First to you Realtors, never discount a non working spouse. Guess who is probably in control of the decision making in the family. And just because they do not have an income does not mean they do not bring value to the loan. And finally Mr./Ms./Mrs. Realtor how dare you discriminate against the non working spouse and violate the credit laws.

Second, to my fellow mortgage professionals...... ALWAYS ask the non working spouse if they would like to be on the loan....... They may say no, they may say yes and they will definately tell you if they can not be (they know). Advise them of their right to apply for joint credit. You will gain more referrals by respecting their rights.

What makes a good Mortgage Professional??????

Joe Adams (Major Mortgage USA/Branch Manager) — Wed, 24 Sep 2008 20:41:23 -0500

Wow, there is so much that goes into that, but what got me started thinking about this is a conversation with Eleanor and what she said was something along the lines on Mortgage people make good business people. To be fair I shared with her a business plan that I have written to possible purchase the dive shop that I teach out of, looking for some holes in my plan. But as we texted and emailed and talked on the phone, she made me wonder why her comment has some truth to it.

We are good listeners (well duh).
Attention to detail (again major DUH).
Since we deal with a lot of biz owners we have a sense of business and the economy.
An understanding of finances and financing (I hope so).
We all have a "little salesman in us" (Sorry Capt Morgan).
Since we are mostly commission, we are already in business. And we understand how our decisions affect OUR bottom line.
We understand a BUDGET.
We understand planning, marketing and goal setting. Branding, getting your product out there and we know WHO are competition is and what they offer and how we can beat them.
WE KNOW OUR PRODUCTS.
CUSTOMER SERVICE.

Bottom line.......... Mortgage professionals are not the only ones that make good business people/owners, lets be honest. This list is a check list for any good business person/owner. It is generic and tweaked to my purpose, BUT # 7, 8, 9 and 10 are hugely important with #9 and 10 being the deal breakers.

Want to be successful?

Look at 9 and 10 on the list and make them your mantra! They others will get you by and yes you might survive for a nice bit of time, BUT 9 and 10 will make you money and set up apart from your competition.

As I typed earlier, I shared this plan with ET (this is the same basic plan I use in my mortgage business and try to instill in my trainees) for this dive shop. In it I covered the local market and other factors.... BUT I REALLY HAMMER HOME PRODUCT KNOWLEDGE AND CUSTOMER SERVICE. The real estate industry is big on "I don't know but I will get you that answer" and I understand the fear of liability, but this is not acceptable to the client when they don't have that answer in 30 minutes or 4 hours or 5 days. I don't care that the other agent is out of town, your clients are texting and emailing and getting the answer you don't have. Now I understand boundary lines and some things, BUT as a lender and possible store owner I find that lack of product knowledge unacceptable. I promise you if you don't know the answer you competition does know the answer.

Be honest you are a consumer, if you have to wait for the answer what happens to you desire to purchase????

And poor #9 leads to really poor #10.

Is Manufactured Housing primed for a big comeback????

Joe Adams (Major Mortgage USA/Branch Manager) — Thu, 18 Sep 2008 12:25:21 -0500

In a past life when I sold manufactured homes the more difficult the economy and the higher the interest rates the better we did. WHY, becuase of AFFORDABILITY! Just think, as the price of homes is up (yes even today after all that has happened) and financing rates go up that brings monthly payment more into play. And for a lot of us in Rural areas this is even a larger factor.

Now, I am not hear to lecture you about these homes; but I am here to help you know how to get the best possible financing for them and your clients. Now, I am only dealing with homes that come with the property, if you are in a "park" where you rent the space these loans will not work for you. That is a differnt market niche from this one.

(yes this is a manufacture home).

If your client is looking at a new home from the dealer or even a used home from a private party or even a repo that is in a park the first thing you will need is a construction loan. There are 4 things you will need for this loan.

The price of the home
The price of the land
a full bid including transport (if any) and foundation, utility hooks, etc. (Remember you are BUILDING A HOME)
A Subject to appraisal.

My construction lenders like to see that I have at least run DU or DO and that the client can qualify for a permanent loan so I always include that in my package to the construction lender.

(so is this) Now how about that important final loan.

