Jay's Blog

How do YOU measure Success?

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Sun, 08 Nov 2009 05:37:10 -0600

Well have you thought about this? If not, why not?

If you have clearly defined written goals than the process probably lead you down the path towards the following question.

What am I trying to accomplish?

Here's Success, by definition, Webster's style;

success 1. favorable result 2. the gaining of wealth, fame

Personally, I'm okay with the first one, but have some issues with the second.

Let's try some questions;

If you reach your financial goals, but have problems with your spouse or children, will you consider yourself successful?

Please give that some serious thought!

If you reach your financial goals, but ignore your health, and feel poorly, are you successful?

If you reach your financial goals, but haven't had any time off to enjoy it, are you successful?

These types of questions are endless and I could go on forever, but won't.

Is that applause I hear?

When you're working on your goals for 2010, STOP and THINK, what would I consider a successful year?

Is it JUST about business?

I think, not.

So take some quiet time, if you're in Southwest Florida, try walking on the beach. If you're in upstate NH, try sitting in front of a quiet fire in the fireplace.

Alone, and Think

How do I measure success?

Then develop a plan, follow it, and

Be successful in 2010.

Buyers/ Realtors Beware! There's a BIG CHANGE comin Your Way!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Fri, 06 Nov 2009 09:50:24 -0600

These days I just keep hearing Bowie over and over and over.

Ch-Ch-Ch-Changes, Turn and face the strain, Ch-Ch-Ch-Changes

In about a little over a month FNMA is scheduled to release Desktop Underwriter 8.0.

I'm just soooooo excited!

Why you may ask? What's the BIG deal?

Well here you are.

The maximum allowable total expense ratio in DU will be revised to 45%, with flexibilities to 50% for certain loan cases with strong compensating factors. Deals exceeding the ratio will be given an ineligible.

Just a couple of thoughts which immedikately come to mind;

I used to feel I had a real good handle on what an Underwriter would consider as a compensating factor, but i don't necessarily feel so confident these days. Yesterdays compensating factor may not be accepted today.

They are now effected by mood swings, the location of the planets, things like that!

Fewer buyers will qualify under the new guidelines!

Get em while they're hot! Today's buyers may be looking at less house next month. That may make them very unhappy.

Watch out for this one!

Buyers currently preapproved may no longer be able to exercise their current preapproval.

If you didn't like preapproval letters before, you may like them less next month.

Check the date on the preapproval letter!

Now let's look at the BIG picture!

From a lenders standpoint the changes are prudent, responsible, and should have been implemented sooner.

Just my opinion? I don't think so.

Well let's get ready for this now, as it'll be upon us before we realize it. Those buyers who just must have the home that they will no longer qualify for need to enter into contract now and close in a timely fashion.

Look out! those sneaky lenders are apt to start making these type of changes now, in anticipation of Fannie's doing so.

Maybe Bowie shouldn't get all the glory, how about Bobbie Dylan,

"and the times they are a changin"

Yes they are and;

A BIG ONE's comin our way!

Homebuyers Tax Credit-They're not done yet! 11/06/09 They are Now!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Thu, 05 Nov 2009 09:22:20 -0600

The Senate has passed an extension, which is attached to the unemployment extension bill.

It now moves to the House!

Here it must be reconciled with a House bill, previously passed. Rumor has it that they like the Senate's version better.

Then it can go to the floor for a vote, possibly tomorrow.

If passed, which it should, it moves on to the Prez, who is expected to sign the bill.

Stay Tuned!

As an additional tasty tibit let's move over to the

Fraudulent Side.

CNN reports;

Some 74,000 people claimed more than $500 million in credits even though they may not be first time homebuyers, according to Treasury Officials.

And, get ready for this, this is special;

More than 580 children, including some as young as 4 years old, have claimed the cr

YOU'VE GOT TO BE KIDDING ME!!!

I couldn't help but wonder, being the sick little puppy that I can be sometimes;

What about the deceased claimants? There's got to be some, don't ya think?

They must not have found them yet.

Well just for the record, please remember,

They're not done yet!

Ammended 11/06/2009

They're Done Now!

The new provision may be a little confusing for existing homeowners, or previous homeowners who do qualify for a lessor benefit, not all will.

And, as before, the $8,000 credit for first time homebuyers, may actually not be $8,000.

That's it, it's done.

Ta Ta for now.

Will you succeed in 2010?

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Wed, 04 Nov 2009 09:45:58 -0600

Well, will ya?

How about another question,

Do you have the will to succeeed in 2010?

by definition, Webster's style;

will 1. wish; desire 2. strong purpose 3. power of choice 4. attitude

Let me make a very strong suggestion to start off with;

Forgive yourself for everything that you have done in the past!

Forgive yourself for what didn't work, for that which you didn't try, for the mistakes that you may have made, everything.

Forgive yourself; clean slate, go forward!

So where do you start?

