Serving California Homeowners Expertise they Deserve!

Jumbo loan greater than 75 LTV Max?????

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 15 Apr 2009 16:25:27 -0500

Is there any wholesaler that will go to a CLTV greater than 75. I am trying to get a Jumbo loan for some clients that are highly qualified but want to limit the down???

10 Benefits a Great Realtor will add to your Purchase Experience!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Fri, 10 Apr 2009 14:15:27 -0500

Congratulations! You have decided to take the steps to become a homeowner in today's market. This is no small task and it can be overwhelming. Many new buyers start there search online on their own. In fact 82% of buyers start their search online. I understand that you do not want to be sold or bound to a Real Estate agent. I get it but you have to do your due diligence and hire a professional. Here are 10 benefites a great Realtor will add to your purchase experience:

1) Professional Advice - Real Estate agents are trained in the very thing you are looking to accomplish, Finding the right home. They can offer professional advice on Style, Location, and Price. They also have knowledge or professional contacts to make sure the structure, floor plan, area are all up to your standards. There is no substitute to Professional Advice.

2) No Cost to You - As a buyer you do not pay the commission of your selling agent. They are paid by the seller for finding you and selling the sellers home to you. It does not cost you anything. Their time they spend with you, the advice they give you, and all the additional benefits come at no expense to you until they find you the right home and you agree to buy it.

3) Negotiation - Realtors are skilled negotiators. A large portion of the job that they do is negotiating the right price and terms of your purchase. This can be the difference and to me very well could be the number one benefit.

4) Expanded Search - Agents not only have access to the local MLS but they also have access to a network of other agents that have inside knowledge on upcoming properties. This extends in most cases above and beyond their own company. Overtime Real Estate agents build strong relationships with colleagues. It is like water cooler talk. In the end you may be the beneficiary.

5) Knowledge of the Area - You may be familiar with the area that you are buying in and you may not. Agents are generally connected with the chamber of commerce, local churches, school associations and restaurants through their farm. Many agents concentrate on specific areas and know everything there is to know about that area.

6) Determine overall value to insure appropriate price - Agents have knowledge of values and sale prices that are accurate in your market. It is their job to stay current with market values and sales in today's market. There are two markets going on today: The normal market and the distressed REO market. Realtors can help you navigate the two markets and help you to determine the appropriate value or price you may offer.

7) Limit Liability - An agent can limit your liability and make sure that you are protected as a buyer. There are time frames, contingency periods that a buyer must meet and there are contractual obligations to meet. Your agent will guide you through this process and help you to make educated decisions regarding your liability.

Emotion Manager - The market today can be very stressful for a buyer. It is essential to control your emotions. You cannot get attached to a property. If you write an offer on a short sale it is essential to understand that you may be waiting for a long period of time and your agent will help set that expectation keeping your emotions in check.

9) Simple Explanations to Complex Issues - Your agent will break down complex situations so that you can understand them fully. It can be very overwhelming upfront but your agent will break down a complex process and help you to understand the little pieces. This will be a major life-changing event and the Real Estate agent will help simplify it.

10) Experience only time and transactions can provide - Your agent has seen nearly all the situations that you may encounter during your purchase. From uncovering a hidden defect, loan issues, property not appraising, title defects, zoning, septic, well, inappropriate disclosure, and many more. They are there to help you understand the concerns that may arise and help work through any situation they may not have experienced.

If you are in the Sacramento Area or Sonoma County Area I recommend the following Real Estate Agents. I have worked with each and everyone of them at some point. In my opinion each of them comprises everyone of these benefits described above. Please contact me for their contact information as out of respect for them I will not post it.

Sacramento Area - Dayna Neuse Remax Gold Roseville , Peter Bond Remax GoldRoseville, Karen Wallace Lyon Real EstateRoseville, Robert Wallace Lyon Real EstateRoseville, Kevin Nakano Nakano Realty Elk Grove, Bryan Hill Pacific Coast RealtyRoseville, Nathan Novelo Connect Realty Antelope, George Snyder Lyon Real Estate Roseville and many others. I am sorry if I missed you here are there are too many of you too mention.

Sonoma County - Brook Terhune Platinum Real Estate Santa Rosa, Delia Nieto Coldwell Banker Santa Rosa, Larry Mitchell CPS Real Estate Santa Rosa.

In summary, it is imperative that you use the services of a qualified Real Estate agent. It is up to you to interview each and every Real Estate agent that you may want to work with. Determine who is a good fit for you. Communication is the key to every relationship and it is a two way street. Qualified Real Estate agents will help you have a successful buying experience.

Home Purchase: How to Survive your 30 day escrow

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Tue, 03 Mar 2009 13:40:48 -0600

The market is phenomenal and the opportunity to buy a home is now. Many of you are taking advantage of the opportunity and that is amazing. Warren Buffet said, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." Many of you are listening.

The time-line for an escrow to close is 30 days in most cases. In the thirty calendar day period we need to get our inspections done, appraisals done, have the loan underwritten, satisfy any conditions of the loan and be understanding of the turn-times of the third party services we employ. It is a cooperative group effort. I have given you below a few tips to help you survive the 30 day escrow and sneak out a winner.

Tip #1 - Be responsive to the requests from the professionals you hired- Before you began the process of buying a home you found a few professionals that you felt would best help you through the process. Many times these professionals (Real Estate Agent and Loan Officer) do not make the rules of the game. They are there to facilitate the process. If one of these professionals request documentation or a check for a service be quick to get them what they need. Your process will stop without it.

Tip #2 - Provide the documentation requested - It is imperative to provide all of the documentation requested. Do not try to find a way around it or think that something will be sufficient if that something is not what was requested. If you do not have what was requested get with your affiliate or loan officer and come up with an alternative. Holding back information from professionals that are on your team can cost you in the long run.

Tip #3 - Remember that we are on your side - All too often we forget that we are all on the same team. A victory is represented by a closed transaction. Communication is the key to that transaction. It stems from all parties who all have a lot riding on a transaction. Small details excluded can lead to a disaster that was avoidable upfront. Tell me the property is zoned service commercial and grandfathered in so I may come up with a solution prior to the problem.

Tip #4 - Be Prepared to fight for the home you want - It is not 2003, 04, 05 and obtaining a mortgage is a little more invasive than the past. If you could fog a mirror we gave you money in the past. Now we are asking for Birth Certificates to show the child support will continue for three years. The age on the application is no longer significant. This starts with the investors and trickles down to the buyer. Nothing good comes easy in life. It will pay off to be diligent and fight for the property.

Tip #5 - Everything is time sensitive - The purchase time-line is as follows. You go into contract and the clock starts. Your loan officer orders the appraisal, gets all the signed disclosures for the property, requests the preliminary title report and a copy of the fully executed purchase contract. Our wholesalers want a complete package to look at your file. The appraisal can be anywhere from 3-5 days, preliminary title report depends solely on the title company (I have dealt with companies in Philadelphia), Fully Executed Contract which can take time if the property is bank owned 3-15 days I have waited and all of this prior to submitting the loan to underwriting. Once we have all the documentation we can submit to underwriting which can be 3-9 days to underwrite. Business Days but the weekends count on the escrow. Once the file is approved there are generally a few conditions to meet and to be reviewed once they are obtained can be 2-4 days. When they are cleared and we are able to order your loan documents this is a 2-3 day job. Then we sign and the package is returned to be reviewed for funding. The funding process is 2-3 days. So if you add up the days on the short end a perfect process can take up to 12 business days with no hold up at all. This would include 2-3 weekends at 6days and we close the escrow in 20 calender days. On the long end 34 business days and 4 weekends would be a 42 day escrow.

In summary, it would require a group effort to survive your 30 day escrow. Note that we all have the same goal in mind. Home-ownership for you as the client is our goal and what we do best. I look forward to working with all of you in the years to come.

The Top 3 Mistakes Buyers Make when getting Pre-approved.

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Mon, 02 Mar 2009 20:53:27 -0600

The very first thing that a buyer should do when considering a new home purchase is contact their Mortgage Broker or Banker and get pre-approved. However, many times this is not the case. Many times buyers see a home that they like either by driving buy it or searching on-line. This home sparks the interest and they use on-line calculators to see if the home is affordable. The payment appears affordable and within their budget. The question is with tightening credit and underwriting criteria will the documentation support that theory.......