USDA Rural Development will do the loan! 102% financing so the client can really get into the end product WITH NO MONEY DOWN. But this is only for new right from the dealer/factory. Not used or pre owned. I actually love this loan. Yes there are some things like termite protection (in snow country?), but think about this...... AFFORDABILITY MEETS LOW OR NO DOWN HOUSING. USDA has no monthly MI/PMI making this even better for budget clients and there is no hit to rate for manufactured homes!!!!! The rate today for USDA is BETTER than FHA and Conventional.
FHA will also do this loan, but as of this typing the client will need 3.5% into the project. That can be deposits for the home, utilitiesas long as we total 3.5% of the project. This is only for new also, or existing. This doesn't work for the owner that wants to move theirs from the rented space to their own land. That would be "twiced moved" and for now FHA frowns on that (I think this is a silly rule, but until it is changed it is the rule). Some investors do have slightly higher rates for manufactured homes.
Conventional Yes there is conventional financing for manufactured homes. Even twice moved ones. Again these loans come with a higher rate, but then the home has a lower price. (We are seeing more of the twice moved projects here in Western Colorado due to the cost of housing and land)

The one thing I like about these homes is the construction loan period is so much shorter. General rule of thumb is approx 90 to 120 days and we are in the permanent loan, so the client has less interest to pay adding to even more affordability.

These are for HUD homes only. If your manufactured home is built to the UBC or IBC code then you have a stick built home. These will be more money and a slightly long build time, but still shorter than most construction projects and they qualify per Freddie and Fannie as "regular" homes, so your financing options and better.

Providing a Good Faith to a Realtor...... just good Customer Service

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 16 Sep 2008 16:56:44 -0500

RING RINGGGGGG there goes that dang phone again, oh hi Trunda Rogers , you need a Good Faith for your client? No problem, have it to you in 30 minutes. Sure no trouble, as I take down the credit scores and all the information on the home. Not a problem at all.

Now I know that a lot of my fellow mortgage professionals, won't even take this call , nor will they even bother with out actually interviewing the client. But I will. Why? How about good old customer service? As long as the Realtor and the client both under stand and I add this to the cover letter when I send it over to the Realtor .....

This GFE is provided for informational purposes only and is structured base on information provide to me by Mr/Mrs Realtor. This is for information only. Until your income and credit scores are verified, your rate and/or loan program is subject to change. Credit Scores do vary and your finally rate will be determine by your actually credit score when verified by the lender and other program guidelines.

Bottom line is that the Realtor is looking for service. I will provide it and we will have a nice working relationship because the Realtor will understand and so will their clients. Sorry, but I don't agree with some that say "well it cost more to process or underwrite an FHA loan with a 580 credit score than it does a conventional loan with a 680. No it doesn't. And just because borrower xyz has had 3 jobs in the last 2 years where borrower ABC only had 1 doesn't increase the cost of my processors time. We still have to make the phone calls 3 instead of 1 and copy the W2's and get the paystubs.

Be honest, the only real difference is cause by the credit score being 40 points off. You as a Realtor and I as a mortgage professional should know if we are heading down the FHA path or conventional or maybe even USDA. If we are on the same page, then I can give you something upfront before I meet with your client....... After all I bet you are using this as a way to "qualify" them and show them what the cost may look like and how much money they may need to bring to the table.

After all an informed buyer is a happy buyer and that makes for a happy Realtor

More Sub Prime MeltDown

Joe Adams (Major Mortgage USA/Branch Manager) — Mon, 15 Sep 2008 12:03:50 -0500

Edvard Munch and his famous painting have absolutely nothing on our industry and the American public and economy today. But as we watch the carnage on wall street one thing I have noticed and no talking head has mention..... BOTH companies were major players in the ALT A/ Sub Prime market. Lehman Brothers with Aurora Loan Services and Merrill Lynch with First Franklin add to the long list of investment banks dipping their sizable big feet in the mortgage world.

I found the comments interesting from the political candidates this morning right along party lines. One saying that no tax payer funds are at risk and the other saying that this is another example of bad economic policy of the last 8 years and lack of regulation.

But what we all want to hear is this FINALLY THE BEGINING OF THE END OF THIS NIGHTMARE????? or is there more to come. As Eleanor Thorne pointed out this morning to me that we have not even begun to hear from the commercial side of sub prime. The media is starting to use the word recession again. Maybe they ought to be using the word depression.

Wall Street is suffering from lack of cash and the consumer to quote my wife this morning are "fealing like hunkering down".

Now the Govenor of New York is asking for the Fed intervention on behalf of AIG.

What is next???? Will the Fed step in for AIG after telling Lehman NO?

It is time to TRASH the FICO Credit Score

Joe Adams (Major Mortgage USA/Branch Manager) — Wed, 10 Sep 2008 15:02:27 -0500

That is right, I did not stumble on those words as I typed them.

It is time to TRASH the FICO credit score!!!!

