Shawn's Blog

Let's Find a Bright Spot.....Please!

Flat Branch Mortgage, Inc. — Mon, 26 Jan 2009 10:20:48 -0600

I have truly been searching for something to hang our hat on moving forward but today did not do us any justice....at least from a recovery standpoint. You see with the economy in a recession and companies sales really falling by the way side we get the following; Sprint laying off 8k, Phillips laying off 6k, Caterpillar cutting 20k, McDonald's (this is McDonald's we are talking about here) is down 24% and Home Depot is eliminating 5k in jobs.

Many are predicting more of the same through the spring. The key to an economic recovery is J.O.B.S. and individuals, couples and families making money, saving money and having money to SPEND. The sticking points in a recession is that it's primary purpose imposes just the opposite thus making it very hard to reverse the trend. To top it off there is such a disconnect between primary rates (the rates offered or trading on Wall Street) and secondary rates (the rates at which consumers can get) that the Fed Purchase Program IS NOT WORKING! I promise to find something "pretty" to read about in the coming weeks but I also must do my part in truly talking about what is fact and not what we "wish" it to be.

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Posted by: Shawn Von Talge

So Much for Government Intervention

Flat Branch Mortgage, Inc. — Wed, 21 Jan 2009 16:43:19 -0600

Well, what once was thought to be a good thing is now gone by the way side and actually sputtered some more. What am I talking about? Mortgage interest rates have gone from one extreme to the other. The morning of December 17th saw ALL TIME low mortgage rates for a period of about 60 minutes from that point till today it has been nothing but bad news for mortgage rates and all the time the U.S. government has been doing most of the buying. For instance on 12/17/08 the 4.5% MBS coupon (the bond that affects mortgage rates high price=low rates) was at 103-06 and today we closed (keep in mind this is the same 4.5% MBS coupon) at 101-04!

Simply put the "media frenzie" surrounding mortgage rates is a complete mirage right now. Be advised that we are no longer in a refinance rally and the one that was underway was the shortest I have seen in 11 years! Let's hope we see some rebounding and quickly otherwise there will be a lot of disappointed consumers out there. Although it seems disappointment has been the norm lately.

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Posted by: Shawn Von Talge

Will Things Get Worse?

Flat Branch Mortgage, Inc. — Mon, 19 Jan 2009 11:24:28 -0600

The above questions is something that seems to be on everyone's mind lately. I recently (last week) received 4 phone calls from past clients facing some very serious decisions. Two of them had lost their job due to the current economic woes and the other two had seen their salaries cut by 40%! ALL had serious concerns on how they were going to keep their homes. These people weren't victims of financial mismanagement or irresponsible they have simply felt the wrath of today's economic reality.....things are bad and could get worse.

Most economists are predicting 2009 to be a replica of 2008. I know this does not come as "things we like to hear" however, this is the reality of where we are at. Why sugar coat times like these? False hope can only lead to disappointment and perhaps even further stress about the "if's". I for one am fairly optimistic about the gentlemen we have taking office tomorrow and the staff he has put together to hopefully change things for the better. This is not a political forum however Mr. Obama has plans for a $775 billion stimulus package, 2.5 million jobs, financial services reform (yes this includes the "asleep at the wheel" SEC) and a wholesale list of other items that need to be addressed asap! Hold your head up high and stay focused and things will work out. We all will be better people from facing these challenges.....perhaps we cannot see it now but "the mark" this economy has left us will hopefully be erased over time.

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Posted by: Shawn Von Talge

Absolutely Unreal Times!

Flat Branch Mortgage, Inc. — Wed, 14 Jan 2009 14:17:55 -0600

I thought I had seen it all but every time I feel things have ran there course another whirlwind hits us. I'm sure it's no surprise but December holiday sales were down 2.7% and excluding auto's were down 3.1% more than double the expectations by most economists of 1.3% and marked the first calendar year decline ever! The DOW is down over 200 points, treasuries are skyrocketing with yields in the low 2's and guess what our friendly and ever rate influencer (known as MBS) have traded "sideways" for 4 consecutive days which means stagnant mortgage rates.

The primary problem we are seeing right now is the banks not translating today's current economic rate environment onto rate sheets and thus customers. For instance, we have two BIG lenders that are so overwhelmed with business that the only way to keep it from coming in is to raise rates! That way bankers and brokers are forced to use other avenues but hey guess what? Almost all banks are doing this to some extent. Simply put the banks are now too busy to handle the volume of business and do not want to "staff up" to cover it because of fear that this refinance rally will be short lived. The general public cannot win for losing and it's getting extremely frustrating to sit on the sidelines and watch this happen. Ben Bernanke stated yesterday (paraphrasing) "If $600 billion of GSE/MBS buying doesn't do the trick, then we'll buy another $600 billion. And if treasury traders even think about donning the vigilante hat of taking market matters into their own hands in a sign of policy protest then we will set up a bear trap of buying term treasuries in size." Bluntly put stopping messing with our market presence or you will pay!

It's nice to see the government take such an active role in trying to influence consumer rates and in particular mortgage rates however, to date the moves have not been doing what was planned as it seems sellers and treasury traders are making their presence felt!

