Mortgage Knowledge at its BEST!!!! (Jeff Belonger)

First time homebuyers tax credit - Who is frauding who?? - Possible extension?

Mon, 26 Oct 2009 10:42:31 -0500

A lot of chatter about the First Time Homebuyers Tax Credit

Let's start with the basics about the First Time Homebuyer's Tax Credit....

Yes, it has helped some that might not have bought.

It has given people money after buying to help fix up their homes, pay off debt, or save for emergencies.

And ___________. ... wait, I really can't think of anything else.

Has the Tax Credit been a mechanism that has artificially stimulated the economy? Some will say yes and some will say no. I will be one of those yes people.

People, we are printing money at record paces that our checkbooks will never be able to pay off. The ATM has crashed…..

From day one, I have been against the tax credit for the most part. I have had my reasons, several of which are starting to show now than later. Yes, it has helped home buyers and it has helped the economy some. But is the damage greater than the good that it was suppose to have done? Yes and there are now news reports giving startling facts. Here is an excellent article from USA Today.. - Home buyer tax credit fraud called 'disturbing' Here are 3 disturbing facts mentioned in the article....

**Costing the government $10 billion. I don't think the government are the ones that write the checks from their own bank accounts. Shouldn't it say, this will cost the American Public $10 billion?***

***Gee, an additional $17 billion. I thought the first time homebuyers tax credit was suppose to stimulate the economy, not weaken it. People, who pays for this? We the tax payer.***

***Apparently our kids haven't learned much in school about fraud. Could these be are next wave of harden criminals? And a 4 year old? I would have to assume that a parent filed that on behalf of their child.***

_______________ _______________

Here is another article by Jackie Calmes with similar answers, but that she also shares some more cold facts that seem scary to me. Home tax credit audit shows abuses -

***Claimed the tax credit, yet didn't buy a house yet. I wrote about this in May of 2009. Fraud Alert on the First Time Homebuyer Tax Credit - Do you chance it? - There have been some realtors that basically told me that nobody would commit fraud on this. I even had one realtor tell me that they had a woman that worked for the IRS that got her money before she bought her house. I truly respect this realtor also. But he was very protecting of his buyer, stating that she would never commit fraud because she worked for the IRS. People, I don't care who you work for, greed will get the best of you at times.***

***Now the government is saying that we still have a weakness in the housing market. Yet they will go on and get the media to state that the recession is over? Jim Crawford brought this to our attention in his blog post, I'm so happy the recession is over! Aren't you? - I am tired of misinformation and politics. Will we ever get the truth? People, I think we don't need to hear it, because the writing is on the wall. Have we forgotten how to read? Or do we need people to tell us what we want to hear? hhhhmmmm***

***Imagine that, a politician needing to be re-elected again and possible trying to push something that might actually hurt our economy instead of helping it. now, this is based on my opinion, but I didn't see this tax credit getting us out of the mess or even truly helping the housing market for the most part.***

Conclusion : What crawls under my skin is not only do the lawmakers on Capital Hill want to extend the Tax Credit, but that they want to increase it to $15,000. Why? What is really wrong with $8,000??? And why can't we go back to the re-payment schedule that was applied in the very first tax credit, when the $7,500 first time homebuyers tax credit was introduced. Seriously, what is so wrong with this? Free is not free. One way or another, we will be paying for this anyhow. Some of you scream about people having skin in the game, when buying a home. Yet some of those same people don't seem to be screaming about having skin in paying back the tax credit.

What about those politicians that just want to sign bills and pass them, just for the sake of getting votes for when re-election time comes around. Yet these same people don't take the time to do proper studies to see if this is actually working as planned. Is this all smoke and mirrors for the most part? Do many of you actually pay attention to this? Or do we just go along with the crowd, because it seems better than what we currently have? We need to think about this and not just roll over in our graves, which could be sooner than later. What say thee?

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

Rating your designation as a loan officer or realtor - Do you manipulate such designations as advertising to get more business?

Fri, 23 Oct 2009 13:36:17 -0500

What is in a name? - Honesty? Integrity? Knowledge? Trustworthy? Creativity? Being reliable?

What is in a name designation? - In most cases, the same that would be attached with any name?

Some of you might be asking yourself, "what am I talking about." How about those names that come with such designations as :

Certified planner - Certified Technician

Mortgage Specialist - Real Estate Specialist

In the mortgage and real estate world, many realtors and loan officers have special designations attached to their names. You will usually find these designations on their business cards or on their web site.

Realtor -

CRS - Certified Residential Specialist

ABR - Accredited Buyers Representative

CNS - Certified Neighborhood Specialist

SRS - Seller Representative Specialist

Loan Officers -

CMPS - Certified Mortgage Planner Specialist

UMB - Upfront Mortgage Broker

CLA - Certified Liability Advisor

My Example : Just last week, I wrote this post about basic information on FHA loans and what you should be careful of. FHA loans 101- The basics of FHA mortgages & mortgage shopping - I truly pride myself on numbers, giving out very accurate figures, and not just my opinions based on assumptions. But to prove them with real numbers, not numbers that can be manipulated to make me look right.

I had a loan officer disagree with my opinion and my figures. Hey, I have no problem with people disagreeing. I might actually learn something. Yet he told me that I wasn't correctly comparing apples to apples and that the upfront mortgage insurance was still a cost to the borrower. That part is true, but he didn't read my whole post and review my comparison examples, which detailed this. And if you know how to compare FHA loans vs conventional loans, you understand the whole mortgage insurance issues. You don't have a specific designation for this.

I mentioned several types of designations, which many of them give that realtor or loan officer more knowledge and education. But there is one type of designation that sells costs and that is an upfront mortgage broker. If you read many sites by upfront mortgage brokers, they sell their costs, telling you that they will negotiate your costs, making them usually sound very affordable. This is great for the average consumer. But what is not mentioned is the service or advice that one might receive or in this case, the lack of. Meaning, my comparisons were sound and flawless. But if you deal with someone that sells costs, but might give you the wrong advice, do you think a cheap loan will still be cheap if they gave you the wrong advice?

Conclusion :

My whole point to this post? To make the average consumer understand that not everyone is as knowledgeable or ethical as they may sound just because they have one of these designations. Yes, many of these designations mentioned require for that person to take classes and a test in order to receive that designation.

How many of you remember going to school and passing a test to a class that you didn't fully pay attention to? How many of you were good at winging things? How many have a photogenic mind, are able to remember what they read or hear, yet might not comprehend what was said?

So, who are you really? Just because you say that you a CMPS, certified mortgage planner, does it mean that you have my best interest at hand? Do you know exactly what you are doing?

In regards to the loan officer in my example. This person advertises lowest cost loans. I have an old saying..."the cheapest loan on paper might cost you more in the long run." If this person doesn't know how to compare specific loans, how can this be the cheapest for you? The best? What happens if that person's choices aren't accurate? Wrong? Misleading? Many loan officers sell costs, but can't give you accurate or reliable comparisons when it comes to specific programs. Just keep this in mind when shopping for a mortgage.

PS... don't get me wrong. In many cases, designations are good. One of the mortgage designations, CMPS, and many real estate designations are great educational tools. But if someone preaches it or slams it don't your throat, that might be their only selling feature to you. A desgination should not be verification for that person to be credible. Just be careful...

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

FHA loans 101 - The basics of FHA mortgages & mortgage shopping - 10/13/09

Wed, 14 Oct 2009 00:18:11 -0500

FHA loans & their misconceptions/myths

The number one myth - FHA loans are more expensive than conventional loans!! - FALSE -

Protection of your family & home purchase will always be with a loan officer with knowledge & integrity… not telling you what you want to hear to make a sale!!

PS… this might be a tad long & boring, but worth it if you are buying/refinancing a home.

I received this e-mail from a borrower yesterday buying in WA. Here are some parts of his e-mail.

Borrower #1

"My real estate agent simply told me there would be more closing cost if I chose FHA, which I don't think true."

A major gripe of mine. When comparing a FHA loan to a conventional loan, you need to compare apples to apples. The only difference would be the upfront mortgage insurance premium (UFMIP). Some loan officers and realtors would like to call this a closing cost. It really isn't. First off, you can roll it into your loan. Hence another myth that some FHA closing costs can be rolled into the mortgage. Still false, because this is not a lender fee. It's a fee from HUD. Yet some will debate this as a closing cost. It's like the VA funding fee or the USDA's guarantee fee.

Same person goes on to say...

"XXXXXXX mortgage is the preferred lender to the property and now offering 4.25% for 30 years. Since my house won't be ready til next spring, XXXXXXXX mortgage can't lock the rate that far. I was told they were not sure how much the rate would be then. This part is very scary to me as a first time home buyer without any previous experiences....!!!"

Rut row.... first off, you can't get a 30 yr fixed rate that low. And even if you could, it would cost you like 8 points. So, this loan officer plays the trump card per say. Knowing that settlement won't be until next spring. This lender is giving an awesome rate that can't be locked in... hhhhmmm

Borrower # 2 -

I have a borrower that was referred to me by a realtor. She gives out 3 names to her clients. (there is a reason for this that I don't totally agree with) I shouldn't have a problem with this, but I do. In most cases, most loan officers can be very competitive, especially when they know you are shopping. This realtor prides herself on giving good referral sources that close on time and give good rates with fees. Okay for now, but I have a point to this.

This borrower wants a 30 yr fixed and a 5/1 arm. I give him several good faith estimates and find out that mine are in the top two. I then get an e-mail from the borrower who wants me to be lean on mine, because he was able to get the other lender to cut a few fees. Huh? First off, I had a $100 fee and this other person had close to $1,000 in fees. Secondly, I will never be the cheapest, but I will be better than average. In many cases, I will give more knowledgeable information than the other loan officers involved. Okay, sounds like I am full of myself. But after years of asking the borrowers questions and getting feedback, so many things aren't mentioned.