It is out of date and well honestly it is worthless. Can you please explain to me how someone that has never paid a bill on time or at all has a 650 credit score?
SubPrime was built on credit score. As long as you had the score, they did not care. 4 Trade lines and they could all be collections , no problem. We don't care. And you really wonder why we are in this mess of a housing/credit crunch. (GREED)
Loan Professionals (not all of us, but way to many) CAN NOT READ A CREDIT REPORT. Because all they look at is the score. I have clients with 590 and low 600 scores that HAVE NEVER MISSED A PAYMENT!!!! EVER IN THEIR LIFE!!!!! Funny thing is sure they are maxed out on a few credit. We refinanced the home and paid off the debt and bingo 680 score.
The FICO system is broken and has brought us to computers making decisions for us. Don't believe me? How about a client with a 693 score (no good current credit, but still that score) getting an automated approval for a 100% My Community Mortgage. I saw it, still don't believe it and the client is a PITA.
The self employed client is getting screwed by the system. Unless you have a 720 score and 25% equity. Look how many self employed people show all their income????? How many Realtors reading this can go FULL DOC. Let us be very clear and straight about this...... 99% of self employed "pencil" their taxes. It really is time to bring back NO DOC. (but that is another rant)

It is time to get rid of this scoring system. It has made people lazy and it was the foundation of the sub prime marketing plan. Lenders got lazy and made bad decisions and those bad decisions lead to bad loans and that my friends spelled trouble right here in trash can alley

*********** EDIT EDIT EDIT **************

(to add this)

If my understanding is right the scoring system we use today actually breaks people into different groups...... those that have say BK in the last 5 years are scored against each other and those that have no BK are scored against each other. Why isnt everyone scored on the same curve? It is like saying ok you are left handed so you get score this way and ok your parents divorced so you get score this way and you are from this state and you get scored this way...... it makes NO SENSE

What an "E" Ticket Ride in the Mortgage World

Joe Adams (Major Mortgage USA/Branch Manager) — Tue, 09 Sep 2008 17:03:02 -0500

For those that are not "seasoned enough" to

remember "E" Tickets at Disneyland/World it was the ticket to get you on the best and most exciting rides. I have fielded numerous calls today about what is going on with rates.

What will they do next?is the biggest question and to be honest,

I really wish I had that flying Delorean so I could give you all the answer we crave. But, lets look at the past 2 years for some sense of guidance. The last 2 falls and winters saw rates drop to the lowest levels of the year. With the buying season starting in spring and going through summer rates actually climbed. Approaching close to 7% and this summer actually breaking that level and then dropping back and bit. And this year with all the up and down of our favorite roller coaster, we were basically following that path. Then SuperHero steps up and takes over the evil Fannie and Freddie and pow, rates drop like (insert your favorite saying here). Rates have dropped to where I thought they might be again this winter.

So as I gaze into my crystal ball trying to advise clients and Realtors on what rates will do tomorrow and next week. I will tell them the story above about the last 2 years and show them what the difference is in a .250% rate change and let them make the decision. As for me, well I have my finger on the lock button and it is a little cramped. My gut tells me that this is as low as we go. Sure we might get a little .125 lower, but then again we might jump .5 tomorrow. I think the highs and lows of the roller coaster will flatten out (5.75 to 6.25)...... Until after the election and New Year. Then as the economy starts to gain a little bit of confidence and jets up off its back and to its knees the rates will hang in the 6.5 range and you know what, that is a rate that we all can live with.

Does Active Rain work? Sometimes? Maybe? AND IN DIFFERENT WAYS

Joe Adams (Major Mortgage USA/Branch Manager) — Thu, 04 Sep 2008 08:35:07 -0500

Well since Eleanor doesn't or won't relate this story, guess it falls to me. You see Active Rain does work and the consumer will and can find you if you offer what they are searching for at the second. Example, of course I have one!!! About 2 months ago, I got a call from a potential client in NORTH CAROLINA (Eleanor's back yard). This lady was looking for a loan BUT no one would bother to help her. She has a UBC modular home, BUT since it had this "sticker from the state on it every one and She meant EVERYONE, told her that it was a double wide and ........ well blah blah blah. So being the good consumer that she is, she wen on line and did a google search..... for modular/manufactured homes (not sure of the exact words she used) but there I was with a few post about, yeppers, MANUFACTURED/MODULAR HOMES. As this client told me her story, the more I came to believe the sticker she was referring to is very similar to what we have here in Colorado, the state electrical sticker that is on all homes.

Long story short........ I asked the client if I could refer her to someone in her State that could help her and I then called Eleanor and explained what we had. Eleanor took it one step farther and contacted the dealer that sold the home and got the back up proof that yes we had a UBC/IBC MODULAR on our clients land. Now this is the important part of the story....... per Fannie and Freddie guidelines a home built to the UBC/IBC standards will be comped to the same. For those that are not aware UBC/IBC standards or specs if you will ARE STICK BUILT SPECS !!!!! Sure makes a small difference in value and finance options.

So, does Active Rain work? While I have not closed a loan through Active Rain, I have added a few wonderful people to my resources and yes, I have receive a handful of leads.... mostly like the one above and a wonderful person in Georgia that told me I ought to move there and put some of "those crooks out of business", which I thought was wonderful and funny. I guess the bottom line is, it works maybe? depends on what you are searching for............