The Mortgage and Finance Planning Resource:

Mortgage Pro Week in Review 7/13/08 Through 7/20/08.

2008-07-24T12:11:03Z

The first Time for me to do the Mortgage pro Week in Review. But who can refuse Jeff Belonger who is devoted to contribute that much information and knowledge to the group and active rain as a whole, I figured let me give it a try.

Here are the Highlights.

Did You know that you can do stuff.

Christina Ewing in her Post FHA Financing on Condos-You really can do it...I Swear!

Teaches us that you can still do a condo FHA loan even if the development as a whole is not approved with FHA. This is called Spot Approval Very informative!

Jeff Belonger in his post Kiddie Condo" FHA loans aka Non-Occupant Co-

Borrower Loans - What are they? In my opinion a amazing college planning tip. In adition it is a great follow up to Christina Ewing's post now that we know we can buy condos with FHA.

A word aboud Taxation.

Niman @TReXGlobal.com : TReXGlobal.com in his post I'm Selling My House to Myself because of Uncle Sam!!! explains a very important Tax planning tool how to depreciate market value despite the fact that you already bought the property 30 Years ago for 30,000. this post reminds us why real estate is such a great investment at all-times.

A word about your marketing. First of all know whom you are after.

Steve homer in his blog Are you Missing 39% of the Real Estate Market? makes great point The NAR is doing some significant research on buyers who they are and where they come from. Read it and learn how to look at your target market.
Misty Lackie in her post Save money, save paper and capture leads Makes a great point, Capture the leads don't just let the flyer's fly< Know where the fly.

About the Shame Blame Game.

Mike Mueller
Walnut Creek, CA
a real professional in my opinion, in his article titled "Lenn Harley is WRONG"in an effort to assign some blame the the real estate agents and brokers states very clearly the challenges we all had when the tide was high and many unqualified Mortgage brokers wrote in on it.
And when the ethical hard working Loan professional couldn't prequalify a client for the amount the Realtor expected, the Realtor had a few more So called mortgage brokers that he kept in his Rolodex that he turned to, to get the deal done By hook or by crook.
Janet Guilbault, California Mortgage Expert in her post Why The Mortgage Ship Sank and The Realtor Ship Sailed Ondelivers a beautiful story of the smooth sailing ship and calm sea we had until late 2007. but then the storm of 2007 hit and only the though and rugged sailors and the strong ships survived,
makes an excellent read.

New Rules coming down the pike.

Robert Ashby in his post Federal Reserve Issues Final Rule Amending Regulation Z (Truth in Lending)Covers the few changes we expected coming down for a long time what I like is his commentary.

Have a great week evreyone it was an honor to be part of an elite group like this. I learned allot from you guys and I hope I did contribute at least a percent of what I learned.

Make it a successful one, Think good and it will be good.

Sincerely

Joel Silberstein

Certified Mortgage Planner

What can you buy with one dollar these days?

2008-07-08T10:48:22Z

Business week had a segment on their video cast how much 1 dollar can buy you today versus how much one dollar was able to buy in 1948.

Back in 1948 one dollar bought you a cup of coffee hamburger ice cream and some other desert.

These days, one dollar can get you a small can of Pringles. Pretty negative huh?

Well they left out one pretty significant piece to the puzzle.

Looking at the US wages history chart on the US labor department website you can clearly see that back in 1948 the minimum wage for an hour was 0.40 cents. That means that if you spend a dollar for lunch which was more then twice the minimum hourly wage then one dollar would have gotten you all these mentioned above.

These days Minimum wage is $7.25,lets have a look on what 1 hour of earnings can buy us today.

Looking just on the McDonald's Dollar menu you can have a

McChicken sandwich $1

Double Cheese Berger $1

2 Pieces of Pie $1

Fruit and yogurt farfait $1

12 once Soft Drink $1

Side Salad, $1

And golden French fries $1 or you can get all of it for just the price of minimum wage!

Pretty similar to 1948 huh or better of?

What does that have to do with real estate?

Great question! and the answer is that people are always hearing how cheep real estate was 20 years ago, how easy it would have been if we where only around then or would have bought then. But people often neglect to look at the income you had back then, See it is relative to your income.

I can bet you that in 20 years from now prices of houses will be allot higher then it is currently and the same chant of shoulda woulda coulda will be repeated..

In Summary

Act Now don't cry about the past.
l
Live in the here and now, plan for the future and learn from the past
. At least make sure then in the future you will not have to cry about the past.
WAITING FOR THE MARKET TO BOTTOM OUT IS LIVING IN THE PAST TOO!

Recession Inflation blah blah blah... if you can afford it now and your current income and future income will be able to support your purchase then buy now and enjoy the upside we are going to enjoy soon once again.