According to Chris Gardner, the author of "The Pursuit of Happyness,"

"Start Where You Are"

That's his new book, and quite frankly where else can you start from? If you have any familarity with his story you know that he got knocked on his butt, got up, and did quite well for himself. For most of us we're not starting off quite that bad, but some may be. Just remember, anything's possible if you have the will to succeeed.

Do you have clearly defined written goals?

Despite the fact that over and over again studies tell us that the most successful business people have "clearly defined written goals," most of us ignore this. Why? Why? Why? I don't know. Is it we don't want to be held accountable? Writing things down seems to do this.

The Power of Choice!

You will choose to succeed, or not. Sounds pretty simple, doesn't it. Make each and every choice wisely.

Finally, determine what success means to YOU, not what it means to someone else. How can you achieve it, if you haven't defined it.

So,

Will you succeed in 2010?

It's up to YOU!!!

GO FOR IT!!!!!

Underwriting Guidelines, What are they anyway?

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Tue, 03 Nov 2009 07:06:04 -0600

Okay we know that just having a pulse doesn't work any more. And we know that the programs are no longer tailor made to meet evey applicants individual needs. BUT;

What are the guidelines now, anyway?

Conventional;

We still have Fannie Mae and Freddie Mac guidelines as a basis, and we still use automated approvals as an approval basis, but they don't stand alone as approval criteria anymore. Now we also have guidelines which are established by and enforced by the individual lenders. Company policies, so to speak. A Loan Officer or Underwriter may state that, that's a Fannie Mae guideline, but that may often not be the case.

Also, in many cases we have guidelines/requirements attached to our warehouse lines. A warehouse line is used to fund a loan, while it is waiting to be sold. Because some companies failed, and still had millions on their warehouse lines, the warehouse lenders put on additional restrictions, so they would be could be sold, in the event that the warehouse lender was stuck with the loan.

The adding of guidelines is often referred to as layering and varies from one entity to another. In my opinion, this practice of, and by itself supports the need for more sources, such as mortgage brokers, to sift through the layering and identify a lending source that fits, or feels comfortable with a buyers needs.

Government;

FHA, VA, USDA/RD are all govern(mental) lending systems and as such you would think that they would be more consistent. You would be thinking wrong.

They do all offer a low and/or no downpayment option, which is greatly needed in todays market.

They do have different ways of looking at the property, which in my market specifically, has played an important role. We've had a lot of foreclosures, so on an FHA loan look out for;

Flipping

There will be no FHA loan in most cases unless the property has been held for 90 days. Then we need two appraisals up to 120 days.

For whatever reason VA and USDA/RD do not have that guideline. Why not? You figure it out, because I don't know.

What about their other guidelines? Let me sum it up as nicely and as simply as possible.

The govern(mental) guidelines are whatever the underwriter says they are!

That's it in a nutshell!

Is it consistent? No. Fair? No. Insane? Maybe (yes came close as an answer).

So when I'm asked;

What are the guidelines, anyway?

Sometimes the proper answer is;

I'm not sure!

Cash continues to pour into Cape Coral, Florida; What's a poor olde Loan Officer suppose to Do?

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Mon, 02 Nov 2009 16:21:07 -0600

What's up with this!

Don't these buyers know the economy is in the toilet.

Don't they have accountants?

Where's the $$$$$ coming from?

Stopped in to see the "bus driver" today. Lots of sales, mostly cash, probably as high as 95%. The team mostly solicites $$$$$ buyers. Well as a Loan Officer I think that, well mom told me not to talk like that or she'd wash my mouth out with soap.

I can't help mentioning having seen a lot of writings about teams, that the Lagace-Whitt Team may be a good prototype. Small, professional, firing on all cylinders. You just don't need 10-15 people to have a successful team.

Susan Milner, at Florida Future Realty, agrees Cash is King!

I've been involved in this marketplace for over 15 years and cash has always been a part of our market, but never to this extent, that I can remember. The market needed a boost and this certainly is accomplishing that.

Also this should help our appraisal situation by providing real comperable sales that are closer to where the market truly is?

But, what about me?

Well just send me some cheese to go along with the w(h)ining.

But I can't help asking as this trend continues;

What's a poor olde Loan Officer suppose to do?

Meet the NEW and IMPROVED "Good Faith Estimate"

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Sat, 31 Oct 2009 10:41:57 -0500

There's a new sheriff in town, actually it's the same old sheriff attempting to flex his/her muscles, if he/she has any.

The US Department of Housing and Urban Development has been working on a new GFE (Good Faith Estimate) for over a year, maybe closer to two and beginning Jan. 1, 2010 we're going to be using this new disclosure, or the new version of the old disclosure.

You can tell it's outdated as it addresses neg am programs, which the market has essentially banned.

You know closing the gate after the horse got out!

The new disclosure is 3 pages long as opposed to the previous one page document.

You know, more is better!