Example - I ask this person their goals, how long they think they will be in the house, baring any work related changes. He tells me that I bring up some excellent points to think about. Because I bring up current rates, the future of rates in 3 to 5 years, home values, the cost of refinancing, etc,etc. Gee, from his answer, it doesn't sound like the other loan officers bring this up.

FHA myth - the monthly mortgage insurance will never fall off. It does just like on conventional loans.

FHA fact - No matter how much you put down, you will have the mortgage insurance for 5 years no matter what. He said, well, I hope to have more equity in 3 years. Good for you, but if you refinance into another FHA mortgage, you will then have the MI for 5 more years. Okay, so I will go conventional. Good for you, again. But there are many new rules regarding private mortgage insurance. In many cases, the PMI companies want to now see a 2 year history of payments. If late, this could influence their decisions. Again, just so many unknowns to risk.

Onto round 2.... In the beginning, I just give him a 5/1 arm and not details of how an adjustable works, because I want to see if my competition does. After about 4 days of him shopping, I have him call me Sunday night around 7 pm. I ask him if he was told how adjustables work and if he was told the margin on this adjustable. What is a margin Jeff.. hhhmmm.. Just a fact that could have an impact on his decision and his future.

Onto round 3.... The good faith estimate. I always tell the client how long that rate is good for when giving a GFE, showing their rate and fees. Many loan officers don't point out that it's good for 30 - 90 days. And if they do barely mention this or they don't bring it up again a few days later, when they give you an updated good faith estimate. I know this because I question and quiz these borrowers. Overall, until you are ready to proceed with the mortgage application and lock-in, some of these good faith estimates don't mean squat.

Overall, there are more loan officers than one would think that don't properly educate the borrower. As a borrower, you don't need a Harvard education, hence why you want to speak to a good loan officer an excellent loan officer. I found many holes in my questioning of this borrower, telling me that he wasn't properly educated with buying a home and shopping for a mortgage. My 30 yr fixed rate with fees were better than the other two. Yet one offered a very good price for the 5/1 arm. I later refused to give him an updated quote, because after speaking to him and getting to know his goals, it wasn't in his best interest. He was suckered into the lower payment. Don't get me wrong, adjustables have their place, especially with today's rates. But again, the best rate on paper is not always the best in the long run, no matter if it can be offered or not. Knowledge is power!!!

Just don’t be that shopper that shops themselves out of that good mortgage.

For some more good reading :

The Basics of FHA Loans - Mortgage 101 for FHA Mortgages - 08/24/09

Credit scores - FICO scores for mortgages - I need a 700 credit score?

Is pre-qualifying a borrower like rocket science??? - Important questions that should be asked by all loan officers.

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- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

I WANT your SKIN in this game !!! Give it up !!!

Wed, 07 Oct 2009 11:06:13 -0500

Give it to me all..... the more that you have down, the more things will work out, that you won't leave your home. And as an investor, I will feel much better. Give it to me, every dime.

Here is my point. There have been a few articles written in the last week or so and several of the comments are screaming for more skin in the game. These comments aren't just coming from realtors and loan officers, thinking that this will help correct the foreclosure market and the housing market, but this is also coming from the government.

There was an article written last week titled : Proposal would boost FHA Down-payment requirement. Some Congressman wanted to raise the FHA downpayment to 5%, adding 1.5%. Hence what propelled me to write : FHA loans to 5% down?

Now, do we really think that an extra 1.5% down will correct and or help the foreclosures? In my opinion, I don't think so. Lenn Harley gave a good comment in my FHA 5% down article. Here is a snap shot of what she stated...

"ZERO down payment loans are no riskier than 20% down loans IF THE MORTGAGE COMPANY HAS FULLY DOCUMENTED THE BORROWERS INFORMATION AND DETERMINED THEIR ABILITY TO REPAY. - Ability to repay. What a concept."

Bingo... and here is what angers me with those on Capital Hill that apparently have no clue and or just don't do their research. Did anyone read this article by Kenneth R. Harney. Who's most likely to walk away from their mortgage? -

Wow, someone actually did some research that might blow your socks off per se. Yes, common sense says that more skin in the game would be best, more practical. I don't mind opinions, but assumptions without doing your research and or putting 1 and 1 together does get my blood boiling. Besides, here is a hint to who might walk away: "It's probably not who you think."

Let's take it a step further. Howard Sumner wrote : deliquency and foreclosure study. In this article they talk about the different types of real estate markets and where they see foreclosures most.

Real Estate SOLUTIONS ???

So how can we help correct this real estate market and keep foreclosures from happening? There will be many that will say more money down, because that is how it was done 20-30 years ago. 2 things on that blind statement. First off, this is 2009, not 1970 or even 1990. The cost of living is more expensive now. Secondly, FHA still allowed for less money down than your conventional loans in the 70's and 80's. So how come there weren't tons of foreclosures then? Is it the down payment? I don't think so, just an excuse.

Solutions?

-- Maybe lower debt to income ratios a little?

-- Possibly qualify borrowers just as we do for VA loans? In the calculations, we have to find out family size and to use utility/electric costs also.

-- Esko Kiuru wrote this article : Mortgage Lenders now more inclined to lower principal. Please read this, because this can be a good solution.

-- Claudette Millette shares this article with us : New Housing bill will force loan modifications. At least the lenders will have to explain specific options. Claudette states - "All lenders will be required to perform what the bill terms as a "net present value" test for all seriously delinquent borrowers." - Bravo... it's a start.

-- I wrote this article 3 months ago, Call To Action - We must fix this real estate market ourselves. I made a pledge and I am still working on this. We need to put our heads together and make the gov't realize more issues and not the common sense approaches.

Food for thought to a main solution….

Did we ever come to realization that a lot of these messes are because of unemployment? The loss of jobs and income? Our government spending habits? And that we need to focus on small businesses, which are a large part of America's work force.... Besides, if we ask for 1.5% more upfront, doesn't that deplete the savings of a borrower that could use that extra money for fixing up the house? For moving? For emergencies?

My main reason for writing this blog? Please read this, which was mentioned above : Who's most likely to walk away from their mortgage?

Lenn Harley wrote this : Raising the downpayment for FHA insurred loans to 5% is ok?

Lenn adds some good insight to this with some good discussion. People, we need to stand up and fight this, letting the gov't know not only how we feel, but what they could possibly do to the real estate market.

All pictures from www.istockphoto.com

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Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

Baseball Playoffs - Phillies - Dodgers - Cardinals - Rockies - Yankees - Red Sox - Angels - Twins - Who will win it all?

Tue, 06 Oct 2009 22:30:21 -0500

AMERICA's Pastime begins…

2009

Baseball Playoffs are here, starting tomorrow, October 7th. Who do you think will win? Who has been hot? Whose been slumping? Who will win the World Series?

As much as I despise the New York Yankees, they have played the best baseball in the 2nd half and in the last month. But just because Steinbrenner buys a team, doesn't mean that they will always succeed. They have the most pressure, with the New yankees stadium being played in this year, and the highest payroll.... they have the pressure of winning it all. The Philadelphia Phillies have some pressure also. Not only to repeat, but to be the first National League team to repeat, winning the World Series back to back since the Cincinnati Reds did in 1975 and 1976.

Here are my picks for the first round winners....

AT AND AT

Who will be in the World Series? I would love to see the Red Sox play the Phillies, but this is what I think..

WINNER?

Philadelphia

Phillies

Now.. yes, part of my heart is hoping for the Phillies. But from a sports perspective, if the Phillies pitching gets back on track, what it did for a whole prior to the last 2 weeks of baseball, they can win it all. And I am hoping for that and some good hitting. There are so many things to at. What could hurt the Phillies the most is their closing issues. Phillies were second to the Yankees in the long ball, home runs. The Phillies have great defense and what usually helps in the play offs is defense and pitching. Time will only tell. Who do you think wins it all and why?

GO PHILADELPHIA PHILLIES 2009

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Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

FHA Streamline Refinances - New Updates that you should be made aware of on FHA Streamline loans!!!

Mon, 05 Oct 2009 15:08:10 -0500

FHA streamline loans are very beneficial in many ways. A few things to keep in mind. FHA streamlines don't take that long, up to 10 days, and the FHA streamline rates are the same as regular FHA loans.

When comparing FHA streamlines to conventional refinances, depending on your credit score, the FHA rate in many cases will be much better. Keeping this in mind, use a loan officer that is very familiar on how these types of refinances work. Just because it's easy to the naked eye, one still needs knowledge of how to make this work for you.

There are two types of FHA streamlines. Changes have been made as of September 18th, 2009 :

1. Streamline refinance with an appraisal : This is where you can include your closing costs within the loan amount. The lower of the two below would be used.

Outstanding principal balance(a) minus the applicable refund of UFMIP, plus closing costs, prepaid items to establish the escrow account and the new UFMIP that will be charge on the refinance

97.75 percent of the appraised value of the property plus the new UFMIP that will be charged on the refinance..

*** Important - Discount points may not be included in the refinance now. If the borrower does agree to these points, the lender must verify that the borrower does have the assets to cover such points. ***

2. Streamline refinance without an appraisal : The calculation for this is the original principal balance(a) of an existing FHA mortgage minus the original UFMIP (upfront mortgage insurance) that is left over plus the new UFMIP that is added to the loan amount.

Key Reminder - The outstanding principal balance(a) may include interest charged by the servicing lender when the payoff is not received on the first day of the month but may not include delinquent interest, late charges or escrow shortages.