Mistake #1 - Test Driving Homes before Pre-approval - Looking at homes on your own or with a Realtor prior to have a clear understanding of your qualification, the cost and the payment is a recipe for let down. Two things commonly happen to the consumer when this approach occurs. They fall in love with the home and either buy it even though it was above their comfort level or get disappointed when they find out they do not qualify. Both are dangerous as one could lead to financial disaster and the other could lead to inaction that will cost you later.

Solution - Consult your Mortgage Broker or Banker on your qualification levels when you get the desire to buy. The consultation is free and can save you time, money and heartache. If you do not have a Mortgage Broker or Banker get a referral from someone you trust and respect or do thorough research and interview two or three. Generally your Realtor will know someone that you can trust.

Mistake #2 - Getting Pre-approved without providing your documentation - If the Mortgage Broker or Banker is willing to issue you a pre-approval in today's credit market without reviewing all of your income and asset documentation and looking at the credit RUN! Every dollar counts and without reviewing the tax returns and the income documentation we may qualify you using an income that will not stand when the loan is underwritten. Your Mortgage Consultant should take the conservative approach to your income to leave room for the unknown.

Solution - Find a Mortgage Professional that you feel comfortable with and invest in yourself by meeting with them face to face to get your pre-approval. This will allow you and the Mortgage Professional to talk in detail about the situation and make sure that you explore all options. If you are unable to meet in person the next best thing is to provide all the documentation necessary and have a phone appointment on speaker phone. (You could always do Webcam or Webinar meetings as well).

Mistake #3 - Assuming the Pre-Approval is good indefinitely - Pre-approvals are credit approvals. Credit is a snapshot in time and can change daily if you are an active user of credit. If you were borderline on your credit approval from the beginning say 623 Fico and you are going FHA and you go buy some 0% interest at Home Depot you may be at risk. A credit report is generally good for about 60 days. Since a Pre-approval is a credit and income approval any change in either make make it invalid. Another thing buyers are not aware of is programs and guidelines are frequently changing and if they are not being updated by their Mortgage Professional they may again be at risk.

Solution - Stay in constant contact with your Mortgage Professional (They should be in contact with you but it is a two way street). Make sure that there have not been any program changes that would affect your approval status. You also have to keep your Mortgage Professional aware of anything that you have done that may help or hurt your approval. An example would be a pay raise or a new credit purchase. Communication is the key to protecting your Pre-Approval.

The next time you are considering buying a home and you are in California, Oregon or Idaho go to http://capitolmortgage.com/officers-detail.aspx?LONum=161 for your pre-approval.

Congratulations you are pre-approved!

The Home Purchase Roller Coaster..........

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 25 Feb 2009 02:33:51 -0600

Buying your first home is such an exciting time. There are so many things that will take place in such a short period of time. Each and every step of the process is a function of the process.

The word Process can make the home-buying experience sound like such a difficult painful task. By definition the word Process means a systematic series of actions directed to some end or a continuous action, operation, or series of changes taking place in a definite manner. (information taken from dictionary.com) The first of the definitions is the one that I think best represents the home purchase roller coaster.

Here we go!

Obviously the end is the day that you as the consumer would get the keys to your new home. The systematic series of actions that precede the glorious day are described herin as the Roller Coaster.

Action 1 Boarding- Meet with your Loan Officer of choice and get Pre-approved for a home loan that will meet your budget. This is generally about a one hour meeting preferably face to face to discuss the payment that you feel is suitable, your three c's (see my post on fannie mae/ Freddie mac costs) and the type of financing based on down payment and qualifications that we will secure. (I say that this is the first action but I receive the majority of my business, 70% from my Real Estate partners, so many times you have looked at a home that sparked your interest or at least started some sort of search). You are now pre-approved strapped into the seat and ready to take off.

Action 2 The Departure and Ascent- You are now pre-approved and you are out with your Real Estate agent looking at homes. You have found a couple that you like and have decided to write some offers. You sit down with your Real Estate agent and strategize on the offer you want to write. Many times after you write that offer you are already mentally moving in the house. "This is where we will put the blue couch" etc. At the same time you are processing the payment in your mind and saying what have we done right as you begin to peer straight down the initial drop.

Action 3 The first drop- You are peering right over the top of the drop waiting for your Realtor to call you back with the news. You have told everybody about the home that you made an offer on and how you don't have your hopes up but you do and that is natural. You are no different than the rest. The phone rings and the stomach drops, You are on your way down. Your Realtor says I am sorry they have countered and the bank say do not even respond if you do not at least offer 15K more. This is out of your limit and you know it. The rush and the thrill of the ascent and the short drop are over. You are about to begin another ascent.

Action 4 The second ascent- After a little frustration you are on your way up again and have found a few houses that you want to write on. You write offers much quicker this time because it is not so foreign and your expectation is less and you realize it was not that bad. You can do this. You submit two offers this time hoping that you will get one of them. Again you are starting to peer over the next sequence of the roller coaster.

Action 5 The Tight Turn and The Corkscrew- You begin to descend into the tight turn. This is when the Real Estate agent calls you and lets you know that one of the properties has made a small counter and they would like to talk to you about it. You meet with them and while you are meeting you come out of the tight turn and you are turned upside down briefly when they answer their phone and the other home has countered. Which do we like better? What is the better investment? What one will we get we don't want to be disappointed? This is is a lot to handle. You choose the one that you like the most and submit the counter. You have made it through the corkscrew and are being thrown into another tight turn. Then your offer is accepted right as you look down another huge drop.

Action 6 The big drop- Now that you are in contract it seems like things are moving fast. The nerves set in as your agent sends in the earnest money deposit, the loan officer asking for the appraisal check, the checks for home inspection and pest if you want it. Money is pouring out and you are saying what did we get ourselves into for real this time. A million different payment scenarios, excitement, fear, second guessing, excitement, nerves you get the picture are all shooting through you as you are speeding down the face of the coaster.

Action 7 another ascent or straight track- Things calm down for minute. The rate is locked the inspections are done and you are waiting for final underwriting approval. The loan is being Processed. That process is gather all pertinent info and updated financial statements if it has been greater than a month, submit the loan to underwriting and wait(average underwriting 5 days right now)., the approval is in 5 days later and there are conditions that we must meet. Many times the conditions are simple but other times the wholesaler asks for things like birth certificates now a days.

Action 8 The loop da loop- This is the point that you are asked to gather some documentation that may seem hard to obtain. Sometimes the giftor does not want to give a bank statement, you are asked to release financial contingencies and have your deposit at risk and you are not certain you can provide exactly what the underwriter has asked for. This is the time that you must remember that both your Real Estate agent and I are on this coaster with you. We want to get to the end safely and successfully as well. We made it through both the loops. Awesome.

Action 9 the last death drop- This would be the signing of the loan documents. You are prepared and you know what is coming but it is a large commitment. No time to turn back now. You sit in front of the notary and begin to sign your life over to the new mortgage payment. This is a long drop but it goes by very quickly. We have made it to the bottom. Yes we are done! Not Quite.

Action 10 The final turn and the end- We still have to fund the loan and based on how well a Loan Officer has done their job there is nothing you should have to do but wait out the steps. You take that last turn and they ask for something else to fund your loan. You are throuwn for a second but we are through it before you know it. We have made it to the end and the Roller coaster comes to a stop. You realize that it was not that bad at all as you get out but you are clearly trying to get your bearings on why you just put yourself through it.

Action 11 The conclusion- You went through it because it is the cornerstone to an amusement park and the reason that you go. We all dream of home-ownership and none of us are quite prepared for the Process. The reason that you go on the Roller coaster with friends is that it makes it that much easier. We as professionals are trained to warn you of the layout of the coaster so that it is manageable and in the end you say Let's do it again!

That will come in due time. For now I say go get something to eat and re-energize as it is time to get on another ride..............The Move!

Who is buying the drinks and pizza we bought the house:)

Disclaimer: For Illustrative purposes not all transactions go the same way. This is not meant to be an exact guide to buying.

The Pain of Discipline versus The Pain of Regret?