The beauty is that the Total Estimate of Settlement Charges is on the bottom of page one.

Personally I do expect many/most of the buyers to fall asleep somewhere on page 2.

The area currently drawing the most interest is in regards to the disclosure of yeild spread premium.

If you are a bank or an institution with a banking license, that being in most cases a mortgage company funding their own loans, but selling them at some point in time, you will not need to disclose ysp (yield spread premium) on the HUD.

This to me seems to be sneaky!

Where's the openness, the transparency? Apparently that's not necessary for the Banks.

You know how upfront they've been, now don't you!

If you are a Broker, you will pile all origination costs of your own, as well as the actual lender, into the origination fee. That's your point, processing, underwriting, etc. plus the lenders processing, underwriting, etc.

That could be a fairly big number! BUT

Yield Spread Premium to the rescue!

Now it will be shown as a credit to the buyer as opposed as a payment to the broker. The effect on the bottom line, disclosed on page 1;

NONE!

Page 3, which may turn out in practical application to be fairly useless, will disclose particular fees which may not change, those that can change up to 10%, and others which can change at random.

Does anyone really believe that a "good broker" will not be able to deal with this?

Ultimately little has changed. The bottom line should remain the same, so

It's NEW, but I'm not so sure it's IMPROVED!

From the WHO

Meet the new BOSS, same as the old BOSS!

No, I Can't Quote You a Rate!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Thu, 29 Oct 2009 04:59:09 -0500

I just got a new "rate sheet supplement" for adjustments and fees. I wish you could see these things. You'd really be surprised that a Loan Officer can accurately quote rates at all. Take a look at this, it's for FHA/VA Loans;

Loan Size

$90,000-$417,000 no adjustment

$60,000-$89,999 subtract .125 from price

$40,000-$59,999 subtract .250 from price

less than $40,000 not accepted

The obvious conclusion; smaller loans cost more money to the consumer.

Credit Scores

Fico 720+ no adjustment

Fico 660-719 subtract .125 from the price

Fico 620-659 subtract .375 from the price

Fico <620 and no score not accepted

The obvious conclusion; lower scores cost more money to the consumer.

Look out for the olde DOUBLE WAMMY!

Small Loans with Low Scores are MUCH more costly to the consumer!

So, John Q. Homebuyer calls and nicely asks, "can you tell me what your rates are today on an FHA purchase." I ask if he has any idea what the mortgage amount will be and does he happen to know what his score is. He answers no.

I can can give him the basic rate today with a verbal disclosure that it is subject to change, depending on the market conditions, his score, and the size of your loan.

When I respond I'm not being nasty, I'm being truthful.

No, I can't quote you a Rate!

Ch-Ch-Ch-Changes

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Mon, 26 Oct 2009 12:07:00 -0500

Where's David Bowie when you really need him.

For those of you who remember Bowie the answer would be anywhere, probably on a "Space Odyssey!"

If you're invovled in the Real Estate industry today that's what you're doing, going through an "odyssey."

odyssey; long journey with adventures

Bowie's take on changes;

Ch-ch-ch changes,

Are you ready for the next line?

Turn and face the strain.

For the last year, maybe two, they've been firing one major change after another at us!

HVCC, MDIA, RESPA, new TIL's, new GFE, new HUD's, that's just for lenders.

Foreclosures, Short Sales, Strategic Defauts, for Realtors.

I know there's more!

Meet the new mortgage underwriting guidelines. Well I'll tell you that I'd like to, if anyone could clearly tell me what they are. Every lender now has their own version. So I'd explain them to you, if I could.

The way we do business today elicits every type of emotion possible; anger, laughter, smiles, frowns, tears and

"You've got to be kidding me!

Connie Podesta is a Life Coach, Speaker, whatever we call what she does today. I saw her in a short video where she states that she was asked to do a presentation for a company about change. She told them to get everyone together and the semenar would be 3 words.

Change;

Deal with it!

Pretty good advice, and I may add, try to be nice about it,

BUT

Deal with it!

Warning! Warning! the end is near!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Sun, 25 Oct 2009 08:58:34 -0500

Barring a change or extension of the statue, the tax credit will soon cease to exist, as of the last day of Novemeber. With the implementation of HVCC (Home Valuation Code of Conduct) and MDIA (Mortgage Disclosure Improvement Act) it has become difficult, but not impossible to close transactions involving financing in 30 days or less.

Therefore;

Buyers hoping to receive the credit need to be under contract now! or certainly no later than the end of this month to have any realistic hope of receiving this benefit.

Do you think that there will be a last minute rush? Well that's certainly possible. That could slow the process further.

Please share this with the buyers that are currently looking for properties, and hoping to receive the credit.

You've been warned!

Why are there no uniform standards for PRE-approval letters?

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Sun, 25 Oct 2009 07:10:10 -0500

Why? Why? Why? are there no uniform standards for pre-approval letters?