These 2 types of refinancing are only for primary residences only. Investment properties that were originally bought as a primary residence, may only be refinanced without an appraisal to only include the outstanding principal and nothing more. Listed here : 4155.1 3.C.2.d and e

If you have a 2nd mortgage or any junior liens older than twelve months old, then this would be considered a regular refinance and could not be done as a streamline refinance. And then you would have to qualify with income and credit.

Some Key FHA streamline changes as of September 18th, 2009 (all of this goes into effect 60 days from the 18th of September):

Seasoning : The borrower must have made 6 months of mortgage payments at the time of application.

Payment History : Greater than 12 months or less than 12 months of mortgage payments.

A. Less than 12 months - no lates allowed

B. Greater than 12 months - allowed one 30 days late in the 12 months, but no lates allowed in the last 3 months prior to the date of the new application.

Net Tangible Benefit : The lender must determine a net tangible benefit to the borrower, no matter if it's with or without an appraisal. The NTB (net tangible benefit) must benefit the borrower by :

the reduction in the new mortgage payment to include taxes & homeowners

refinancing from an adjustable rate (arm) to a fixed rate

(or) reducing the term of the mortgage

Keep in mind, that the new mortgage payment must be 5 percent lower than the old payment. This is the requirement when going from a fixed rate to a fixed rate. There are different requirements when going from an arm to a fixed rate or from a fixed rate to an arm. Please read the mortgagee letter, ML 2009-32.

Maximum Combined loan to value : If subordinate financing is in place, the maximum combined loan to value, which is CLTV, can't exceed 125%.

For streamlines with an appraisal, it's determined off the new appraisal.

For streamlines without an appraisal, you use the original appraised value.

Certifications & Verifications : The lender now needs to confirm that the borrower(s) have a job and income prior to closing. This must be done on the lender's letterhead and signed and dated by someone at the mortgage company. If assets are needed, the lender must verify and document this also.

*** there are a few more changes, when it comes to the FHA streamlines, yet very minor. All of these changes can be read in Mortgagee Letter 2009-32 ***

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Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

CONTEST - CONTEST - Get recognition & more POINTS - Attention all Newbies!!!

Sun, 04 Oct 2009 12:04:16 -0500

Since the 2nd update was featured early this morning and getting more recognition, I am extending this contest for 2 more days. The cut off period will be Tuesday the 6th at midnight EST. Winners will be announced Thursday the 8th by 2pm….

Time is running out. If you are new to Active Rain within the last 6 months and that your blog hasn't been FEATURED, please read this contest for the newbies. Fall into Blogging as Fall Approaches!

Now, if you have been on here longer for 6 months, but really haven't been active much, or have written many blogs, but still never received a main feature on the feature board.... then you can still participate. Hey, I am in charge of this contest, so I can make up the rules as I go along. ;o)

Seriously though, with less than 12 hours to go, you have the chance to not only get a feature, but a chance to place in the top 3 and be recognized by many of Active Rain. Also, you get a chance to win some more points. All you have to do is write a blog. Don't worry about it being perfect, just give it a chance. What do you have to lose?

GOOD LUCK TO ALL!!!!

PS... any questions, please don't hesitate to call me or e-mail me... or just leave a comment. thanks

CONTEST - CONTEST - Get recognition & more POINTS - Attention all Newbies!!!

Sun, 04 Oct 2009 12:01:02 -0500

Since this was featured and getting more recognition, I am extending this contest for 2 more days. The cut off period will be Tuesday the 6th at midnight EST. Winners will be announced Thursday the 8th by 2pm…..

GOOD LUCK TO ALL!!!!

PS... any questions, please don't hesitate to call me or e-mail me... or just leave a comment. thanks

CONTEST - CONTEST - Get recognition & more POINTS - Attention all Newbies!!!

Sun, 04 Oct 2009 11:57:06 -0500

GOOD LUCK TO ALL!!!!

PS... any questions, please don't hesitate to call me or e-mail me... or just leave a comment. thanks

FHA loans to 5% down? No seller concessions allowed? Rumors? - The government at its BEST again !!!!

Fri, 02 Oct 2009 14:21:54 -0500

FHA loans to 5% down? A 5% down payment for FHA loans?

I totally understand the issues at hand, that many agencies are now having more loans foreclose, that more loans are being lost on the books, and that lawmakers are re-looking at FHA's 3.5% downpayment to possibly raise it to 5%.

Here is the article in question written by Rich Edson of Fox Business. Proposal would boost FHA Down-Payment Requirement.

I have a few concerns, not only what some politician wants to do, but the reasoning behind it. If you read the article,

Here is a comment by Chairman Ben Bernanke.. "I think it’s undeniable that the FHA loans -- because of the low down payments and so on -- are riskier than other mortgages being made, and therefore have a greater risk of loss which would be made up by the taxpayer,” said Bernanke."

Bernanke went on to mention this, "You can make the restrictions tougher and tougher, that reduces the risk to the taxpayer -- absolutely.” “And it reduces the number of people who can get mortgages.” - BINGO.. it will reduce the number of mortgages that people can get. Then where will the real estate market be?

Here is why I am so blue and upset, with confusion in the background. We talk about ...

the housing bubble
homes losing value
foreclosures & bank sales
people that can't afford their mortgages now
skin in the game - larger down payments
loans that are becoming harder to close
higher credit scores hoping to make better mortgages

And the list could go on and on.... but one major question. Could a lot of what was mentioned above, be attributed to ...

job losses?
Less Income?
Higher family expenses?
Living expenses? (health care? School?)

Overall, if you don't have a job, or lose it in the process of owning a home, or just can't save because the cost of living is increasing... wouldn't this be a larger contributor to what was mentioned above? What about USDA loans and VA loans, that are 100% financing options. Yes, their default rates are increasing. But is it because of 'no down payment'? The economy? Unemployment? Job losses?

Let's dig a little deeper. I know a loan officer, Gerry Suarez, that has a client that bought a house and used a FHA loan as their choice of financing. She had put 3.5% down, had fair credit scores of 625, and in the last year, she is under water on the house. She has been paying her mortgage because she can afford making the payments. If she sold her house in today's market, she would owe about $40,000.

My point? She has a job, is responsible, and enjoys the American Dream of owning a home. How come we never read articles about those that put 10% or 20% down, yet went into foreclosure? It happens and happens more than you would think. I have been giving spreadsheets from other large mortgage companies, showing loans that weren't performing on their books with large down payments. It's scary people. And here is a great example of the government stepping up to the plate, thinking that they know best.

One other thing that was mentioned in the article. "The bill, proposed by Congressman Scott Garrett (R-N.J.), would also eliminate FHA financing of closing costs."

First off, this is how rumors start. FHA doesn't allow you to finance the closing costs, except on a 203-k loan. (a few things can be financed per se) You have what is called seller concessions. So I have to assume that this is what the author means, that they want to take away the seller contribution, which is at 6% at this moment. To take it away completely? And to add insult to injury, have the borrower put down 5%?

My thoughts and opinions. -

Do we really think another 1.5% extra, for a down payment, is going to solve this problem? What about focusing on jobs? What about welfare checks? Sending millions of dollars to other countries, to help them, but not helping ourselves.

Small solution? What about possibly lowering the debt-to-income ratios then? I have recently approved a borrower with 3.5% down, $2,000 in reserves, with a credit score of 710, and her ratios were 38.7% and 47.3%. That means that almost 39% of her money goes to her mortgage payment, to include taxes and homeowners insurance. And that 47% goes to the mortgage payment plus all other reoccurring monthly debt. And this is before taxes !!! But what is missing from this picture?

-- living expenses, such as food, clothing, gas, electric, gas for automobiles, etc, etc

Overall, I know we have many issues that need to be fixed, the housing market is one of them. But every time I see some government official or politician try to get the house and senate to approve something, that could hurt our industry more than help, it ticks me off. What ever happened to common sense? Rhyme over reason? What do you, the American people say? The tax payers, what do you have to say????

UPDATE 10/08/09 : continued discussion on skin in the game, having equity or not. Having a large downpayment or not. Please read : I Want your Skin in this game !!! Give me your skin now...

Solutions !!!!

(please read some of my solutions below in this comment - click link above)

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

Shopping for mortgages - The Public Image of Advertising that is misleading !!!! - Part 1 of 2

Tue, 29 Sep 2009 13:16:50 -0500

ADVERTISING – Those ads that seem too good to be true.

I have been in the mortgage business for 17 + years. I have seen so much advertising when it came to mortgage companies and how many of the ads were misleading or just flat out lies. Those companies advertising low rates that didn't happen. This easily went on from 1992 to 2002. I always wondered why this wasn't regulated as strongly as it should have been. I found out that some of these companies had 100's of complaints, yet they still operated for those 10 years. I think this is misleading and I call it Shark Advertising. It's dangerously misleading, yet it worked for many companies, at the expense of the borrower.

If anyone has noticed, we haven't see as much advertising from mortgage companies or large banks in the last 18 months or so. I am now seeing a few mortgage companies advertise on the radio and as of lately, a few advertise on TV, especially ESPN. The ads are misleading because they appear to make you believe that it's being backed by the government. (Miriam Bernstein made this comment below that explains this part.. - Comment # 30 -)Has anyone seen a few ads on tv that look like a news update, a spokesperson telling you about government funded programs or that the government is helping in sponsoring these programs. Yet if you read the fine print, it's a mortgage company, disguising this ad very carefully, spinning it as thought the government is putting this out to the public??

I am even seeing this more and more in such places as Facebook. Below are a few that I am seeing on Facebook now.

Here are some ads found on facebook and comcast.net. As you can see, these mortgage companies and or companies that are lead generators, make you think that the government is behind this. Obama hasn't asked homeowners to refinance. The first one on the left, upper left, is from a company called Lower My Bills. They sell leads to other mortgage companies, after they have gathered your information online. Then you have like 4 to 10 lenders call you, sometimes daily.

People on Facebook that give basic information – eye catchers to pull you in.

