Tuesday, October 14, 2008

What Affect Does the Bailout Have for You, The Consumer? Current mood: confident Category: Jobs, Work, Careers   I got a great question from a client today about what affect the announcements from the federal government agreeing to back all bank lending would have on the consumer.  Here is the question and my answer. Good Stuff!     Greetings Melinda -   What effect does today's announcements have in lending decisions? Oct. 14 (Bloomberg) -- Citigroup Inc. and Goldman Sachs Group Inc. were among banks that soared in New York trading after the U.S. government said it would invest in nine of the country's biggest financial firms and guarantee debt they issue. Shares of Morgan Stanley, Bank of America Corp., Merrill Lynch & Co. and Wells Fargo & Co. also climbed on the plan, in which the government will spend $125 billion to buy preferred stock in the companies. ....It's a good thing, it's what needs to happen, it will allow the markets to start functioning again,'' said Ralph Cole, a vice president for research at Ferguson Wellman Capital Management Inc. in Portland, Oregon, which oversees $2.7 billion including shares in JPMorgan, Wells Fargo and Goldman. ....We'll know if it's working when we see if overnight rates go down and banks start lending to each other.'' Citigroup, JPMorgan, Bank of America and Wells Fargo will each receive $25 billion, according to people familiar with the matter, while Morgan Stanley and Goldman will get $10 billion. Bank of New York Mellon Corp. will receive about $3 billion and State Street Corp. will get about $2 billion, the companies said today. The investments are part of a $250 billion plan to put capital into U.S. financial institutions, which have been burdened by bad loans and rising borrowing costs. Michael   Michael~ This announcement has to do more with money that banks lend each other on a national and international platform then us down at the consumer level.    Best,   Melinda Potcher Mortgage Broker Trinity Mortgage, LLC (505) 259-6397 cell (505) 214-LEND fax melinda@trinitymtg.biz http://www.homeloansalbuquerque.com     Currently listening : The Information By Beck Release date: 2006-10-03

Don't believe or buy in to the hype when the media says that there isn't any credit available out there!  It's just not true!

I have 5 loans I am working on presently, including;

an $800k refi

4 homebuyers looking for properties that are preapproved for loans ranging from $142,000 to $270,000.

Everybody wants a "smokin deal", and believe me they are out there!

Rates are currently holding at 6% on a 30 day fixed conventional or government loan (FHA/VA).

3% down is all you need.  A family member, employer or friend can also gift you down payment or closing costs.  A seller can contribute 6% (STILL) to your closing costs.

Additionally, for entrepreneurs and small business owners, I have been visiting the local banks this week to confirm that they have money to lend to startup businesses and they assured me they are ready and willing to lend.

My phone has been ringing a lot w/ 5 new applications last week and one so far this week.  My realtors phones are ringing too.

So don't buy the gloom & doom out there, folks - it IS what YOU make of it.

Have a great week, and call me w/ any questions.

best,

Melinda Potcher

Mortgage Maven

http://www.HomeLoansAlbuquerque.com

Currently listening : Where The Light Is:John Mayer Live In Los Angeles By John Mayer Release date: 2008-07-01

Category: News and Politics

Subject: FW: Worth reading!

Mortgage Crisis:  The REAL Blame By Drew Zahn© 2008 World Net Daily

Stan J. Liebowitz

While many pundits are pointing to corporate greed and a lack of government regulation as the cause for the American mortgage and financial crisis, some analysts are saying it wasn't too little government intervention that cased the mortgage meltdown, but too much, in the form of activists compelling the government to pressure Freddie Mac and Fannie Mae into unsound - though politically correct - lending practices.

"Home mortgages have been a political piñata for many decades," writes Stan J. Liebowitz, economics professor at the University of Texas atDallas, in a chapter of his forth coming book, Housing America: Building out of a Crisis. Liebowitz puts forward an explanation that he admits is "not consistent with the nasty-subprime-lender hypothesis currently considered to be the cause of the mortgage meltdown."In a nutshell, Liebowitz contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority home ownership up, that it undermined the country's financial foundation to achieve its goal."In an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s," Liebowitz writes. "The decline in mortgage underwriting standards was universally praised as 'innovation' in mortgage lending by regulators, academic specialists, (government-sponsored enterprises) and housing activists.  He continues, "Although a seemingly noble goal, the tool chosen to achieve this goal was one that endangered the entire mortgage enterprise."  "As homeownership rates increased there was self-congratulation all around," Liebowitz writes. "The community of regulators, academic specialists, and housing activists all reveled in the increase in homeownership."