Let's start with do we all agree and/or understand what it is, the old preapproval letter that is. If I have this right, a buyer and their agent are trying to represent to a seller and their agent that the buyer should be able to acquire the mortgage that is necessary for them to purchase the property that they are submitting an offer on.

Preapproval; pre means before, therefore it would follow that preapproval means before the approval. Let's not lose sight of that!

What documentation is needed, or what documentation does the loan officer, the usual grantor of the preapproval letter, have in his/her possession, to issue this letter?

When the buyers Realtor receives the preapproval letter do they know the answer to the above question, or do they inquire about this? I cannot remember any Realtor asking me what I had for documentation, ie: what I based the letter on.

Credit;

If the lender doesn't have a tri-merged credit report in their possession, shred the letter. Approvals are based on middle scores or lower middle scores in the case of joint applicants. Only a tri-merged report will give you 3 scores. A single or double in file doesn't do this and in my opinion has little to no value. It certainly wouldn't justify spending Sunday afternoon showing the buyer 5 properties, just one man's opinion.

What is the middle score? Do you ask? It not only effects approvals, but also pricing in today's world.

Income;

To fill out an application I'm asking the applicant for the last two years of tax returns, all schedules, the last two years of w2's, and 30 days of recent paystubs, with year to date income. Wouldn't you think a requirement for a preapproval should be at least a w2 from last year and recent paystub with year to date income? I mean we've got fax machines, some people still use those, don't they. We've got scanners and email. How hard is it to get this info. Not hard at all.

The self employed need the last 2 years of tax returns (all schedules), period. There's just no other way. That is still actually a problem, in that we are now into October, and will need some sort of year to date profit and loss.

Assets;

Even cash deals require a bank/asset statement showing sufficient funds to close to submit an offer. Why shouldn't a buyer acquiring a mortgage be required to provide the same documentation.

Okay, if I give you a preapproval letter based on the documentation stated above, you may actually have something there. Certainly more than what you've gotten in the past.

Realtors; insist on it! Require preapproval letters with some strength.

Require that every preapproval letter, from every loan officer, has at least the minimum documentation, or send it back.

So why do we not have to meet any uniform standards for preapproval letters.

Simple.

It's not required!

Home Valuation Code of Conduct (HVCC), is it working?

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Sat, 24 Oct 2009 08:50:52 -0500

It's truly amazing how we, in the real estate industry, can adapt to change. I guess a large part of this developed ability is because we have to.

When you mention HVCC to a lender or a Realtor, you'll probably see a scowl on their face, or you may receive a nasty comment, particuarly if they have recently had a problem appraisal on a recent transaction.

HVCC, what's it do?

The intention, in its broadest sense, was to isolate appraisers and the appraisal process from any outside influence over their work, that is determining an opinion of value for a specific property. Like any regulation it has it's good points, maybe, and its bad points.

Here's where we start;

No employee, director, officer, or agent of the lender, or any other third party acting as a joint venture partner, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner...

WOW!!!

Or in any other manner, what was left out?

In an article and video on Realtor.org Jerome Nagy, NAR policy analyst, states that the intent is to set up a "Firewall" between the lending participates and the appraisers. He further states that this does not have to be an AMC (Appraisal Management Company), but that many/most lenders select this method.

Realtor.org reprots that in a survey conducted with approximately 30,000 member responses, 37% reported that they had had transactions voided due to appraisal issues.

37%.....I don't like that number!

The most difficult part for me is that some of the appraisals may have been accurate, in that the purchase price couldn't be supported by recent sales. How many? Don't know.

I found it interesting that while the restricitons for appraisal communication with appraisers is fairly stringent that in FNMA FAQ'S (frequently asked questions), published in July of 2009, it said that the code does not specifically prohibit communication with an appraiser by a Realtor.

Here's what I don't like or understand;

Credibility; if it is the answer to inflated appraisals, why was it not adopted by the governmental agencies. I mean who likes regulation more than them? The answer is;

NO BODY!

Why are the AMC's not more closely regulated?

Why do I continually see appraisers from outside the market area? How much local market knowledge can they have if they're attempting to cover large parts of the state? Can this be done effectively?

Personally, I don't think so.

Okay, enough. Does it work, is it working?

The idea was to not try to force an appraiser to;

"Hit a number"

But we furnish them with a copy of the contract, which is allowed. And it is allowed that additional data be presented to an appraiser to influence their decision, after the appraisal has been completed.

So.....

It slows down the process somewhat, with what I feel does not truly accomplish the stated goal.

So.....

In my opinion, for what it's worth;

NO! it's not working.

Today's Mortgage Guidelines, Conservative or Traditional?

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Fri, 23 Oct 2009 06:08:14 -0500

I keep on hearing about today's guidelines being ultra conservative or that the "Banks" don't want to lend money. The first point I'm not sure I agree with, the latter is a convenient place to place blame, in my opinion.