Here is a loan officer on Facebook that placed this on his Wall, to capture the attention of others. You just need to be aware of what you read. Sure, this can happen, but there are some unknowns not mentioned. And sometimes the loan officer will raise that unknown, so you can't obtain that great rate and get the next best thing. Keeping in mind, it's not always about the Best Rate. How service? Integrity? Educating the borrower? And so much more.... Please read : I want the same deal that my friend receivd... & Mortgage payment vs Interest Rate

Web Sites that are deceiving !!!!

As I explained in this blog post, deceptive web sites, here is a great example above. Doesn't this look like it could come from the USDA themselves? But it isn't. It acts as a lead catcher, catching your info to call you and or sell you about USDA loans or any other type of mortgage loan. No Cost Obligation is mentioned on the site. - We always love to hear about free things, but are they free overall?

Here is a FAVORITE of mine !!!

I am sure many of you have seen this one on tv, FreeCreditReport.com. The commercial announces a free credit report. But at the very end, it says that you need to enroll in their Triple Advantage program.

A free credit report? They have tons of commercials & commercials cost money to display on TV. They also have like 3 to 4 different kinds of commercials and. producing commercials cost money.

Well, I feel like an investigative reporter for the news. I filled out my info online, trying to see what I get. It says that it takes 3 to 5 days for me to obtain these credit reports from the 3 credit agencies. (giving my credit card #) And then there is a button that says, to obtain your 3 reports now, click here. Imagine that, it's asking for $24.95 now. See the 2nd paragraph on the left, highlighted in yellow? It talks about the new Federal Law and I am wondering if that is what they are sending me now, because that is free. But from what I know, you have to go to annual credit report to get the free reports.

All 6 commericals - Free Credit Report.com

Conclusion : Just be very careful of what you read and what says free, when it might not be free. I always have said, someone has to pay for it from some where. Is it you? Is it me who pays for it?

Overall....No matter what, consumers will fall for some of these ads. It's called false hope. Especially when desperate, you just want to believe that someone can help you.. or, that it's cheaper with them than the others. thanks

Shopping for mortgages - The Public Image of Advertising that is misleading !!!! - Part 1 of 2

Shopping for mortgages - The Lending Trees of the World (lead generators) - Part 2 of 2

Advertisements - Is the grass greener on the other side?

FOLLOW ME ON FACEBOOK

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages -

- Conventional Loans - 203 k loans -

- Mortgages -

Experience & Knowledge at its BEST !!!

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

An Active Rain Newbie Contest - Fall into blogging as Fall approaches - 09-26-09

Sat, 26 Sep 2009 11:23:15 -0500

FALL into Blogging as FALL approaches

For those of you that have realized that blogging is a great source of business, that it's a great way to get your name out there, and just a great way to network and share opinions.... here is a great way for those that are new to either Active Rain or to blogging, to show case some of your talents.

Ah, you say you don't have any blogging talents? Not to worry or fear... you have to start some where, right? You may 'fall' at first, but it's not failing. If I look back at my first 15 to 20 blogs, they weren't very good, nothing compared to what and how I write now. Some of it was just building my confidence up and in other cases, picking the brains of those that worked their way up. Keeping in mind that some are just good at writing, but quality content is king.

PS... even if you aren't signed up to blog, you can still write your blogs as 'members only' and still participate in this contest. The rules are below...

Basic Reasons to why blogging can be helpful :

Marketing yourself - Business Cards, Testimonials, & the Internet - could they be combined?

What is a Rainmaker? Someone that is a full member of Active Rain, who has full access to all that AR has to offer. That is to include blogging to the public. Active Rain has made it affordable for those to try it the first month. Active Rain Rainmaker - first month $5.00 -

When you have full access to Active Rain, you become a Rainmaker and are given this badge. FYI - I just came across a profile that is not a Rainmaker, so the only blogs they can post are 'members only' blogs. Yet, each of his blogs are listings. People, the only people able to see these are the members of AR. The public can't view these nor can Google index and search your blogs. Another great reason to join Active Rain.

Here is what I feel about Active Rain, about blogging, and what contests like this allow....

It's a chance for new members to show their talent. If anything, a chance to possibly find your blogging voice. Overall, blogging gets you recognized online & in your local area.

And keep in mind...The great thing about this community, in regards to AR, there are people willing to help you and help you grow.

So, you are new to Active Rain and possibly very new to blogging. You are afraid to jump out there and expose yourself. Here is a chance to be yourself, just put something out there, and to get new business, referrals, and to make new friends.

Do you know that 80% of the consumers out there shop online when looking for a home, mortgage services, or possibly the services of a stagger. That these consumers come to the internet looking for information and hoping to be educated on certain services. Have you read the many success stories here on Active Rain, proving that blogging works? Check them out here : Active Rain Block Party

We Want You !!!! With so many new ways in regards to technology, blogging has been a great way to market yourself and your business. But how can I blog? What can I write about? What about my presentation or style of writing? It takes time and for many of us, it didn't happen over night. You must be patient.... But what a great place to try and learn how to blog other than writing on Active Rain.

Within this contest, just be yourself. Judging will be based on original content and creativity. It won't be limited to just writing, meaning that you can use videos in your blog, graphics, and or pictures. If you want some great tips, Brad Andersohn is a great resource for tech stuff, blogging tips, and so much more. Subscribe to Brad Andersohn It can be on anything that you want it to be, any topic. What we want is for you to capture our interest. And keep in mind, lay-out and readability is important also, just as staging a home.... presentation.

And think of this contest as a way to prime yourself for your what you do, if you are a realtor, loan officer, title clerk, appraiser, etc, etc. Sheldon Neal wrote about this, What makes you different? Stand out from the crowd? This is a must read...

First prize will be awarded 1000 points and be Featured on ActiveRain and in the Active Rain Newbie group.

Second Prize will be awarded 750 points

Third Prize will be awarded 500 points

*200 additional points for all that enter this contest*

You can view the entries here..... Fall into Blogging as Fall Approaches

CONTEST RULES:

1. Who is eligible? Anyone on this site less than 6 months (please read below about this ) and who has never had a feature. Yes, if you have been on here for less than 6 months, but have received a feature, you can't enter. For some of you that don't know, a feature is that little Gold Star that you get at the bottom of your post and your blog is placed on the main page of Active Rain. Those blogs being featured in the AR groups don't count as an AR feature. UPDATE : even if you have been on here for a few months longer than 6 months, please read this comment : Additon to the contest rules comment # 14

2. Number of entrees per person will be limited to (2) and it must be completely original and authored by you. Any plagiarism found will be deleted and may be posted on Rich Jacobson's "wanted for plagiarism" post.

3. Submit your post to these 4 groups : An Active Rain Newbie Contest - Fall into blogging as Fall Approaches - 09/26/09, Dedicated Bloggers, Bloggers Choice Selections, Positive Attitude for the Weary Soul. The 5th & last group can be your group of choice.

4. Make sure that the title of your blog has this in it some where - "An Active Rain Newbie Contest - Fall into Blogging as Fall Approaches".

5. You must include the following in your Tag words below : "An Active Rain Newbie Contest - Fall into Blogging as Fall Approaches". If you don't, you won't qualify. (what is a tag? Tags & Tag words)

6. DEADLINE for submitting entries is Sunday, October 4th at midnight.

7. Winners will be announced Tuesday, October 6th, 2009.

8. Only 200 points will be awarded per PERSON regardless of the number of entries submitted - with the exception of the Winners.

PS.... please, also link your entry in this post, in your comment......

PPS... as the founder of this contest, not working directly for Active Rain... please don't get upset if you aren't awarded points right away. Give me and AR at least 7 to 10 days. I have a real job)

Lastly, bribing the judges can and will be optional. But nothing under 2,000 rubles. Hence why the judges won't be mentioned until the contest ends at midnight on October 4th.

Anyone wanting to judge, please e-mail me at jbelonger@ihmci.com

Here are the previous Newbie contests and contest winners :

Contest - 04/21/2008 : "Give it your Best Shot", & Winner : Winner of "Give it your Best Shot" contest

Contest - 10/25/2008 : A Chance for Newbies to Shine on Active Rain & Winner : Winner of the chance to shine contest

Contest - 01/21/2009 : A newbie contest - It's even better than American Idol & Winner : The winner of the Active Rain Newbie Contest !!!!!! - It's even Better than American Idol

Contest - 05/04/2009 : A Newbie Contest - Be different from the crowd - Spring into some SPRING fun!!!! & Winner : The winner of the Active Rain Newbie Contest !!! - Being different from the CROWD

GOOD LUCK TO ALL !!!!!

An Active Rain Newbie Contest - Fall into blogging as Fall approaches - 09-26-09

Sat, 26 Sep 2009 11:19:40 -0500

FALL into Blogging as FALL approaches

PS... even if you aren't signed up to blog, you can still write your blogs as 'members only' and still participate in this contest. The rules are below...

Basic Reasons to why blogging can be helpful :

Marketing yourself - Business Cards, Testimonials, & the Internet - could they be combined?

Here is what I feel about Active Rain, about blogging, and what contests like this allow....

It's a chance for new members to show their talent. If anything, a chance to possibly find your blogging voice. Overall, blogging gets you recognized online & in your local area.

And keep in mind...The great thing about this community, in regards to AR, there are people willing to help you and help you grow.

First prize will be awarded 1000 points and be Featured on ActiveRain and in the Active Rain Newbie group.

Second Prize will be awarded 750 points

Third Prize will be awarded 500 points

*200 additional points for all that enter this contest*

You can view the entries here..... Fall into Blogging as Fall Approaches

CONTEST RULES:

4. Make sure that the title of your blog has this in it some where - "An Active Rain Newbie Contest - Fall into Blogging as Fall Approaches".

