Lewis's Blog

One for the books... think FHA is no big deal?

2008-09-05T19:26:52Z

As I sit in the office tonight wondering if any other mortgage banker is still working at 5:30 on a Friday night the phone rings. A pleasant lady on the other end says "hello, I am calling for Lewis". I said this was me. She told me she was referred to my company by her good friends but she went with another local company that claimed to have the best rates in town, no closing fees, you guys know the story.

I have recieved these calls many times before but this one was different. My propects sweat voice turned to a quiver and she almost broke down on the phone. I felt her holding back her tears while she appologized to me. She was at the end of her rope. Apparently the other mortgage company had been working on her file a long time. I mean a long, long time.... I mean since March! I asked her why she was getting so upset and she said her loan officer told her she could no longer qualify for a 5.25% fixed rate 30 year loan.

I am getting good at playing psychiatrist lately so I ask a few questions, certain she is seconds away from losing her house. This lady was soo upset....... I asked what her credit score was and she said over 800..... I asked if she was self employed and sure enough she has been a W 2 employee at the same job 10 years.... I asked about assets? yep 75K in a TSP...... Value was not an issue as when she purchased two years ago she put over 20% down. I told her something had to be wrong...... By the way, the mortgage shop she had been working with for months has a pretty strong name in the area, i knew there had to be a catch.......

I took the loan app, pulled her credit, recieved the Retirement statement, W 2's and paystubs by fax and had an appraiser run comps. Pulled a caivers, assigned an FHA case number and walla.......... house gets appraised Saturday and loan got uploaded tonight....... appraisal will be done Monday.....

Want to know the problem with the deal? The broker shop is not FHA approved and it is a 95% cash out deal and Fannie / Freddie don't play that no more........ That's it! End of story..... I locked her rate at a smoking 30 year fixed rate and this bad boy is gonna close next week..... the loan had been with the other lender since March!!!!!!!!!!! Closing this deal will give me more enjoyment than any fee I could ever make....

PEOPLE!!!!!!!!! LISTEN UP!!!!! Stop with the lowest rate lender always gets the deal...... it never works out that way.... Get High Quality Advice when you are dealing with a mortgage transaction.......

Maryland FHA Expert

I am having a gas problem ... and I need help -

2008-09-03T22:47:33Z

Listen up people ---- I am having a gas problem.....

I have been using a local propane company for the last several years. I have always noticed a quarterly propane bill that seemed very high but never paid much attention. Lately, I like most of you, have been scrutinizing all outgoing expenses. Seems as if my quarterly propane bill was $300+ each time and it appears as if I am paying duplicate bills all the time.

I call the propane company billing department and ask them why my bill is so high all the time. They said I am on a quarterly cycle to have the tank topped off. I told them the only thing the propane powers is a gas fireplace that gets used 12 - 16 weeks a year. They said I need it serviced and I probably have a gas leak. They serviced it, found no leak, charged me $250 and told me I did not have a gas leak. I got my next bill, $300+ again. In the summer time! They said it must be the pilot light. Whatever --- a pilot light burning $300+ of propane in 12 weeks? Ok... I turn off the pilot light!

I get my new bill this week. Damn if it wasn't $300+ again. I had enough. I called the billing department and told them come get the tank, they can have it back. They billing rep replied, with a noticable attitude, "no problem". She advised me of the early termination charge and the tank removal charge. And they would in addition prorate my next "fill up" and at that point my account would be terminated.

Someone tell me how to fix my gas problem????? I really do want to keep my fireplace but $1200 per year for one propane fireplace?? Is that normal?

America - Land of FOREIGN opportunity???

2008-09-03T16:52:17Z

America - Land of Foreign opportunity ? --

A large Korean bank is very close to gobbling up a huge percent of Lehman Brothers. China is dumping Fannie/ Freddie shares in favor of US Treasuries. Oh yes - there is gold in American financial landscapes if you have the bucks to play and foreign investors are jumping in with both feet. As conventional loans continue to tighten guidelines, look for a new breed of investor to enter the US Mortgage market with completely new underwriting guidelines. What this means to you is still up in the air but changes are coming...... stay tuned!

............... Maryland FHA Expert

Whatever happened to Baseball?

2008-08-29T00:40:52Z

Whatever happened to Baseball?

In these days of stress and uncertainty it is always a pleasure when you have the opportunity to take your mind off the craziness for a bit.

There is a new book out that will bring back memories of your childhood and have you grining from ear to ear. If you played youth baseball you gotta read this book. If you want to teach your children about life, read this book, then read it to your kids.

I am not one to hawk a product for someone else over the internet. Matter of fact a make it a rule not to. I have no monetary involvement in pushing this book. I do however know the man who wrote it. Jeff Potter had myself and many other parents scratching our heads over many decisions he made on the field. He would prove us wrong every time. From starting what many considered the worst pitcher on the team in a championship game only to have him throw a shutout against a team that should have crushed him. To benching the best player in the state to make a point. You will be smiling when you read this book. I was as I delightfully relived my youth.

After every chapter I found myself shaking my head -- those were my experiences playing youth baseball. I learned those life lessons the same way Potter teaches and coaches, although I never quite "got it" at the time. The kids Potter coached eventually all "got it". I have never been a big reader but I read this book from cover to cover without putting it down. If you are a sports fanatic and have kids you will thank me for turning you on to this book.... if you want to teach your children life lessons or if you yourself need a reality check, get this book!

read this book then pass it to your kids...... it is that important and teaches life lessons in ways that hit home!

Timing the market for that magic rate / property value sweet spot......

2008-08-27T07:56:53Z

I think it is inevitable. How rates have been maintaining the level they have been hovering at the past few weeks I have no clue. I guess the mortgage backed securities market is just in a wait and see mode. Fannie and Freddie today reported large profits on recent loans. But it is coming. A rate correction.

The possibility of rates dropping are still a reality, but sooner or later, they will turn for the worse. Chatter from the Fed this week is to expect a rate increase and soon. Take interest rates out of the equation and you will find home prices an unbelievable bargain and many predict housing values to continue to slide.