Get in touch with a financial professional , Real estate professional and make things happen

For the US minimum wage history chart click here

FEDS lEAVE RATES UNTOUCHED: Thereby calming the bond market and getting us better rates

2008-07-01T14:32:10Z

Rates started to level off from its volatile ups and downs we had in the recent few months since they start cutting rates.

This goes to prove a point again to the public that contrary to the popular believe that when the federal board cuts rates the so will happen to the mortgage rates.

NO THIS IS A MISTAKE

Rates go up on a scare of inflation

Rates go down when that scare tames off.

In addition to that, bonds and stocks compete for the same dollars. Therefore, when stocks goes up bonds have to go up and compete since when stocks experience growth and momentum money tends to flow out of bonds which is where money for mortgages are coming from.

Bonds however, have a strength that stocks does not have and that is security. Bonds might offer less momentum then stocks in the overall scheme of things but they offer a consistent leveled long term income for the investor. Therefore when the economy is shaky, bonds tend to pick up with the exception to inflation. inflation will kill the desire to own bonds.

Inflation is caused when the dollar loses its value

part of the value of the dollar is how much interest the fed will pay for its investors when invested in the fed bonds. since it is a global market and the euro also sells bonds and so does china. If the euro is paying 4.2% and tour fed is only paying 2% now you tell me who is more desirable?

In Summary

lower rates then our competitor the euro = weak dollar

Weak dollar= inflation

Inflation= higher mortgage rates

Higher mortgage rates= lower Real Estate market!

You are at the Top When....

2008-06-25T08:53:07Z

I wrote these lines on fathersday, these principles can help you grow to the top.

The following lines are a transcript I wrote down while listening to my mentor (if I can call him that way) Zig Ziglar.

You are at the TOP When you,

Clearly understand the failure is an event and not a person.
That yesterday ended last night and today is your brand new day.

You are at the top, When you made friends with your past, are focused on the present, and optimistic about the future.

When you know that, success a win doesn't make you, and failure doesn't break you.

You are at the top when, you're filled with hope, faith, and love, and live with out anger greed guilt envy or thoughts of revenge.

You're at the top, when, you're mature enough to delay gratification and shift your focus from your rights to your responsibilities.

You are at the top, when you know that faith stands for what is morally right is the prelude for being the victim of what's criminally wrong.

When you are secure in who you are, so you are at piece with god and at fellowship with man.

When you made friends of your adversaries, and have gained the love and respect of those who know you best.

When you understand that others can give you pleasure, but genuine happiness comes when you do things for others.

You are at the top, when you are pleasant to the grouch courteous to the rude and generous to the needy.

When you, love the unlovable, Give hope to the hopeless, friends to the friendless and encouragement to the discouraged

When you, can look back into forgiveness, forward in hope down in compassion and up with gratitude

When you know, him who is the greatest among you must become the servant of all.

When you recognize, confess develop and use your god given physical mental and spiritual abilities for the glory god and for the benefit of mankind.

You are at the top, when you stand before the creator of the universe and says to you well done thou good and faithful servant.

After indentifying the top you get to realize, that the top is really the bottom, the foundation on which upon can be build any type of carrier.

READ THEM AND RECITE THEM REGULARLY, SO THAT IT CAN BE BURNED INTO YOUR SUBCONCIOUS MIND.

Yours truly

Joel Silberstein

Real estate and financing frequently asked question continued

2008-05-22T23:01:07Z

Cntd

3. Would you advise to take out an Interest only?

Answer. It depends why you want and interest only loan. If you want an interest only loan because otherwise the payment is too high I would say NO way! Rather don't refinance or purchase the house its way to expansive for you.

However if you want an interest only loan because you want more flexibility with your money for example to save the deference in payment, I would say yes please, and tell your friends too. As in matter of fact I advise my clients to get an interest only loan and keep paying the same like a full interest and principle loan. The interest you pay to the bank and the principle part to pay to themselves and deposit it into a side fund that yields at least a rate of 4% and let it sit as an emergency fund.

4. Is it a good time to buy now?

Again let me answer it with a question! Will it be a good time to start saving money now or should I wait a little? Are there seasons when it pays to save and when not to? Ludicrous! Always, start saving right now!

When you buy a house especially to live in it, you are essentially saving money! You are deducting the whole mortgage interest and it is like if you never earned that money when it comes to taxes. You can deduct up to 1,000,000 dollars on mortgage interest and yes you heard me right! So if you are paying taxes and paying rent you seriously need to rethink your financial structure. A person, who earns a $150,000 income and is a renter, will pay an average of 1500 dollars a month rent in the area I live in. That is 18,000 dollars a year spend on rent that is not deductable. That means if you are in a tax bracket of 34% that will be 6,400 dollars to the IRS. If the 1500 would be payment to mortgage interest, there will be no 6,400 to the IRS. Now are you ready to save money?