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Posted by: Shawn Von Talge

The Mortgage Rate Myth

Flat Branch Mortgage, Inc. — Mon, 12 Jan 2009 10:17:04 -0600

We all know that a small refinance boom is taking place and I cannot say enough how thankful I am to be swamped with business. However, I continue to get phone call after phone call with regards to the "media driven" 4.5% mortgage rates. First, let me say that mortgage rates are NOT at 4.5%! Second, today's environment is much different than the past. We now have "risk based pricing"; meaning depending on the borrowers risk (i.e. loan-to-value, credit score, type of home, and loan amount) will very much influence the rate at which the borrower can get.

For instance; a person with a 700 score, putting 10% down on a single family residence will more than likely get a higher rate than someone with a 740 score putting 20% down on a single family residence. Both are great scores however with "risk based pricing" anyone who has a credit score below 740 will take a "hit" to the rate. Let me reiterate so when you hear your friend, co-worker, or family member talk about the 4.875% rate they got; EVERY SINGLE INDIVIDUAL AND MORTGAGE APPLICATION IS DIFFERENT and NOT EVERYONE WILL GET THE SAME RATE.

It simply seems the media has got the general public fooled to think that if they can't get a mortgage rate in the 4's then something is wrong! Nothing could be further from the truth and ever since we started this "refinance rally" rates have not hit 4.5% not ONCE! So keep things in perspective when you are speaking with mortgage professionals. We want to get you the best rate possible but cannot work magic tricks in order to do it. If you qualify for 5.25% on a 30 year fixed that is a darn good rate! Don't be fooled by gimmicks and rates quoted below what the banks and mortgage companies are telling you over the phone. Are there points, broker fees, bank fees, origination fees, are they "portfolioing" the loan, what are closing costs? These are questions that you need to ask and you also need to know your credit score and loan-to-value.

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posted by: Shawn Von Talge

Politics....How Funny

Flat Branch Mortgage, Inc. — Mon, 15 Dec 2008 08:58:49 -0600

What happened late Thursday evening and into Friday was instigated by one thing.....politics. I wish I could say that politicians looked out for their constituents and the general public but the reality is they simply look out for themselves. I'm not one to get into political discussions on a mortgage site but the issues that affect the U.S. economy and for that matter the global economy affect the mortgage industry and what transpires moving forward. Headline news is always on it's toes in affecting mortgage rates and many other aspects of our industry.

Case in point.....look at Illinois and Governor Blageovich. I could go on and on about things that politicians have done out of sure greed, devine right or because of some power trip. The difference between them and the others is they (the former) got caught. Just like everything else in life there are good seeds and bad seeds. Unfortunately what gets advertised the most are the bad seeds and how they sprouted!

Ok....back to my point. The lower states (i.e. Alabama, Tennessee, Georgia and others) are "right to work states" meaning they are non-union. They voted against the bill (all republicans) in essence to hurt the union workers and in particular get back at UAW (United Auto Workers) and protect the foreign auto makers like Toyota, Hyundai and Honda who have several plants in the lower states. Let's see where this takes us moving forward.

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What We Could See Soon

Flat Branch Mortgage, Inc. — Wed, 10 Dec 2008 08:07:52 -0600

We have seen history unfold right before our eyes over the past 12 months. We have witnessed companies that have been operating for over 150 years either get bailed out or file for bankruptcy protection. We have seen absolutely huge companies get billions of dollars from the U.S. government only to be back at the front door knocking just a few weeks later. We have seen massive layoff, closures, and cut backs from just about every company in every industry.

Financial institutions are now converting themselves to bank holding company's just to get access to Federal Aid in order to stay afloat. States are having real issues making payroll moving forward because they cannot sell state debt to fund their projects. Guess what.....this morning there was another huge announcement that is going relatively unnoticed. GMAC the auto and consumer lending company failed to meet the capital requirements to become a bank holding company. Per regulations they need $30 billion in capital to complete the transition however, less than 25% of the GMAC existing debt has been tendered to raise the capital required. It is projected that in order to meet this requirement they must have a commitment of about 75% participation in order to meet this requirement. Could we see another failed financial institution?

I recently spoke to a close friend of mine who exited the industry about a year ago and the news that he told me is shocking. Just yesterday his company (industrial) let go over 180 employees one of which had a tenure of over 35 years. He was very nervous about his own job and for the first time in his life was scared. No industry or profession is safe! Hospitals are laying people off because the economic crisis has people putting off health issues to save cash. Professional sports are reeling because they are scared fan support will be significantly decreased because of the economic times. Let's get this mess behind us and move forward being better people, parents, friends and professionals!

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Where to Start?

Flat Branch Mortgage, Inc. — Mon, 08 Dec 2008 08:46:41 -0600

It looks like "The Big 3" are very close to working something out in hopes the government will give them a hand out of $25 billion or more. On another note it looks like a BIG company will look at bankruptcy to resolve it's financial woes....Tribune Company is short cash to pay it's creditors interest payments coming due on $12 billion in debt and has now hired a company to look into a possible Chapter 11 bankruptcy filing. This news has simply been shoveled "under the rug" on Wall Street as the DOW has opened up triple figures on the auto bail out plan and President Elect Barrack Obama's infrastructure plan.