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Mon, 23 Feb 2009 15:47:07 -0600

We are taking a moment today to step outside of the normal content of this blog to discuss something that we think is very relevant to your mortgage needs. I heard a lot of the content from a man named Jim Burns who is an author and it made me think of our industry right now.

The pain of regret is a choice that we face every day. We are giving the choice to get out of bed or to hit the snooze button. Hitting the snooze button can make us late to one of our many obligations. Our lives today are filled with obligations that we Must attend. We are constantly running from one event to another and we are barely taking the time to be present in the moment. The day is over now and we hear that alarm again: Do we give into the pain of discipline or the pain of regret?

Just stop for a second and think of all the things that we as human beings like to do. Working out (OK that is an opinion), networking, blogging, working, eating, vacationing, attending Church, reading or watching TV. Each and every one of those items asks the question of pain or regret just before we engage. Example: Yesterday I opened the freezer and for the first time in a long time there were Dibs in there. I looked at them and I thought to myself do I really want to eat those? I did and initially there was no regret but when I stepped on the scale to maintain my health I felt the regret of indulgence.

Many of us are simply living life to fast! Many times we are not focused and the lack of focus has us off in so many directions we do not know which way is up. We must focus on what will bring us balance, joy, harmony and happiness in our life. To do so we must do the following which is the very hardest thing to do. We must say "no" to the good things so that we may say "yes" to the best things! This practice will lead us to regretfully tell some of our friends no I am sorry we cannot, cut out the dinner splurge at Round Table Pizza and cook as a family etc. In Business, this can be very hard to do because we are always looking to develop relationships. We commit to a million different events and in the end we cannot be present for them all.

The term that I heard from Jim Burns (Author) that best summarizes everything above is that many of us are in "Crisis mode living." The Economy is in shambles, job loss, divorce, sickness, retirements being lost overnight, banks dropping like flies, and of course the Real Estate Market is facing some challenges. People are switching to survival mode and when that happens we tend to speed up and lose focus. The loss of focus leads to experiencing the pain of regret more frequently as we are unable to remain disciplined. "Crisis Mode Living" simply wipes us out.

Wiped Out

"Untended fires soon become a pile of ashes." Break down your day and cut out everything that does not bring you what you are looking for in life. Give up the bunko game to focus more on the family. Our family feels the pinch when we live in crisis mode. It is our job to slow down and let the storm pass. Tend to what needs to be tended and leave the rest for another day.

So how does all of this relate in the least bit to Real Estate. We have right now one of the greatest opportunties to buy or invest in Real Estate. See a great article written by Kevin Nakano of Nakano Real Estate http://www.nakanorealty.com/articles/realestate/great-time-to-invest-in-real-estate.htm. We have the chance to get in while the market prices are low as well as the rates. The perfect storm if you will. In order to take advantage of that we have to step out of the "Crisis Mode Living" economy and focus on what the "Best" choices for our families are. Do not listen to all the others that are telling you to wait because interest rates and prices will continue to fall. If they are not in the industry and they are offering advice to you be aware of the source. Don't get me wrong it may not be the time for you to buy. You may need to work on some things to be in the appropriate position to do so. That is why it is so important to ask yourself the following:

Will this decision lead to "The pain of discipline or the pain of regret?" What can you do without and how can you go deeper with what you do need in your life. Whether you are a business owner, a homemaker, a first time home buyer, a move up buyer, investor or simply someone looking to grow yourself it is important to know that discipline can be painful. It can hurt to do things or not to do things. The question is: What hurts worse Discipline or Regret?

Fannie Mae/ Freddie Mac Costs; Loans are getting Expensive!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 18 Feb 2009 12:04:11 -0600

Fannie MAE and Freddie Mac have gone to risk based pricing. This is not new news as loans have always been priced and approved based on levels of risk. When you as a consumer are looking to be financed the lender is evaluating three things. We refer to them as the three c's.

Credit - this is your history of repayment of other loans such as auto, note loans, installment, student loans and revolving debts such as credit cards. Your mid fico score is seen to be a fair reflection of your repayment history. Experian, transunion and equifax are the three bureaus who produce these snapshots in time that generate your scores.

Collateral - this refers to the property and the down payment or equity position you are in. Having 20% equity in a home is considered the breakeven point for a lender in the event they have to foreclose. Naturally the greater the equity the lower the risk. Someone with 40% plus is not likely to let a home slip away and has the ability to price to sell if they get into a dangerous position.

Capacity - this is your ability to repay the debt. Your income, more importantly claimed documentable income is what they are looking for. This is the arena that was most widely abused in recent years and as a result has become the most scrutinized and most important. Income is only part of capacity as length on the job, type of job and how you are paid are additional factors that are very important. Your debt to income ratio is your housing and other credit related minimums divided by your gross monthly income. The goal is to not have this exceed 43%. that means that the house and all the debt represent 43% of your GROSS income.

Traditionally, if you he a 620 fico score, 20% equity position and documented your income on a purchase you would qualify for the lowest wholesale rates we have to offer. However, this has changed drastically and it is undergoing another set of revisions.

Today you have to have a 740 fico to be in the top tier and from there it drops off fast. Those who want to refinance and take no cash out of their home with a 695 fico and 20-25% equity have to pay a 1.5% risk adjusment. This means that their par wholesale rate will be much higher than those with 740. Yield spread premiums are paid to brokers by wholesalers for selling higher rates or to absorb these costs. (another blog entirely) today the Ysps are not large enough to cover that 1.5% so the costs are passed on to the client making loans more expensive.

This one example is a cheaper example of the pricing adjustments that have been passed onto us all. So although rates are low it does not mean that you will get a low rate or if you do you may have to pay for it. Raising costs and adjustments is just one way for these companies to make up for losses.

The end result is that government loans such as FHA, VA and USDA do not impose such adjustments. Do not he suprised if your broker or loan officer tells you that FHA may be a more cost effective approach to financing your home. As always consult your professional and ask them to explain or show this to you in a manner that makes sense.

Good luck and until next time.

Tax Credit? Will it Stimulate the Economy or is it a Temporary Fix?

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Mon, 16 Feb 2009 14:06:52 -0600

The new version of the Tax Credit has been released and is expected to be signed into law as soon as today. This tax credit will give first time home-buyers up to $8,000 as credit when they file their taxes. The newest version does not require the credit to be repaid. The first time home-buyer would have to purchase the home prior to December 1st of 2009. If the buyer sells the home within the first three years they would be required to repay it.

Here are the list of my concerns:

1) The goal is too give a credit to those who get off the fence and jump into a hurting housing market. So, we put a time limit on the consumer forcing them to make the largest financial decision some may make before they are truly ready so that they can get free money?

2) The credit is designed to give the consumer money they will turnaround and spend in the struggling retail industry to help Stimulate the Economy. Like a well designed gift card consumers rarely spend only the amount they are given. So what account pays the overage. A credit card? 0% interest for a year at Home Depot?

3) Once the time-line is over and the government sees that the overall effect was very little and all they did was help to add debt to a debt driven society what will they do extend the time-line. There are several homeowners who will make it in the time that is allotted for the tax credit but there will be several who won't. Many of those that make it in time will have rushed just for the free money and may put themselves at financial risk (have it now society). Then we will extend the time-line for those that just did not make it so we can capture the others that felt like they missed their opportunity restarting the cycle.

4) If the debt does not have to be repaid then where is the money coming from and who is going to pay for it? There is no telling on this. The money will come from somewhere and the repayment is spending this money in the retail market and acquiring more debt hoping to stabilize companies that are on the verge of bankruptcy. The question is once the money is spent and we return to reality where many are struggling to make it spending will decrease and the companies will return quickly to where they were.

Overall, I like that there are plans out there to help jump-start our economy. As a Mortgage Broker I am excited that my home-buyers may have funds to reestablish reserves post purchase. If that is where they place the funds and they do not spend them in the retail market then the plan is a failure? If they save the funds then we gave them free money to sit on. This would not accomplish the goal but would be wise for the buyer. The Tax Credit reminds me of a heart being restarted by a defibrillator. The heart is jump-started back into action but only temporarily if the actual problem is not found and treated. The Stimulus Bill is a temporary fix or a delay while we dig for a cure. If the liver is the problem we can jump-start the heart all we want but in the end when the liver fails our body shuts down. In the end we are providing a stimulus package that is leading to impulse purchase, rush decisions and poor fiscal responsibility. Sound Familiar. Isn't that what got us where we are at?