5. But shouldn't I wait until the market bottoms out!

Oh yeah? What is the bottom? How much should a single family cost for you to see that it is already rock bottom? There is no answer to this. Many times the in markets like this we notice the bottom when it already passed us.

And every house has a different bottom depending what the previous owner paid for it or borrowed against it. The owner doesn't care about the market, he wants to wrap around his debt in the selling price. Which marked bottom will persuade him? So the bottom you should be focused on, is your bottom line

Ask yourself the following question to determine if it is time to buy.

Can I afford this mortgage payment?

Can I save in taxes on this purchase?

Will this property go up in value in the next 5 to 10 years?

If the Answer is yes then grab it!

Joel Silberstein

The Silberstein Group at Trump Financial

718.732.0383

917.660.3630

www.joelsilberstein.com

Real estate and financing frequently asked question continued

Real Estate Finance Frequently asked Questions

2008-05-21T22:42:08Z

I will write about the most frequently asked questions by many of my clients with regard to real estate financing, and let this serve as a general guide.

•1. I have $300,000 cash should I put it all down to get a lower mortgage or better yes to have no mortgage at all?

Answer it depends. If you will buy a more expensive home just because you have $300,000 cash and without putting down more money you will not afford the payments then you should consider putting it down

However if you can afford the mortgage payments, and the only reason you are putting down more money is because you don't want to deal with the mortgage bills let me ask you these questions.

Would you burry money in a tight sealed pot somewhere on community property?

By paying for the house all cash you did just that! You paid for an asset that doesn't belong to you essentially the government can foreclose on your property if you owe them $2500 in water charges or environmental fees, in my book that's community property.

Would you deposit money in a bank account that does not always allow you to withdraw it? Well it's not to say that you will not be able to withdraw your money only to say that you have to qualify before you do. Would you? Or when coming to the bank to withdraw your money a very pleasant person will politely tell you we are very very sorry but the bank is tight in cash now and we cannot give you your money back at the present time. Would you invest in such a place?

That's exactly what you do if you pay off your house, most people go back to their property when they are in need of cash thinking they have enough money in it. But guess what the bank will deny you a loan if the market is though will you put $300,000 in such a position? Staying liquid is key Look at all the banks that survived this crazy market only the ones that remained liquid so you do the same!

But I hate bills what should I do?

By having this money invested you can have money paid to you monthly basis for as long as the money stays invested and that can even help you pay your mortgage.

2. I am a Senior Citizen and I want to buy a house what type of mortgage should I get?

Answer. You should get a Reverse Mortgage, even if you have money to put down for the house don't use that money, have that money invested and out away for case of emergency. In addition, let it earn for you a rate of return.

A reverse mortgage is a mortgage that is in reverse. Normal mortgage you borrow lump sum and pay it off (exactly what amortization) A reverse mortgage is the bank gives you a lump sum or smaller monthly sums, and you balance slowly grows upward reverse from paying it off. The bank will give you a reverse on either a house you want to buy or on a house you already own to free up some cash. What A great way for freeing up cash for people on a fixed income i.e. retired folks.

Ultimately Consumers Drive the Markets

2008-05-06T09:23:08Z

But Blame we still assign to the institutions, like the feds and investment banks.

In an article in Bloomberg today UBS a Swiss based investment banker, is to cut 5500 jobs due to clients i.e. investors withdrew 12.2 billion dollars from their accounts Leaving them with significant less capital, leaving them no choice but to cut back o n their expenses.

Let stop and think for a second.

Question: Why would investors take out money from UBS?

The Answer: Subprime mortgage losses!

Question: Why didn't you take out the money before the investment into sub-prime mortgage loans took place?

Answer: Because I am an investor and I take risk! I felt that UBS had a strong reason for diving in head first I wanted to see if the UBS Strategy will ultimately pay off

Question: Did you feel comfortable about the newly found underwriting guideline at the time?

Investors answer: At the time I taught that since Home prices are on the rise, a lot of baby boomers are soon to be retiring therefore new second homes will be bought pushing the real estate prices further up, therefore the 100% loans and the no doc loans made sense because even if the loan is a 100% of the value this year, Next year the loan will only amount to 95% and so on year after year.

Question: Have you considered the potential of the need to repossess the house due to foreclosure and in that case your money will not perform even if your principal investment might be protected but it won't bring you a rate of return

Investors Answer: you right I didn't look into that, but I had faith in UBS and in their experience!