The hits keep coming for other major employers in the U.S. as both 3M and Dow Chemical cut their earnings outlook and in turn slashed jobs and possible plant closings. I only hope as we near 2009 we have a wholesale list of good news to talk about. I am optimistic that 2009 will be better but by how much and how quickly are the key questions. Let's hope our soon to be President has the answers!

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Rules of the Game Changing

Flat Branch Mortgage, Inc. — Wed, 03 Dec 2008 08:33:09 -0600

We all know what is happening with the economy and just how far the fox hole goes. Or do we? I am in utter amazement as to the volatility we still face even in light of the government guaranteeing everything that contains a pulse! For instance, just Monday we saw 30 year mortgage rates hit 5.375% and yet today we will see rates at 5.75%. Though the former is still a fabulous rate what is intriguing to me is the fact that nothing has changed in the MBS environment to warranty this type of swing. In all my research, studying, and speaking with people the only thing I can gather is that "flows" (meaning the flow of money from the selling and buying side) have recently switched to being one-sided. Keep in mind the $500 billion directed by the government for the sole purpose of buying Agency MBS has not even hit the market yet.

On another note advertising by companies linked to the real estate industry is done over 62%......wow what a shock! Companies are doing everything imaginable to cut costs just to stay afloat during these very tough times. How about a hand out for the little guy? This just in.....Countrywide / Bank of America is being sued.......AGAIN! It's no secret that they have been actively trying to modify as many as 400,000 loans to help borrowers stay in their homes. However, some of the "investors" in these pool of mortgages are now suing Countrywide Financial for the losses they will take on their mortgage holdings. With reduced rates, write-downs and cheaper terms investors are set to lose billions and want Countrywide Financial and in turn Bank of America to fit the bill for their lost investment.

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Enjoy The Holidays!

Flat Branch Mortgage, Inc. — Mon, 01 Dec 2008 07:25:55 -0600

It's always a pleasure to see the snow trickling through the sky and hitting the green lawns this time of year. If your like me then you truly love December and what comes with it! We all know about the economy, mortgage market, housing crisis and what is going on at Capital Hill. Step away for a minute and appreciate what you have, the family that surrounds you, and the friends that always seem to remind you of what is important in life!

Enjoy the holidays, enjoy your family, and enjoy your life. We only get to live it once so we better stand up straight, dust off our boots and get back up! The individuals, families and companies that can get back up after repeatedly getting knocked down will be the ones that truly succeed in life.

Brought to you by Professional Mortgage Group and Wishing You A Happy Holiday Season!
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The Recap!

Flat Branch Mortgage, Inc. — Wed, 26 Nov 2008 07:20:00 -0600

We finally have some good news to talk about! If your an avid reader of this blog you will recall that I made it known that the U.S. Government needed and wanted to help mortgage rates become "more attractive" (see blog dated 10/15/08). Well yesterday we finally saw "the hustle behind the muscle" with an unprecedented $800 billion dollar commitment to consumer borrowing costs.

They (U.S. Govt.) created the Term Asset-Backed Securities Loan Facility (officially known as TALF). This entity (not operational until February 09) will purchase $100 billion in direct debt from Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Another $500 billion will be directed to Agency TBA MBS (Mortgage Backed Securities).....that's great news for mortgage rates! The remaining $200 billion will be vested into asset backed securities involving student loans, auto loans, credit cards and SBA (Small Business Association) loans. No matter how you look at this, these moves are much needed, overdue and outright awesome for our industry! The caveat to this will be the long-term repercussions of this cash influx into the U.S. financial system? What do I mean? The U.S. Government is taking extraordinary albeit necessary risks to free up market liquidity and promote key economic growth (GDP down .5% for the third quarter). How will this never-ending tale end up? Will there be huge defaults, will we have to print money, what will the U.S. debt load look like 3 years from now, and how will we pay it off?

The answers to these questions are unknown however, the one certainty in all of this are these actions are necessary and I am very much glad to see them coming!

Those of you that do business with PMG, Inc. noticed that I not only predicted these types of moves but I also sent this information out over five and a half hours before my closest competitor. Will these gains and low rates hold? I would like to think so especially since this rally didn't even involve the $500 billion yet to come from the U.S. Government. This money has yet to hit the MBS market rather the gains we did see were from pure speculators and other financial institutions like Hedge Funds, Asian Banks and U.S. wholesale institutions. I like our chances to hold some modest to impressive gains albeit we will see some continued choppiness . That will not go away on such news but at least we had great news none the less.

On another note you may have seen that GM recently pulled a $7 million a year contract with Tiger Woods. Can I say "I told you so" (see blog post dated 11/12/08)? Professional sports, teams and franchises are having extremely difficult times in justifying the huge amounts of money they pay to advertise on this front! We will continue to see companies pull out of the sports arena because they simply cannot afford the expenses associated with today's economic environment. In turn we will continue to see large changes in sports like golf, Nascar, football, baseball and many other popular sports as the owners of these teams deal with the reality of today's environment!

Brought to you by Shawn Von Talge of Professional Mortgage Group, Inc.