Solution: Come back for the next blog entry on the solution. Why teaching fiscal responsibility is a bad thing for the economy!

Homebuilders are sinking their own ship! REVISITED AGAIN!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Sun, 08 Feb 2009 22:19:36 -0600

Several Months ago I wrote the blog that I have pasted below. I wanted to take a moment to revisit that blog because I have seen some change. Locally I attend our MLS marketing meeting on a weekly basis. I have been doing this for the last year. In the last four months or so I have noticed that there are Homebuilders beginning to attend the meetings. At first they were there as spectators. Then they began to market. I said in the blog below that they offer very little commission to selling agents. Most recently JMC introduced the graduated payment schedule. They offer 3% and then an additional .250% for each subsequent sale. Ex. 3% first home, 3.25% second home and so on. It resets each year.

Point One: They are finally half awake. Pay Realtors to sell your homes since that is what they do for a living. I think this is an in-genius idea. List the home in the MLS and let it be shown. (Works real well with Standing Inventory.)

Point Two: If only they would understand that having a lender or being a lender is a way to alienate prospects. Like I said before a pre-qual makes sense but let the borrower use their lender and keep the incentive. It makes for a negative experience all around for the consumer. The consumer does their due diligence to find a team that they are comfortable with and the builder gives them an ultimatum to change that team. Talk about pressure. Cooperation with Lenders would make more sales occur I am certain of it. (save the money, liability, heartache and pissed off clients and let us do our job.) We have done several loans this year for a builder here that were fallout from their LO's. Low pay, high hours and limited resources make it hard for the LO to get the job done. In comes the Broker (soon to be forced to become a banker) to save the day.

Summary: I noticed somewhere in here while I was reading some comments about Realtor/Loan Officers and how that would be nearly impossible to do well. I feel the same about Builder,Realtor, Lenders. Specialization is where people succeed. Hire out what you do not specialize in. I heard a great example of this in a class recently put on by Don Yoakum (Keller Williams multiple office owner). The question was the following:

Can anyone tell me what Mervyns specializes in? The crowd was silent. Then the following:

Can anyone tell me what you will find at Nordstrom's? Expensive up to date fashion and great customer service.

The point was in this economy which of those is struggling. Mervyn's is Bankrupt and Nordstrom's is business as usual. It is my opinion, which seems to be supported by others, that you cannot be a Jack of all trades master of none. Especially if you want to make it in this market.

Homebuilders please wake up. It would be better for us all.

HomeBuiders are Sinking Their Own Ship!

The waves are crashing and the storm has set in. The ship is taking on water fast. The crew is doing everything in their power to keep the ship above water. Are they? In a time where there is a lot of inventory on the market and homes are struggling to sell you would think that we would open our mind up to ideas that would help sell our inventory.

It is my opinion that Home builders are shooting themselves in the foot. They are putting a hole in their own boat. These are definitely very strong words so I am prepared to back them up. Let's go back to the time when the industry was booming. Homebuilders did not need to offer huge incentives to get the homes sold. They also did not have to worry much if an outside Mortgage Broker was doing the loan because you would have had to been a complete(fill in the blank) not to get a loan closed then. Many home builders would not cooperate with outside Real Estate agents and it did not matter. Although I believe many agents did everything in their power to find a resale. Those that did cooperate offered a minimal commission to the selling broker.

The tides have turned and the inventory is sitting. My thought is that the builders would be more than excited to offer incentives to those who have a direct influence on the buyer to buy there homes. The Real Estate agent and the Loan Officer that have pre-approved the client in today's market generally have a good relationship with the clients. They have earned the trust in a market where trust is lacking. Well, if this is the case then why do home builders go out and start their own mortgage company. Yes, to keep as much profit in their pocket as possible I understand this. They also offer the selling broker a commission although still very minimal in my mind.

Bear with me for a moment:

1)You are the selling agent - there is an REO on the market somewhat move in ready. They are offering a 4% commission or 3% and a bonus (fairly common these days). The competition is a new home that is 3 months from habitable offering a 1-2% commission. Which one do you show? I know that many of you are going to get all ethical on me and say that it is your responsibility to show both and that your commission does not dictate your service. I feel the same but in America it is not hard to lead a client to the move in Ready REO for several reasons (a whole other blog topic).

2)You have a Loan Officer that you want to work with and the Home Builder says "you will not get the incentive if you do not use our Loan Officer. What a dumb move. I understand getting pre-qualified but why would you de-incentivize a prospective buyer when you have to sell the homes?

3)I am starting to see relationships with Realtors and Loan Officers strengthening greater than I have ever seen them. We are realizing that it is a team effort to close each transaction. The Real Estate agents that I am working with want to see me get the transaction and vice versa.

So what is my point:I think that if the homebuilders would go out and network with Real Estate agents and Loan Officers they would sell more homes. Everybody likes brand new toys. Loan Officers and Real Estate agents are sales professionals. We sell the products that best suit the client. We would sell the new homes if Builders would cooperate and allow us to make a commission. Home Builders eliminate what I believe would be their best sales and marketing tool. Forget trying to run a mortgage company. You are a Builder not a Mortgage Broker. Team up with the professionals that can get your homes sold. The job is to get rid of inventory. Join the crowd instead of alienating yourself. Marry new home sales and resale's into the same category. They are all houses that need to be sold and have mortgages put on them.

Paraphrasing a line from Janet's phenomenal blog "Why I think Realtor's are missing a great opportunity to connect with Mortgage Brokers" this is "Why I think Home Builders are missing a great Opportunity to connect with Real Estate agents and Loan Officers!"

So you can put away the oars and stop bailing out the water if you open your minds and let the help on the ship. We can plug the holes for you and we will get the weight (inventory) off your ship. It is OK to let us help you. Being greedy and trying to keep everything in house is costing you a lot of money in my opinion.

You want a delay? Ask for a rush.

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 04 Feb 2009 23:56:33 -0600

As you all know there has been an increase in applications in the recent months. Much of the increase can be attributed to a drop in the rates that open the floodgates for Streamline FHA refinance activity and rate and term refinancing activity for those with equity. Many wholesalers that were 2-3 days in underwriting dropped back to 7-8 days in underwriting. When you have a 30 day escrow that begins the day that the bank accepts an offer, in a month like February, which is short and has a bank holiday, there is little margin for error.

Many times the wholesaler will offer incentive for a full package. This would include an executed purchase contract, preliminary title report, appraisal and all other documentation that the findings has asked for. The goal is to have the underwriter touch the file once and clear the file for loan documents. Many times there are a few conditions that are required to be met for this to happen so the Loan officer gathers the items and sends them into the wholesaler. They are then reviewed which may take 2-3 days. Finally, clear to order loan documents.

The delay starts with the banks inability to get an executed contract back to you in a timely manner. On the worst file I have worked it took one month plus prior to receipt of the fully executed contract. The contract was accepted on the 22nd of November and I received the fully executed contract on the 23rd of December. At this point I was given the escrow company to request a copy of the prelim.

Here is where I get to my point. Many times at the point that the file is approved it has been much longer in # of days than we would all like. In a perfect world the bank would quickly sign the offer, escrow would not be slammed and title would get us the report. The file would be submitted and no conditions would be needed, We would go straight to loan documents. This is rarely the case as the wholesalers are being very thorough in their underwriting. The more they need the less they want to touch that file again. It is our job as Loan Officers to collect all the documentation that they want to ensure the fewest amount of touches per file.

There have been several instances, primarily on a gift letter for FHA, that a consumer is reluctant to ask the giftor for a copy of the bank statement proving they have the funds to gift. I understand a parent or family member being reluctant to let another family member know how much they may have. At this point we are asked by the client and the Realtor if we can give them what we have, get to the signing and ask the parent at that time for the document because the parent can see that this is going to happen.

The Answer: Anytime we ask an underwriter to fore go a document that is necessary to make the file saleble or insurable in some cases we are asking them to put their job on the line to trust that we will deliver. They are doing a loan officer a favor in good faith to help us keep moving forward so our Realtor partners do not begin to believe we are not performing. In the event the relative refused to give up the documentation at a later time and date and the loan had been funded in good faith we are subject to a possible buyback. This is a cuss-word in the broker world and at the wholesale level. This is very costly.