Question: so why change of heart now?

Investors Answer: I don't know I don't feel right!

Conclusion: The Investors does not feel right with having money with UBS but he did feel right before. So I have to quote Robert Kiyosaki, "There is no such thing as a risky investment, the investor is risky. By not educating himself correctly about the investment he is risky" So he will withdraw money look for a safer place to park it into like bonds (Mortgage bonds included) driving risky stock market down for a day or two and driving the bond market up for a day or two. In the interim, better rates for consumers.

Sincerely

Joel Silberstein

The Silberstein Group Mortgage Team

At Trump financial.

2041 The Year That Social Security trust will officially be out of money

2008-04-06T13:08:04Z

What A magical year!

Just 3 years after the most conservative mortgage client would have paid off their house, reduced their biggest bill so to speak, now they can kick back and retire get 3 years of social security!

Bunk! We are out of money the young polite lady on the other side of the phone says, as in matter of fact we need to put down the phone because the government only printed so much money to pay for the first 3 minutes of the conversation only....

Ouch! what an awful situation. the good news though, there are other ways called non qualified contribution you can save money in for retirement purposes and one way has to do something with the mortgage. as in matter of fact the non qualified label stands for government, They they are not qualified to control it!

Think of it

Don't rely on the goverment for anything, just use the platform they provide know it, and use it well.

Sincerely

Joel Silberstein 2041 The Year That Social Security trust will officially be out of money

Think about your clients while your competitors think about themselves

2008-04-06T12:38:49Z

I thought it is a great cartoon it can be found on http://www.msnbc.com/

What I learned from that is That while the battle between the sharks goes on, there is another company doing something very right! Google always was the leader for adding value to the consumer. allot of free things. I can even remember talks in the investors circles if it pays to invest in google, What value do they have what is their product? but in the mean time google kept on adding value opened up business services add-words free search engines to websites and desktops. this is the way they grew they focused on the value they bring to consumers not by swallowing the competitor, Not by violating (or being accused of)anti trust laws.

The same we should all behave in our respective businesses, don't focus on what you will be getting out of it, just add value and keep on doing it. If you take care of enough people there will plenty who will take care of you! (Misquoted quote from Zig ziglar)

Just a thought!

Sincerely,

Joel Silberstein

Great News on inflation today

2008-03-28T10:23:59Z

The PCE reading, which stands for Personal Consumption Expenditure is a report released every month by the feds, the looks back and it measures inflation. (How much buying power the dollar lost if any)

As I wrote before, inflation is the worst enemy for long term bond or mortgage rates. With a great reading on inflation today fear of fast inflation was tamed and that means better mortgage rates.

If you care about detail read below, The PCE Report is a monthly report reporting on the previous month.

There 2 parts to this report, the PCE that includes all goods and services that a person on the personal level buys or pays for. Then there is the Core PCE, which looks at the core alone and excludes volatile Industries like food and Energy. The fed’s target rate of inflation (Yes There has to be some inflation) is 1-2% year over year.

This months’ reading was exactly 2.0 which is in the feds target Zone. Which means that the fed’s actions to keep the economy flowing paid off for now! Regards Joel Silberstein The silberstein Group

Another 200 billion dollars now available for the mortgage market

2008-03-19T10:34:59Z

Another Announcement calmed fears in the financial markets. The Office of Federal Housing Enterprise Oversight, (Makes me wonder how do they come up with these names?) Just announced that they just lifted a capital restriction they kept Fannie Mae and Freddie Mac that kept them from buying to much mortgage bonds, or some other restriction I do not know exactly-what it was, that is now lifted thereby making available yet another 200 Billion dollars for the mortgage market.

In My yesterdays post I mentioned the feds are not responsible for making the mortgage market better but for the general economy in all market as a whole. The Announcement by the OFHEO is a measure that exclusively impacts the mortgage market, Just like the TSLF mentioned in my previous post.

Make it a great day!

Sincerely

Joel Silberstein

The Fed's rate cuts and its intended outcome

2008-03-18T15:02:14Z

The feds Primary Job is to monitor and control to some extend the economy as a whole. there job is not just to provide low interest rates to the housing market.

One of the ways the fed can stimulate the economy is by cutting their rates. By cutting their rates money is cheaper so banks can borrowand lend out. Not necessarily for home-loans but for business loans, etc. If there is more money available housing will enjoy something as well.

The side-effects of a rate cut is

the potential loss of value to the dollar.
Inflation
and higher mortgage rates.