So here is the big question - Are higher interest rates a fair trade off for buying property at 60 - 70% of values from just three years ago? If you are looking to time the market when it hits the sweet spot of low rates and low values this could be the time. Consult with a mortgage expert while the timing is right!

A giant has fallen - Carteret Mortgage says good bye

2008-08-26T18:18:33Z

If you haven't heard yet, Carteret Mortgage announced they are closing their doors. Of all the net branch organizations, this was the one I respected the most. Trust me - I was a net branch for four years. The founder of the company said they simply ran out of money.

I believe the net branch model is one that will not last this mortgage crisis. There are just to many cowboys out there running free with the title of branch manager. Regardless of the regulations, forms, and policies you have in place, the model just doesn't work. You simply cannot hold the string tight enough and police the branches effectively. Carteret however is leaving the industry with it's head held high. I think they just made a smart business decision. Don't believe you have seen the last of Mr Weinstein. He is one smart man. He built an empire and was well respected compared to many of the other net shops.

I anticipate a few of the other big net branches to tumble. It is always horrible news when people are without work, but maybe a few more of these are what the mortgage industry has in store for itself to be able to make a correction. You see, these loan originators get 85%, 90% sometimes 100% of the fees. How can a company pay that much mony and still have enough handle the bad loans and buy backs the cowyboys create. Not to mention any RESPA, State or Federal violations.

God bless the many unemployed mortgage originators and office staff. Find yourself a nice home to lay your head. Don't just demand 90% pay splits but look for a company with values that can weather the storm. The going split for originators has dropped to 50% in the DC / Baltimore area. That is what any company that will weather this storm pays anyway. I have run the numbers over and over, if you do not net X amount each month, eventually you will die. The net branch model kicked butt when originations were up because the company made a per loan fee typically. With loan volume down, it is now harder to pay the bills.

If your a victim to a layoff to due your company being shut down and you are a talented loan officer - do me a favor stay the course.... you were meant to be here and will reap the rewards in a few years..........

for more info on Carteret shutting down click here Carteret will shut it's doors

I for one am sad to see them go. Some of the other net shops I could not say the same about but this one kind of hurts...... anyone with comments or predictions regarding the net branch model - let's here you!

Blackberry or iPhone?

2008-08-24T20:14:16Z

I am now eligible for a new phone from AT & T. Man, I think I have been with them ( Cingular, Cell One etc..) since the time I had a bag phone. I am a cell phone junkie. My wife and three kids all have phones on my plan so I become eligible for an upgrade quite often and take them up on it quite often as well.. :-)

I have been very happy with my Blackberry Curve. I have tried just about every other PDA on the market and nothing seems as reliable as my trusty Blackberry. I got my wife a iPhone over a year ago. It was a blessing for me because she now reads her email daily as opposed to, uhhh, never. She swears by the phone.

I have used her phone several times. The display is very cool. The phone is very cool. The keyboard takes a lot of getting used to. But, it just isn't a Blackberry. The new Blackberry Bold is due out soon - at least they keep telling us.... I am holding out for that bad boy but I am getting the itch and the Bold keeps getting it's release date pushed back.

So here is the question - Blackberry or iPhone? or any other in between?

LOOK OUT!! there's an Option Arm headed towards you ~~~`

2008-08-23T16:58:08Z

The calls are now coming in the office with greater frequency. "Mr. Mortgage guy, I am in an Option Arm and now I owe more than my house is worth". The helplessness in the voices on the phone I hear are sickening. This is a part of the mortgage crisis that wasn't going to happen. You see, these borrowers are typically executives with six figure incomes, top notch credit and money to burn. Their trusted mortgage banker told them what all option arm sales people told their clients - make the minimum payment and invest the difference. Yeah RIGHT!!!

Everyone knew what these loans were about. NOBODY ever thought of what might happen if housing values plunge, personal income declines and loan programs such as the no doc and stated loan became extinct. And now as many of these loans are set to recast and as many borrowers realize exactly how much they have ADDED to their principal balance, many will not even qualify to refinance.

If you are in an Option Arm currently, seek high quality mortgage and possibly legal advice now! If you do not qualify for a refinance on your existing option arm, seek a leading realtor in your area and explore options of selling. Get out while you can.

And people are arguing about 3% down payment asisstance help to live the American dream? This next round of forclosures is going to set a new tone in Americans hosuing landscape - and it ain't gonna be good......

Be prepared - seek high quality mortgage advice

Don't become a statistic!

Massive losses in the financials could mean lower interest rates to YOU!

2008-08-19T08:08:32Z

The financial markets remain in turmoil. Lehman, Merrill, Wachovia chatter regarding solvency for these giants is a strong as ever. National City appears to be on life support. Fannie and Freddie values have plunged and have a lifeline connected to the Federal Reserve.

Investors have changed their appetite to the safe haven of bonds. This could mean lower interest rates on mortgages. At least this appears to be the way the market is trending today.

Stay alert to email notices of significant rate drops. Remember back a few months ago, when the market improves by a large margin, there could be a very small window, sometimes just a day or two to react and lock a loan. Of course the media with it's massive power and influence will help to create awareness of major changes to rates but sometimes their information lags a day or so and by that time it may be too late to secure a low rate.

It's Free, It's Fun, It's Your Credit Report?

2008-08-12T22:14:45Z

High Quality credit advice from an Active Rain legend.....

Via Jason Sardi, Pennsylvania Mortgage Broker:

To say your credit history & score is HUGE these days may be a borderline understatement. For purposes of my experience, I'll concentrate on how credit relates to getting a mortgage to buy a home or trying to refinance the one you currently own.

Talking about credit is about as much fun as chewing broken glass while watching Yanni's latest video on VH1, at least to most. Even for the most severe masochists or staunchest Yanni advocators, it's probably not a subject full of brim excitement.

So, I'll try to make this concise and simple. Educating yourself and working with professionals who can guide you along the way, to make sure your credit is worthy of a three course meal at the White House, is crucial. I'm not just talking about those whose credit is in the crapper. I'm also writing to folks whose credit may be moderate or maybe you've never made a late payment in your life but your score is low. The Credit Reporting Industry is wagging the dog, forget about whining... work and know the system.

