It's been over 100 days since the HVCC law came into effect, and I'm throwing in the towel on this one.  What a disaster.  The HVCC law "protects" borrowers and lenders by preventing mortgage pros from speaking directly with appraisers, and thus not allowing them to "influence" the values.  The practical consequences of this law has caused lenders to feel less confident in the appraisal, than ever before.

In practice, this HVCC law has helped create a third party appraisal referral industry.  This industry is collecting as much as 40% of the appraisal fee.  Because so little remains for the appraiser, many of the experienced appraisal professionals cannot stay in the industry.  What remains are inexperienced and green appraisers who do what they can to arrive at a value, and travel as far and wide as possible to stay busy enough to survive.  Lenders are now forced to charge borrowers additional fees for appraisal reviews that can undercut values, and kill the loans from moving forward.  Many lenders are even requesting second appraisals, at the borrowers expense, to feel confident about the reported values.

In the end, borrowers are stuck paying more for the appraisal, and many lose out on purchasing a home because of the inaccuracy of appraisal work being seen.  There has also been a tremendous amount of "poor assigning" done by these third party agencies, where they have assigned appraisers, who are not local to the area, assessing values where they are completely unfamiliar with the geography.  These third party agencies have no real competition, and can bank on other peoples work, so what do they care?

I had to face just this type of scenario with a recent client, where an appraiser from 110 miles away was assigned to an appraisal of residential property.  His value was off by about $10,000 from where the market was, and after 2 appraisals, and 6 weeks of going back and forth, the proper assessment was accepted.  The purchase escrow did close successfully, but the real estate office was upset with me because I could not guarantee the appraisal would come in at value, and felt like it took way too long to close.  My response is simple and true, don't blame the mortgage professional, blame Washington.

California Home Loans | Mortgages | Refinance | Mortgage Loan

I recently had to do what so many of us hate doing, maybe more than anything else, in our profession.  I had to tell a friend that I could not help him buy his first home and secure financing for his California home loans.  I've been told a thousand times by a thousand people that you should not help your friends professionally to begin with.  That it's safer to simply refer them to someone you know or work with, rather than deal with the pressures of taking on a friend as a client.  Well, up until today, I thought that way of thinking was just silly.  I've helped several friends buy their first California real estate and/or secure their California refinance.  Most of the transactions, like all of my other clients, went smoothly.  But this friend tested the very limits of my patience and professionalism.

As you continue on in your career, you learn lessons along the way.  How to spot a borrower that you should stay away from, and how to cut your losses when you're fighting an uphill battle.  The challenge for me came when it was a friend that wanted me to fight his fight.  He asked me to please help him through his challenges, and so I did.  As we continued though the process, the rubber finally met the road, and the documentation he was submitting to me, did not support what was coming out of his mouth.  As his documentation revealed different aspects of his situation that he did not disclose to me, he began to have explanations for everything.  The red flags were there, and my experience told me to cut him off.  Whenever you realize a client is lieing to you, you should always walk away.  But I attempted to deliver his explanations to my team and insisted they push forward.  In about a seven day period, I had several people in my office questioning me, and what I was doing.  By continuing to get my friend approved, I was alienating my broker, and my processor, and losing their confidence.  At the end of the day, I did what I knew I would have to do.  But not after I damaged some of the relationships and respect I had built up in my company, all these years.  It simply wasn't worth it.

Friends are a wonderful group of people to help.  But that help must come with a set of standards that have to be adhered to.  Just because someone is a friend, does not mean you should look the other way when they lie, once, or twice.  The feeling in my gut is relief, that it's over.  But the sense of loss and failure, for a person I wanted to help so much, will linger on and will remind me the next time a friend wants help, and starts to lie, that you just have to say "NO."

I picked up a new client this week, with an interesting set of circumstances.  I want to share it with the community, because there is a great lesson to learn here.  My borrower went into a local housing development, and really liked one of the finished homes that they were selling.  He went into the sales office to inquire about purchasing the home, and they referred him to their inside mortgage agent, for a loan approval.  They collected his financials and pulled his credit, and offered him an FHA loan with a 3.5% downpayment, or conventional loan with a 20% downpayment.  My borrower asked them if he could go conventional with less money down and they told him no, and that this was all that they could offer him, and that this was all he could do.  They then pressured him by telling him that he had to choose which loan program he wanted because they had others that were interested in buying the home.