Benefits of the rate cut is primarily for

Commercial banks that are in business of checking and savings type of banking.
Home equity loans that are typically have a 10 year life.
Auto Loans
credit cards.
Business loans

As I wrote above the benefits are intended for the economy in general and not necessarily to the housing market. The housing market can initially suffer by getting higher interest rates due to bonds being enemy #1 of inflation.

An example-of a recent fed move to benefit the Housing market exclusively was the Treasury Securities Lending Facility introduced for the first time last week.

Current Financial turmoil greatly resembles what was happening during the great depression.

2008-03-17T16:11:31Z

It is Amazing what is happening in the financial markets.

History repeat itself. Well it surely does, but not always exactly the same way, and not always to the same people.

There is a well known proverb that a smart person learns from everyone and everything around him. By learning from some else's mistakes. He spares the painful ordeal of experiencing it himself.

A Quick look at History

During the great depression, banks where foreclosing houses in record numbers. Taking away the homes of good paying Americans, people who were on time with their bills were stripped of their homes since the banks who where lending the money where short on cash, because investors withdrew all of their money from the banking system due to the stock market crashing and the investors had to pay back money they borrowed to invest. With the banks being out of money they had no choice and they called all their loans due.

On the news today is Bear Stearns. What's happening now is sort of the same thing that happened in the great Depression. Bear Sterns was in big trouble due to having a lot of exposure to the sub-prime loans that generated great loses. and as investors lost confidence in bear Stearns, that created a run on the bank situation, where investors are rushing to withdraw their money from bear Stearns, only to further exacerbate the liquidity crisis (shortage of cash).

What does this mean to the Consumer

This means that there is going to be a lot less money available to consumers in terms of loans, despite the feds cutting rates. Since money is primarily available to consumers by lenders like bear sterns or Fannie Mae, who get their money from individual investors and not from the government. If investors lose confidence in mortgage back securities, there will be a lot less of it and that means less money for real estate loans even if the fed cut rates. With the fed cutting rates that will be a good infusion and temporary cushion, however not the complete solution.

Action item for this market

Is to realize that the house /equity is not the best place to keep your money in. First of all, it is because you are essentially locking your money into an asset where you cannot withdraw it from there only in a lending favorable situation, or in times when there is a credit crunch or liquidity crunch. In times like these when lenders don't have cash, (like Bear Stearns) you are not going to be able to cash out! Even if that means not sending your son to collage, even if that mean money for a liver transplant!

Second reason why equity is not the best place to store cash, is because you are not diversifying your risk. Real estate markets are directly related to the lending and interest rate environment. If it is harder to finance , prices come down. That means keeping your money in a vehicle that might be in a depreciating state when you need it most. But by diversifying your equity instead of paying off one house, you have a better chance of having the money available when you need despite temporary market depreciation.

Lets learn from the lenders who weathered the storm, They weathered it by diversifying their assets. Lehman the close rival and competition to Bear Stearns is well positioned. They have a line of credit of 2 Billion dollars! And they achieved that by diversifying their assets globally, and in many different market unlike Bear Stearns who primarily focused on Mortgage Backed securities in the US.

Action Items in summary,

Do not dump all your money into the house, Instead diversify throughout markets and international markets.

The reasons are

•1. Because you want to remain liquid regardless of lending landscape

•2. Because you want to diversify your assets in order to diversify your risk (like Lehman)

There are many more reasons but to start out with these 2 is quite powerful!

Click here for the LA Times Article

Call me if you would like to weather proof your situation .

By the time I was done with proofreading this article, Bear Stearns was already acquired by JP Morgan Chase for pennies on the dollar.

Will Fed rate cuts result in lower mortgage rates?

2008-03-02T13:30:37Z

I get quite often calls from my clients and Realtor partners every time the fed cuts rates (more often than not these days) asking me Is it a good time to refinance now since rates should be lower due to the recent cuts?

The answer is it depends, how do you like that for an answer!

It depends on Inflation and the reason for that is,

Would you lend your cousin or friend $ 5000 for him to repay you $4,250?

That's exactly what inflation does to money; it takes away buying power and 5000 dollars in 5 years is just like $4250 dollars now, assuming a rate of inflation of 3% over 5 years.

Since a mortgage is a pledge from the borrower to the bank to repay their money in a 30 year period time, it better be worthwhile for the bank to wait until they get back their full amount. Now if inflation is at 2 % a year (the level at which the feds try to keep it) that means the dollar is worth 2 years from now 98 cents instead of 100 cents. That means Take 30 years (the time it takes to pay off a mortgage) X 2% (rate of inflation) =60. What that means is, that by the time the mortgage is completely paid off the money is now worth 60% less then at the time the mortgage started out.

To hedge them against inflation, lenders typically charge an interest rate high enough to cover profit in addition to inflation.