Underwriters want to get the file moving forward as bad as we do. All they want is for us to get them the proper documentation at which time a RUSH can be an acceptable request. We are rushing to meet a bank imposed deadline that started slow because they could not get the contract out.

The Solution: We are all a team looking to accomplish the same goal: to close a transaction and help a client into a new home. The smoother the process the better. As the professionals it is our job to convey to the consumer the importance of the documentation and why it is necessary. Communication and working together is the key.

I am very fortunate to have some great partners in the business who help to facilitate the closing in a manner that makes everyone happy. I am writing this to go on record that there are times that a client echoes frustration in the turn times. This is a great opportunity to support all parties involved and educate the consumer. I have seen many cases where the professional chooses to complain along side the consumer. This is unacceptable. We all want to get the deal done.

If you want to delay your file from closing then ask your Loan Officer to ask for a rush prior to them having all the appropriate documentation. Ask them to try to skip steps in the process. In the end all the steps have to be complete. My question is whether you want them to happen prior to the client signing or prior to the client expecting to get the keys. A smooth post signing closing is a happy client no matter what the ride before it has brought. As long as the ride has been explained and they have been educated they are happy to have the key.

Asking for Rush without all the documentation necessary is certain to cause an Underwriter to want to delay. Just ask yourself this: Do you like working on files that come to you complete and well packaged or do you like the incomplete sloppy ones?

Married to my SmartPhone Part 1.......................

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Thu, 29 Jan 2009 13:27:55 -0600

The alarm is going off and it is 5am in the morning. I reach over to hit snooze and I cannot find the alarm. That is right I use my smart-phone as my alarm these days. It is sitting across the room on the dresser. I get up to go turn off the alarm and grab my honey. It is 5 am remember and my eyes have not even adjusted to the little light that is coming from my alarm.

Immediately upon turning off the alarm portion to the phone I go straight to my inbox to check my emails that have come between the time that I went to bed and waking up. Who the heck is emailing between these hours I do not know? (yes I do, the answer is the other smart-phone junkies that I associate with). After I check my email I am straight onto Facebook which is an awesome application on my Iphone.

By this time my wife is starting to stir and she is reaching to find her phone so she can do the same thing. We proceed to go down the stairs and start the coffee and we have yet to say good morning to each other. Our other spouse listens and follows our every command so we will deal with them first:) After the coffee is made we take a moment to put down the phone.

The Bell rings and I am quickly back in to the intimate relationship with my phone. Marlet Alert has sent me a text message to let me know if I am going into the office to higher rates or lower rates. I close the window and go back to the inbox to check on the status of my emails and my friends on Facebook. Nothing new so I decide quickly to check my schedule for the day. I have three apoointments and I want to make sure that I prepare as soon as I get to the office.

I ask my wife (the human one) what we might be having for breakfast and I see that she is on her phone looking up recipes.....................................this is just the morning edition of married to my smartphone.

Stay tuned to see how the day progresses.....PS-I will text you when part 2 comes out,

Have a safe and Happy New Year!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 31 Dec 2008 17:18:45 -0600

I just wanted to wish everybody on the Rain a Happy New Year. I hope that 2009 brings everyone the very best it has to offer.

A Christmas Miracle!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Mon, 29 Dec 2008 15:13:55 -0600

Christmas has been around a very long time and I have been involved in 30 Christmases in my lifetime. In the past, there have been many great times and I have had the ultimate Christmas fun. I would describe this loosely as a time that was spent with family, spreading the cheer, receiving the gifts that I wanted, giving the gifts that I could give, Eating:), and having the day off from work.

However, this Christmas was very different for me. I was humbled greatly in 2008. I was taught many lessons and I learned to appreciate things that I had taken for granted in the past. This Christmas was going to be filled with all of the above mentioned but I did not want anything for Christmas. I was happy that I had a place to live, food on the table and I was allowed the possibility to rebuild my business, appropriately. Business is awesome by the way. I have been placed with great Realtor partners and a great Broker to work with.

On to the Miracle. It was the morning of December 16th when my phone rang at seven in the morning. It was a family member that never calls me that early in the morning. What was wrong? I had a family member admitted to ICU. This family member is only three months old. I got up and I rushed to the hospital. When I got there I witnessed the worst sight I had ever seen. I really felt that there was no way that this family member could pull through. I am an optimist by nature but this did not look good. I turned to the Lord and prayed simply that his will be done and whatever was to come of this please give the members of the family the strength to stick together. The next 9 days were turbulent at best. Christmas day, my wife and I went down to the hospital to see the family member and others to wish them a Merry Christmas and see the baby. When we got there is when I witnessed the Miracle. The baby was laughing and playing just as I had seen her at Thanksgiving. We are not sure of the long term effects of the injuries but she is doing awesome.

Christmas will forever be changed in my heart. This was a Christmas Miracle and the best present that I could receive. It was a very positive ending to a year that was filled with change and growth. I am so glad to have prospective and I am so glad and thankful for the prayers that were received during this time. Although the road ahead is a very long one for my family the baby is a live and healthy. Simply, a true Christmas Miracle.

FEAR of FINANCING: The Disease That is Costing The Real Estate Industry

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 12 Nov 2008 17:39:50 -0600

Janet really hit the nail on the head with this blog. She did a tremendous job. It is a post that I think everyone wants to see.

Via Janet Guilbault, California Mortgage Expert :

There is a new disease out there: Fear of Financing (FOF). FOF is a psychological disease that prevents people from buying houses. While we have yet to discover a cure, you as a Realtor can sell more houses if you understand it, and help potential buyers overcome it.

Buyers have already heard that same tired old real estate mantra: "Prices are low. Rates are historically low. This is a great time to buy". They believe that, too. So what's holding them back?

Their secret fear that they won't have the ability to finance the American Dream.

And they probably won't talk to you about this, either. Fears show weakness. Fears are embarrassing.

Sometimes it is easier just not to get in the elevator if you are afraid of elevators. Enduring those few minutes of fear inside the elevator, and getting to the top floor? Just not worth it.

So they just keep walking, and never get to the 10th floor.

Maybe you are losing buyers because they just keep driving (right past that house they love, overcome with an attack of FOF).

Frankly, Fear of Financing is easy for your buyers to justify. It does take more to qualify than it did before. But FOF has reached a frenzy that is out of control and a bit irrational. It is hurting business.

People approach me all the time with this statement: "I hear you can't get a loan on a house anymore......." The statement sort of trails off because they don't want to finish it by saying this: "unless I intend to brave rejection and the possibility I may not qualify".

The media likes to promote FOF...have you noticed?

Let's face it, the fear of rejection looms large in all of our minds. It is why it is hard to interview for a job. To make your sales calls. To try out for cheerleader or the lead in the play.

Rejection stings.

So how do we get buyers to that warm and fuzzy place where they believe the RISK is worth the REWARD?

The Antidote for Fear of Financing

How about selling houses by attaching financing options and quidelines to each listing that you have? Lenn Harley said it best when she commented on Leander McClain's featured post, describing her best marketing strategy for 2008:

Shifting from advertising our services to buyer to offering financing opportunities for prospective buyers has made the difference.

Okay, I will pause here and remind you of something I have written about many times: Financing sells. Look at the car business. When they want to move cars they do this by selling financing, not the car. Does it work? Yes indeedy.

I love looking at flyers Realtors put in those little boxes on your signs. I bet prospective buyers do too. But only one in a hundred I look at has payment options, rates, or a call to action if the client would like to get pre-qualified. Why is that?

If you don't HAVE a mortgage partner to help you with this, you need one.

I know from personal experience that some people will call the mortgage person on the flyer BEFORE they will call the REALTOR on the flyer. Wouldn't you rather capture that lead by having them call YOUR mortgage partner?

Okay, still on the topic of signage: Why is it that I almost never see one of those little signs that hang below the big signs say something like this: GREAT FINANCING AVAILABLE. Or this: SPECIAL FINANCING. Or this: LOW DOWN PAYMENT. Or if you happen to have a really SMART mortgage partner: BELOW MARKET FINANCING (seller has agreed to "buy down" the rate for future buyer).