Conservative

If you have entered the real estate field in almost any capacity in the last 5-7 years you must feel that today's guidelines are very conservative, ultra conservative probably. I mean just 3-4 years ago lenders were willing to write a 100%, stated income, investor loan. Well as a lender I have one comment for that particular program;

What IDIOT designed the guidelines for that one!

My sincere apologies to the idiot, after all someone bought it from them!

Okay, so if the client had a pulse and wanted a house, or even if they didn't, they could have one!

Now we want tax returns, w2's paystubs, bank statements, your mother's maiden name, your shoe size, and other pertinent information as determined by an "underwriter." AND we want this information from everyone, no exceptions!

Traditional

For the above referenced "newbies," and while 5-7 years experience doesn't sound like you're new, in the big picture or today's world, you are.

Yes, we want the above referenced documentation and possibly more. This is what we used to ask for when people paid us back. That sounds like a pretty simplistic viewpoint, but we did have a better track record of being repaid when we required this type of documentation.

We based our loan decisions on your ability to repay the loan, known as capacity. Your desire to do so, known as charactor. A history of saving or cash reserves, known as capitalization. And a decent property quality, know as collateral. If you were strong, or at least acceptable in these areas we gave you a loan.

A greater influence was placed on the opinion of human beings than on things such as a computer program/approval, as we didn't have those.

The "Banks" also had portfolio loans, loans where they actually lent their own money, for their best customers who didn't fit into the above guideliones. They were considered a higher risk and received a higher rate. Imagine that!

So, what's better? Conservative or Traditional guidelines?

Well for me personally, it's copout time! There's just got to be some middle ground.

Hope we find it soon!

Don't SHOULD all over yourself!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Tue, 20 Oct 2009 09:47:23 -0500

Should is an interesting word. When I looked for its definition I learned that it is the past tense of shall. Should by itself, very often, isn't so bad. For example; I should have a good year this year. That's an okay statement, but let's add another, killer word, to it and change the feeling entirely.

Should have; as in, I should have done something. Now that sounds different doesn't it.

It's the middle of October so we can all reflect back on the past year and possibly with some regrets state, I should have done, whatever, you choose.

We also can look forward and determine where we are going next year. It would help if at this time we had or were developing some;

Clearly defined written goals!

So that next year, hopefully, we don't look back thinking I spent the year "shoulding" all over myself.

Think about this seriously. You may agree and you may not.

As individuals involved in the real estate industry, regards of the function, in most cases our January 2010 income is being determined today!

If you agree, put it in gear. If you don't you might want to reflect back on this statement in January.

Let's give credit where credit is due. The comment;

"Don't Should all over yourself"

actually came from Tony Robbins in an interview with Darren Hardy, the publisher of Success magazine. The interview took place at the end of 2008.

So think about it, 2010 is charging at us, so watch out, and

Don't SHOULD all over yourself!

Clearly Defined WRITTEN Goals!!!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Mon, 19 Oct 2009 09:23:12 -0500

If you have ever been to a sales seminar or have spoken with, or listened to a sales trainer, or life coach, you have been told, and know that the most successful people in THE business, any business, have;

Clearly Defined WRITTEN Goals!

First question;

Do you have them?

Second question;

Have you ever had them?

Third question;

WHY NOT?

It's that time of the year, and many of you inwardly are saying to yourselves;

I've got goals, I know what I want to accomplish, I know how.

I don't need to write them down!

Do you want to be truly successful? Do you want to be accountable?

What do you have to lose?

Okay, get to it. Go over them with your broker, boss, or mentor. Get real crazy and show them to your spouse. Carry them with you. Put them in a clearly visable spot where you see them frequently, how about constantly.

No you don't have to wait until December 31st, right there with your new year's resolutions. We all know what happens with them.

If you want to be one of the "Best of the Best"

you need;

Clearly defined WRITTEN Goals!!!

What's your Preferred Business Method of Communication?

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Sun, 18 Oct 2009 06:18:47 -0500

I was reading the November issue of "Success Magazine" and came accross the results of a poll asking what method of communication business people preferred or more precisely the question posed was;

What is your preferred method of communication in business?

Good Question!

The results were; drum roll please.

40% email

39% face to face

13% phone

5% online social networking

3% text

Considering the amount of email I receive and also how much I send out I guess I'm not surprised with the result, but I wouldn't really put myself in that category.

I'm more of a face to face type of guy!

BUT, in todays business world that's just not always possible. When we do a mortgage for a second home, usually I never meet the customer. That's kinda sad in my mind.

Is the phone dead as a communication method or just passe'?

You tell me.

I really can't see the social networking outlets or texting as a preferred method. I wonder in what type of business this would be successful?

I did however, find this info interesting and wondered how this data should fit into my marketing plan for 2010.

Don't forget to get going on that!

So, stop and give this some thought.

What's your preferred method?

and

Do your clients/associates know your answer?