But when inflation becomes higher or unpredictable the lenders will have to charge an even higher interest rate.

Reasons for inflation includes a cheaper dollar IE, when the feds cuts the rates it charges banks, Then the dollar is easier to get for a much cheaper price, thereby increasing inflation rates thereby increasing Mortgage rates. Therefore we conclude that the feds have no direct influence on long term Mortgage Rates

For a longer version of this answer click herefor Bernanke explanation.

Why the market is where it is

2007-11-29T09:27:42Z

Why is the real estate market slow?

Well my thoughts are that the reason why Realtors and developers are sitting with large inventory and even pre-existing housing sales are in the slump, is because consumers are scared. I am not going to blame the media but they put out the story as it is no explanation just allot of numbers and we all know numbers can sometimes be confusing.

We have the lowest rates in 2 years

The Chart above is a 2 year history of the Fannie Mae 6% Mortgage Bond. The lower the bond moves that means it has lower value therefore consumer has to pay more then 6% the higher it moves the 6% bond has a higher value therefore better pricing to the consumer. Kind of Confusing? yeah I know But that Proves my Point!

The Average consumer is completely confused of the economy in total especially in the Real estate Market!

We as professionals have to educate them

Here is what I think we still have going for us

•1) housing prices have not gone up since the so called meltdown

•2) Employment is still strong Remember that employment rates is a very strong indicator as to where the market is heading, Since the employee that earns and pay what's driving the market and not the investors that gamble and play.

So what is missing consumer education?

Remember that Matt Lauer is getting paid for bringing a story that's exciting not explanations That's Boring!

That leaves the bulk of the work for us so let's go out there and make a difference

Sincerely

Joel Silberstein

Cutoff to Mortgage interest deduction on Mansions - By John Dingell D, Michigan

2007-10-25T09:46:45Z

I read in the

A real estate publication in New York real estate Market That John D Dingell Chairmen of the house energy and commerce committee, expects to introduce a comprehensive Climate change reform legislation once Congress returns this month.
In an effort to reduce energy consumption the bill will Cutoff Mortgage interest tax deductions for all houses with 3000 square feet and up.

I learned one thing from Sandford C. Botkin, tax lawyer, CPA, former IRS attorney that whenever Congress proposes o do a Tax simplification something bad is coming. Now especially that they propose an outright tax deduction elimination!

Now what this bill will do in my opinion is penalize Congress them self's with less tax income because as a general rule the Rich will find another way of playing the system energy consumption will not be reduced in this world of technological evolution when even computers have to build like a military device to accommodate Have gamers

Another point that this bill goes to show you that you never know what tax law bring later therefore when dealing with retirement dollars it makes more sense to play with nonqualified retirement plans that your taxed on the principle dollars invested. (Refer to missed fortune By Douglas Andrew)

Sincerely

Joel Silberstein
Mortgage Planner

U.S. Rep. Chris Murphy (D-Conn.) Hope to ban Compensation on Subprime Loans

2007-10-19T14:21:34Z

I read in the Realtor Magazine on-line that Chris Murphy democrat of Connecticut wants to ban the YSP, otherwise known as compensation from the lender to the mortgage broker on sub-prime loans.
He claims that this forces borrowers to pay higher rates

A Classic example of socialism. His intention is to save rates for the consumer right? or at least thats what he wantsyou to believe! What this will ultimately do is the following

Increase fees up front from the borrower (unless he wants to ban that too)
Decrease the supply for the sub-prime market which will ultimately push rates further up
Get borrowers to loose the tax deduction they now have on interest. By shifting the compensation that brokers have to the from end meaning that the borrower will have to pay it in form a fee) thats deems it not deductible only when amortized over the life of the loan! most people don't stay in this type of loan for a long period of time therefore getting them to loose is it altogether!

The Mortgage Business is already a very regulated business. further regulation at the point of origination will not deem it more responsible, but possibly drive this entire market out of business therefore decreasing homeownership in the USA

Just another thought

Joel Silberstein

link to article

http://www.realtor.org/RMODaily.nsf/pages/News2007101805?OpenDocument

Shocking revelation!-Disclosure Laws Have Big Impact on Prices

2007-10-19T08:58:51Z

Link to the article

http://www.realtor.org/RMODaily.nsf/pages/News2007101803?OpenDocument

I am Not going to cut and paste the entire article but the bullet point the articles brings out is that the new disclosure law's that requires sellers to disclose if the property is in a flood zone or airport noise zone, hase a big impact on prices as high as 4% in certain parts of the country!

Wow Shocking, where have you been living beneath a rock? did you do business out of there?