Do you really think a sign that says "I'M GORGEOUS INSIDE" will do a better job of hooking a buyer? I don't.

And to those of you who send newsletters: do you have a spot on every newsletter for a mortgage update?

Right now it is extremely important that every POTENTIAL BUYER understand that there is still money to loan, and that you as a real estate professional can provide financing direction and assistance.

Make it easy for every person who responds to your marketing to have a clear idea of what they need to do to GET FINANCING

Give them the option of calling the mortgage partner BEFORE they call you (this gives you 2 chances of getting a call instead of just one

Show them payment options on your listing flyers. Tell them you have financing for "a broad range of credit situations".

Don't try to become an expert on mortgage rates and guidelines. Become an expert on overcoming what keeps your customers up at night. That's the way a marketing genius thinks.

Encourage the discouraged. Remain upbeat and positive about financing. Give them that glimmer of hope that they are secretly hoping exists.

Written by Janet Guilbault, Mortgage Lending Expert with RPM Mortgage, Based Out of the San Francisco Bay Area 925-552-3867 (Direct)

Market Gloomy? Statistics tell a different story!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Tue, 11 Nov 2008 18:59:01 -0600

I am a firm believer in the Brian Buffini system of doing business and one of the things that Mr. Buffini says is: KNOW YOUR STATISTICS!

What I believed to be the norm in the Sacramento and Placer county markets was not the same picture the statistics present. My general thoughts through what I was hearing from those in the industry and most commonly the media spoke emphatically about the large supply of REO's. When you drive down the streets you could see sign after sign of the foreclosures, short sales and conventional sales caused by divorce, relocation or simply just because. I decided to get out the statistics for both Placer county in September and Sacramento County in October to see just exactly what was going on.

First, I want to preface this by saying there is a lot of FHA, inventory, houses sitting for a long time, a buyers market if you will. Here is what I found out to be true in both Placer county and Sacramento county.

Information based on the Multiple Listing Service data from Metrolist compiled by the respective associations.

Sacramento Placer

average DOM of 1-30 58.8% 54.95%

31-60 12.74% 15.5%

# OF MONTHS INVENTORY 3.5 MONTHS N/A

TOTAL NUMBER OF CLOSED ESCROWS 2103 424

%CHANGE FROM LAST YEAR 173.1% 91.9%

MEDIAN PRICE(sfr) $195,100 $314,450

% SOLD UNDER 300k 80.8% 40.6%

TYPE OF FINANCING UNITS SOLD (sfr, CONDO, PUD ONLY)

CASH 440 63

CONVENTIONAL 1,202 270

FHA 420 64

VA 42 10

OTHER 135 17

I don't know about you but these statistics tell a story. The market is moving and homes are selling. We were one of the first in the downturn so maybe we are seeing some of the light sooner. This is location specific and meant to be thought provoking. What are the numbers in your area? It is always great to know your market.

REAL ESTATE AGENT or MORTGAGE BROKER! Which says more?

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Tue, 11 Nov 2008 17:37:51 -0600

Recently, I was introduced to a word game that can be rather fun. It is called word warp and if you are an I-phone user you can download the game for free. The game itself is taking six letters and creating as many words as possible with them. To advance to the next level you have to get the word that uses all the letters.

I thought that we could have a little fun here at the RAIN and see which of the titles REAL ESTATE AGENT or MORTGAGE BROKER creates more words. After we get the words that each of the professions create I will then put together a story using all of the words.

It will only take you a moment to post a comment with a few words that you were able to come up with and in the process we may even get to have a little fun.

Confused? Here is a sample: VCAEIT

ACE; ACT;ATE;CAT;EAT;ICE;TEA;TIC;TIE;VAT;VET;VIA;VIE;CAVE;CITE;VICE;CIVET;EVICT;ACTIVE

The main reason that I even sat down to write this blog is that I feel a lot of stress in the industry and the economy as a whole. I though that this could add a little levity to the situations that we are all facing. Some are doing awesome and others are struggling all in the same office sometimes. Why is that? We all know the answer. Take a moment out of your day and have some fun with this. Who knows it may create an awesome story that we can share with others. I know that all of us that are making it through this time in the market are learning a lot and will wind up having some stories to tell.

I will start:

REAL ESTATE AGENT MORTGAGE BROKERS

Real, age, ate, teal, tale, tear age, broke, rag, ere, grab, rake

Have fun with it if you would like and be creative on the story that we try to create.

PS - I pluralized Mortgage Broker because I wanted to make it the same amount of letters.

Pick Me! Pick Me! I wanna be your Broker!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 29 Oct 2008 16:27:19 -0500

I wanted to take a moment to talk about something that I think is taken for granted and often overlooked. That something is how you choose the broker that you work for and why?

Everybody in the Real Estate sales game is self-employed. Whether you are paid via 1099 or W-2 it is based on commissions and most of the sales are self generated leads. With this being the case then what goes in to the decision to choose the Broker that we work for.

I have talked with several agents that have told me they went with this company because of the name recognition, comp plan, it was convenient, my friend works there, it is close to home etc. etc. While I think that all of these reasons can be justified they are not why we should choose who we work for or more accurately "with." I think that all of you can agree that the client ultimately chooses "you" over the competition. Obviously, the more that we can offer a client as a value added service the better your chances to be chosen but it is you in the end.

The main reason that I am bringing this to the forefront is I have seen lots of movement in the industry for obvious reasons. Some shops shut down and a move was necessary. I have made my only career change this year and I interviewed with several. Some but not all of the considerations that went into the decision were: proximity to home, comp plan, processing, FHA approved broker, environment, competitive fun, remote accessibility (let's face it our jobs are out in the field), Solid Processing, systems, growth opportunity, the people, hiring criteria, and reputation in the community. I fell that I have made the best choice for me. I have a broker's license so I could make more per deal maybe but I would assume the liability and would have the overhead that is attached. Who we choose to work with will heighten our ability to produce in many cases.

Two examples of what I am talking about: I met an agent that works for a large Sacramento company and she stated that she sells 60% of her listings in house. The second example would be is more generic but my production has increased simply due to the energy that emits from the good Loan Officers around (disclaimer: I am extremely competitive)

I think that a lot of thought is required to make an informative decision on who you should work with. I would hope that I can get good response from those of you here at Active Rain on what goes into the decision and why? It is nice to know why people choose where they are at but I also think that the avoidance of change when it is absolutely necessary is costly. I hope that those readers that may be considering change in this environment can take your feedback and make the best choice possible. Remember, we are ultimately self-employed so what works for you may not work for your friend. Hope that all is well for everyone.

Investment Properties

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 22 Oct 2008 14:57:28 -0500

#1 Fannie Mae and Freddie have recently changed the guidlines to maximum 4 financed properties when trying to buy an additional rental or second home. Hard Money is one option but are there any protfolio lenders that will take on more than 4 financed properties.

#2 Cash Out refinance duplex 150K loan amount NOO with Income instability. He has had various formas of income over the years. Mostly all bookkeeping but mostly all working with family.

All help is appreciated.

Part two of what makes a good offer? 4 myths seen in the market.

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 22 Oct 2008 13:48:58 -0500

Hey, I know that you have to continuously blog to get comments in this forum. There was a time that I was blogging everyday and seem to receive a fair share of comments and then I stopped and refocused. The point is part one of this topic received no comments and it was a fair topic. I think that all too often a decision is made on an offer based on the type of financing one is obtaining. This can ultimately lead to a bad decision because the pre-approval letter does not tell you the whole story.

Automated approval can be a very powerful tool but it is only as solid as the information that is poured into it. If the Loan Officer puts garbage in then garbage will come out. I am here to echo what I know many of the members of this community have been saying and let all the listing agents know that FHA is a wonderful option and takes NO LONGER than CONVENTIONAL.If a client rather put 3% (3.5% as of January 1st) down and keep much of their reserves liquid in the event they have a life situation (a wise choice) it should not hurt them. So I want to dispel some of what I have seen in the market:

Myth #1 FHA takes longer than conventional

Ans: Now that FHA is the main channel of finance the wholesalers are well equipped to Underwrite FHA in as little as 24 hours. There are a few additional documents to be signed but other than that they are the same

Myth #2 FHA the property has to be super clean and have clear section 1 and 2

Ans: FHA only asks for the Pest report when it is mentioned in the body of the contract or mentioned by the appraiser. They are looking for Health and safety issues not to kill the deal.