He was immediately turned off by the pressure, and became uncomfortable with them.  He told them he would get back to them.  He then contacted my office wanting to get pre-approved for a home loan.  I then submitted the loan, and approved him for a conventional purchase with 5% down.  The guy had 800 credit scores.  I generated an approval letter for him to share with the sellers, and they would not accept that he had secured financing through another mortgage company.  They presented him with a letter and asked him to sign it, obligating him to pay $250 per day past the expected close of escrow date, because he chose to work with his own lender.  They then threatened to take away the seller concessions they offered him, if he went with me.

My borrower became furious.  As he stated to me, they did not present all of his financing options available to him, then they attempt to penalize him for working with someone he's comfortable with, and then threaten to remove the seller concessions when they were originally offered to him because he was not working with a buyers agent.  He almost walked away from this purchase. He also felt because he was of asian decent and his english was not perfect, that they were racially discriminating by originally telling him that he had to go with their mortgage people. Fortunately, I was able to speak to him and suggest they would agree to work with us, and sure enough they did.

The moral of this story is that no one needs to force anyone to do anything in this business.  While sales may be slow for some of us, the home sells itself.  Forcing potential clients to work with people they're not comfortable with hurts everyone.  The credibility of this developer is now in question and the borrower does not feel good about this transaction.  There may very well be violations of the Department of Real Estate codes, as well as racially predatory practices that took place.

My thoughts are, be a professional.  Do your job thoroughly, and respectively.  Do not assume because someone doesn't speak perfect english, that they're stupid.  If we all try to be considerate and respectful with each other, and those we work for, as well as to our clients, we can have very successful closings that bring future referrals our way.

Joe Almirantearena - California Home Loans

I received a call yesterday from a borrower with an interesting situation that I thought I would share.  For the last 2 years she has been working on improving her credit scores and reducing her debt.  She started with a 420 credit score, and today is enjoying a 640 mid credit score.  She wants to buy a home in her area, because her current rent payment is nearly equal to what a California home loans payment would be for the price of a home she's interested in.  Her income is solid, her debt is low, but she does not have any money for the downpayment.  In California, up until 5 weeks ago, there was a loan program called FHA access, that allowed you to secure a 97% FHA 1st, with a 6% second that would cover the down payment and closing costs.  Citimortgage was the servicer of this program, but as many of you know, they have ceased their wholesale operations as of the middle of January.

So saving for a downpayment is the next step for her, and this little trick can make all the difference in the world.  If a borrower is interested in purchasing a home, figure out what the monthly PITI for the home would be.  Take that amount and subtract it from the rent payment they are currently making.  Whatever that dollar amount adds up to be, save that amount each month, open up a savings account at a local bank, and deposit that amount each month for 12 months.  I asked her to do just that.  If she does it, she will discover at least 2 things.  First, whether or not she can actually afford the higher mortgage payment, and second after 12 months of saving, she will have a significant portion of her downpayment saved up to buy her California real estate.

Considering how unstable the California real estate market continues to be, and how uncertain the economy as a whole is looking for 2009, there's a strong probability that she will find after 12 months that California real estate prices still remain low, and California mortgage loan interest rates competitive.

I had a conversation with a client of mine that many of us are going through.  He contacted me yesterday to wish me a happy thanksgiving, and to ask when I felt the bottom of the California real estate market would be.  I told him that there is money pumping into the credit sector now, and that prices have already come down substantially in the last year.  I told him he should take advantage of a sub 6%, 30 year fixed interest rate market, and get off the fence.  He seemed to believe that prices will come down even further, and that the middle of 2009 would be the low point.  I told him that if that is what he believes, he should go with it.

It left me a bit puzzled.  On one hand, everyone agrees that we are in an economic crisis, and on the other hand people do not seem to understand that if businesses go out of business in 2009, less competition will drive up price levels, creating stagflation, and increasing interest rates.  Considering how much property is available for sale, the sky high foreclosure rate, and the very low interest California home loans market, the time to buy is now!

How do all of you feel about the market right now?  Do you feel it's time to get off the fence?