Your Columbia Missouri Mortgage Broker

Typical Monday.....Another Bailout

Flat Branch Mortgage, Inc. — Mon, 24 Nov 2008 08:33:13 -0600

Over the weekend the U.S. Government again opened its hand to another failing financial institution otherwise known as Citigroup. It received a $20 billion capital injection (on top of the $25 billion it has already received) plus a collaboration among the Treasury Department, Federal Reserve and Federal Insurance Deposit Corporation to absorb $306 billion in "troubled assets", although Citi is responsible for the first $29 billion in losses and possibly more.

On another note GM said that the board is not opposed to considering Chapter 11 bankruptcy to help itself through the global credit crisis. Congress rejected the auto makers "begging" for at least $25 billion to stay afloat. Representatives asked that the "Big Three" draft a detailed "layout" of their operating infrastructure, innovations and commitment to fuel efficient auto's before any money would be given. The auto makers have until December 2nd to provide the draft before Congress will reconvene on the matter. I am on record has stating that the auto industry is simply to big to let it fail (1.25 million would lose their jobs almost immediately) however, to think that these executives can fly to Washington on Lear Jets and simply get a "hand-out" is almost insulting to the American Taxpayer! These companies are very poorly run as they simply do a lot of things that are both inefficient, senseless (i.e. paying someone working a manufacturing line over $80K a year), and irrational.

Let's see how all of this mess shakes out. The more this drags on and the more I research about it the more I am convinced that 2009 will not be a very good year for the economy and real estate industry for that matter.

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More of the Same......Shockwaves!

Flat Branch Mortgage, Inc. — Wed, 19 Nov 2008 07:13:02 -0600

What to talk about.....there is so much happening so fast that this post cannot keep up! Let's start with Treasury Secretary Paulson deciding that the $700B appropriated by the government for the specific use of "purchasing toxic assets from financial corporations" thus freeing up their capital to lend has essentially been thrown out the window! He stated yesterday that by the time TARP was approved and passed the global situation had deteriorated to such a degree that he believed the asset purchase program would not be effective enough. "Therefore we exercised the authority granted by Congress to develop and quickly deploy a $250 billion capital injection program, fully anticipating we would follow that with a program for troubled assets purchases." I'm confused...we have been told since day one and for the week and a half leading up to the TARP bill passage (for which I was a big fan of) that the funds WOULD be used for the purchase of "toxic" assets from financial institutions. Mr. Paulson even outlined and deployed a structure to hire, facilitate and implement staff for the valuing, booking and purchasing of these assets. Now we are being told that the time and energy of this move is essentially wasted at least for it's primary purpose! I tell you what I honestly do not know what to believe, opinionate on or read for that matter when it comes to the financial market system and the U.S. government for that matter. They certainly are not doing themselves or the economy any favors by wavering on such decisions. Don't get me wrong the markets, credit availability, and economy for that matter are changing at faster speeds but to have this type of swing in philosophy because of "market conditions" is a little hard to fathom.

The bottom line and I will say it again.....YOU MUST STABILIZE HOUSING if you want to see a turn around in the economy. In fact the NAHB (National Association of Home Builders) Chairman Sandy Dunn said that yesterday's home builders sentiment "shows that we are in a crisis situation. If there's any hope of turning this economy around, Congress and the Administration need to focus on stabilizing housing." Again, there are people on Capital Hill more intelligent than I but one thing I do know is that if you want a housing uptick and if you want that uptick to sustain itself for any period of time three things must happen. First, you must have mortgage rates lower than where they are currently. A 30 year fixed rate mortgage must hover between 5.25% and 5.5% for borrowers "sitting on the fence" to be enticed to take advantage of extremely low rates. In order for this to happen we need bulk buying of Mortgage Backed Securities and more than likely Asian and U.S. Government involvement to solidify confidence in this fixed income sector. Two, there must be "make sense" loans available. Sub-prime is gone, Alt-A is nearly gone and conventional has tightened so much we have gone from one extreme (loose guidelines) to the complete opposite (very tight guidelines). By "make sense" I mean do they have the ability to pay, do they have a track record of solid timely payments (even if there were extenuating circumstances that led to late pays or even bankruptcy), do they have money in the bank for a "rainy day" and does the loan (from a risk perspective) simply make sense. Yes.....these scenario's are out there I see them every day! Third and finally you must have an availability of lenders and money to access. Large financial institutions/lenders are really scared of buying back loans currently so they are really making sure they get the cream of the crop borrowers even to the point that some lenders are offering incentives if we have borrowers with 800+ fico's and send them their way.

