Ok everyone - here is the first question in what will be a weekly series on -  

what would you do? ----     

You have excellent credit -  785 scores...  

you have been on your job 15 years and make a solid income....  

you have money in savings and a very nice 401K built up.....

you purchased your home at the very height of the market-------   you owe 400K and you home is now worth 275K...  

you have made assumptions and believe it will be 8 - 10 years before you break even on the value of your home......

what do you do?

1) - continue to pay the mortgage?

2) - request a short sale?

3) - tell the bank the keys are in the door and like they say in old Mexico city   AMF

I am not looking for the ethical answer nor am i looking for a expose on what is right or wrong......   just a simple decision on what would be best for you and your family.... 

so     What would you do?

All those billions of dollars earmarked to modify American consumer mortgages have not been policed. Loan modification departments at the major lenders are jokes! I have personally been involved with attempting to help modify clients as well as my own loan. I do not do this for a fee. If you want to understand just how much the US Government is in touch with the billions they targeted for these programs, simply call your mortgage company and ask if you qualify...... Overworked, Unqualified and no authority are the qualities of the people you will talk with. Most clients get turned down over a phone interview..... How can these banks turn someone down without documentation? How can these institutions not be held liable for helping consumers..... The US Government is nothing but ENABLERS who turn their back on policing the very guidelines they create.....

here is a scary thought -

what if every American homeowner who is upside down STOPS paying their mortgage?

Thinks the banks would start modifying their homes now?? This could become a reality in the upcoming months if foreclosures continue to drive down property values.....

Great insight from an Active rain superstar!

It seems as if every week there are new guidelines, requirements, licensing etc. to remain operating as a mortgage broker these days. It appears as if the big banks want to be the only option to turn to when you look for a mortgage.

Every day I recieve a call from long standing veterans in the industry asking my opinion of the state of affairs in the mortgage broker world.

People - It ain't pretty.....   

There are several options consumers can turn to when looking for a mortgage.

Mortgage Brokers - known to produce 65% of all loans originated.

Mortgage Bankers - a mortgage broker that utilizes a warehouse line and then typically sells the loan off to an investor.

Banks - we all know about them. I reccomend to support your local banks and leave the big boys alone. - Before dealing with a bank, be ceratin the will be around long enough to fund your loan. More bank failures are imminent!

Credit Unions - very strict underwriting guidelines but possibly the best terms in home financing if you qualify.

Private Investors - typically equity lenders that will make certain the reward far outweighs the risk.

OK - Mortage Brokers and Mortgage Bankers are being slammed with new guidelines such as increased net worth, more liability to repurchase bad loans and generally more sructiny with their closed loan packages. Broker cannot make loan decisions. Mortgage Bankers can make lending decisions but are very scared to do this currently because investors do not have to buy a closed loan and it could remain stuck on the mortgage bankers warehouse line - which creates a whole new set of issues.

Banks march to their own set of rules. Yes, some of the rules are more stringent, yet some of them definitely tip the scale in favor of banks surviving this mortgage meltdown and outlasting the survival of mortgage brokers and mortgage bankers.

In this risk/reward world we live in, expect to see more mortgage brokers and mortgage bankers close their doors. In a recent report I have read, 75% of mortgage brokers/bankers that were in business in 2005, just a few short years ago, are now defunct. Consumers are witnessing a new breed of loan originators and should expect more to come, possibly at an even rapid pace.

The intention of our government is to regulate the loan process but in my opinion, when you destroy an industry and eliminate 75% of the competition, You know what happens when competition disappears? You got it... inflated rates..... I will keep everyone posted on the state of the industry but for now... rates are at the lowest point ever and it is a great time to refinance or purchase a home.

When searching for a new job many potential employers pull a credit report......

I am interested in learning what a typical loan originator / real estate agent's credit profile is....

please click the link below and answer the one question survey...  i will update results regularly...

this will help everyone get a better understand where they stand compared to the rest of the industry should you apply for a job and have your credit pulled in the near future......

Let me begin this post with this disclaimer…. THIS IS NOT AN ATTACK ON DAVE RAMSEY -  he is an idol of mine… I have purchased his products and believe in what he is all about….   This is simply the facts on how their endorsed agents handle consumers and how Dave Ramsey personnel handle complaints…..

I am a huge fan of Dave Ramsey... honestly, he doesn't preach anything we don't already know but his delivery is spot on and about as real as it gets..... i recently received a loan proposal from one of Dave Ramsey's "endorsed agents"...