Here are a few tips & quips:

* Get a copy of your Credit Report. It may not provide your actual credit score, but at least you can verify the accuracy of the information on your report. I've included information below that you can utilize to do this. Quick thing here, credit modules differ within industries. For example, the credit report a mortgage company pulls may differ from that of the institution giving you a car loan or credit card. Mortgage folks weigh heavy on student loans and car loans and even heavier on your Mortgage History, provided you have one.

* Communication is key with your credit. If you are experiencing rough financial times, call them before they WILL call you. Let your creditors know what is going on. It probably won't stop them from reporting you late to the credit agencies, but it probably will provide you one less of a headache. That's what life's all about... avoiding headaches:-)

* The only thing that may be just as bad or even worse than credit overload, is no credit at all. Establish yourself in the creditor's eyes. If you have no credit, get secured credit that reports to all three credit reporting agencies. This may mean making a deposit at your bank and taking out a loan against it or pre-paying on a credit card. If you are doing the latter, use that credit card and pay it off it off regularly.

...if you have a bankruptcy or foreclosure in your past, establishing 12-24 months worth of a good credit is absolutely crucial!

* Oh, those credit cards. I'll put it bluntly, the bigger the differential between what your current balance is and what your available balance is, the better for your Credit Score. Don't be afraid to call your credit card company and ask them to raise your available balance. Don't use it, just have it there to improve your credit standing and score.

...sidenote on credit cards. Don't be afraid to call your current credit holders and ask them to lower your interest rate. If the first person you talk to can't or won't, ask to speak with a manager. If unsuccessful in that endeavor, call back at a later date. Be persistent & professional in your efforts. Lowering your rate even the slightest bit can save you some serious money now and down the road.

* Pay your bills on time. Yeah, I know, this is a no-brainer to most. Yet, it doesn't report late to the credit bureaus until you fall 30 days late. Try to make sure you don't get 30 days late on anything. Sure, you may incur late fees if you are even a day behind on some credit, though Mortgage Companies typically give you a 15-day grace period before you incur any late fees. From my experience, make sure your mortgage/rent is paid on time first, then student & car loans, then credit cards. If you are a renter...

...pay your rent by check and keep copies of your canceled checks. Twelve months worth will do (pay month by month, pre-paid bulk payments won't do you any favors...create a consistent history). This establishes a housing history. While it doesn't do anything positive for your credit, it does wonders when you apply to buy a home.

* Settle delinquent accounts for pennies on the dollar. If you owe the International Bank of Jason Sardi a cool $5,000.00 and your account is charged off, you should call to arrange a settlement once it goes to collections. Often times, you can come to an agreement for a lump sum of $2,500.00 or less and you may even be able to work out a payment plan. Either case, make sure you pay that account satisfactory and get the paperwork of the agreement and the final pay-off to prove it. Paying off delinquent accounts will probably drop your score at first, but will do wonders for your score down the road (provided you keep paying everything else on time).

* Avoid 'Hard' Inquiries. Your current creditors may check your credit, but that is considered a 'Soft' inquiry and shouldn't affect your credit score. Yet, if you are applying for credit out the behind, those inquiries can adversely affect your score. It raises the red flag that you may be on your way to becoming credit dependent. Psychologically speaking, never give them that drift, make them know that their livelihood depends on you... not the other way around.

* Credit Restoration Companies may be able to help but avoid anything that says, "Consumer Credit Counseling." CCS is considered a form of bankruptcy in many lenders eyes and their ability to pay your debts at a 'consolidated interest rate & lower payment' is suspect and often times worsens the situation. On the other hand, I've only witnessed one Credit Restoration Company worth its weight in the seven years I've been traveling this gig. There may be and probably are more, but I've only witnessed one. If you want more info, contact me. Always remember though, you can do everything to make sure your credit is at it's best, yourself... it's a matter of being educated and persistence in your efforts. That takes time. Though time is a commodity not all of us have.

Below is info on the reporting agencies that you should contact to get started. Even if you have an above average credit score, you'll pay more than you should if your credit score is even 20 points lower than the next guy or gal. Save yourself money, put in the time and seek out the Mortgage Professionals to ensure that time is well spent. Your credit is crucial... our knowledge of the industry and mechanics involved... can save you money and fulfill your dreams of home-ownership. If you already are a homeowner, we can help you get on the path to make finances one less worry in this life.

Equifax

P.O. Box 740241

Atlanta, GA 30374

1-800-685-1111

www.equifax.com

TransUnion

P.O. Box 2000

Chester, PA 19022-2000

1-800-916-8800

www.transunion.com

Experian

P.O. Box 2104

Allen, TX 75013

1-888-397-3742

www.experian.com

Bear in mind, at this point, you're entitled to one free credit report a year. Or, and I'd personally recommend this, you can get the whole batch which is simply called the 'Annual Credit Report Request Form.' That's free as well! The following sites will lead you in the right direction:

http://ftc.gov/credit

www.annualcreditreport.com

The bottom line in all this, the status of your credit can either cost or save you money. Which option sounds better to you?

FHA Loans & FHA Mortgages -- Legislation Update -- August of 2008

2008-08-12T22:13:29Z

High Quality information regarding new FHA mortgages and loan limits from an FHA expert - Jeff Belonger

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages -- Mortgages :

As many of you are aware, the mortgage industry has been going through some major changes in the last 6 months. Well, get ready for some more changes. In my honest opinion, many of the changes are for the worst. Sorry, but it's reality and we need to pay attention more than ever.

I am going to list the important changes next. I will list from the most important to least, but based on my opinion.

1. Seller funded downpayment assistance programs - Know as DPA's or Downpayment assistance programs. Seller's can't participate as of October 1st, 2008, unless the borrower is approved prior to this. FHA confirmed the definition of "borrower approved" by stating that cases run through the FHA scorecard, eligibility will be determined by the date of the last scoring time. For manually underwritten loans, the eligibility will be determined by the date of the underwriter's signature on the MCAW or the loan transmittal form. ** Ask your loan officer for definitions in what was just mentioned. ** FYI - Even though the new bill was passed by Congress, Bill HR 3221, there is a new bill that will hit the floor soon to oppose the banning of DPA programs.