There is a caveat to all of this and that involves risk. There will be defaults but the question is have the loans been structured in such a way to limit the default risk, do the rates being charged on these loans warrant the inherit risk and was the loan originated in the right fashion. I'm not talking about 580, 100%, stated products. But let's face it borrowers, at least at times see a rocky road. I mean there are companies that have been around for over 150 years that have been cliff diving lately. One of my main concerns about even talking about this subject is my opinion on FHA origination. In my mind we are setting ourselves up for another windfall of problems if FHA continues to originate and guarantee the volume of loans that it now sees. Just yesterday it was announced that during fiscal year 2008, the FHA endorsed over 1.2 million single-family mortgages. That's up from 532,000 in 2007! HUD credited the recent rise in FHA lending to the fall of sub prime lending, plentiful adjustable rate mortgage resets, higher FHA loan limits, and more affordable housing prices. Did you get the part that said the fall of sub prime lending? As of June 2008 the FHA's share of mortgage origination's rose to 22% skyrocketing from under 2% in early 2007. However, all that new lending has put a strain on the FHA's capital ratio, which fell to just 3% (1% above the minimum requirement) this year, down from 6.4% in fiscal year 2007. What does that mean? Bottom line they are lending more money, collecting fewer interest payments in connection with that money because default rates/foreclosures are going up! I'm not quite sure what the answer is to all of this but what I do know is that FHA will need to make some changes because the WRITING IS ON THE WALL.

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Shockwaves Keep Coming Part II

Flat Branch Mortgage, Inc. — Mon, 17 Nov 2008 08:22:48 -0600

Well, I finally get one day out of the office (Friday) and what has changed....nothing! In fact this morning Citi announced it would cut 52,000 jobs in the very near term. Citi, who employs around 352,000 as of the end of September also said it would try and reduce expenses by 20% although I have to believe the job cuts will be where the blunt of that expenditure will lie.

The bottom line in all of this economic windfall is we (you, I and the U.S. economy) are hurting! That may be the understatement of the year. Are we at the bottom, is there still room for us to fall? The answer to that question is....nobody knows but I will try and answer it none the less....yes and no! I truly in my heart feel things are at or near the bottom. However, I think financial analysts, traders, and even heightened professionals are gullible to say the least to think that the worst was over a year ago like many believed. We are in uncharted territory most of the U.S. population with the exception of the more "seasoned" citizens have never seen an economy in this condition. Folks we are on VERY shaky ground right now with some laws that are going to take affect and perhaps hurt a battered industry (mortgages) even more. After watching a ton of hearings/meetings on capital hill over the past year I really do not have faith in the politicians making the calls when they can't even pronounce individuals names correctly or do not have the slightest clue on how intricate our financial system is but they sit on a committee that directly impacts the decisions made!

Our system is flawed and the radical changes taking place are going from one extreme to another on the opposite end and the more troubling thing about it is nobody is talking about it! Yes changes need to be made, yes confidence MUST be restored, yes we need regulation but the U.S./World economy is not what it was like in the 1920's. We are far more complex with systems that are so far complex that a manual from the earth to the moon couldn't explain everything. That's why when I see the unemployment rate hinting at 7% and I see it going to possibly 8-9% it scares me! When I see the two of the most prominent indicators of the economy (real estate and auto's) struggling so mightily even in the face of Billions of dollars being thrown out every window....yes it scares me. When I see huge corporations who simply made bad business decisions get bailed out, file for bankruptcy and then get billions of dollars while a simple mortgage broker who has come across bad times but does his job very well get his occupation yanked out from underneath him/her yes that scares me! Let's see where this all shakes out but I just have my doubts the more this carries on that we will see relief even in 2009.

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That's Right......Shockwaves Keep Coming

Flat Branch Mortgage, Inc. — Wed, 12 Nov 2008 09:09:29 -0600

Where do I start we have already been in uncharted waters for quite some time. But it seems that simply isn't enough these days as history seems to happen every day! American Express is now operating under a bank charter so it can have access to the discount window operated and controlled by the Federal Government. Otherwise, god knows what would have happened to that company. Folks this is just the beginning when it comes to these huge credit card companies that seem to do everything imaginable to keep individuals and families in debt. When families stop paying their mortgage, guess what? Their credit cards have already ceased getting payment or are not far behind. We will see a lot more news on this front in the coming months...guaranteed!

The auto industry looks to be getting some consideration from the U.S. Government in regards to some sort of bailout. Now let me go on record as saying I think this must take place. Think about how many thousands upon thousands the auto industry employs. Not just Ford, GM and Chrysler themselves but what about the companies that supply parts, technology, and materials to these companies? The auto industry, much like the housing and mortgage industry is critical to the U.S. economy! In fact if you look at history when the housing industry suffers so does the auto industry. Whether we like it or not these two industry's operate hand in hand and when one suffers the other isn't far behind. The housing industry has gotten and continues to get the much needed financial assistance from the U.S. Government and as much as I hate to say it the auto industry will need to stick it's hand out as well otherwise our problems will worsen to an extreme that would rival the Great Depression.

AIG gets ANOTHER $40B from the ever charity known as the United States. As if the first $80B wasn't enough and many analysts at that time projected they would be back for more. These huge financial companies operated on a credit basis only it seems as they all were extremely leveraged. No cash reserves considering the size, operating capacity and significance to the financial sector. It is simply baffling to me, STILL that companies that have been around for over 150 years (i.e. Bear Sterns) cannot make it through even two years of turmoil. Believe me I know things are bad perhaps worse than most people think but what happened to good fiscal accounting and savings plan?