 - let me ask the Active Rain community.... is 2.75% on the front end in ponts + junk fees what you would expect from the man, myth and legend called Dave Ramsey?   I had to take a pic of the actual quote and insert into this post as I was not able to cut and paste it.... take a look for yourself........  i have left out the company and originators name, just as i did in the initial email i sent to the folks at dave ramsey ---   see their reply below......  ** as a side note - i copied about 13 of my long time friends from AR....  we all know them......  these people know exactly how this went down....  it is a disgrace!

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One option I would suggest is going FHA.  This reduces the monthly mortgage insurance by almost half.

Home Loan Specialist

XXXXXXX   Mortgage

Office: 866-xxx-xxxx  

Cell:  

Fax: xxx-xxx-xxxx

Exclusively Endorsed by Dave Ramsey:

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I have sent Dave numerous emails and all they do is get screened by his workers..... see below... especially if you are a fan of his.... let me know your thoughts...  

quote on 9/15/2009 30 Yr loan 5.125% 2.75% points cost of points $9679.56 est closing costs $2825.00 APR 5.56% huh????? I don't think so!!!!
___________________________________________________________________

Dear Dave,

I am a huge fan. I drive my wife and kids nuts making them watch you on TV and listening o your products in the car. I would give my left arm to be endorsed by you. I have tried multiple times but my requests go unanswered. With that said – I have a MAJOR concern.

I am an 18 Yr vet in the mortgage business. I believe in a fair profit. I believe in Dave Ramsey. I do not believe in flat out rip offs such as the example below………. *** I am NOT accusing the actual company off ripping off clients – however I can prove in an email I have possession of that the company in mention does not police their originators -- Let me break this down for you…. I was forwarded this quote from a past client who wanted a competitive loan proposal…….. My mission here is not to get anyone fired or punished but it is to make you aware of the lack of quality control your company has with regards to your endorsed agents…… in fact, I have removed the agents name and cell phone – if you want that information just give me a call…. I can forward the complete email…… regardless, this is not the Dave Ramsey I admire and turn to for advice on a nightly basis and I feel I owe it to you for all the free advice you have given me over the years. 

I quote this refinance 5.0% ( which is par pricing ) and 1 point. The one point is my paycheck and it covers associated loan costs as well.

Your Dave Ramsey endorsed agent is charging the consumer 5.125% and 2.75 POINTS!!! On top of that, the APR – which is what the government tells consumers should be used as the basis for loan comparisons – is incorrect! I have not seen 2.75 points since the 90’s and the days of the 125% second mortgage……. this is worse than banks overdraft and over the limit fees….

Dave – say it ain’t so. Tell me you don’t endorse this crap……….. I look forward to your response…. 

Lewis Poretz
President – Open Mortgage

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 Lewis, please send me the entire e-mail.  We take these issues very seriously. 

As an 18 year veteran in the business, you certainly know that all loan situations are different.  I would ask that you allow me to find out all of the facts before accusing XXXXXXX of being “crooks.”  That is a very hefty word to throw around.  We have worked with XXXXXXXX for over 15 years and never have I had an accusation like that thrown at them. 

I will definitely check into this once you send me all of the information. 

Thanks.

XXXXXXXXX

Director of National Sales & Sponsorships

The Dave Ramsey Show

877.410.3283, ext. XXX (voice)

______________________    Below is my response to the original email from dave ramsey people.....

Wow -  I think it is awesome you guys responded to this that fast…. 

listen, I am not calling that company a crook. The company does not create the good faith estimates, the loan officers do…… But I can tell you this – I am part of a weekly conference call of about 20 small and medium sized mortgage shop owners like myself all over the country… we call ourselves the mortgage mastermind group -  we are experts…..  we also have principals and morals and as Dave says  “ a heartbeat”….   I will gladly forward anything you request but I would like a phone call from you guys just telling me my client or myself will suffer no repercussions……  in other words… I don’t want any pissed off loan officer coming after my ass……  so I don’t want my name or my clients name passed out…. can you call and confirm that?

Lewis   410-956-0050      below are comments from my group, they all love Dave as well….   I thought I owed it to Dave Ramsey to blow the whistle… I just don’t want to get in the middle of this….

Shit, tell David Ramsey that he should chop off this loan officers hand, for using him as an endorsement, when she is raping this person.  Hey, I don’t see a huge problem with someone making $8,000….  But there is $9,600 in upfront points plus about 1 pt on the back end, which is another $3,500…..   so, $13,100 on a $351,000 loan amount?   Just a wee too much…..     if my client ever found this out, I would not have a client for life nor referrals.

Send it to dave along with a rate sheet

Send it to Dave along with a carefully crafted story and maybe he'll have you on the air.