2. Cash Investment from borrower - Not only do they kill the DPA program, which helps buyers to purchase a home with little or no money out of pocket, but HUD now raises the cash requirement. The previous requirement was 3% from the buyer and the new investment from the buyer is now raised to 3.5%. FHA should be publishing a mortgagee letter in the next 30 to 60 days and this should go into effect on January 1st, 2009. My opinion? It's tough to save as it is. On a $200,000 property, the buyer will now need an additional $1,000. You will still be able to get 100% gifted to you by a relative and still be able to get 6% seller contributions.

3. Risk base pricing - FHA is going back to the old method of upfront mortgage insurance premiums. The new changes were mentioned here : http://www.fhaloansfhamortgages.com/fha-mortgage-insurance-new-risk-based-pricing-guidelines-effective-07-14-08 So, FHA will be going back to the old method, which is just one calculation. This will go into affect with new FHA case numbers assigned on or after October 1st, 2008.

4. Mortgage Limit Decrease - As many of us know, when the Stimulus package was approved and signed by the president, FHA loan limitswere increased, but only up until December 31st, 2008. The mortgage limits will be lowered in high cost areas to 11% of the area median sales price up to a maximum of $625,000. HUD is still trying to decide whether it is $417,000 across the board, $417,000 "floor" and higher limits in high cost areas or $625,000 across the board.

Overall, as you can see, there are some important changes in the mix. And in my opinion, this will hurt real estate more than help it. But nothing is confirmed until FHA publishes their mortgagee letters to reflect the changes.

For those that of you that want to help save the DPA program, Gerry Suarez wrote this post. http://activerain.com/blogsview/621419/we-have-one-more Please read this and vote, let your government officials know how you feel. Voice your opinion.

Zillow & Trulia ratings..... enough is enough

2008-08-11T18:31:07Z

When Zillow hit the net with mortgage quotes I was all over it. Wow! A free source of leads where professional mortgage bankers can strut their goods and issue rate quotes based on market prices...... NOT - all I saw was quotes that could never be delivered upon by slimy mortgage people. They ratings were bogus as anyone could just rate themselves. I kept quoting for a few weeks. My loan proposals were very competitive with slim margins on every quote. The only phone calls I got from zillow were people who couldn't even qualify in the first place. And the bogus rate quotes just continue to amaze me in the fact these slick sales people are even still allowed to quote. Zillow has an awesome concept but without some serious policing I am no longer playing the game.

Trulia peaked my interest after my frustration with Zillow. What a smoking idea of offering up quality advice and hoping your answers get noticed in the form of sales opportunities. I have closed one deal from trulia and have had several selling opportunities, all from simply offering up high quality advice to questions posted on their site by consumers. Not to toot my own horn, but I do feel I supplied solid answers to the questions posted and received a lot of thumbs up and a few best answers. However, in the last few weeks I have noticed a few thumbs down. I don't get this. I responded to cut and dry questions and regardless of my responses being best answers or even a thumbs up, they certainly were not thumbs down quality. So now I assume Trulia is being poisoned by the same people that post bogus quotes on Zillow.

These are two outlets that are easy to navigate, completely free of charge to consumers and professionals and have one thing in common. Unpoliced, these sites are pushing the true professionals who have quality advice to offer up to consumers at no charge away. I am taking a break from trulia and Zillow and I am not certain I will return. I have had it. This industry as a whole carries a stigma about it and to allow quotes that can never be met in a hundred years and bogus ratings obviously handed out by competitors is complete BS and I refuse to participate.

Anyone else have similar stories? Let's hear them. I know Ziillow and Trulia people read Active Rain posts. let's get them to listen up loud on this one!

Did a computer create this mortgage mess?? you gotta read this..

2008-08-08T20:26:13Z

Let me take you back to a day in the life of a mortgage broker. Back in the early 2000's, when conventional loans went to 100% and life as a mortgage broker was schweeeettttttt.

You see, I am starting to believe this mortgage crisis is a product of a computer, an automated underwriting system that had some serious flaws. Sure the statistics show that the greater percentage of foreclosures are high loan to value mortgages and lower credit score borrowers. But here is the problem. Talented loan officers that understood exactly how to craft a 1003 and input it into DU or LP ( that's Fannie or Freddie's automated underwriting engines ) could 9 times out of 10 get the approve/eligible they so coveted. If a level 1, 2 or 3 findings were issued, it just seemed like a challenge to "tweak" the loan for that approve/eligible. It was almost a game. Looking back, it was quite a joke and probably is the most misunderstood factor driving those foreclosure numbers, not high loan to values or low credit scores in and among themselves. Low scores doesn't automatically mean bad borrower!

Let's look at an FHA manually underwritten loan. In order to overturn a refer finding issued by DU / LP, a solid credit file must be packaged with complete verifications and strong letters of explanation. In real terms - the loan has got to make sense...... At that point the underwriter must ask themself two questions.

1) - Does this loan benefit the borrower?

2) - Will this loan perform?

The problem with automated engines is that you just can't ask a computer these questions and expect for it to scratch it's head and make a logical decision. Underwriting engines are put together based on statistics by mathmaticians. But the intangible is that a computer is not human. Back in the day if a loan officer got a refer because of debt ratio, he would just drop the interest rate by 1% and get an approval with a rate up to 1% of the note rate. Hmmmm now does that make sense? Back in the day you get a borrower who says they make XXX amount of money per year and you get an approve/eligible that does not ask for income verification. hmmmmm Back in the day you get a 100% interest only lender paid mortgage insurance approval on borrowers with low scores if you could show assets to the computer or any other strong compensating factor to the "underwriting engine". Wasn't it a 580 score at one time that would go My Community 100%?