Another item just hitting the news although not nearly as much as other happenings around the globe is the economy's affect on sports. MLB, NFL, NBA, Nascar and others are all feeling the pain as they plan for free agent signings, sponsors and their budget. Keep in mind they rely on us (the fan) to make their payroll and when we lack money to attend these events, they will lack the revenue to go out and pay huge dollars to these athletes. It's already being seen in Nascar as Ford and Chevy have "hinted" at the possibility of significantly pulling back in this ever growing popular sport. At the same time teams are having some what big problems in obtaining sponsors for their cars. In fact, some teams may have to have multiple sponsors for a single car because of the lack of cash that these companies are now spending to advertise. We truly are witnessing history with every passing hour, day, week and month. The economy is ripping through every facet of what once was seen as untouchable entities. Stay tuned things are going to get very interesting.

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Thank You

Flat Branch Mortgage, Inc. — Mon, 10 Nov 2008 08:23:19 -0600

I wanted to take the time to thank some of our very loyal and valued business partners. Our business, industry and company model completely revolve around the realtor and the clients they refer to us. In a time when clients/buyers are hard to come by I feel extremely grateful that we have such loyal business partners/friends. We truly value your business and friendship and will continue to do everything possible to earn your referral. A special thanks to....

1) Mikki & Karl Starmer: Re/Max Fulton / Fulton, Missouri
2) Mike Hill: Weichert Realtors-First Tier / Columbia, Missouri
3) Jason Thornhill: Weichert Realtors-First Tier / Columbia, Missouri
4) Amanda Lee: Weichert Realtors-First Tier / Columbia, Missouri
5) Joy Keith: Century 21 Peak Dye / Mexico, Missouri
6) Donna Peak: Century 21 Peak Dye / Mexico, Missouri
7) Dennis Jordan House of Brokers / Columbia Missouri
8) Jay Wilson Weichert Realtors-First Tier / Columbia, Missouri
9) Tim & Nikki Kuchta 3D Realty / Columbia, Missouri
10) Elaine Swaney 3D Realty / Columbia, Missouri

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Tips in avoiding foreclosure

Flat Branch Mortgage, Inc. — Wed, 05 Nov 2008 08:21:29 -0600

If you are facing problems making your mortgage payments there are options available to you. To help avoid losing your home to foreclosure the following highlight some important steps that you should take.

1) Call your mortgage company right away to talk about your situation.
- It's important to act quickly because if you fall further behind in your payment,
there are fewer options to avoid foreclosure.

2) Understand your options.
- Repayment Plan: If you have missed some monthly payments, you may be able
to catch up by creating a schedule for repaying the past-due amount.

- Advance (Home Saver Advance): If your mortgage company tells you that your
loan is owned by Fannie Mae, you may be eligible for an unsecured personal loan
to help you catch up on mortgage payments.

- Modification: In some cases, mortgage loan terms can be changed on a temporary
or permanent basis to make the payment more affordable.

If you are unable to achieve or negotiate the above scenario's it may be wise to consider selling your home or perhaps the following two alternatives.

1) Short-Sale: If you cannot sell your home for the amount that will pay off the loan, talk to your mortgage company about a short sale. Depending on your situation the mortgage company may be willing to accept a payoff amount less that you owe.

2) Deed-in-Lieu: If you cannot sell your home in a reasonable period of time, your mortgage company may be willing to accept a deed where you voluntarily transfer the property to the mortgage company.

The following are some foreclosure prevention resources:

- Home Loan Learning Center
- Home Preservation Foundation
- HopeNOW
- National Foundation for Credit Counseling
- NeighborWorks America
- HUD - Tips for avoiding foreclosure
- Consumer Concerns for Older Americans

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Your Mortgage Loan....Be Prepared

Flat Branch Mortgage, Inc. — Mon, 03 Nov 2008 09:21:07 -0600

We have touched on a lot of different topics on this blog but I recently thought of a topic that we have yet to address in detail. What should you be doing in order to prepare yourself for what lies ahead when applying for a mortgage loan? The following points will hopefully make the process easier to understand and help you index the items that you will need to consider.

1) Know your credit score and what's on your credit: This should be the first item you look into when considering to apply for a mortgage loan. Are there any reporting errors, collection accounts that need to be resolved, or just derogatory information negatively impacting your score? You would be amazed how many reports have medical collections that individuals didn't even know were there! There are also reputable credit repair companies that for a small fee will help you address and tackle the issues of repairing or erasing derogatory or erroneous information on your credit report.

2) Locate and organize your financial documents: You will need to have two year's taxes, pay stubs, bank statements, savings statements, 401k, IRA and any other investment information readily available. You may be asked to provide a divorce decree, bankruptcy documents, Social Security Award Letters and Pension Statements as well. The bottom line here is stay organized and have this information where you can readily find it without difficulty. Should you be missing anything I would suggest you contact the necessary party (i.e. Accountant, Bank, Social Security Office, Employer, etc.) to get a copy of what you are missing.

3) Get a Good Faith Estimate and talk with a very reputable lender: The most important thing to remember here is knowing what's involved in the mortgage process, what you will be charged and where it all goes. Be sure to look at the entire package (i.e. interest rate, APR, fees, education, ethical background and knowledge of the market). The lowest rate lender in town may not be the best option for you if they don't know what their doing.

These are the three main aspects in dealing with getting home financing. The process can be much easier if you are prepared and work with a company and individual who continually educates him/herself and guides you to the options that best fit you!