Myth #3 Larger down makes the transaction more likely to close and equals a more qualified client

Larger down does not mean it is more likely to close. There are several factors that can make the file tough to close. Source of the down payment is critical. Any thing less than 20% on the conventional side requires 5% to be the bborrower's own funds. Also Fannie Mae has implemented risk based pricing which increases the rate on lower fico bborrower's pushing their debt to income higher. This is not a compensating factor.

Myth #4 An investor with a large down payment is more likely to close than low down or layered 100%.

Ans: In the market today an investor may not have more than 4 financed properties so if they have a large down but have 4 financed properties they will have trouble finding financing.

The moral to the story is that a good Loan Officer will package the file and deal with all the foreseeable borrower obstacles upfront. The only thing that should make a deal go sideways is property conditions or lack of supportable value etc. When considering an offer it may be wise to consider the institution that is providing the financing for the client before accepting the offer that appears to be the better of the two or 30 in some cases.

Listing Agents what makes a good offer? Part one

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Mon, 20 Oct 2008 18:02:09 -0500

With the constant change in the financial markets today it must be difficult to know which offers come to you with solid financing. There are a few questions that I have for the agents for the other side so that we may all better understand the psychology. Who wins out of the examples below:

97% FHA financing with a DU approval and the source of the down payment verified vs. 20% down conventional financing?
100% financing USDA approved in USDA approved area vs. 10% conventional
100% financing VA vs. 100% financing USDA on a house that needs a little TLC
97% FHA with a gift for down payment from relative vs. cash offer from contingent pending sale
97% FHA first time home buyer vs. Investor with more than 4 financed properties

Purposely, these scenarios leave many questions unanswered for all the parties that are involved in the transaction. I want to hear from the agents that have been in the field on what makes the offer better or worse. I have several pre-approved clients where the offer was rejected because it was FHA or it was USDA and they had not heard of this as an option. Maybe I can clarify on my pre-approval why our financing is solid and there is no reason to worry. I think there are many times that the offer at face value looks better from the perspective of the sellers and the agent but depending on the Loan Officer's and the extent of the pre-approval process and their knowledge it may not be the better of the two.

What are the steps that you as listing agents take to validate an offer and make sure that the financing is solid before entering into contract?

Is an offer for 5K less a worse offer if it does not close?

How can I help my clients stand apart from the competition when they are extremely qualified but have little down that they want to part with?

Thank you for the feedback. I will continue in part two to explain the differences between the above examples and how although one may appear better at first why it may not be. I will include the feedback that I have received from you on Active Rain as well. Thanks again and until next time.

United We Stand! Divided We Fall!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 01 Oct 2008 19:10:33 -0500

The current economic climate has many of our borrowers worried and many of us may be in that boat as well. It is very easy to let the media get in your head. They will twist words, exaggerate and spin the column to best make a story. That is the job of a great journalist. To evoke emotion from your reader means that you struck a chord. However, with the bailout news and the state of the economy it may be wise to take a note from a book called The Four Agreements which calls you to "be impeccable with your word." Negative thoughts bring about panic, stress and irrational decisions that are based on emotion and not logic. Buyers are worried about whether they can get financing and thinking that now is a bad time to buy. The truth is we want to gobble up assets while they are cheap. If you are investing for the long term there really would not be a better time. Currently, we are divided on what measures we need to take to get the ship sailing in the right direction again.

The votes for the Bailout were nearly split down the middle. I know there are a lot of Homeowners out there that have lost significant equity and are still paying there mortgage and do not want to have to pay for those that made bad decisions. Greed was the creator of the crisis and that is another topic. We have to right the ship and we have little time to argue what will be the ultimate solution. We either continue to stay where we are at (little liquidity, demise of banks, low consumer confidence, tight consumer lending and little money to circle but that poses many problems). The job market is different today than in the past. We are in the information age and there are many more entrepreneurs. The small business owners are barely making it. Ex: A pre-school is being started(maybe at an inopportune time) that has 15 kids and a great teacher, These kids really learn and the school needs 50K to finish the structures and complete the design. The teacher has an impeccable track record, credit, and husband has a great job. Easy 7A SBA loan in the past not happening so the kids are stuck in a half built school. The money is not moving and as long as that is happening neither will the economy. It is time that we pay forward our blessings and give a little to get something in return. Maybe it isn't? History shows that we do this again and again and each time we say it is the worst ever. Today I read an article that discussed the 70's Inflation fight that led to the late 70's housing boom. It also mentioned the 80's and the seventeen percent mortgages and the questioning of Capitalism, the crash in 1987, high anxiety global concerns of the early 90's, and the dot.com era etc. Each time we have pulled out only to make another critical move that led to Greed which in turn caused a collapse.

Swaying Bi-partisan votes in the same direction is difficult at best. There is little that two sides ever agree on in totality. If there was there would not be two parties. The idea for the stable to pay it forward to the less fortunate right here in America seems to me alot like all the work that we have done over the years in other countries. We seem so willing to send our money elsewhere to create a presence or dominance but we forget to drop it right here in our backyards when necessary. We battle it. Case in point: last week at the Auburn MLS meeting in California we were arguing about whether we should send $1000 to Texas for "IKE" relief or give it to our local salvation army whose head count they feed doubled in the last 60 days. Whether local or National we want to help but in some cases we might direct the money the wrong direction.

One of the arguments against the bailout was increasing the debt. This is always funny to me because we have no problem asking Lawyers, Nurses, Doctors and all the others to go into debt getting student loans so that they may get a job serving the public. Is this not debt that would serve the public as a whole? It may even allow some of the Doctors and Lawyers to get a student loan and go to school??? Student loans are an investment into the future of that person and all they get to serve. This Bailout is an investment in our future and all that we serve as a society including those that are abroad that we help so often. Let's not forget that it would be a government investment that if they held long enough would pay them back.

We will get out of this and then in the next 10-20 years we will go through something again. The world is evolving fast globally. It is growing faster than we probably wanted when we pushed for Globalization in the first place. The main reason that we will go through this again is Greed and the lack of financial education that is taught to our youth. I pray that we will begin to find value in teaching children about credit, debt, assets, liabilities etc. I know that I would have loved to have learned about it. My education has been learned from trial and error most of which has been error. I should be in a great position but I am not. My income grew six figures a year for three years and has dropped the same in three years. That is a lot of change fast. I was Ignorant and can only blame myself for that. However, there has been a lot of good that has come from the roller coaster I rode.

It is a must that we do something to begin to correct our economy and I am confident we will. The question remains is what preventative measures will we take to avoid similar problems in the future. I hope that we strongly look at the title of this blog and learn that United We Stand and Divided We Fall.

By the Way did I tell you all that loans are available and we are funding them all the time. I received several emails and calls from clients asking if they were still OK if they found the home that they want.

This was written not to irritate or infuriate anyone nor does it imply my position politically or my stance on the bailout. I just know that we have to take some action and fast. Hope that this was thought provoking for you.

Every Mortgage Broker's Battle!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Wed, 24 Sep 2008 16:01:32 -0500

There are many great books out there that are phenomenal to read.

One book that I read was called Every Man's Battle. I was thinking today why I was working on ordering my loan documents for a client about the daily battles we go through as mortgage brokers. There is a laundry list that make the job both exciting, fun, rewarding as well as stressful. Some of them include but are not limited to:

1) resending conditions that were in the original package (my largest irritant)

2) Being directed to the website for updates on status but the website is not updated.

3) Getting lost in the voicemail abyss

4) Reps that are in meetings everyday all the time

Anyway, I am not writing this to complain. I understand that the mortgage world has gone automated to speed things up and limit the touches on each file. In many cases this has made it real easy to get a loan done. However, there are many cases that technology has led to the delays. I upload the conditions. They sit. I call the rep and they say I see them in the system. I do not know what is going on. Why don't you forward them to me so I can forward them to my Underwriter directly. It seems to me that technology has increased the touches on the file at least on our end.