An article in the Los Angeles Times from the late '90s praised the sudden surge in homeownership among minorities, calling it "one of the hidden success stories of the Clinton era."  John Lott, a senior research scientist at the University of Maryland, however, claimed in a Fox News article yesterday that the success came ata great price.  According to Lott, the Federal Reserve Bank of Boston produced a manual in the early '90s that warned mortgage lenders to no longer deny urban and lower-income minority applicants on such "outdated" criteria as credit history, down payment or employment income.  Furthermore, claims Lott, Fannie Mae and Freddie Mac encouraged and praised lenders - like Countrywide and Bear Stearns - for adopting the slackened policies toward minority applicants. "Given these lending practices mandated by the Fed and encouraged by Fannie Mae and Freddie Mac," writes Lott, "the resulting financial problems for financial institutions such as Countrywide and Bear Stearns are not too surprising." 

Liebowitz' contention that lenders were under pressure to loosen their standards for racial and political goals was confirmed years ago by the companies at the heart of today's crisis: Fannie Mae and Freddie Mac.  A New York Times article from Sept. 1999 states that Fannie Mae had been under increasing pressure from the Clinton administration to expand mortgage loans among low- and moderate-income people and that the corporation loosened its lending requirements to comply.  An ominous paragraph of the article reads, "In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s."

Liebowitz likewise predicted in a 1998 paper the risk of sacrificing sound financial policy for social activism."After the warm fuzzy glow of 'flexible underwriting standards' has worn off," Liebowitz wrote, "we may discover that they are nothing more than standards that led to bad loans. It will be ironic and unfortunate if minority applicants wind up paying a very heavy price for a misguided policy based on a badly mangled idea."

And though some have speculated that lenders in the '90s dove into sub-prime mortgages in an effort to gouge new markets, the president and chief operating officer of Freddie Mac in 1999, David Glenn, confessed his company was pushed by a federal agenda.  "The mortgage industry intends to pursue minorities with greater intensity as federal regulators turn up the heat to increase home ownership," Glenn said in his remarks at the annual convention of the Mortgage Banker Association of America.  "The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories," Glenn said.

Fannie Mae recently reached an agreement with the U.S. Department of Housing and Urban Development tocommit half its business to low- and moderate-income borrowers. That means half the mortgages bought by Fannie Mae would be from those income brackets. 

 A few years later, when Greg Mankiw, chairman of President Bush's Council of Economic Advisers, voiced a warning about weakened underwriting standards, Congress rebuffed him as well.

The Wall Street Journal quoted Congressman Barney Frank, D-Mass., in 2003 as criticizing Greg Mankiw "because he is worried about the tiny little matter of safety and soundness rather than 'concern about housing.'"  Frank, chairman of the House Financial Services Committee, rejected a Bush administration and Congressional Republican plan for regulating the mortgage industry in 2003, saying, "These two entities - Fannie Mae and Freddie Mac - are not facing any kind of financial crisis." According to aNew York Times article, Frank added, "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Currently listening : Yes I'm Ready By Barbara Mason Release date: 1997-10-08

Daily Real Estate News  |  August 19, 2008

Campaign Launched to Undo Down Payment Ban

The Housing and Economic Recovery Act prohibits the Federal Housing Administration from insuring loans made with a seller-funded down payment. This essentially bans the practice since nearly all these loans are made with FHA-guaranteed financing. The ban takes effect Oct. 1, 2008.

The Nehemiah Corp. of America, the nonprofit responsible for arranging thousands of these loans, has launched a campaign and Web site to persuade Congress to override this aspect of the housing bill. The site includes a countdown clock tracking the end of DPA to the second, a blog and links to YouTube videos and to its MySpace and Facebook presence.

So far, more than 75,000 "letters" to Congress have been generated, according to Nehemiah. The goal is to triple or quadruple that by the time that countdown clock hits zero. Lifting the ban won't be easy, but "I think that an active, organized American citizenry can change anything they choose to," says Scott Syphax, Nehemiah's president and CEO.

Source: The Wall Street Journal, Dawn Wotapka (08/14/08)

To speak w/ a Professional with over 14 years experience about your options in Purchasing Real Estate, Call Melinda Potcher, Mortgage Maven today!  (505) 259-6397, or email at; Melinda@TrinityMtg.Biz.  http://www.HomeLoansAlbuquerque.com