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What Will The Fed Do #2?

Flat Branch Mortgage, Inc. — Wed, 29 Oct 2008 09:48:30 -0500

At 1:15 CST we will know but most predict the benchmark rate (Federal Funds Rate) to be cut by .50% to 1%. Some think that unless significant recovery signals are seen in the near future the borrowing costs for large financial institutions could be at 0% by June of next year. One of the disturbing factors concerning this unprecedented move not seen since the Eisenhower administration is the fact that many of these banks are still hoarding the cash or looking for other opportunities to buy "distressed" banks instead of lending for which these moves were intended. Washington voiced a stern message yesterday to banks looking at doing this!

KEEP IN MIND....that mortgage rates WILL NOT be affected by any cut or hike to the benchmark lending rate! More over it's how the overall macro economic environment reacts to this cut that will determine mortgage rates fate. Mortgages rates are directly related to the buying and selling of Mortgage Backed Securities (MBS) which are like riding an insane roller coaster ride with their volatility. Typically in a "normal" financial environment (keep in mind we are not in any sense of the word in a normal environment) a rate cut would lend itself to higher inflationary concerns thus diminishing the value of fixed income assets (i.e. MBS) and thus their luster would be tainted. What am I saying? Bluntly in a normal world MBS would be hurt by a rate cut because of inflationary pressure thus leading to higher rates. However, with that being said I highly doubt we will see that affect. Why? Because the economy is contracting and commodity prices have tumbled leading to less of an inflationary issue and more about an economic rebound concern.

We are living through unprecedented times folks! There are no models, past experiences, graphs, or scientific projects for what we are experiencing! Anyone who tells you any differently is simply wrong. With every passing day we see new records in the DOW, huge swings in mortgage rates, further signs of a recession and other negative factors. Hang in there, buckle up and be smart. Do business with the right people, do your homework and educate yourself and things will work out.

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What Factors Affect The Interest Rate I Get?

Flat Branch Mortgage, Inc. — Mon, 27 Oct 2008 08:54:31 -0500

One of the major components of any home loan is the interest rate. Some clients have realistic expectations and others do not. With so much volatility in the market place right now I thought I would touch base on what factors affect the interest rate you could receive on a mortgage loan.

1) Credit Score: Anything below a 740 will get "hits" to their interest rate. Meaning you will get a higher rate if you have a credit score below 740.

2) Loan-to-Value / Down Payment: All things being equal someone putting 5% down will get a higher rate than someone putting 20% down.

3) Loan Amount: Any amount below $140K (at least with most brokers) will get a higher rate than someone borrowing more than $140K.

4) Escrow Account: When lenders quote a rate they are assuming you will establish an escrow account (taxes and insurance included in your payment). However, if you would like to pay them separately and "waive escrow" you will get a higher rate.

5) Occupancy Type: A "primary residence" transaction type will get a better rate than say lending on an "investment" property.

6) Documentation: The ability to document your income (i.e. pay stubs, W2's, taxes) will warrant you the ability to get a better rate than someone you has challenges doing this.

7) Loan Program: The type of loan program you are eligible for will help determine your rate. FHA, USDA, Conventional, VA all have different rates and qualifying factors.

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Some Good News For A Change

Flat Branch Mortgage, Inc. — Wed, 22 Oct 2008 09:15:30 -0500

It's not often we get to talk about a "hint" of good news with today's market woes, struggling households and a heated election however I wanted to point out two points that have or soon will be helping the average Joe get through this unprecedented year.

First, in case you haven't noticed the price of gasoline has come down from a high in Missouri of $3.99 a gallon to $2.59. So if you have a automobile with a 17 gallon tank (standard on some auto's) then you will notice a savings of $23.80 every time you visit the pump. Crude it an all time high this year at $147.27 a barrel and now stands at $68.97 ($78.30 decrease!) Most of this due to a stronger dollar, weakening demand, and struggling world economy.

Second, it seems the "bail out" bill may be finally trickling into the financial market sector in which it was intended. We have seen overnight lending rates between banks fall, we have seen more confidence in bonds and in particular Mortgage Backed Securities (MBS). This has helped mortgage rates come down .875% to 6.0% currently on a 30 year fixed. On a $140K loan that's a monthly savings of $79.32!

I truly believe this "bail out" money will end up in the right places doing the right things to help the broad economy. The question is at what price and what will be the end implications of such a move and the continued moves by the U.S. government. But at least we have seen some changes "leak" into our everyday lives that should assist us in getting through the 2008 year and well into 2009. This is going to be a slow paced change and it will take some time to recover however, it seems we are at least started down the right path. Let's just hope we don't come to a "T" and take a left when we should have taken a right.

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USDA Funds Now Available

Flat Branch Mortgage, Inc. — Mon, 20 Oct 2008 08:57:44 -0500

The news is in and USDA applicants WILL be happy! Late Friday October 17th the fiscal year 2009 budget passed and USDA funds are now available. As posted on this blog on September 22nd (well ahead of our competition I might ad) we reported that USDA funding would cease starting October 1st. This process happens every year as the following year's budget must be approved in order for future USDA funds to be available. This process usually takes 2-3 weeks and can vary greatly at times.

