REO Insurance Report

Agents Succeed at Growing Premium in Soft Market

Mon, 19 Oct 2009 12:51:09 -0500

In the insurance markets, like most others, 2008 has been a challenging year to say the least. Shrinking premiums and soft market conditions have left many wondering if there is any hope on the horizon.

Quite the opposite is true for the agencies that have found a few booming markets associated with a bust cycle in the economy. One such market is the failing mortgage market, more specifically the distressed and foreclosed asset market. Insuring this market comes as a breath of fresh air to many agencies who have found it more by mistake than through any deliberate marketing efforts.

It is an echoing story that repeats itself each and every day in the National Programs division of All Risks, Ltd. It starts out with a phone call and the bewildered agent on the other end of the phone, frantic to help a client. "I have a bank that we write a lot of the P&C insurance for..." the voice says with a short pause, "they are getting quite a few foreclosures and asked me if I could find them insurance." The voice continues. "I don't even know where to begin and we saw that you had a program for this, can you help?" Usually as we progress into the phone call and determine that our REO/Lender Placed Insurance Program is a perfect fit, you can hear the light bulb go off over the phone. "Do you have marketing materials that our agency can use to promote this program to other banks?" The voice says on the other end of the phone.

It is exciting to be a part of this discovery process with our agency partnerships. It is also very stisfying to know that another agency has successfully found a market in which the current economic conditions will provide for rapid premium growth. Seeing this opportunity and seizing it now is the difference that it takes to succeed in a soft market.

Leading economists have predicted that the current market is only the first uptick of a foreclosure storm that will be unprecedented in the history of our country. Many lenders have been on mandatory foreclosure moratoriums in order to prevent the markets from being saturated by undervalued "fire sale" properties. In the last half of 2009 and beginning of 2010, these foreclosures will be hitting the market , swelling the number of foreclosures dramatically. Then comes phase two. The commercial real estate market, that is now near record high default levels, will start a foreclosure cycle that will rival or exceed that of what we have seen in the residential markets. The combination of these factors will create the perfect storm to capitalize on the market to provide insurance programs for these properties.

It will be the agencies that position themselves to offer a good insurance program, designed with the lending institution's needs in mind, that will be able to take advantage of this upswing in business and enjoy a new level of success in 2010.

State of the REO (Real Estate Owned) Market

Wed, 24 Jun 2009 10:17:45 -0500

Although foreclosures slowed pace slightly in May, it more than likely will be a short lived leveling of the market. With interest rates trying to creep up and refinance options dwindling more and more, homeowners are "stuck" with payments they can't afford and no where to turn. Add to this the increased pressure for lenders to get their balance sheets cleared of toxic assets (non-performing loans and foreclosures), and you have a perfect storm that is going to cause great turmoil ahead in the housing market.

Despite every effort to keep rates low, they are still creeping up and eventually will go WAY up. Some are predicting mortgage interest rates in the double digits coming out of this super imposed low rate era. Very simply, as we continue to print money and create stimulus, we decrease the value of our dollar. With this decreased value in the dollar, the cost of borrowing money will have to increase. In fact, the cost of everything will have to increase. It is called inflation (created in part by increasing the amount of currency in circulation). This will close down the refi market, bring to a crawl the already slow paced existing homes purchase market and dry up what little builder (new homes) market is left. Keep in mind, however, people did buy houses when interest rates were 19%, just not as many.

The sky is not falling, but the economic laws do still apply here, so ignoring the facts in evidence won't change what has to happen. What goes up will correct. In a stable real estate market we go up 7% and correct 2% and we still gain 5% appreciation on our homes. In the markets of 2001 to 2005 property appreciation was insanely high. Some areas were seeing 37% property appreciation per year for 3 years in a row. When you have this type of sharp rise in the market you have to be prepared for an equally big correction. That correction is what we are seeing now.

So, if you bought a house in 2005 for $400,000, it might only be worth $292,000 in your market. This is the problem most people are seeing in their markets. It is making it easier for people to just throw their hands in the air and walk away from the property. That is what is being seen in record numbers, and yet another contributing factor to the rise in foreclosures. This trend should be expected to continue to gain momentum through the better part of 2010 as home prices continue to fall, struggling to find a bottom to this out of control spiral.