6. DEADLINE for submitting entries is Sunday, October 4th at midnight.

7. Winners will be announced Tuesday, October 6th, 2009.

8. Only 200 points will be awarded per PERSON regardless of the number of entries submitted - with the exception of the Winners.

PS.... please, also link your entry in this post, in your comment......

Lastly, bribing the judges can and will be optional. But nothing under 2,000 rubles. Hence why the judges won't be mentioned until the contest ends at midnight on October 4th.

Anyone wanting to judge, please e-mail me at jbelonger@ihmci.com

Here are the previous Newbie contests and contest winners :

Contest - 04/21/2008 : "Give it your Best Shot", & Winner : Winner of "Give it your Best Shot" contest

Contest - 10/25/2008 : A Chance for Newbies to Shine on Active Rain & Winner : Winner of the chance to shine contest

Contest - 01/21/2009 : A newbie contest - It's even better than American Idol & Winner : The winner of the Active Rain Newbie Contest !!!!!! - It's even Better than American Idol

Contest - 05/04/2009 : A Newbie Contest - Be different from the crowd - Spring into some SPRING fun!!!! & Winner : The winner of the Active Rain Newbie Contest !!! - Being different from the CROWD

GOOD LUCK TO ALL !!!!!

An Active Rain Newbie Contest - Fall into blogging as Fall approaches - 09-26-09

Sat, 26 Sep 2009 11:17:45 -0500

FALL into Blogging as FALL approaches

PS... even if you aren't signed up to blog, you can still write your blogs as 'members only' and still participate in this contest. The rules are below...

What is a Rainmaker? Someone that is a full member of Active Rain, who has full access to all that AR has to offer. That is to include blogging to the public. Active Rain has made it affordable for those to try it the first month. Active Rain Rainmaker - first month $5.000 -

Here is what I feel about Active Rain, about blogging, and what contests like this allow....

It's a chance for new members to show their talent. If anything, a chance to possibly find your blogging voice.

And keep in mind...The great thing about this community, in regards to AR, there are people willing to help you and help you grow.

First prize will be awarded 1000 points and be Featured on ActiveRain and in the Active Rain Newbie group.

Second Prize will be awarded 750 points

Third Prize will be awarded 500 points

*200 additional points for all that enter this contest*

You can view the entries here..... Fall into Blogging as Fall Approaches

CONTEST RULES:

4. Make sure that the title of your blog has this in it some where - "An Active Rain Newbie Contest - Fall into Blogging as Fall Approaches".

6. DEADLINE for submitting entries is Sunday, October 4th at midnight.

7. Winners will be announced Tuesday, October 6th, 2009.

8. Only 200 points will be awarded per PERSON regardless of the number of entries submitted - with the exception of the Winners.

PS.... please, also link your entry in this post, in your comment......

Lastly, bribing the judges can and will be optional. But nothing under 2,000 rubles. Hence why the judges won't be mentioned until the contest ends at midnight on October 4th.

Anyone wanting to judge, please e-mail me at jbelonger@ihmci.com

Here are the previous Newbie contests and contest winners :

Contest - 04/21/2008 : "Give it your Best Shot", & Winner : Winner of "Give it your Best Shot" contest

Contest - 10/25/2008 : A Chance for Newbies to Shine on Active Rain & Winner : Winner of the chance to shine contest

Contest - 01/21/2009 : A newbie contest - It's even better than American Idol & Winner : The winner of the Active Rain Newbie Contest !!!!!! - It's even Better than American Idol

GOOD LUCK TO ALL !!!!!

An Active Rain Newbie Contest - Fall into blogging as Fall approaches - 09-26-09

Sat, 26 Sep 2009 10:43:06 -0500

FALL into Blogging as FALL approaches

PS... even if you aren't signed up to blog, you can still write your blogs as 'members only' and still participate in this contest. The rules are below...

Here is what I feel about Active Rain, about blogging, and what contests like this allow....

It's a chance for new members to show their talent. If anything, a chance to possibly find your blogging voice.

And keep in mind...The great thing about this community, in regards to AR, there are people willing to help you and help you grow.

First prize will be awarded 1000 points and be Featured on ActiveRain and in the Active Rain Newbie group.

Second Prize will be awarded 750 points

Third Prize will be awarded 500 points

*200 additional points for all that enter this contest*

You can view the entries here..... Fall into Blogging as Fall Approaches

CONTEST RULES:

4. Make sure that the title of your blog has this in it some where - "An Active Rain Newbie Contest - Fall into Blogging as Fall Approaches".

6. DEADLINE for submitting entries is Sunday, October 4th at midnight.

7. Winners will be announced Tuesday, October 6th, 2009.

8. Only 200 points will be awarded per PERSON regardless of the number of entries submitted - with the exception of the Winners.

PS.... please, also link your entry in this post, in your comment......

Lastly, bribing the judges can and will be optional. But nothing under 2,000 rubles. Hence why the judges won't be mentioned until the contest ends at midnight on October 4th.

Anyone wanting to judge, please e-mail me at jbelonger@ihmci.com

Here are the previous Newbie contests and contest winners :

Contest - 04/21/2008 : "Give it your Best Shot", & Winner : Winner of "Give it your Best Shot" contest

Contest - 10/25/2008 : A Chance for Newbies to Shine on Active Rain & Winner : Winner of the chance to shine contest

Contest - 01/21/2009 : A newbie contest - It's even better than American Idol & Winner : The winner of the Active Rain Newbie Contest !!!!!! - It's even Better than American Idol

Contest - 05/04/2009 : A Newbie Contest - Be different from the crowd - Spring into some SPRING fun!!!! & Winner : The winner of the Active Rain Newbie Contest !!! - Being different from the CROWD

GOOD LUCK TO ALL !!!!!

Dave Ramsey - say it ain't so!!

Fri, 25 Sep 2009 08:37:02 -0500

Who is upset by those that say they care about us, but actually don't care. Their sites are set on the ALMIGHTY dollar. How many proclaim to be your friend, giving good advice. I am speaking about those that have their own talk shows, web sites, etc, etc.

Below, Lewis Poretz gives what I think is a good example of someone building fame in the mortgage world, yet something doesn't smell right. Dave Ramsey has been respected by many... I don't agree with his main theme, that you should pay your house down as soon as you can... especially in today's market. But overall, he is selling his name to other loan officers, allowing them to use his name to endorse their name and or product... yet it seems that someone was getting very greedy. Lewis tried pointing this out to Dave Ramsey, but has gotten all resistance and negative feedback. It makes you wonder what Dave Ramsey's primary agenda is. In my opinion, based on the facts below, it sounds like the almighty dollar, coupled with trying to be famous. Again, just my opinion... but if I had a manager watching my e-mails... and a complaint came in such as the one Lewis sent, I would want to respond personally... and to look into these matters. But this has gone on for over 10 days now. Makes you wonder.

People... just be very leery of those that proclaim to be experts and such. Just because one might be all over the internet, have a great following, or be endorsed by someone else that you trust... doesn't always mean that they have your best interests at hand... food for thought. And please go back to Lewis's main blog, because there are some excellent comments that kind of make my point. Get to know who is actually behind the name. Please read comment # 15, by Ken Cook. This is part of my point. How does one become an expert? To be able to give advice that sounds great, but it might not be the best advice? This is slightly off topic, from my major complaint, but it's more food for thought. thanks

Via Lewis Poretz - expert mortgage advice:

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!

-------------------------------------------------------------------------------------------------------

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:

------------------------------------------------------------------------------------

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

-------------------------------------------------
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.

----------------------------------------------------------------------------------

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.

----------------------------------------------------------------------------------------

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????…….

----------------------------------------------------------------------------------------

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)

Marketing yourself - Business Cards, Testimonials, & the Internet - could they be combined?

Wed, 23 Sep 2009 09:03:33 -0500

How many of us truly have a business plan? How many of us are still afraid of the internet? How many of us don't utilize the internet as they should? I am sure marketing dollars are tight for many of us. How do you target your marketing dollars. Keeping in mind, time is money. So how do you utilize your time and your money?

There are so many ideas and marketing strategies, even in a down market, when you don't have much money to use for marketing. In my opinion, I do believe that print advertising (not 100% dead) is out the door, that you can spend your money in better places.

I wanted to share three basic concepts that we might take for granted, and not utilize to our full potential. I was inspired to write this after reading Jay Beckingham's blog, "Rain Power" It's Awesome. Jay gave some good basic tips and talked about Googling yourself. I wanted to take this a step further.

3 Basic Concepts of Affordable Marketing

1. - Business Cards - Probably the cheapest way to advertise yourself or keep your name in front of other perspectives. Sure, you usually have to give that person your business card. I did write 2 informational blogs in regards to business cards, what they should look like, and how to utilize them by being creative.

Business cards can help move your career forward -

Business card tips - Part 2 -

But how about taking it a step further. If you write enough blogs, and or have a few different web sites/blog sites, and interact on the internet; how about just telling people to Google your name. I have talked about this in other marketing blogs and in my opinion, this could be a very powerful marketing tool. Not only powerful, but cheap. Sure, if you don't have a common name, this certainly helps. But even for those with a common name, if you write quality blogs and use some of the tips that Jay mentioned in his blog, you can sometimes pass those celebrity names. Overall, think about this, just telling a client to Google you. Or even write this on the back of your business card. I think it's a great way for a prospective client to get to know more about you.