So maybe the Governement should consider bringing the human element back. And while they are at it, allow FHA to go to 100%. I have considered FHA a 100% program for years, the loan just had to be structured within guidelines. I have become less of a fan of risk based pricing as underwriting engines are issuing unfair findings and more of a fan of manually underwritten loans.

Your thoughts and comments are welcome and encouraged. Someone needs to come up with a good idea because FHA secure, the killing of DPA's and all the other nonsense coming from politicians IS NOT WORKING!

Adjustable rates can be good! READ THIS!

2008-08-06T22:14:40Z

ADJUSTABLE RATE FREAKING YOU OUT?

let's take a closer look --

So your adjustable rate is set to adjust and you're freaking out right? Relax, everyone with an adjustable rate is freaking out. This is very normal. Do you understand how adjustable rates adjust? Could you be freaking out for no reason? Could your rate decline??

I have received a few calls this month from clients who chose the flavor of the month three years ago and took out a three year interest only arm. When I answered the first phone call I thought to myself, here we go.... they're starting to pop. Upon further investigation I found this to be the case.

Arms adjust by adding the margin - this is a set number that is in your adjustable rate rider you signed at closing. A typical margin a few years past was 2.25%. You add this margin to the index - typically the one year LIBOR index on most conventional interest only arms. The current LIBOR rate is 3.22 add the margin + the index - 2.25 + 3.22 and you get your new interest rate of 5.47% See there - not so bad is it?

THE FINE PRINT -

If you are confused about what your rate will do when it is time to adjust, give us a call and we can dissect the adj rate rider, advise you of where your next adjustment will leave your interest rate and offer you options to deal with any adjustments. Adjustable rate riders can vary from deal to deal. Sometimes the margins are much higher than 2.25%. Sometimes rates adjust every 6 months instead of every year. There are also rate caps and maximum adjustments you must understand. Some loans have pre payment penalties. The bottom line is to understand your loan and know what options are available to you.

Get your loan documents out that your title company gave to you at closing, find your adjustable rate rider and have it reviewed by a mortgage professional. make certain your recieve high quality advice on how to battle your adjusting arm.

THEY FROZE ME!

Lines of credit continue to be frozen. It does not matter if your credit is golden and you have not ever even used your line of credit. Banks are freezing them every day. If you anticipate a need for cash in the near future and will be depending on your home equity line of credit to access desired funds, make certain your line will not be frozen. Learn what lenders are currently freezing lines of credit. Remember, 95% cash out programs still exist! Explore the options of a 30 year FIXED rate vs a variable line of credit that may or may not be available when you need it. Have your trusted mortgage advisor run loan scenarios and determine what loan would be in your best interest.

UNDERSTAND YOUR OPTIONS AND SEEK EXPERT ADVICE!

DON'T BECOME A STATISTIC!!!

Do you think? Is it possible?

2008-08-04T22:59:49Z

The Fed meets tomorrow and most analysts predict the Fed to do nothing. Regardless of any changes to the rate, what the Fed says and the tone of how they say it can force the mortgage backed securties ( MBS ) market to move significantly either up or down.

Do you think they have another rate cut up their sleeve? The big "R" word - recession, may prevent any cut to the discount rate and may possibly force the Fed to begin raising rates. but just what if.... what if the Fed surprised all and cut the rate?? And what if they cut it by .50 basis points????

I guess this is just wishful thinking but this big time crisis we are in calls for big time decision making and unconventional thinking. What effect would a surprise rate cut have on the mortgage market that is on life support? How much would a rate cut have an impact on stimulating lending once again, by allowing all the "A" paper quality consumers who have been sitting on the sideline because they waited too long the last go round, to jump back into the game. Think of the new business title companies, appraisers, real estate agents and all would have.

Do ya think?????? nah ... it will never happen..........

Yelp!!! somebody Yelp me... check it out

2008-08-02T08:28:48Z

As I scour the internet at all hours of the night in search of the latest and greatest blogging site, widget site, message board etc... I came accross this site yelp - this is a great site for businesses.

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Top provisions of the new bill according to NAMB

2008-07-31T14:59:51Z

Here is the scoop and point of view direct from NAMB on the new bill that was just passed. I am still thinking everyone has a take on this bill but this is the best laid out details of it i have seen yet.

Dear Lewis,

I am pleased to announce that yesterday morning President Bush signed into law H.R. 3221, the Housing and Economic Recovery Act of 2008.

After months of negotiations between the House and Senate, as well as an initial veto threat by the White House, I am confident that the final version of this bill will serve as a foundation for responsible solutions to the current market realities today and into the future.

H.R. 3221, perhaps the most significant piece of housing-related legislation we have seen in recent years, implements necessary consumer protections while promoting stabilization of the current market and industry through reforms to the Government Sponsored Enterprises, Fannie Mae and Freddie Mac, (GSEs) and the Federal Housing Administration (FHA) program.

Originally introduced with a "broker-only" licensing and registry section and with constant attacks and rumors of prohibitions on yield spread premiums (YSP), NAMB tirelessly lobbied to achieve a final bill that includes all originators and nothing on YSP. I am also pleased to say that the bill includes several provisions such as FHA modernization and GSE oversight reforms that have been long standing goals of NAMB. In fact, NAMB testified before Congress fifteen times in 2007 and 2008 on issues related to this bill.

In addition, several of the anti-broker provisions that NAMB is constantly fighting off are not included in the bill, most noticeably the prohibitions on YSP, million dollar net worth requirements for mortgage brokers and broker-only licensing requirements. We can attribute the accomplishments on this bill to you and the extensive advocacy campaign launched by NAMB. Your response to requests to e-mail or call your legislators was vital in achieving the all originator approach of this bill. NAMB's extensive advocacy campaign informed members of the House and Senate of the need to establish standards and a registry for all originators to help protect consumer's financial information and rid all mortgage origination channels - banks, lenders, credit unions and mortgage brokers - of bad actors. In the end, Title V of the bill was changed to include all originators, despite heavy lobbying efforts from various industry groups to obtain exemptions from the registry section.