Ya SNOW! Bring it on!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Sat, 17 Oct 2009 07:32:21 -0500

Joe says,

We're tough and we can take it. We don't care if it's still October, or maybe we do, Bring it on! we're tough. I've got the snow tires on, the snowblowers purrrin, the shovels ready to go, and salt for the walkway, or not.

Bring it on!

Joe's wife looks at him with a touch of sadness in her eyes and says, "but honey it's only October and I don't like snow that much."

I can't help but wonder how many of those soon to be freezing and snowbound are card carrying members of the;

Coulda, Shoulda Club!

Check out the blog by the same name written previously for details.

So what cha gonna do?

Just let me mention briefly that we still have a strong supply of reasonably priced homes right here in Southwest Florida, and personally I'm not afraid to man up and agree with Joe's wife.

You could be swimming in the pool, fishing in the Gulf, hittin some balls on the course, or what ever else you like to do in the sunny, WARM weather.

Ya, ya, I know you're tough, blah, blah, blah, but, we're warm and smiling.

Let me ask a question.

Have you ever seen someone shoveling snow and smiling and/or whistling at the same time?

Me neither, I wonder why not.

Okay, I have to admit that a cold front is passing through, wiping out the humidity, and that it will probably only be in the mid 70's today and tomorrow, but here's what the local rag forcasts for the rest of next week;

Monday 78 Tuesday 84 Wednesday 85 Thursday 85 Friday 85

I left out the part about it being sunny, didn't I?

Life is full of choices, I've made mine, and maybe yours is;

Snow Ya! Bring it on!

YSP-Yield Spread Premium in it's simpliest form

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Fri, 16 Oct 2009 06:59:33 -0500

I always hear a lot of talk about YSP and how it's now going to be outlawed and possibly kill ALL of the mortgage brokerage business. I wonder if most people have any idea what this stuff is that's so terrible.

Here goes.

Two different rates are available to the customer on a 30 year fixed. Let's use a $100,000 mortgage as an example.

4.875% and 5.25%

If the client selects 4.875% at the closing he/she will pay .125% in points, or $125. That's as close to a par rate as I could get. Par is a rate where there is no charge to acquire the rate. As a broker I have not yet made any money, so I'm going to charge 2.022 points at the closing, or $2022. The P&I is $529.21

You'll see where that number comes from in a minute, as i'm trying to compare apples and apples, as closely as possible.

If the client selects the 5.25%, at the closing they will pay no points, but the lender/investor will pay me a YSP (yield spread premium) of 2.022 points, or $2022. The P&I is $552.20, a difference of $22.99 per month.

If you're wondering what happened to the $125, I ate it. I don't try to get that exact in my pricing, so okay the customer benefits.

If you divide the $2022 by $22.99 per month than the customer retrives their money in 87 months, or 7.33 years. They do have a lower payment during that time and may or may not benefit from potential tax breaks.

Okay, that's it! Fairly boring you may say, you got me!

A couple of observations;

These are real rates from yesterday.

These rates may or may not be below what you can get at your local bank.

Let the customer be able to choose, please, not your Congressperson!

But,

I do not believe that of and by itself outlawing yield spread premiums will end mortgage brokerage!

The NEW FHA!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Wed, 14 Oct 2009 08:23:39 -0500

I was listening to a brief interview with the new FHA Commisioner David Stevens and I was stuck by the fact that we have had so many major changes at the FHA. Here's just a couple of examples of the major issues;

Capital Reserves

Stevens stated that we have over 30 billion in capital reserves. That there is both a primary and secondary reserve account AND that the loan quality has improved. Seems like all is well according to the Commish.

Credit Scores

Once again I hear that there is no credit threshold for FHA loans. I feel cheap and just a little dirty when a high ranking FHA official states there is no credit score requirement for FHA loans, which is technically true, without mentioning that these loans are being funded by institutions who definitely are credit score driven, usually with a 620 minimum.

I am aware that some companies are claiming to do loans with less than a 620 score, BUT how many loans do they really approve? One out of ten, one out of twenty, really I'm not sure. In Southwest Florida a buyer, in almost every case, needs a written preapproval letter, and I'm not putting my name on any preapprovals with less than a 620 score.

I find it interesting that the Commish stated that the average credit score for FHA loans is currently 690. They may not have a requirement, but they sure are monitoring the situation. Veeeeeeery interesting.

Market Share

An FHA market share of almost 30%, which is what Mr. Stevens claimed, is a little scary to me. Being in Southwest Florida, and having lost the ability to do any conventional loan with PMI, as it no longer exists here, I am aware that any loan with less than a 20% downpayment goes to FHA, or one of the other govern(mental) outlets.

Just for auguments sake, why wouldn't an MI company want to do a loan with a 10% downpayment (minimum), 720 credit score, and ratios of 33/38. I know that this is a restricted market, but it would be the cream of their previous product, and in all likelihood have a lower default ratio. It would also take some of the pressure off of the FHA. Once again 30% scares me, and it's rising.