2. - Testimonials - Now, I sometimes cringe while reading some testimonials, because I wonder if they are real. I actually saw someone copy someone else's testimonials. Yes, this actually happened. But what another great way to market yourself on your home pages or possibly to have a link on your business card, sharing some testimonials. Now, unfortunately, I can't give you my specific link to my testimonials on my blog page, because it's down for now. But people actually read these sometimes and it can help make a decision, if those testimonials sound sincere and real. Example : I just had a borrower call me yesterday, after having an issue with their current lender, and actually read my testimonials. What impressed her was that I seem to care, because someone wrote that I actually was on the phone with them until 11 pm, answering some questions. Showing that you care, without pushing it down someones throat, or harping on it, can and does work. PS... Video testimonials, which I wrote about a year ago, but I forgot to mention. Thanks to comments by Will and David, comments # 22 & 24.

3. - Internet marketing - Blogging & Social Networking - The basic concept here is having an internet presence. Knowing that 80% of the people that shop for homes and mortgages, first shop/search online. It doesn't mean that they make their final decision from searching the internet, but that it can play a large role in their final decision making process.

There are debates in blogging vs social networking, that blogging is dead, and that Twitter is the best way of doing business. I don't want to get into that debate. If you do want to hear a good topic on this, Jason Crouch and Ken Cook co-host a weekly radio show and talk about this stuff. Yesterday's talk show had Paul Chaney as a guest and they explored some good information. Social Media tricks & tips - (click here to hear yesterdays show)

Overall, I firmly believe that if you aren't actively blogging, that you are missing the boat. In many cases, the expense for this can be cheap, depending on what services you use. In my opinion, if you are new to Active Rain, AR is a great place and affordable to start your blogging with.

- Active Rain success stories -

2 posts on blogging -

Crash course on blogging

Blogging - short term and or long term?

UPDATE : Jeff Dowler wrote a very informative post : Social Media and your business - Tips, Strategies, and no nos...

PS. - And if you ever have any questions about Active Rain, starting a blog, or any thing else, please never hesitate to contact me. I will try my best in helping.

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

FHA Mortgages/HUD is adopting some of the HVCC rules - Changes for 2010

Mon, 21 Sep 2009 09:48:48 -0500

HUD released a new mortgagee letter on September 18th, 2009, mortgagee letter 2009-28, that is titled Appraiser Independence. HUD wanted to clarify a few things in regards to FHA loans and adopt some of the guidelines from the HVCC guidelines for conventional loans. HVCC - Home Valuation Code of Conduct

FYI – I read a blog from Friday that was title, FHA is adopting HVCC as of January 1^st.

This is misleading and I wanted to clarify this. HUD is adopting some of the rules & guidelines set within the HVCC. In the new FHA mortgagee letter, it specifically stated this :

"FHA does not require the use of AMCs or other third party organizations for appraisal ordering, but recognizes that some lenders use AMCs and/or other third party organizations to help ensure appraiser independence."

This came directly from page 2 of mortgagee letter 2009-28.

What are some of the key changes or things to keep in mind from the mortgagee letters mentioned? -

Mortgage Brokers & commissioned lender staff - Hence the mortgagee letter, Appraiser Independence, "FHA approved lenders are now prohibited from accepting appraisals prepared by FHA roster appraisals who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender's staff who is compensated on a commission basis tied to the successful completion of a loan." - directly from mortgagee letter 2009-28 - My opinion, many lenders will just order FHA appraisals through AMC companies. (appraisal management companies) - This will ensure any confusion and or finger pointing.

Appraiser Engagement - An appraiser should or must have knowledge of the area or type of properties that they are appraising. The lender should not assume such knowledge and it's also the lenders responsibility to ensure accuracy and quality, along with that FHA appraiser. This is on page 4.

Prevention of Improper Influences on Appraisers - This has been addressed in mortgagee letter 1996-26. HUD wanted to reaffirm that no member of the lender's staff or anyone commissioned that oversees the completion of that loan, be allowed to have such communications that would have any impact of the valuation, to include having the ability to order or manage the appraisal assignment. The DE underwriter is allowed to request clarifications and discuss with the appraiser components of that appraisal that influence its quality. Bottom of page 2.

Appraisal Portability - FHA appraisals were always allowed to be transferred to another lender, when the FHA case number was assigned.. This new mortgagee letter, mortgagee letter 2009-29, is clarifying that it is allowed, but adding some new rules if the first lender is delaying the transfer of the original appraisal. It just says that a second appraisal can be ordered under certain circumstances, which is listed on page 1 of mortgagee letter 2009-29.

Appraisal Validity Periods - Mentioned in mortgagee letter 2009-30, it states that the appraisal is only valid for 4 months from the date of the appraisal, no matter if it is an existing property, proposed property, and even under construction.

My opinion : I know how many realtors are in an uproar about the HVCC issues and how they are affecting the conventional loans. Even though it's not mandatory that FHA loans are done the same way, HUD is just implementing safe guards. I think many of the HVCC issues stem from brokers that have to rely on the banking institution that they are passing the loan to and those larger banks that are just so busy, that they just pass it to a management company that might not be organized. As a mid-sized banker, I have not seen any problems from neither side, even if I have ordered my appraisals through the AMC company. Yes, we started to implement this already on the FHA loans, in fear of some issues. But it has not slowed down the process of my loans one bit. Just food for thought.

On another note, most things mentioned in mortgagee letter 2009-28, are just repeated from prior mortgagee letters from over 12-14 years ago. If any new changes, it was the appraisal validity period and the appraisal portablity, which were mentioned in 2 new mortgagee letters, mortgagee letters 2009-29 & 2009-30.

All guidelines/rules go into effect for all FHA case numbers assigned on or after January 01, 2010.

DISCLOSURE : I am not a certified appraiser. The information that I obtained came directly from HUD's new mortgagee letter. Being the first out there with any new changes, is not always the best, especially when it's misleading or not correct.

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

FHA Loans vs Conventionals Loans - Things you should know about even with 10% down - 9-19-09

Sat, 19 Sep 2009 08:55:20 -0500

FHA loans seem to be one of the main choice of mortgages in the last 12 months or so. There are many reasons for this. And FHA loans will definitely be the main choice for anyone buying a condo now. More on that later.. What I hate hearing is that FHA mortgages have taken the spot of the subprime loans. This is not true by any part of the imagination. This statement is from those that are inexperienced in both the mortgage and the real estate industries. The realization has been that 30% of the subprime mortgages from 2002 to 2006, should have been FHA mortgages, not subprime.

To compound this, so many said just because you had a conventional loan, you had the better loan. This was not always true when putting 3% or even 5% down. In most cases, you were told this, because that particular lender was not FHA approved. Now? Even with 10% down and credit scores less than 680, FHA loans in many cases, will be the best mortgage for you. You want to see a shocking example?

And sellers, don't listen to your agents on how bad FHA loans are.

The example below is based on a $300,000 purchase price with 10% down. One reason why conventional rates are a little higher in this scenario as in FHA rates is because Fannie Mae and Freddie Mac have added penalties per se. If you are putting down less than 30% and your credit score is less than 720, certain fee penalties would apply to you, which would increase your rate and or points. The FICO (credit score) that I am going to use is 659 and I will still show in this example that FHA loans are cheaper, even with 10% down.

***And keep in mind, some lenders have penalties on FHA mortgages with credit scores under 660. And many lenders can't do FHA loans under 620. Just beware of those that promise you a mortgage with scores under 620. It can happen, but they aren't as easy as advertised. Please read - Credit scores/FICO scores - I need a 700 credit score? ***

Disclaimer : These rates are examples of today's pricing, and the spread shown in the example is real with the same profit margin for both sides. To compare this scenario apples to apples, there are no lender fees and with a half of a point. The conventional rate also includes the penalty for the 659 credit score, hence why there is a half of a point charge, because of the large pricing penalty for the credit score.

Some of you might be saying that you will be adding $4,725.00 onto your principal balance if you did the FHA mortgage because of the FHA one-time mortgage insurance premium. This is correct and I don't want to confuse you with more numbers and charts. But here is a quick breakdown. If you kept your house for 5 years, you would have saved $12,646.20 in payments in 5 years. Subtract the Upfront Mortgage Insurance premium from the monies saved in 5 years and you have saved a difference of $7,921.21!!! And one other thing that is very small, but still makes a difference. You will be subtracting a few more dollars per month from your principal because your interest rate is lower, which would offset the interest that you would write off on the 6.25% rate. Just something else to remember, but consult your tax consultant or CPA.

Lastly, keep in mind, depending on the area that you are buying or refinancing in, that you might not be able to get a conventional loan unless you have 10% down or a 90% LTV. The reason being is the mortgage insurance companies and how they view certain geographical areas and declining market areas.

Which leads me to the issues about Condos. Not only are there restrictions from the MI companies (Mortgage Insurance companies) in regards to what area you live in, but that many lenders won't go above 80% LTV's now on conventional mortgages. On a FHA mortgage for condos, you can still go up to 96.5%, depending on the state, but you still have to make sure that the condo association has been FHA approved. There has been a major change on FHA condo spot approvals. Please read : FHA condo changes for spot approvals -

For more FHA loans vs conventional loans comparisons :

FHA loans vs Conventional loans - A true numbers comparison with 5% down - 12-20-08 -Using a 710 credit score

FHA loans vs Conventional loans - A real comparison with 5% down - 11-15-08 - Using a 659 credit score

FHA Loans vs Conventional Loans - 20% down - A Rude Reality Check - 04-03-09 - Would you believe that FHA loans could be cheaper even with 20% down? Come see why and how.

FHA Loans vs Conventional Loans - 5% - 4 comparisons that you need to know - 05-02-09 -Comparing a FHA loan against 3 types of conventional loans with different types of monthly mortgage insurance. Guess who won while still using a 679 credit score.....

FHA loans vs Conventional loans - Knowing the true comparisons - 07-10-09 - A great comparison with a 679 credit score and 5% down. This example will still show that even with a better than average credit score, that FHA loans are still better in many cases.