Our company is very diligent about putting together a very complete package at the time of submission. We take the time upfront so that we may later save the time. I do not like having to micromanage my files. My job is to get out there originate loans, package the file and keep the client up to speed. I spend too much time updating the wholesaler.

Another huge battle that we face today.

I pride myself on providing the most current up to date programs for my consumers. They are all very well educated on what is available and the pros and cons of each. However, the challenge that exists today is that it may not be good ten minutes after they leave the office. CalHFA put a freeze on a few of their programs. This was a swift action and I expect more. I have to tell all the consumers that come through the door that this may not be available down the road. This is what we can do for you today. FHA and VA have remained the most consistent in these times.

The good news is this. It is a wonderful job that we get to have.

It is our battle to win. We get to navigate consumers through the murky water in a time that the media makes sound miserable. The book Every Man's Battle is about the struggles of man and temptation. The ability to battle through the temptations and to win every day. To keep what is important to us close and never lose sight. Instant gratification will fade away.

I know that the times are challenging and frustrating behind the close doors in the industry. I know that you may be tempted to find another job for the time being or even permanently. You may be tempted to downsize the operation or to fire a wholesaler. Fight through the temptation. If you are still doing battle right now in these times they will get better. We are all becoming better at our jobs. Now more than ever I will deal with the frustrations from above because I have never felt better about winning the battle. I have had the opportunity to fight with some phenomenal Real Estate agents, Title Officers and Appraisers. Keep battling Mortgage Brokers.

Three ways to 100% in California

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Tue, 23 Sep 2008 13:51:01 -0500

As many of you are highly aware of there is a little turmoil in the markets. As of today at 1133 am, I am doing 100% financing three different ways. They all have there own little pros and cons but they are a way to get the first time buyer into a home.

1) CalHFa with a Chdap silent second.This requires the borrower to have a 680 fico score but is a real strong candidate for consideration. This can be combined with an FHA first mortgage and you are on your way to 100%. CalHFA put a freeze on the CHAP and the Hicap as well as their 35yr IO and the 40 year products.

2) USDA rural housing program - This loan is awesome. It is a true 100% financing option with no Mortgage Insurance. It is available to first time home-buyers and requires a minimum 600 credit score. There is a 2% guarantee fee that can be financed and the seller can pay up to 6% in closing costs. The downside is that there are eligible area and income requirements. The income goes by the number in the household so if you have a large family the income limits are pretty reasonable.

3) VA 100% financing - The obvious downside is that you have to be a veteran to qualify. The upside is that this is a true 100% option for our Veterans. There is no Mortgage Insurance at all. There is a VA funding fee that can be waived if you are considered greater than 10% disabled by the military. VA will allow up to 4% in credits.

It is extremely important to get with your affiliates and find out the options that your buyers have in the market. With Fannie Mae's risk based pricing implementation I have found many cases that FHA pencils out better. Even for the client with a larger down payment this has been true. Fannie Mae has less of an add for the higher LTV (above 80%) because some of the risk is mitigated by the mortgage insurance. Now more than ever I think that it is important for the borrower to understand all of the options that might be available. They must be prepared to document anything that might present a question.

This is not an all inclusive guide to finance. It is simply to give you a quick idea of what is out there and the general pros and cons. There is a lot of business in the market and if any of you ever have a question I will make sure to answer it fast or find out the answer in the event I do not know.

To great success in the world of Real Estate.

Homebulders are sinking their own ship!

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Sun, 14 Sep 2008 15:43:05 -0500

It is my opinion that Home builders are shooting themselves in the foot. They are putting a hole in their own boat. These are definitely very strong words so I am prepared to back them up. Let's go back to the time when the industry was booming. Homebuilders did not need to offer huge incentives to get the homes sold. They also did not have to worry much if an outside Mortgage Broker was doing the loan because you would have had to been a complete (fill in the blank) not to get a loan closed then. Many home builders would not cooperate with outside Real Estate agents and it did not matter. Although I believe many agents did everything in their power to find a resale. Those that did cooperate offered a minimal commission to the selling broker.

The tides have turned and the inventory is sitting. My thought is that the builders would more than excited to incentivize those who have a direct influence on the buyer to buy there homes. The Real Estate agent and the Loan Officer that have pre-approved the client in today's market generally have a good relationship with the clients. They have earned the trust in a market where trust is lacking. Well, if this is the case then why do home builders go out and start their own mortgage company. Yes, to keep as much profit in their pocket as possible I understand this. They also offer the selling broker a commission although still very minimal in my mind.

Bear with me for a moment:

1) You are the selling agent - there is an REO on the market somewhat move in ready. They are offering a 4% commission or 3% and a bonus (fairly common these days). The competition is a new home that is 3 months from habitable offering a 1-2% commission. Which one do you show? I know that many of you are going to get all ethical on me and say that it is your responsibility to show both and that your commission does not dictate your service. I feel the same but in America it is not hard to lead a client to the move in Ready REO for several reasons (a whole other blog topic).

2) You have a Loan Officer that you want to work with and the Home Builder says "you will not get the incentive if you do not use our Loan Officer. What a dumb move. I understand getting pre-qualified but why would you de-incentivize a prospective buyer when you have to sell the homes?

3) I am starting to see relationships with Realtors and Loan Officers strengthening greater than I have ever seen them. We are realizing that it is a team effort to close each transaction. The Real Estate agents that I am working with want to see me get the transaction and vice versa.

So what is my point: I think that if the homebuilders would go out and network with Real Estate agents and Loan Officers they would sell more homes. Everybody likes brand new toys. Loan Officers and Real Estate agents are sales professionals. We sell the products that best suit the client. We would sell the new homes if Builders would cooperate and allow us to make a commission. Home Builders eliminate what I believe would be their best sales and marketing tool. Forget trying to run a mortgage company. You are a Builder not a Mortgage Broker. Team up with the professionals that can get your homes sold. The job is to get rid of inventory. Join the crowd instead of alienating yourself. Marry new home sales and resale's into the same category. They are all houses that need to be sold and have mortgages put on them.

So you can put away the oars and stop bailing out the water if you open your minds and let the help on the ship. We can plug the holes for you and we will get the weight (inventory) off your ship. It is ok to let us help you. Being greedy and trying to keep everything in house is costing you a lot of money in my opinion.

Flyer Box and Riders. Advantage or Disadvantage? Part 2

Matt Freeman; Broker- California Mortgages (Capitol Mortgage Corporation) — Fri, 15 Aug 2008 18:26:48 -0500

I wrote a blog a while back that examined the need or use of Flyer boxes, certain riders and the actual overall effectivness of each. There was a decent response to the article and that was that. Now, I have been introduced to a product provided by skywire and sold by Realovation that solves everything I stated as a concern. The Virtual Aid assistant is a rider that delivers the information contained on a flyer and more directly to the clients cell phone or email.

No more need for the flyers to be distributed to the local neighbors, no more need for the empty flyer boxes and most importantly no more need to spend the money on the useless flyers because that is what the client wants. The virtual aid assistant takes less time, less money, less hassle, more leads, more clients and more closings. What you say? That is right you can keep the leads that are generated by the virtual aid.

What I did not say before is each time that the client or prospect requests information from the rider via the cell phone you are immediately notified. Yes, this may sound like call capture but call capture never sent the information that all the prospects want. Few want to hear the narrative of the property most want to see the photos of the place. After all, that is why 80% of all homeowners start the search online isn't it?

So how does it work? Attached to the sign on the property there is a rider that has a toll free number and a property ID. The prospect dials the number and enters the property ID. At that point they are given a choice to have pictures sent directly to their cell phone, have a flyer sent to their email, listen to the recorded information or be forwarded directly to the agent. Simultaneously you are text messaged the number that called. It is also all captured on your computer software that allows you to track which homes are getting the attention.

Contracts are month to month, and the cost of the riders are cheap. At this point you may ask me if I sell the product. No, I do not but I endorse it because I have bought for some of my agents and I pre-qual the leads for them. That eliminates the bored teenager playing a joke. You have the loan officer deal with that kid. If the prospect can buy I refer them back to that agent and we close the deal. It has been a great way to work with my listing agents and been a great way to connect to buyers.

In the short term it has at least solved all the questions that I had regarding flyer boxes and riders and whether or not they are an advantage or disadvantage..............until next time.