Tuesday, August 12, 2008

Past 10 Clients - Looking for Referrals for New Clients Current mood: adventurous Category: Jobs, Work, Careers   Recently, I realized that sometimes I need to tell a story about how I was able to help a client for other people to have a "light  bulb moment" and think of other people to refer to me.  In that vein, I'd like to share some brief details of my last 10 clients, and maybe that will help you think of some people you could refer to me, as I am currently seeking new clients. If you have any questions, please do not hesitate to contact me at; http://www.HomeLoansAlbuquerque.com, or (505) 259-6397 direct.  My email is; melinda@trinitymtg.biz.  I am as ever, Melinda Potcher, Mortgage Maven.         Past 10 Clients (randomized to protect their info); **  He had an investment property & wanted to do a cash out refi so he can buy another piece of property.  He has a high 700's credit score, over 2 years on the job, money in the bank and a low ltv.  He owns other rental properties and his ratios come out to 40% on the back even w/ the mortgage debts & rental incomes.  I got him 6.75% on a 30 year fixed. **  They have a medically disabled son.  They are downsizing from a $400k home to a $250k home.  It will save them $1000 a month in the payment which they can divert toward their son's continuing medical care.  Stable employment history, but medical bills have wiped them out financially.  Low credit scores, some savings.  I got them 6.375% on a 30 year fixed FHA loan. ** They wanted to refinance to a 15 year mortgage and pull cash out for large equipment purchases to grow their business.  They have high 700's credit scores.   I got them 5.875% on a 15 year fixed and showed them that by applying $2000 extra to the mortgage each month they could pay off the 15 year mortgage in 5 years.  By switching them from a 30 year fixed to a 15 year fixed I saved them over $92,000 in interest charges.  Self Employed.  Back end ratios were 35%.  ** She wanted to buy her first investment property, and was going to pay cash.  We showed her the value of having a mortgage.  She put 25% down on $250k for a loan of $187k, at an interest rate of 6.75%.  she has high 700's credit scores and stable employment with a good deal of investments & assets.  Back end ratio was 39%.  ** They had never had a mortgage before and had always bought properties for cash - in fact over $10mil in assets are in real estate.  Their CPA encouraged them to call me & get a mortgage on their new primary residence in High Desert.  Average credit scores, (some credit challenges) lots of assets. Self Employed.   20% down on $600k.  I got them 6.25% on a 30 year fixed conventional mortgage. ** He is a journeyman electrician and about 24 years old.  He has been working for the past year on establishing credit & residence history by renting an apartment.  He now has 700's scores, and qualifies for a purchase price of $125,000 on an FHA 30 year fixed at 6.75% with no money down - seller can pay up to 6% including the down payment through gift funds.  His monthly rent right now is $850.  His monthly house payment will be $883. ** He was buying another investment property.  25% down, high 700's credit scores.  Got him 6.25% on a 30 year fixed - it is a single family rental property.  Monthly payment is about $1250 which is what he is getting in rent. **  They want to do a cash out refi.  They currently owe $85k on a HELOC with a limit of $150k.  Their home is worth $700k.  they are building their new dream home, but live in this one right now.  Their interest rate on the HELOC is about to adjust, and they want to refi to a 15 year fixed so the rate is stable until they finish the new house and sell this one.  High 700's scores, Self Employed, lots of assets.  Because LTV is so low, can get them 6% on a 15 year fixed. **  They wanted to do a no cash out refi.  They had credit challenges when they bought the house, and currently have a 30 year fixed mortgage at 8.125%.  Credit was repaired over past 6 months w/ protect your rights, and now refinanced & put both on the mortgage on an FHA 30 year fixed at 6.25%.  it saved them over $250 a month in their payment. ** He wanted to buy some land to hopefully one day build his dream home.  High 700's scores, works 2 jobs as a professional , saved up 10% down payment.  Got him a 5 year lot loan for land on a variable prime rate (prime is currently at 5%) from a local bank and the monthly payment is about $650.

Making The Best Use of The "Tools" in Your Toolbox
Current mood: contemplative
Category: Jobs, Work, Careers

This past spring I took on the enormous task of project manager for the city wide membership drive for BNI (Business Network Int'l).  www.bni.com

Toward the end of the drive (end of May), I found myself kvetching w/ my counterpart in El Paso Texas.  We discussed what appeared to work, what didn't, and why we thought so.

The Texan relayed an insight to me in conversation which later hit me over the head - you can call it my "AH-HA" moment if you want.

Basically, he was touting the side benefits of inviting business folk to check out BNI ... whether they came to the visitor's day or they didn't, he had opened a doorway for them to expand their contact spheres & opportunities to conduct more business.  The side benefit was that since he had already established a rapport w/ these invitees through invitation letters & follow-up phone calls, this had opened a doorway for him to make sales calls on these folk.

He had opened a savings account called "social capital", and was steadily putting away a few cents here, and a few cents there.  If you are unfamiliar with this term, I suggest you check out www.entrepreneur.com, and do an advanced search under archive blogs & Dr. Ivan Misner, founder of BNI.

I'm intrigued to find out "what happened next?" with the Texan... stay tuned - I'll share, alright?

Melinda Potcher

www.bniNewMexico.com

www.HomeLoansAlbuquerque.com

Currently listening : Goodbye Jumbo By World Party Release date: 2006-04-04