FHA loans vs Conventional loans - Things you need to know with 10% down, especially in regards to Condos - 09-19-09 -

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

The Welfare Mentality of the First Time Homebuyer's Tax Credit

Thu, 17 Sep 2009 07:43:11 -0500

The average family wants to buy a home, but at what costs? At what cost to us, the American Tax Payer. The First Time Home Buyers Tax Credit is about to expire in 2 1/2 months, but now there are many urging for it to be extended. Have we looked at all of the facts?

I am sending you all to a blog that I published at 2 am this morning, and wanted to direct you to it, because I felt that it could have been missed here on Active Rain. Please click on the blue link below.

The Welfare Mentality of the First Time Homebuyers Tax Credit - I truly think that we need to study this closer, the pros and cons, before it's extended. But you see, the gov't doesn't usually work that way and this scares me greatly. Please read this. I also included several other posts about this topic as well. You will be busy reading for days.

PS… I have disabled comments on this blog, so they all can be left on the blog mentioned above. I want to keep the conversation in one spot. thanks

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

The Welfare Mentality of the First Time Homebuyer's Tax Credit

Thu, 17 Sep 2009 00:50:08 -0500

There has been a lot of buzz about extending the First Time Homebuyers Tax Credit. Why? For two reasons...

Because the $8,000 Tax Credit expires on November 30th, 2009.
And because many have stated that these tax credits have stimulated the housing market and our economy.

We have heard mention of recession, great depression, inflation, economic default, hard times, etc, etc. Has the First Time Homebuyers Tax Credit helped the economy and the housing market? Yes, in some cases. But people, it's another gov't band aide.

In regards to the tax credit, many have argued that it has gotten them more clients that would have never bought. My thought? Home buying can be an emotional process. It can also lead to misinformation on why one might buy. I am a frim believer that people will buy anyhow. Did it get some off the fence? Sure it did. Keep in mind, many real estate markets are different from each other.

But let me pose a question to everyone out there. Where do you think this money is coming from? Who do you think will be paying for this? Is our society a welfare mentality, just printing money that we don't have? Should we run our Country like a business or as a soup kitchen? Brian Brady added to my thought process with this eye opening post. Suspend the practice of flesh devouring : let the tax credit expire.

You can’t have your CAKE and EAT it too..

What inspired me to write this post, was after reading the comments on Loreena Yeo's blog, Would Congress please extend the $8,000 tax credit.

People, let's be honest with ourselves. Are we also scared if the tax credit is not extended, that it could also hurt our commissions? Just think about this. But what caught my attention were many of the comments on Loreena's post that said, "Please extend the tax credit", yet most of them didn't state why. And if they did, they said because it's helping the housing market. Based on whose facts? Yes, this can be debated.

But what about this... many of these same realtors wanting to extend the tax credit, were the same ones that said one of two things...

1. You should have skin in the game (by Lenn Harley) or

2. knocked the seller funded downpayment program, such as Nehemiah or AmeriDream

Shouldn't these same arguments be applied to the tax credit then, for those that are able to use the tax credit at closing? Let me explain further....

So how do we get out of this mess and and have an Economic Recovery, which the real estate market is a big part of.

How about starting with unemployment. Loreena argued that buying houses creates 100's of jobs, specific products would be bought. I agree and disagree. Because you will also lose jobs in the process.

But let me get to my point. Shouldn't we find ways to a recovery that wouldn't cost the tax payers money? I also read in many of the comments that the tax credit helps increase multiple offers in many areas, driving up the price of the home. Will many of you agree with this?

So prices have increased. Is this a ghost price? A real price? An inflationary price? If we accept this, why not bring back the seller funded down payment programs then? Known as the DPA programs.

Conclusion : The argument on Capital Hill and amongst many realtors and loan officers has been that you need skin in the game. And then the next wave would argue against the DPA program, because it could inflate the price of the home. But we have established that the tax credit does the same. But wait, it is costing us tax payers money for the tax credit, yet the DPA program doesn't cost the tax payer any monies.

Overall, aren't we a powerful country? With some of the smartest individuals, yet we are way in over our heads. What happened to common sense? Are we just mere puppets of a gov't that says they know best for us? Is our society a welfare mentality, just printing money that we don't have? I thought I found some common sense solutions that I wrote about in June 2009. Call to Action - We must fix the real estate market ourselves. Keeping in mind, that all of this is of my opinion, but with careful thinking and not of that of my pockets.

For other view points on this topic, please read :

The Press is On : By Lane Bailey - I think this is a very good read and we should pay attention to this. He talks about stopping the tax credit.

Would Congress please extend the $8,000 tax credit - By Loreena Yeo - Even though I am opposite of Loreena, read the comments. One needs to understand Economics, supply & demand, but also that hand outs have crippled us in the past.

Suspend the practice of flesh devouring : Let the first time homebuyer tax credit expire. By Brian Brady - A great twist and creative view point of our children's future.

We are going 35 mph, and about to hit the wall. - By Alan May - His complaint is that many people are rushing to take advantage of the tax credit. And that lenders with their delays will hurt buyers chances. Hey, I love helping first time homebuyers, but the tax credit has been around since 2008. If buyers waited last minute, do we keep extending, yet costing us millions of dollars in the future. What about inflation? Inflation vs deflation - Is it criminal?

Why devouring flesh is morally wrong. By Brian Brady - Brian extended his argument and included a great video. Maybe this will open some eyes?

Are first time hombuyer mortgage programs ending soon? - By Steve Kappre - Steve talks about how some states were able to get you the $8,000 tax credit at closing. But keep this in mind, less than 50% of all states has this type of program.

Extending the First Time Home Buyer Tax Credit Now?.... What's the rush? - By Lenn Harely -
I think this is an excellent article, because it's shorter than mine and too the point. Yet it brings up some easy to understand issues.

Call to Action - We must fix the real estate market ourselves. - By Jeff Belonger - I wrote this a few months ago. I think some of the solutions mentioned by myself and in the comments, seem to be common sense, and in many cases, not cost the tax payers money.

For god's sake, let's move on - By Paul Henderson - Paul offers a few more opinions...

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Credit scores - FICO scores for mortgages - I need a 700 credit score?

Tue, 15 Sep 2009 09:18:42 -0500

Yes, credit guidelines have gotten tougher, but NO, you don’t need a 700 credit score.

Here we go again, with realtors making things sound semi easy. There was a question on Trulia last week, and the buyer said that they heard that you needed credit scores of 700. And what do you do if you have scores from 614 to 620.

Here was part of the answer from a realtor answering the question.

"You can actually purchase a home with a credit score in the 500'sdepending on job history, etc. I have several lenders who can assist you."

Sorry, but this answer sounds easy, and it's not that easy if you are under 620. Yes, there are investors out there that are allowing credit scores below 620, even down to 535. But the guidelines are much stricter. You really can't exceed the income ratios, your job history needs to be good, and your credit still needs to be decent and conform to the FHA guidelines.

Keep this in mind, even though it could be done, at what cost to you? Does your loan officer explain this to you and break this down? The rates and or add ons for lower credit scores are much higher also. And if loan officers and or realtors say, don't worry, you can refinance later, then WORRY !!!

Let's quickly review your refinance options.

You can only do a rate and term within the first 12 months after you purchase your home. If you want to pull any equity out, on a normal refinance, you need 12 months or more.

Let's say rates are now 5.50% with zero points, with a 620 credit score. You currently have a 585 credit score and because of this, your current rate is 6.25% and it's costing you 1 1/2 points. (yes, this is the type of penalty for that kind of credit score) You really can't refinance for about 6 months, and you are working on your credit scores to improve them. Well, in 6 months, rates increase to 6.00% with zero points. You are basically stuck with that higher rate that you originally received.

Keep in mind, it still costs money to refinance, even if you do a FHA streamline refinance. Yes, there are no cost mortgages, but your rate is much higher.

What to do with credit scores if they are below 620 :

This is where a true mortgage professional comes into play. I just had a VA client referred to me by Allison Stewart, who was told on Friday that their scores dropped to 617, as a mid score. I spoke to them on Saturday and explained to them that I can work on their credit and get that up 3 points. Well, on Monday, the previous loan officer called them and told them the same thing. How come she didn't bring this up on Friday? Maybe she is new and not sure? Not good with credit? In any case, here are some basics.

You want to keep your balances below 35% of your credit limit or lower. The higher the percentage, the more it could affect your credit scores. By paying down your balances, this could raise your scores.
Don't pay off your collection accounts if you are applying for a mortgage. You would then want to pay these at closing. By paying off early, it could actually lower your credit scores. It does depend on how old these collections are.
Lates over 12 months old don't hurt as much. Sometimes you can talk to your creditor to remove a questionable late mark.

Summary :

Most of what is mentioned is for FHA mortgages. If you are doing a conventional mortgage, you do need a 620 or higher, and even this costs a lot more than a FHA loan at 620. Here is a comparison with even 20% down. FHA loans vs Conventional loans with 20% down - A rude reality. Besides, you even have MI company issues, that could still deny the loan with a 620 credit score.

Overall, you might want to get into a home as soon as possible. You might have a loan officer that wants to help and can with the lower score, but don't forget, will it cost you more in the long run. You want to deal with a loan officer that will break this down and show you both sides, both comparisons. And be careful of broken promises, because not everyone has integrity and or is truly out for your best interest. This might sound negative, but this is a fact, from examples of past clients that have dealt with broken promises.

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

FHA Non-Occupant Co-Borrower loans - Also known as Kiddie Condo loans

Sat, 12 Sep 2009 08:31:37 -0500

FHA Loans – FHA Mortgages

Non Occupanying Co-Borrower loans - Kiddie Condo loans

FHA loans have many features that still aren't talked about as much as one would think, because they are still fairly new to more than have of the loan originators out there. Now, some might argue half is very extreme, even though this is my opinion, I will still stick to this statement for many reasons.