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Lewis, I would have to send the customer’s information to XXXXXXXX in order to get the whole story.  It’s kind of pointless without that, wouldn’t you agree?  Making a judgment without that information is the equivalent of blindly taking your word over XXXXXXXX and forgive me if I decline to do that. 

If you won’t give me the information then I cannot help your client.

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at this point i sent him the complete quote along with the originators name and contact info ---

All I want is a call from you…  it is not the client you need to help…. he understands that it was a bad quote……  he can clearly see the charges in black and white…  it is Dave Ramsey’s reputation…   why are you defending this shit…   here   do what you will but if I find you passed my name out as the whistle blower and something happens to me or my family by some loan officer who has nothing to lose I am giving forewarning… I want myself and my client to remain anonymous…   please   why do I feel as if I am the bad guy here????…….

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and this is the BS i get back from someone who works for one of my mentors.......

1)     You refuse to give me all the information needed for me to look into this. 

2)     I have said that we take accusations like this very seriously and that I would look into this situation once you provide me the information I need to do so.  You responded by accusing me of “defending this shit.”

3)     You’ve copied 13 people in on the e-mail chain who have nothing to do with this conversation. 

4)     Your actions and your language are completely unprofessional.

5)     I will not waste a single minute on the phone with you.

6)     I will not respond to any further e-mails from you.

xxxxx xxxxxxxxx

Director of National Sales & Sponsorships

The Dave Ramsey Show

877.410.3283, ext. xxx (voice)

xxx xxx xxxx (facsimile)

Imagine - A new business model where consumers actually put their trust in the company handling their mortgages, banking, insurance etc.....

It's coming people.... and you are the one's who have been forcing the issue... 

yep - a financial institution with a heartbeat and a real honest feeling for the American consumer... an institution that has the consumer in mind first and foremost as opposed to the bottom line....

A place where you will be able to turn to for lending, banking and investments but in addition, a financial institution that listens and offers high quality advice regarding non traditional services such as helping consumers get out the financial mess they are in rather than attempting to discipline consumers for poor decisions.......

Hang tight -  I feel a new model being written... the winds of change are shifting...... and everyone of you should be congratulated because the American consumer's distaste for the way things have been done for a long, long time is coming to an end.....

As a mortgage professional I always ask other business owners, " how's business"? Just the other day my AC repair man was in the office attempting to get me some more cool air pumped into my suite as the heat was becoming unbearable. As he wrapped up his visit I asked my typical, how's business"? Man, I did not expect such a long conversation to follow.

He went on to tell me how life had been so good the past five years or so. He remained small all these years offering personal service to builders, socked plenty of money away and pucrhased several rental properties that had great cash flow and plenty of equity........

Fast foward five years......................... These properties now sit vacant. Most of them have lost so much value they are now upside down. Of course the loans he got on these properties were the flavor of the day at the time, 5 year interest only arms that are due to reset in 2010. And also of course, based on his great credit and some money in the bank at the time, they were stated income loans. And worse yet, those awesome builders who helped stack his money to purchase those properties who had always paid when the job was finished are now paying 30, 60 and even 90 days net..... and by the way.... stated income loans ain't no more................

If this situation sounds familiar, stay ahead of the curve before it is too late, understand your options and seek high quality advice from people who understand this business. Put a solid plan together to eliminate debt and monthly payments and stick to it.

Honestly - what is my home worth??

     ............  Often getting a home appraisal these days becomes a very humbling experience. We all have heard the saying "my home is my castle". Many times emotional values far exceed true market value when determining how much your house would sell for.

Foreclosures and short sales have pushed market values down. Way down... When determining the value of your house, an appraiser uses comparbles, otherwise known as comps. The house that sold for half the value of your house last month at foreclosure.... well that just pushed the value of your house down. No - it is not fair and given time you may be able to get more for your house than any appraiser can value you it at, but for lending purposes, it is what it is.....

Mortgage lenders have been battling the value issue daily. The new HVCC guidelines have been killing otherwise slam dunk deals. When refinancing a home, understand what you may be walking into. Know the facts upfront. For more details give us a call so you can make an informed decision before moving forward with any refinance.

How do I attempt to make clients bridge the gap between perceived value and actual value?  I ask them this question. - If you had to sell your house in one week, where would you have to price it at?

If you want a true estimate of market value for your property, get in touch with a high quality real estate agent. Remember, it is much better to be informed than lost in the shuffle. Be proactive and understand your options in today's real estate market. There are deals to be had out there. Don't miss out.

.........If you have been crushed by this economy – god bless you….

  REVERSE MORTGAGE MARYLAND