Among the bill's provisions are several that NAMB feels are important to our membership:

All-Originator Registry: Establishes a nationwide loan originator licensing and registration system that will set minimum standards for loan originator licensing substantially improving the oversight of all originators. In addition, all loan originators - lenders, banks, credit unions and mortgage brokers - must register with the Nationwide Mortgage Licensing System and Registry and go through a criminal background check (except loan originators working for Federally-chartered institutions).
First Time Homebuyer Credit: Allows first-time homebuyers of a principal residence in the United States to take a tax credit of 10 percent of the purchase price of the residence (not to exceed $7500). The credit will begin to phase out if single taxpayer's income exceeds $75,000 per year or the couple's income exceeds $150,000. The credit will be paid back over 15 years and applies to residences purchased between April 9, 2008 and July 1, 2009.
FHA Modernization: Effective January 1, 2009 it increases FHA loan limits for single-family residences to the lesser of 115 percent of the local area median home price (but no lower than a floor of 65 percent of $417,000) or 150 percent of the GSE high cost loan limit of $417,000 or $625,500 (similar increases for other 2-4 unit single-family properties); establishes a 12-month stay on FHA's proposal for risk-based premiums; sets the down payment requirement at 3.5 percent; and prohibits seller-funded down payment assistance (both direct or through a third party). Authorizes a $25 million appropriation to improve technology, processes, program performance, eliminate fraud and provide appropriate staffing. Please click here to view two charts outlining these FHA modernization provisions.
GSE Loan Limit Increases: The loan limits were set at the greater of 115 percent of the local area median home price or $417,000 for a mortgage secured by a single-family residence, $533,850 for a 2-family residence, $645,300 for a 3-family residence, and $801,950 for a 4-family residence. These limits will take effect January 1, 2009. For high-cost areas, the loan limits are adjusted to a cap of 150 percent of the GSE limit of $417,000 for a one-unit property or $625,500. These limits will take effect January 1, 2009.
GSE Oversight Reform: Creates a new regulator (five-year term, appointed by the President, confirmed by the Senate) with oversight authority similar bank regulators, establishes a new affordable housing fund and capital magnet fund to be funded by a 4.2 basis point fee on all new loans, significantly changes the affordable housing goals and raises the conforming loan limit to the higher of $417,000 or 115% of the local median home price, not to exceed $625,500 (effective January 1, 2009).
FHA Rescue: Creates a voluntary program for lenders to write down the loan balance in exchange for an FHA guaranteed loan not to exceed 90 percent of the newly appraised value of the home. The lender would pay a 3 percent FHA loan origination fee. To qualify, the borrower must have a debt-to-income ratio above 31 percent on the original loan. The program is capped at $300 billion.
GSE Stability: Authorizes the Treasury Secretary to temporarily increase the GSEs' line of credit and to, if necessary, buy equity in the GSEs in order to provide confidence to credit markets. Also provides a role for Treasury and the Federal Reserve in GSE oversight to ensure safety and soundness.
TILA Reform: Requires TILA disclosures to be delivered seven days prior to loan closing, requires that disclosures include examples of how payments would change based on rate adjustments in addition to disclosing the maximum possible payment under the loan terms and mandates that the consumer receive early disclosures before paying anything more than a nominal fee that covers the cost of a credit report.

As President of this great association, I am proud to say that NAMB and its members were instrumental in shaping this bill into a law that will benefit the majority of American homeowners and help to stabilize the nation's housing market. Our hard work has gained recognition on the Hill and in the industry.

With your help, NAMB has had tremendous success in deflecting numerous pieces of misguided legislation that would not only hinder the success of small business mortgage brokers, but would also have severe unintended consequences for consumers and the market. NAMB has also earned the respect and attention of many key legislators because we explain our industry and make our case. NAMB hasn't shied away from any fight before and with your continued help we will continue to fight for your business and your consumers.

In the coming months, NAMB leadership and staff will be working to facilitate discussions between industry representatives and federal and state regulators in order to address the questions and challenges that are sure to arise as the different programs in H.R. 3221 are implemented. We are currently working with FHA officials to arrange a webinar for members. We will also continue to work on the issues that remain and to fight to preserve a vibrant small business mortgage broker channel.

In conclusion, I would like to say thank you. This is a critical time and we cannot win battles such as this one without the support of the NAMB membership. This bill is yet another example that there is strength in numbers and we must unite as an industry to preserve our livelihood. Your swift responses to our calls-to-action are unprecedented in the industry. No other association in our industry has a vibrant, powerful, active grassroots advocacy network like NAMB. And for that I say thank you. As a member of NAMB you represent the best of the mortgage broker industry and your voice in matters such as this is heard on Capitol Hill and across the nation.

Sincerely,

Marc Savitt, CRMS
NAMB President

Client disregard will kill your company! - A tale of two title companies

2008-07-30T20:31:44Z

It is the little things that make a difference ~~~~

My company recently closed a purchase deal with a local ReMax where the listing and selling agent both worked. These guys were pros who have outlasted the masses and whose reputation was impressive. As a mortgage company we did everything right. Stayed in touch the whole way, delivered on our commitment to the client and most of all, provided a Hud three days before settlement and had the funds in the title companies bank account the day before.

Closing went great and we won both these agents blessings. At closing, my loan officer noticed both agents were handed their "paychecks". Ok, very cool. One of the perks of using an in house title company that operates under a CBA. I have no problem with that.

However, the utter disregard the title company showed for my mortgage company was pathetic! The loan funded Monday! These are tough times people and as the owner of my company, I wanted to do everything I could to get this loan funded on our part so I could pay my LO this week. Nothing but attitude from the title company the whole way. I asked if the money could be wired to my account because even though the seller and the agent sgot "paid" at the table, our check mysteriously was not there. After a lot of bitchin and complaining, the title company agreed to wire the money for a $35 charge. Whatever, we told them just get us the money. Tuesday morning... no money. Myself, the loan officer and my processor called and called and all we got was voice mail and unanswered phone calls and emails. This morning I had had it. I called the ReMax office and ask that they walk down the hall and demand that the title company pick up my phone call.