It is crucial for these funds to be available as the USDA/"Rural Development" loan is one of the last 100% financing options available. The timing is excellent as most closing will take place between now and the end of the month. It's nice to finally give some good news for a change! Continue to check back for the most pertinent and current information concerning the housing market.

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Houston We Have A BIG Problem!

Flat Branch Mortgage, Inc. — Wed, 15 Oct 2008 09:14:58 -0500

If it isn't bad news we have no news in today's environment. Let me put this bluntly, aside from January we have gone from the best mortgage rates of the year to the worst in just over 30 days. Since September 8th we have lost almost 400 basis points in mortgage rates. Essentially that is well over a point (actually over 1.25%) increase in mortgage rates in just over 30 days! If your an avid reader of this blog you may remember my post earlier in the year about seeing the biggest volatility in mortgages rates in over 10 years. Well, this just crushed that synopsis!

If we want to have ANY hope of getting out of this economic mess we need the housing market to turn. You CANNOT have a housing market recovery if mortgage rates are approaching 7%. Donald Trump said it best yesterday, "the biggest impact on the economy is the housing industry not auto's, government, infrastructure or energy it's the darn housing industry." It's simply too bad that something like this has to happen in order for the average citizen, city, state and national government to realize that the housing market is the driving force behind all that is good in a "normal" operating vibrant economy!

Now the good news! Retail sales fell off a cliff recently with almost every entity seeing significant declines. Retail sales fell 1.2%, core retail sales (excluding building materials, autos and gas) fell by .7% the largest decline since September 2001. Sales at furniture and home furnishing stores fell by 2.3% in September, the fourth straight monthly decline and the largest single monthly drop in more than five years! Discretionary items fell by 1.1% for sporting goods, hobby, book and music stores. Restaurant patronage fell .5% the most since January 2007 (-1.1%). The auto industry continues to struggle, although a it's on the back burner compared to the housing crisis, as sales declined another 0.6%.

We are now at higher mortgage rates, spreads (between treasuries and MBS) and bank borrowing costs than we were pre-conservatorship of Fannie and Freddie. It's a very tough time to be even associated with this industry as today is the 8th straight day of rising rates and the horrible news that always seems to be associated with it.

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"Bailout Bill" H.R. 1424

Flat Branch Mortgage, Inc. — Wed, 08 Oct 2008 08:42:11 -0500

I spent most of yesterday morning reading through the 451 page document trying to decipher exactly what encompassed this bill. I thought in light of my profession, desire to be more educated, and a scholar of my trade the right thing to do was to "brush up" on my Washington lingo. Reading through this bill accomplished three things: first, it gave new meaning to the word boredom. Second, it truly opened my eyes to just how scary these types of powers truly are and third, what kinds of "little" (very loose term) laws our congressman through into the bill.

We all know the big points of the bill? The $700 billion at Paulson's disposal, the increase in insured deposit limits from $100K to $250K and congressional oversight throughout the whole process. However, did you know that the $250K limit expires on December 31, 2009? Did you know that although there is a ton of oversight and monthly, quarterly, and annual reports due but that the Treasury Secretary or in this case Henry Paulson basically has TOTAL autonomy on who he hires to oversee the buying and selling of the "toxic" debt? These hedge fund managers although much smarter than I will be spending billions of dollars both in valuing the "un-valued" assets and spending the money to get them off balance sheets of investment banks and other financial institutions. Mr. Paulson has total autonomy with whom, when, how much and who is involved in these transactions. To put it bluntly folks Mr. Paulson has unlimited power to do and practice as he best sees fit to free up liquidity in the market place.

Did you know that there is verbage in the bill, specifically Sec. 308 "Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands"? I bet you didn't know that there are "tid bits" or "amendments" to things like tax law, motor racing tracks, railroad tracks and disaster relief? Although the majority of this bill was to address the "toxic" debt and liquidity issues there was also a ton of changes to tax law, tax code and accounting practices; not to mention research and reports due on the "mark to market" accounting rule that many believe is the root cause of disguising balance sheet woes.

I was and still am a big proponent of this bill (H.R. 1424) however, I will say be reading this "monster" it truly opened my eyes to the fact that the United States and for that matter world economies are in the hands of one man; Treasury Secretary Henry Paulson!

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On To Rounds 3, 4, & 5

Flat Branch Mortgage, Inc. — Mon, 06 Oct 2008 09:03:24 -0500

Stock losses continue to mount even after the $700 billion was signed into law on Friday. The Dow is down over 2% within the first minute of trading this morning. The roller coaster ride continues and only time will tell when the so-called "rebound" will take affect. The Mortgage Backed Securities (MBS) that the government has aimed to shore up have had very little impact and in fact most traders are still preferring Treasuries; not a good sign for mortgage rates. We have seen mortgage rates improve slightly however, not at the pace expected post Fannie and Freddie bail out.

Even has I type this the market is approaching a loss of almost 300 points. Let's hope there is a rabbit in a hat some where and someone pulls it out and quickly. I have spoken to several individuals much older and wiser than I and all have said that this is the worst economy that they have witnessed. The market in general lacks confidence and optimism and both are crucial to turning this thing around.

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