I'm not one to blog about a holiday, normally.  I see it often times as an insincere way to promote oneself.  However, today I feel inclined to write about people that are perhaps the most important members of our society, and many times least rewarded.  We've all been reading and writing about how bad the real estate and mortgage industry has been this year.  How challenging it has become to close a California mortgage loan or work with sellers that resist reducing their asking price, but the truth is these priviledges we enjoy are due to the men and women who have fought for us, and died for us.  Many were teenagers and people that did not fall into the traditional careers that we chose.  But they are the backbone of liberty, independence, and freedom that we enjoy.  Take the time to thank a service member the next time you come across one, and offer them a debt of gratitude for the life you enjoy.

A loan processor friend of mine, I'll call her Lisa, shared a story with me yesterday, about a mortgage broker that had a meltdown.  I thought the lesson learned applies to everyone in the real estate and mortgage industry, so I will share it.  Up through 2008, this mortgage broker, I'll call him Sam, had a thriving business.  He employed 30 solid producing loan officers, and enjoyed having a fruitful business.  As the market changed in 2007, Sam began to lose loan officers, and is currently down to 4 or 5.  He hired Lisa, about 6 months ago, to be his contract loan processor.  When she was hired, she agreed to: the standard job expectations, and to process loans at a reduced per file cost, in exchange for all of the volume of his office.  As the months have gone on, Sam has isolated himself from his colleagues, and has become hostile towards those around him.  It has reached a point where he does not even want to talk to his borrowers after he takes the initial loan application, wanting instead that the processors handle everything that comes up, including dealing with his clients directly.  He only interacts with his employees to question the status of loans, and to bark and blame everyone for not doing enough to close his and their loans.

Lisa decided that since the time being spent on each loan has dramatically risen, and the number of times each loan was having to be resubmitted to alternate lenders has increased, that she should be fairly compensated for her time.  She asked Sam if he would agree to increase her compensation per closed loan due to the added time requirements she experiencing.  Sam flew off the handle.  He began to pressure Lisa about why loans had not been closing, and why things were not getting done.  Lisa explained to Sam that in addition to the new lending environment they're in, and the additional responsibilities of contacting all of his borrowers, the loans were taking more time to close, and that she needed to be compensated correctly for it. Sam threatened to let her go if she did not do everything she could to close a loan, and told her it his her responsibility for everything concerning the loans, and that he would not compensate her for the additional time she spends on the files.  Lisa chose to no longer take on anymore loans for Sam, close all of the loans she is currently working on, and seek new brokers to process for.

This story is probably more common in todays market than anyone would care to believe.  Most of us in the California real estate and California mortgage world, are commission based workers.  We know what reasonable expectations are.  We have to hustle every day, in each of our respective positions.  Teamwork, respect, and hard work are cornerstones of success, and if we lose confidence in our team, the engine stops running.  We all have to remember that whether we're the realtor, mortgage broker, processor, title agent, or escrow officer, everyone gets paid when the loan closes, and all of us have to support each other if we want to succeed.  If we feel like we're having a hard time making it, don't forget that those around us are also struggling, and still need to be treated with the same respect that we would want to be treated with.  If Sam could have simply stopped feeling sorry for himself long enough, and realized that his processor was making a reasonable request, that her compensation would come from the borrowers, and not out of his pocket, he probably would not be losing her.  Sam's self-pity and self-destruction is causing him to lose his entire business.  In this difficult time, we all need to remember what made us succeessful from the beginning.  Be a professional, treat others with respect, have confidence in your team, and you can be as successful as ever.

I am new to blogging and social networking.  My question is to all of you that are much more familiar with this technology than myself.  I am starting to see that for the mortgage and real estate industry, taking advantage of the social networking websites can be very advantageous.  I was thinking of setting up profiles on the major social networks, ie.,( facebook, myspace, trulia, zillow, mortgagefit, activerain, localism, etc...)  Then incorporating some sort of tool, where I can distribute my blog posts to all of my profiles on all of my social network pages, once I post it.  My questions are, is this a good idea?  Will this build one-way links back to my California mortgage website?  Is there a tool that will help do this for me?  Do any of you have suggestions on how I would go about doing this, or know the name of a tool that can do this? Thank you.