Standard work of a mortgage Professional is to determine monthly payment for the borrower

That consists of

Principal and Interest
Hazard Insurance
Flood insurance (if required)
Home Owners Association fees
Taxes
Total debt

It was always a big factor, the only difference is that prior to the law the problem was on the borrowers side like the payment is too high borrower cannot afford it but now, it is another tool in negotiation up front.

It might even turn out to be a blessing in disguise: that the reduction in price will let more borrowers qualify in In spite of the higher monthly fees due to flood insurance.

Just another way of looking at it

Sincerely

Joel Silberstein

Example of Mortgage Planning in the Pittsburgh Post-Gazette

2007-10-17T17:05:55Z

link to article

http://www.post-gazette.com/pg/07284/824509-68.stm

Affluent senior citizens tapping reverse mortgages for extra cash

Thursday, October 11, 2007

By Tim Grant, Pittsburgh Post-Gazette

Daniel Marsula / Post-Gazette

Reverse mortgages have been a popular tool for cash-strapped retirees, but wealthier folks are finding ways to use them, too.

With a mansion worth $21 million, a wealthy retiree near Philadelphia decided the most logical way to access that cash and improve his standard of living was to take out a reverse mortgage on the house and invest the money for more income.

"That's obviously an exception," said Douglas Ziegler, a reverse mortgage officer with Gateway Funding in Horsham, Montgomery County, who handled the transaction for a 64-year-old man. "It's not your typical loan."

Yet deals like that are becoming more common.

Once considered the option of last resort for poor retirees struggling to keep up with the cost of living, reverse mortgages are now growing in popularity with more affluent senior citizens.

Eric Declercq, managing director of the reverse mortgage unit for Countrywide Financial Corp., said the company had recently done two reverse mortgages for about $10 million each.

"We believe the future of reverse mortgages lies in improving the quality of life, freeing up cash for travel, leisure and investments," Mr. Declercq said.

A few of my Own Comments

You will see that The affluent will take a product thats designed to help the poor and twist a little and get more of it then the poor for whom it was originally created. Don't they have a way with money? (refer to my previous post)

Also Note in the article and I quote "that the affluent want to improve their standard of living uh" pretty intriguing! don't they already have enough money? the answer is that of course they have saved up allot in tax deferred vehicle's like IRA"s and 401K and the like they are just looking for the Best way, less taxing, a way thats more for them and not for uncle sam!

Also note the at the very last line of the article where Mr Declercq is quoted he has the following priorities

Travel

Leisure

Investments. This explains why so many people are struggling financially!

Sincerely

Joel Silberstein

Mortgage Planner

Comment on Ric Edelman: Strategies To maintain Wealth

2007-10-14T12:49:46Z

Today while listening to the Ric Edelman's radio show a women called in. Apparently she was elderly and she owns 2 pieces of property one she currently lives in, and another an undeveloped piece of river front property and as large as 14 acres.

Her question to Ric was that the house she lives desperately needs renovation and she is asking Ric if she can take out money from the other undeveloped property through a 1031 exchange.

Rick answered that 1031 exchange is merely a tax deferred method it takes all the money you get from the property you sell and rolls it into the new property therefore you will not have any money out of this transaction to renovate your home, therefore concluding that this strategy is not for her.

What I was starlet about was that he cut her short by answering what he did and elaborating on any other strategy therefore she might conclude from his answer that she should sell the property and incur a large capital gain and take part or the whole money (I don't know how big of a gain there is going to be) to renovate the property!

The problems I have with this is as follows

Unnecessary tax to the government
Taking an appreciating asset like Real estate and converting into a non appreciating asset that's analogous to buying an expensive Bentley for its stereo system that will be taken out.
For Failing to show the client how to achieve greater financial comfort while holding onto the property and still achieve her objective of getting cash for the renovation of her other property

Now what would you professionals say about this conversation above?

I will follow up with my strategy in my next post!

Sincerely

Joel Silberstein

Mortgage planner

Case study: Retired Client looking For Advise

2007-09-12T09:22:22Z

She approached me with an interesting question

should I pay for the house all cash or should get a mortgage since I making a nice profit of the house I am selling?

Now this is a Question we right away jump and say No don't pay for the house entirely all cash Just get a mortgage. after all this is what we sell our livelihood we are mortgage brokers our name will predict our answer!

But what is the right advise to the client?

What I answered to the client after taking every detail of her income and assets was, that being that thats all the money she has, she should not dump all of it into the house. It will be very easy to put it all in there, but not as easy to retrieve it since she is retired. Now of course a reverse mortgage is always an option but how much she can take out will be determined based on life expectancy, and will not be a fast process!