As a loan officer with more than 17 years of mortgage experience, the non-occupant co-borrower program is very simple to understand.

FHA will allow a co-signer that is not living in the house to actually be on the mortgage and co-sign for the loan. Keep one important thing in mind, they must be a family member/relative. And this can be great for first time homebuyers. One thing that so many get confused no matter what type of loan they are applying for is that a co-signer with good credit can't overcome the bad credit of the primary borrower. Meaning that the co-signer with good credit can't get you a better priced loan. If the primary borrower still has lower credit scores that don't qualify, then the loan won't happen.

Now keep in mind that this is a lot different when doing a non-occupant co-borrower loan with a conventional mortgage. Unlike the FHA non-occupant co-borrower loans, which the primary doesn't actually need a job, on a conventional program such as this, that primary borrower still needs to qualify with some type of income ratios. And this usually doesn't help. Besides, in most cases, with the pricing hits on a conventional loan, it would be much cheaper doing a FHA loan. Keep this in mind also, back in April of 2008, HUD allowed this on refinances also. A family could help you refinance your property and not live in the property.

Now, for those of you who remember John Belushi in Animal House, what I consider an American Classic back then, this next part my be very important if you have kids about ready to attend college or are attending college.

The FHA non-occupant co-borrower program can also be known as the Kiddie Condo loan. This basically mirrors the same guidelines as what I explained above. It's just another term and another way to help keep your kids college expenses lower. First off, you don't have to buy a condo. It could be a single family dwelling, or a duplex. One thing that I didn't mention above is that you can't have a co-signer on 3 units or 4 units, not unless they are going to live in the property as their primary.

What's appealing about the FHA Kiddie Condo loan is that you could have other students live in the property and that you could receive rent. A great example :

Duplex : Each unit has 3 bedrooms. Rent goes for about $500 a month. Your total mortgage payment, to include mortgage insurance, taxes, and homeowners insurance is $2,250/month.

You have one son in the property who won't be charged rent. That leaves you 5 other tenants at $500/month. That is $2,500/month. That basically covers your mortgage payment and leaves you a little extra for repairs and such. Your son pays less for attending college, and you get a tax right off, and that you are building equity. Please speak to a tax accountant/CPA for details on this.

Key Point to Remember -

Even though a lot of this sounds easy, you still need to work with a loan officer that is up to date on this kind of financing and on FHA loans in general. A good example : you use to be able to have non-occupant co-borrowers even on 3 units and 4 units, up until about a year ago. One more thing to keep in mind, even though these are HUD's guidelines on FHA mortgages, many lenders have lender overlays. That some lenders might not be able to do what I described above. I know one borrower that already ran into this, after many promises upfront.

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

September 11, 2001 - 9/11 - We must never forget!!!!!

Fri, 11 Sep 2009 08:40:08 -0500

Do you remember where you were when first hearing the news? What was your first thoughts? I still remember to this day, exactly where I was. I was at a red light, just about to make a left turn, about 500 yards from my office. My first thought was what kind of idiot would fly that close and hit a building. Was it a mistake? Did the pilot fall asleep? My mind was racing. As I drove up to the parking lot, there was another news flash that another plane just flew into the South Tower. At this time, I knew it wasn't an accident and my adrenaline was rushing strong.

I ran into the office, a few of my co-workers just settling into their seats, not knowing what happened. I ran into my bosses office and turned on the tv. We sat there watching for about 45 minutes. It wasn't more than about 10 minutes later, when two of our processors went back to their desks to work, when I yelled out, "OMG, OMG... one of the towers is collapsing. Just after watching the South Tower to fall first, I just sat there with my hands in my face, tears streaming down. I just didn't know what to think.

Just thinking about all of those families and how they lost their loved ones, just because of some group that has hatred for all that are alive. It just makes me sick to my stomach. We just need to remember all those that lost their lives that day, their families, and those that sacrificed so much to help others. And also to remember those that lost their lives and sacrificed after the fact, searching for those terrorists and bringing them to justice.

All I know and remember after 9/11 was watching the news coverage 6 to 8 hours a day. Mainly into the wee hours of the morning. Sometimes going to sleep at 3 am or 4 am. Just watching so many families asking for help, to find those loved ones that haven't called home yet. I was so fortunate because I didn't know anyone that was killed in these attacks. But I did have a few friends that lost others. My only concern was when the attacks first took place was to make sure that my brother-in-law was okay. He worked in Manhattan and use to work in the South Tower a year previously. He was moved to midtown, which was like 20 to 30 blocks away, and I am so grateful for that.

I can also remember when we first invaded Afghanistan and Iraq, that maybe I should go back into the Army. See, I served from 1986 to 1988, and I am proud to be an American. And I was very close to the cut off date to enlist. There was a part of me that wanted to give back and help. Just as those 411 emergency workers who lost their lives trying to help and save those that were trapped in the Towers. We need to remember all that were involved and those still struggling with their losses.

The Sphere, which is symbol of what happened on 9/11/01. I got to vist that Sphere - The Sphere

And for those of you who might have missed this from last year, Yvette Smith tells her story. 9-11 A Day I won't forget This is a must read. Just have a tissue handy.

9/11 - REMEMBER IT FOREVER

So you think you outsmarted the crowd because you skipped the $8,000 first time homebuyers tax credit

Tue, 08 Sep 2009 21:35:53 -0500

How smart do you think you are? Do you think you can outsmart people, just because you read some good advice, yet it failed to share with you the opposite side of things. That has been one of my biggest fears and pet peeves when it comes to blogging. And another? That many blogs are opinions, not facts, yet they sound like facts.

Janet Guilbault wrote this interesting post that makes a good point : Outsmart the crowd : Skip the $8,000 tax credit & wait to buy - She talks about skipping the first time homebuyers tax credit in hopes that you could get the house of your choice for $20,000 less. She adds that winter is around the corner and the market should be slower, which could get you that price reduction. Again, some good food for thought, yet forgetting some very key points to her opinion. And just for the fact, in my opinion, this is a risk. Are you willing to chance your $8,000 tax credit? Let's look at this further....

RISK – CHANCE – HOPE – LUCK – FALSE HOPE

Again, Janet states that you should skip the $8,000 tax credit, because you could get a better deal on a house in the winter months. And because there wouldn't be as many buyers in the market, because of the first time homebuyers tax credit of $8,000 would not be available. Overall, I feel really strongly against this kind of advice.

Here are my thoughts on why you should be careful of such advice :

Reduced property values - You got the house for $20,000 cheaper, and based on a $250,000 mortgage, that would save you $120 a month. So you didn't get the $8,000 tax credit. It would take you 5.5 years to save that tax credit with your monthly savings.

Interest Rates - Do you have a crystal ball? Do you know where mortgage rates will be in December? You get that new house for $230,000, yet the rate increased .375 of a percent. Your new savings will now only be $64 a month. That means that it would take you 10.4 years to save that $8,000.

Real Estate Market - Do you know how appraisals truly work? Do you understand that an appraisal is an opinion from a certified appraiser? Not one house is the same and in many cases, not all appraisals of that same house are the same. I could give you many examples of specific homes in recent months, having a few different appraisals that could vary from $3,000 to $20,000 in value.

$8,000 tax credit in your pocket - You now have the $8,000 in your pocket 2 months after settlement. What could you do with that monies?

- Use the money to fix up the house.

- Use the money to pay off some credit cards, which could save you more money in the long run.

- Possibly pay back some debt to those that helped you get into your new home.

- Save for any housing emergencies that could happen at any moment.

- Ryan Shaughnessy, in comment # 11, states that you could use the tax credit to pay for 12 months of your mortgage payments. Imagine that, no mortgage payments for a year.

Waiting for a possible increase to the tax credit, possibly a $15,000 tax credit - So you take Janet's advice and say to yourself, maybe they will extend the tax credit or raise it to $15,000. Ouch, in my opinion, that is a huge risk. If you are actually in the market now, why play the market? If you come across your home now, but it now, don't roll the dice.

Real Estate Market - Each real estate market is different. In my opinion, even the experts can't truly predict what the housing market will do. Some have said that we have hit bottom. Some say it could be a year. But then again, in some markets, prices have increased already. In Janet's post and in a few of the comments, some people have stated that there will be a correction to this. Again, it's an opinion, not a fact.

$20,000 reduced value - You don't physically see this money. You don't get 20k in hand. And what happens if the house was over-priced to begin with? What happens if values don't increase in 5 years? The only equity is that equity that you build yourself. In 5 years, you knocked your principal balance down by $16,000.

Mortgage Programs - you can buy now, but could you buy 3 months from now? You have a 659 credit score and what happens it goes to 660, mandatory? No more home. Steve Kappre talks about this in his blogs.

Conclusion : Janet ended her post with this ... "If you save $20,000 on your house, do you care if you sacrifice an $8000 tax credit? Probably not. (But don't expect anyone in the real estate industry to talk about this until AFTER the rebate ends)."

Well, I will still be talking about it, no matter if the tax credit continues or ends. I am all about educating the consumer, sharing both perspectives on real estate and mortgage issues. And yes, I would care if I sacrificed the tax credit, especially based on what I stated above. Especially if interest rates went up a half of a percent by December. In my opinion, I can go to Vegas and or Atlantic City to gamble. But why gamble on free money, money that you don't have to pay back. We are in a very tight economy now. I don't think many of you have money to gamble with as you did several years ago. (I don't want to get into the statement of free money, because yes, as tax payers, we are paying for that)

Lastly, excellent time for first time homebuyers. Home values are lowest in the last 5 years, with interests being close to the lowest in several decades, and $8,000 given to you if you qualify.

IMPORTANT REMINDER – The $8,000 first time homebuyers tax credit ends on November 30^th, 2009

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For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!