Mr Stevens took office July 15th and was handed this rapidly growing organization. To a degree the FHA currently reminds me of "Jabba the Hut," it scares me a bit. Throw in the fact that it is partially regulated by the Congress and look out.

All I can say is;

Ladies and Gentleman

meet

The NEW FHA!

Are you ready? Here Comes the SNOWBIRDS!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Mon, 12 Oct 2009 08:12:26 -0500

I tried to get a good definition of "Snowbirds," you know something colorful or entertaining, but alas I failed, they were all kinda boring. So I thought why are they called snowbirds, it's not like they fly here. From what I can tell most of them arrive by car. Maybe we should call them;

SnowTurtles!

You've seen they way they drive.

"It's over there George," says Alice, as she points accross the 3 lane roadway.

No blinker necessary, George makes a hard right into the parking lot. Many of the other drivers, admiring his skill, join in giving him the good olde traditional Florida middle finger wave. George and Alice smile and are happy with their successful negotiation of our roadways.

We get EVEN!

Many snowbirds(turtles) complain about the tax structure for their second homes. They think it's unfair, and they can't vote to change it! he, he!

When do they arrive?

The first migration will start over the next couple of weeks, with the second wave after Christmas. Things have changed since they left, certainly the real estate market has. I hope they can adjust.

Just some final thoughts;

There's a website for the gulf coast, where I live, well not where I live in the Fort Myers/Cape Coral area, because

www.snowbirdsgulfcoast.com apparently only goes as far south as Bradenton/Sarasota. I'd like to think that we're a well kept secret, but I'm sure that's not the case.

Elvis has a video entitled "Snowbird," if you all need some travelin music.

Well, we're havin a heat wave, the waters warm, the suns a shinin, so come on down.

Personally,

I'm Ready!

What's your Walk in the Rain Like?

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Sat, 10 Oct 2009 06:30:02 -0500

With 161,505 members, and growing daily, I was wondering how many different ways the members used the Rain and what they got from it?

Do you Blog?

If every member Blogged today we would have 161,505 blogs. I don't know what the average number of daily Blogs is, but someone knows. How about a National Blog Day where every member writes one and only one blog. I doubt all the members would participate, but what if we got 100,000 or maybe 150,000. Just looking at the groups, we have such diverse groups, I can only imagine the topics and the plethora of information.

What groups do YOU belong to?

If you can't find some groups who share your interests you must have your head buried in the sand, and don't worry we could start a new group "Bloggers with their heads buried in the sand." Why not? there's just so much to enjoy.

Let me share a personal example; I was born in NH and moved to Southwest Florida in 1992. Right around now the foliage in NH is Faaaaaaaaaaaaaaantastic. I belong to two NH Groups and the photos by Steve Loynd are just so beautiful. If he didn't now how much we loved them, hopefully he does now. Thanks Steve, Great job!

Do you comment? and are they well thought out?

You can add to a post with thoughtful comments. They help the readers and the writer equally in my opinion. A blog is a forum and you don't have to always agree, BUT

Be Nice!

Do you learn much and do you share it with others?

I've learned a great deal from the writings of the "Rainers." So let me say thank you all very much! Does anyone use the information as a teaching tool? I would think many of the postings have that potential.

So enough from me. What I really want to know is;

What's YOUR walk in the Rain like?

ps: you can check out Steve Loynd's photos at New Hampshire: Real Estate and Life in the Granite State. It's worth the trip!

Hey HUD, Help Us Out Here!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Fri, 09 Oct 2009 09:54:06 -0500

I just got done reading a post about HUD regs regarding "flipping" and I couldn't help thinking about how this is hurting first time homebuyers in Southwest Florida.

The general purpose of this reg is to prevent unscrupulous investors from buying a property today and selling it for a substantial profit this afternoon, tomorrow, or next week without any improvements on the property being done. I thought that was capitalism, which is not in vogue right now, but we'll save that rant for another time. Before someone else brings it up I do realize that there was a fair amount of abuse here, but I would like to point out no one else followed FHA with this regulation including two other well know governmental agencies known as the VA and USDA/RD.

I wonder why not?

In Southwest Florida we are finding investors and investment companies that are purchasing foreclosed properties and doing partial or total renovations. In many/most cases the properties are fairly priced and agressively marketed.

The HUD reg locks out the first time homebuyer attempting to aquire FHA financing as the properties don't stay on the market for 90 days!

They appraise okay, and they can acquire conventional, VA, and RD financing (where available).

BUT, NO FHA!!!

How about cuttin us some slack here.

I suggest putting the flipping reg into the hands of the regional FHA offices for evaluation.

There's got to be a better way!

How about if our local politicians get off of their duffs and earn their money for a change. Get to work on this.

All I can say is;

Hey (HUD) help us out here!

Will Ya?

PLEASE!