A woman with a major attitude answered and seemed extremely bothered and annoyed I was even calling. They had my money for three days!!! I asked what was up and she said they were really busy and the money would go out sometime today. In the background I heard workers laughing and carrying on. I told her that was unnaceptable and she said sorry, we are reall backed up. I told her when I hang up the phone, my next call would be to the Maryland State Banking Commission. She snapped, "I will get it done for you now" and hung the phone up on me. The money was in my account 5 minutes later.

I recieved a Hud 1 today from another title company for a loan that closes tomorrow. I have never worked with these people before and after my experience earlier in the morning I was gun shy big time! The Hud was $5000 to the bad. The title company forget to credit the $5000 deposit our client had put down on the contract offer. Immediately my contact appologized that it was overlooked and within two minutes I had a corrected Hud on the fax machine. I called that persons boss, explained what had happened to me just an hour earlier with another title company and advised he ackowledge his processors immediate attention to detail and willingness to make the needed correction in such a pleaseant and expedicous manner.

How in the hell can ANY company, regardless of the field they are in, treat clients with such disregard in this economic mess we are in where every single deal matters so much. People, I am amazed every single day!

Credit Card ripoffs!! Bank of America does not care!

2008-07-29T18:58:04Z

Excuse me while I vent a bit ----

I own a mortgage company. I understand how to manage credit. I understand how to maintain a good credit score. I now understand and realize that credit card companies should anticipate and deserve an unprecedented number of defaults, the most in the history of credit cards. let me take a minute an explain......

I feel that I utilize my available credit as good as anyone out there. When cash flow is low, I access my available credit. When my revenue increases and cash becomes available, I pay off my credit in full. I have two business bank accouns with B of A. I have a two personal checking accounts with B of A. I have two credit cards with B of A, with a very high credit limit I may add. I also have a savings account and a horse trailer loan with them. I always pay on time!

I open my new bill today. What I saw hit me so hard I almost fell to the ground. I expected a larger than usual balance as I elected to pay a large bill with my credit card instead of using cash or getting a loan. I did not expect to see what i saw...

My company was having an exceptional month and I knew I would pay this bill in full. This is how my account reads.

Total credit line - $35,000

New Balance Total - $9,196

Periodic Finance Charges - $225

Adjustments - $99

Transaction Fee - $10

minimum payment due - $353

annual percentage rate for this billing period - 31.12%

I call B of A customer service. After being on hold for 25 minutes due to heavy call volume the phone gets answered by someone who sounds like a robot! How can I help you. Yes sir I say, asking him to pull up my account. After drilling me with 50,000 questions he says go ahead. I proceed to tell him I have been a B of A customer for over 15 years, well before if was B of A or even before it was Nations Bank. The robot said I am calling the credit card department and he didn't care how many accounts I had with the bank. I was simply attempting to advise him that I am a long time customer with multiple accounts, both business and personal. He did not care. I attempted to explain my case and he just kept interupting me. I asked him why my interest rate was over 31% and he said I was in default on my payment. Listen up people - I was 5 days past the due date!!!!!

Sure I understand the small print. I understood the promotional rate I was granbted 15 years ago when I accepted the card. I understood all the BS that he was reading from his canned script that was in front of him. I simply tried to maintain the fact I was a B of A customer forever and I had multiple accounts. He did not want to hear it. i asked to speak to his supervisor and he told me no. I told him if they kept me on the 31% rate I would never be able to pay it off and I would just let the account default. He told hme that was certainly my perogitive. Where si the customer service? Where is the compassion? 31% - That is what third world countries charge. That is more than hard money lenders charge. That is in excess of what loan sharks charge!!!!

The fact of the matter is I will pay this account off in full and never use them again. I plan on pulling every account i have from B of A and not looking back. But let me ask you this - What if I couldn't pay this account like so many Americans can't? Do the math. When you add the interest and fees up and elect to pay the minimum payment like many Americans are forced to do, the balance goes up every month. When the balance goes up every month, and you are over your credit line, the payment goes up every month. These credit card companies are setting us citizens up for failure! And you know what, they don't give a damn.

Here's another quick story on B of A. I opened a checking account with B of A for my 17 year old son. They issued him a check card. Very cool. My kid calls up and needs a few bucks, I go online and transfer funds into his account. I look at the bill this month. Even though he had a zero balance, the bank approved a transaction for a five dollar meal at Chik Fil A. $5 for the meal + $34 for over the limit fee. He now has a negative balance and goes to the gas station. $10 gas and another $34 over the limit fee. I ask the bank how could you approve these charges to a card that has no available funds. They replied - they do it as a service to their better clients.

And the government claims mortgage brokers are the cause of the financial mess we are in............

FHA reform - is it smoke and mirrors?

2008-07-29T13:04:32Z

As the reform bill becomes a bit more clearer every day -------

Let's take a look at this scenario - client calls up and says this is my situation and seems to fit into the reform act or whatever you want to call it. As a trusted mortgage broker, it appears i must send them back to their current lender. There is not one thing i can do as a broker to help.

When they get to their lender, it seems the lender can choose to move forward or not. And I would have to believe regardless of the bills guidelines, each individual investor will have their own set of guides. And by the way, if these loans go back through their current lender, will that present a sales opportunity for them even though they are reducing principle and rate?

It just seems as if the current servicers are going to buy into this, there is going to have to be something in it for them. I don't get this reform act. Who is it going to help and the biggest question is, will this squeeze mortgage brokers that are surviving even more? What is this reform bill going to accomplish? Anyone??????

Appraised value? What exactly does that mean?

2008-07-25T14:09:36Z

Appraised Value?

What exactly does that mean?

During the loan application of any refinance, at some point we ask the question, “ what’s your house worth? ” I typically ask my refi prospect that question a few different times and a few different ways. It is that important. Credit and income play a part in the approval process but so does loan to value or LTV. I ask my prospect Henry Jones how much how much is his house worth. He tells me $450,000. Ok, next question is when did you buy it and how much did you pay for it. Henry tells me almost two years ago, I paid $375,000. He tells me he “stole the house”. By the way, Henry owes $375,000 because he did one of those 100% interest only arm loans that were so popular in the early to mid 2000’s. Most of us, including myself, had one.