Therefore I suggested to speak with a financial planner and to determine how much income she can realistically generate with the cash she has on hand, and based on that to determine how much of a conventional mortgage can she support with her total income.

What we will have accomplished

1) We have access to the money and principle at all times.

2) if the house goes down in value she still has her capital

3) We just reduced her tax liability on her total income since she has mortgage interest to deduct.

Sincerely

Joel Silberstein

PS. Of course there are other ways but I just wanted to point out this strategy

Can you do a NO DOC Loan?

2007-09-10T08:28:54Z

Finding solutions for our clients that is the key and not merely quoting Rates!

A lady called me up last week and she wants to get Pre-Qualified for a mortgage. She selling her house and buying another for a little less since they cannot afford the mortgage.

Looking into the situation a little further I came up With an entire different picture.

She has an interest only mortgage now and she is barley making the full payments on it. Her income is $2600 a month and the mortgage liability is about $3500.

I mentioned to the client that she will not qualify for a mortgage she is looking to get since her income is to low. So I got response something like this

Can you do a NO DOC Loan?

NO DOC In No Solution for not having any income.

I get that allot from clients that self prescribe themselves solutions that are in no way a solution just a temporary band aid. Like refinancing into an option arm program to hibernate from the mortgage payments.

No I said to my client, you cannot pay more then 42% of your monthly Income. income can be supplemented by having a rental income but you cannot go above that line Either no doc or full Doc.

However if you are above 62 years old you can qualify for a reverse mortgage and can have a mortgage without any payment for as long as you live in the house. you can have that on a purchase and on a refinance.

Wow the client said I never heard of that!

Consumers Blocking themselvs from success

2007-08-29T22:40:13Z

Some Buyers who own mult family property are getting paid cash and not reporting it therefore saving on taxes.

This is a huge mistake!

First of all it is against the law,

And second of all, your building is only worth according to the income it yields. if it yields less (according to what you report) it is worth less! Any commercial mortgage lender will give you a mortgage only against the income of your property and not merely on the comparable. And in most cases the income on the property needs to be substantiated before the lender can determine how big of a loan the property can support.

the same disadvantage you might also have when selling the property, since any savvy buyer will ask to see the schedule E of your tax return to substantiate income and expenses you might not get the full value.

So we as real estate professionals or mortgage professionals we have to advise our clients to shoot straight and reap the benefits.

Look at the taxes you are paying as an investment in the value of your property!

Just a thought

Joel Silberstein

Great example from 4 large Banks

2007-08-26T10:12:11Z

Last week 4 large lenders stepped up to the feds discount window and each borrowed 500 Millionon dollars, these banks are Bank of America, Citigroup, JP Morgan chase, and Wachovia. .

The speculation is that their motive was largely symbolic and to calm the market. But what I am thinking is, that they jumped on an opportunity to create arbitrage. The normal discount window is 6.250% and has to be repaid the following day. Here they are presented with a rate of 5.750% and can be repaid in 30 days now thats an opportunity!.

Banks know where to invest their money for a quick profit, and are in the business of borrowing money for less lending money for higher interest so to create a little spread between their expanse and their income and thats called arbitrage!

Now I think we can learn this practice from banks on how to do this ourselves!

Call Me so I can send you some litrature as to how to go about it

Sincerely

Joel Silberstein

Responsibility At the Mortgage originator Level

2007-08-23T16:33:51Z

Good after noon My friend's

Having read my mentor's Tim Davis blog today where he wrote about whom responsability it is for this mess we are in. Tim assigns some or all responsibility to the consumer.

I agree with him but we cannot exclude the mortgage broker entirely who where supposed to inform their clients about the challenges down the road, and how the loan will preform in a few years from now and not just merely quoting rates, a trade that true mortgage planner's are conforming too.

Furthermore, the banks who shut their doors they all originated Loans which no body in their right mind would lend their own money on.

A little more on that note, I spoke to an account representative today at Bank a. Bank a (as I would like to call them here)was the lender who used to buy all the loans from ABC and bank of Arizona and securitize those loans on the secondary market. When Lehman declined to continue to buy them toward's the end of this market as we know it, thats when ABC and the like shut their doors.

But whats really interesting is, that Bank a is still in business and still originating no doc loans and stated stated loans and still doing most of what they used to do prior to this meltdown and for not so much higher rates. Their philosophy was, we do them but we need to add risk into the equation and they did. they did not dominate the market because they where always more expensive then ABC on the wholesale Level but guess what, they are still around!

Bottom line, Dont trade in your principals and ethics for greed, because greed tends to loose and then you can be left without anything so keep your principles and ethics.

Wow I cant belive I wrote that

Sincerely Yours Joel Silberstein