STRATEGIC DEFAULT-"I'm Walkin, Not Payin"

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Fri, 09 Oct 2009 07:41:04 -0500

Way back in February of 2008 I wrote an article entitled "I'm Walkin, Not Payin." Back then that was a fairly new phenomenon. However as time has passed, it has managed to stick around, and now has a real chic label, Strategic Default.

It's basically the same concept as I'm Walkin and Not Payin because my house is worth a lot less $$$$$ than I paid for it, and my mortgage balance far exceeds the value.

I was directed to an article by Kenneth Harney, of the St. Petersburg Times, by Jeff Belonger (thanks Jeff), asking "Who is the most likely to walk away from a mortgage?" He gave a hint in the second paragraph. "It's not who you think."

Here's the result of the research he cited;

In a sample of 24 million individual credit files, homeowners with high credit scores when they applied for a loan are 50 per cent more likely to "strategically default"- abruptly and intentionally pull the plug and abandon the mortgage- compared with lower-scoring mortgage borrowers.

In contrast with most types of delinquencies they often go from perfect payment histories to no mortgage payments at all.

Very Interesting!

Okay is it just a business decision which only effects the existing borrower? Well I think we can rule that out. Defaults of any and all types are raising havoc in the marketplace and the "strategic defaulters" apparently have the ability to pay but choose not to.

Are they just being selfish? Do they not care about the outcome/impact on their own family, friends, neighbors, and you, and I. You need to draw your own conclusions.

There will be consequences for them; bad credit and deficiency balances possibly (they may owe the lender money after the foreclosure). There may be a need to file bankrupcy at a later date. The credit card companies will probably either cancel their cards, or substantially raise their rates. Access to new credit will be extremely costly or not available.

Do you think that they really take all of this into consideration or are they just locked in on their home?

Frankly, I don't know!

Well there may be a nice shiny new term for it, Strategic Default, but any way you cut this pie it still means;

"I'm Walkin, Not Payin!"

Don't tell me about the labor pains-show me the baby!

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Thu, 08 Oct 2009 10:48:48 -0500

Isn't reading a wonderful thing, and I must give credit where credit is due.

That quote comes from a book entitled, "Thank God It's Monday," by Roxanne Emmerich. And while I'm less than 25% through the book already, I'd suggest it, as good stuff.

So what was meant. Essentially this comment was about don't tell me about the work and the difficulties, show me the results.

What she was saying is;

Results Rock!

here's the gist;

Identify unreasonable goals and why they are unreasonable.

Recognize the obstacles and how to overcome them.

Develop a strategy.

Now to borrow another quote, from Nike;

Just Do It!

The obvious is that you will never reach unreasonable goals until you are willing to challenge them, develop a plan to reach the goal, and stick to it regardless of any/all obstacles which present themselves.

So when you've accomplished your unreasonable goal(s);

Don't tell me about the labor pains-show me the baby!

Stopping Mortgage Defaults, The Solution lies in the Past.

Jay Beckingham (Allied Home Mortgage Capital Corp.) — Thu, 08 Oct 2009 08:38:14 -0500

Very often today when I hear someone complaining about the new restrictive underwriting guidelines, I stop and correct them stating "traditional" not restrictive. That is that the guidelines are closer to what they were when people actually paid us back.

First of all I'd like someone to step up and say "I did," and explain what they did.

The question would be who developed the computer approval models and how much mortgage experience did they have?

Personally I liked it better when the decsion was made by well trained, qualified human beings.

On another issue, which many may not be aware of or have forgotten.

When I first saw secondary market adjustable rate mortgages the ratios were 25/33. That's 25% for PITI and 33% for PITI plus debt. That meant 33%, not 33.5%.

You didn't get exceptions!

Government loans were a little more liberal, but if the ratios on an FHA were 29/41 then you weren't going to routinely get approvals with a back end ratio of 48/49%.

Think about that!

That's 48% of the GROSS, not the net. If the buyers gross $4000 monthly and pay 18% taxes, they net $3280. If you use the net they probably don't qualify for the mortgage.

Maybe we should follow the example of the VA and use residual income.

How many of you out there don't know what residual income is. Well the simpliest explaination is that to a certain degree it looks like a mini budget taking into consideration most of you monthly expenses and determining what's left over to live on. It's not perfect, but it's closer to reality.

We didn't have stated income.

How many problems do you think stated income caused. There is neither enough time nor enough room to cover this effectively.

We did have Portfolio loans.

That's where good, established bank customers, who didn't fit secondary market loan criteria could come in and get their needs taken care of. Yes, the rate was a little higher, but they were pretty much guaranteed a loan. It was better than stated income because to a certain degree we just didn't ask any questions about income. We already knew who are best customers were and that we were going to give them a loan. That relationship was worth it's weight in Gold!

Okay so what I'm indicating is quite simple.

It's that some of the solutions to our current problems may be hidden in

The PAST!