On paper this is a slam dunk deal. Henry has a credit score over 750, makes great income and even has cash reserves in the bank. An underwriter’s dream loan!

But Henry has a big time problem. Henry wants to believe his house is worth 450K. Matter of fact you can’t talk him out of it. It is his castle! But the fact is, he overpaid for the house two years ago AND the value has actually dropped $25,000. Man you should have seen Henry’s face when I told him my appraiser ran comps and the value wasn’t there.

If this deal is sold to Henry, as many times loan officers just sign the docs and worry about the details later, well this deal wastes everyone involved time, money and effort in addition to the high level of stress brought on. When refinancing, deal with a competent loan officer and make certain that your income, your credit and the value of your house is reviewed before you sign a loan commitment.

One more thing. What your house appraises for does not mean that is what you could sell it for. It should, we all agree. If you want to know the TRUE value of your house, put a for sale sign in the ground and advertise all offers considered.......

Rates are headed upward!

2008-07-24T07:51:35Z

WARNING!!! RATES ARE HEADED UP!!!

Rates that were in the upper 5% range just a few weeks ago could very possibly be in the 7% range by the end of this month and many experts anticipate interest rates in the double digits in the future. Of course all the experts could be wrong and rates could dip down yet again, but if they do I believe it will only be temporary. Eventually, rates will turn upwards..... Keep this in mind as well:

There is no such thing as - "What is your rate today?"

It's called risk based pricing. Credit scores, loan to value, assets, debt ratio and loan programs all factor in to an interest rate quote. If anyone quotes you a rate with asking qualifying information the rate quote is worthless! Don't put up with bait and switch lenders. Get the facts.

UNDERSTAND YOUR OPTIONS AND SEEK EXPERT ADVICE!

DON'T BECOME A STATISTIC!!!

jumbo loans cash out to 85% -> $729,000

2008-07-23T21:54:27Z

JUMBO LOANS to 85% CASH OUT!

Listen up everyone --- This program is here today and just like every other program in this crazy mortgage industry can be gone tomorrow. FHA will allow 85% cash out on loan amounts up to $729,000. Yes that's right - FHA. These loans are offered at very competitive interest rates. They offer liberal underwriting and allow credit scores down to 620. No reserves are required. Compare the cost of a typical Jumbo loan to a Jumbo FHA loan and you will be amazed! Rate and term refinances are also available. Inquire about this program before it dissapears!

Cutting costs - a few simple steps can save you $$$

2008-07-23T07:55:14Z

Cutting costs - a few simple steps

There are a few simple ways to cut costs immediately. Review your bills with a fine tooth comb. I recently examined my Direct TV bill. I noticed I was leasing my three receivers. Leasing?? I paid $299 for those bad boys. Well when I called customer service they informed me that was the lease price and the price to purchase those receivers was actually $695. Awful nice of them to tell me the little detail that they were leases when they called and offered me an upgrade. I wanted to cancel a receiver I never use and there was a termination fee along with the fact I had to send the receiver back and would be billed for any damages to it. I told them forget it and kept paying the $5.95 per month lease. Alerted by this, I managed to change my packages around to the "newer" plan they never told me about and saved 35 bucks a month.

My cellular bill seemed as if it was out of control. After calling customer service I noticed that I was paying on a plan that was over 8 years old. I was also paying for a line I had not had in three years! I was fortunate to be talking with a customer service rep that actually cared and I trimmed over $100 off my monthly bill!

Examine your credit card statements very carefully. Those sneaky companies charge fees in excess of $40 for over the limit, although they allow the charges to go through. When a bill is due on the 1^st of the month, if payment is not received you get whacked upwards of $49 for a late fee. On top of that, credit card companies have some legal mumble jumbo that if you are late they can arbitrarily raise your rate. So you have a bill due on the first. You assume you have a grace period of fifteen days before any late fee is charged and you have 30 days before your credit takes a ding. NOT TRUE! I recently examined a credit card bill and noticed the interest rate was 29%. Now this is with a company I have had a card with for over 15 years! When I called customer service they advised me if I paid one day after the due date I was considered in default and they had a right to whack me with penalties and raise my interest rate to what you would expect out of some third world country. This is happening to everyone! Call your credit card company and tell them you want the rate adjusted down or you will take your good credit and go elsewhere. Many times, a simple phone call will solve this problem.

My point to all of this is many, many times we as consumers get complacent and just pay the bill. Review these bills. I promise everyone one of us is paying too much for something. As money tightens for all of us, these little things can help.

Example of a true loan commitment - don't settle for anything less!

2008-07-22T08:18:29Z

Call it what you will - a commitment letter, a pre approval letter, a credit approval, a loan offer whatever......

Here is the deal:

A true loan commitment will include the following.

1) - Income verified with W 2's and most recent paystubs

2) - Assets verified with most current bank statements

3) - a complete three bureau mortgage credit report pulled

4) - approval of the loan through some sort of automated underwriting ie... DU / LP

Realtors - if loan commitments from you current lenders you use do not include verification of the above, they are worthless. Sure, with slam dunk credit scores and a solid belief that the client really has the money in the bank and truely makes what they say is commonplace in this industry, until you have verification of the above, it is NOT a true commitment letter. It is simply a piece of paper to satisfy your needs to sell a property. Do many loan officers issue a commitment on a hunch? - YES... Have I ever issued a commitment on a hunch? - you betcha I am simply stating a fact!

Clients - if your loan commitment does not include verification of the above you could possibly be living in false hopes of obtaining a loan. Sure, many clients do not want to release any more information than they have to and yes it is a pain in the butt to submit paystubs and bank statements before the contract is even written. But mark my words, if the last piece of the puzzle after the contract is accepted, the appraisal is done, the home inspection is completed etc.... is the actual loan approval - you better believe your going to point your finger at the loan officer for not asking for these document sup front when your loan is denied due to income or assets....

Of course the items above do not and never will constitute a final underwriting decision, but with the proper documentation disclosed beforehand, a smooth settlement will have a much better chance.