I just witnessed a tough situation today that all of us must go through at different times in our lives.  A close friend of my family, diagnosed with Leukemia just a few weeks ago, came home from the hospital, after the doctors said there's nothing more they can do.  He had a tremendous amount of hope for successful treatment before he entered the hospital, and now he feels like it was a waste of time.  The look I saw in the face of my friend, was one of terror.  Fear of dying has got to be an overwhelming feeling, when you know it's right around the corner.  Beyond the crying, and the suffering his wife and child are going through, the terror in his eyes has been burned into my brain, forever.

I can't help but think about how much time I spend working on these loans.  How often I've stayed late at the office, to close a California home loan, or to help my clients reach that dream of homeownership, and had to give up time with my family to do it.  Or how many weekends I've given up, spending them at an open house, with a local realtor, to generate leads for my business.  I'm reminded that time is precious.  Our time on this earth does not last forever.

Make the most of your time, and make the most of your career, this is a lesson I'm learning here.  Stop wasting time on prospects that aren't sure whether they want to buy a home or not.  Admit when you can or cannot help someone.  Make sure those that you work with, and surround yourself with, understand that time is precious, and we're on this earth to experience life, not waste our time showing properties to folks that are really not going to buy.  Or working with borrowers that want you to chase them down for everything.

Life seems to become crystal clear when reaching the end of the road.  Seize the moment, today!  It doesn't last forever.

This is a helpful list of things to consider.  Before putting all your money into mortgage payments, please
consider the following 7 important issues. By considering these important financial issues, you will be able to make your payments work much harder for you.

1. Get pre-approved BEFORE you look for your new home.

Of all the steps to do before you buy a home, the pre-approval part is the easiest.  One of it's benefits: It will give you complete peace-of-mind while you are looking for a home. The best part, it's usually free. Your California mortgage lender can give you a written pre-approval with no obligation on your part. Getting pre-approved means money in the bank!  Being pre-approved means that you have a guarantee of obtaining a California home loan up to a specified level.

2. Know what level of monthly payment are you comfortable with.

When your are discussing your pre-approved mortgage with your California mortgage lender, you will find out up to which level you can borrow.  You must also pre-assess what amount of dollars you want to spend each month on your home without getting uncomfortable.  Your financial situation could give you a higher level of pre-approval than what you could feel comfortable paying each month. Once you have set that amount, you will know the price range of the house that you should be looking for.

3. Select the type of California mortgage that will best suit you.

Before you commit to a certain type of California mortgage, there are a number of questions you should be asking yourself.  Mainly: How long do you think you will own your present house?  Are the interest rates going down or up?  Will your earnings change in the near future, will that change have any influence on your future payments?  Once you know the answer to these questions, you should be in a better position in choosing the appropriate type of California home loan you should be looking for.

4. Payment frequency options.

Accelerated weekly and bi-weekly periodic payments can save you thousands of dollars in interest payments. If you plan your mortgage periodic payments well, you will significantly lessen the amount of interest that you will be charged over the term of the loan.  The best trick is the accelerated bi-weekly mortgage payment system.  You pay every second week, half the amount of what should have been your monthly mortgage payments.  By using this system, at the end of the year you will have paid the equivalent of 13 monthly payments.

Note: Not all mortgages are of the accelerated bi-weekly

5. Authorized pre-payment.

Another system that can greatly reduce the total interest amount you will have to pay is the authorized pre-payment system.  By paying off a certain percentage of your mortgage, or by increasing the amount that you pay monthly, will greatly reduce your mortgage costs.  By using an authorized pre-payment system you can have a major impact on the number of years you will have to pay your mortgage.

Note: Not every mortgage has the prepayment option built in.

6. Work with a financial expert.

Before you choose your mortgage type, or the California mortgage lender, get the insight of a professional.  Ask a California mortgage specialist.  A California mortgage specialist will usually answer your questions at no cost or obligation and, if you do use his or her services, you will probably get your California mortgage loan faster, and with better conditions than if you didn't.

7. It's usually better to choose a good house instead of a good deal.

Here is an example.  In 2004, two houses were sold.  One for $320,000 and the other for $610,000. One was at a major road and the other one, not far from it, in a reasonably quiet street.  Both houses were purchased by respective owners around 1982.  The one at a major road was paid around $70,000 while the other was paid around $90,000.  The owner of the later home not only got higher appreciation from his house, he also enjoyed a quieter life for 22 years.

Good Luck!