What is the bank's answer? Modification of the loan terms to create affordable payments and keep people in their homes. In theory it is a great idea and a great option for some consumers. The only problem is that it is not working. The lending industry is seeing a 50% re-default rate on these modifications and this rate is expected to soar to as much as 75% re-default. The unfortunate reality is that there are more factors coming into play than just bad loan terms. The U.S is about to hit a 10% unemployment rate. This is alarming and also one of the major contributors to the sharp increase in the default rate of mortgages and ultimately the sharp rise in the number of foreclosures.

Within this crisis, the new boom markets arise. Many agents now specializing in foreclosures, short sales, and distressed sales are reporting income levels better than many years in "the boom". There are many new markets that will arise out of this transforming economy. To be truly GREAT at anything, you have to be able to look a bleak situation and be able to find the opportunity within to arise victorious. Stay focused on opportunity, educate yourself with the facts, and formulate a strategy.

Thanks again for reading

Tom

Record High Foreclosures Again In April

Wed, 20 May 2009 09:06:57 -0500

A record 342,038 U.S. foreclosure filings, default notices, auction sale notices, and bank repossessions were reported for the month of April according to RealtyTrac, the leading on-line marketplace for foreclosures. This report comes right on the heels of March's record number. The report further shows that 1 in every 345 U.S. housing units received a foreclosure filing in April. RealtyTrac says that this is the highest number of filings since they began reporting in January of 2005.

The States leading the foreclosure charge are Nevada, Florida, and California in that order. Nevada boasts that 1 in every 68 housing units received a foreclosure filing in April, while Florida comes in at 1 in every 135 units and California at 1 in every 138 units. While Nevada residents might be rejoicing that they saw an 18% decrease from last month NV foreclosures are still at a 111% increase from April 2008. Meanwhile, Florida got smeared with a 37% month over month rise and a 75% rise over April of 2008. California might be seeing some stability return with a 10% decrease in April and only a 42% increase over April 2008.

What does all of this mean for the market? As they say on Groundhog Day, six more weeks of winter. In recent month's as much as 50% of home sales nationally have been from distressed proerties. We will see this trend continue and housing prices will continue to fall for 2009. Banks that were slow in the foreclosure process, waiting to see where all of the current legislation and stimulus plans fell into place, are coming off the fence and moving forward aggressively with the foreclosure process. We will see this trend continue through 2009 and the current sharp spike in foreclosure volume will continue through the next quarter or two at minimum as banks become more aggressive to "clean" their balance sheets and prepare to start anew on the other side of the current recession.

Elder Joins All Risks' New REO/Foreclosure Property Program

Tue, 19 May 2009 08:23:48 -0500

Tom Elder has joined the All Risks National Specialty Programs unit as the lead financial institutions underwriter for the new nationwide REO/Foreclosure and Lender Placed Property Insurance Program. At All Risks, he will target commercial banks, credit unions, savings and loans, mortgage banks, and financial institutions that service and/or invest in mortgage loans.

Previously, Elder worked for MetLife Bank as a regional reverse mortgage consultant. Prior to that, he owned a mortgage company for six years.

The REO/Foreclosure and Lender Placed Property Program is available nationwide on an admitted and non-admitted basis with an A.M. Best "A XIII" rated carrier. Features include simple Web site administration, monthly itemized billing for all coverages and transactions, premium earned on a daily prorated basis, special coverage and retro rating plans. All Risks offers a customized program with a variety of limits, deductibles and coverage options.

REO Risks for Private Money Lenders

Wed, 13 May 2009 21:49:41 -0500

It was a good time in the boom for rehabbers and hard money lenders alike. There were plenty of properties to find and an easy profit to be made. This combination of things made it very appealing to some to make hard money loans or private money loans. I would class the folks who moved into this market as either amateurs or seasoned pros.

Being in a sector of the market that directly observes the fall out from the bust real estate cycle that we are currently in, I get to see first hand the mistakes of the amateurs that decided to embark on the private lending adventure.

Although there are many things that could be pointed to as potentially avoidable mistakes if planned properly from the beginning, I am going to focus on the foreclosure process and avoiding areas of exposure that are left if not properly planned out.

Above all else, whenever you start a new business venture, of any sort, you should always imagine the worse case scenario and plan backward from there. There should also be an exit strategy planned long before an entrance strategy is ever executed. With private money lending the worse case scenario is a default on the loan and potentially having to foreclose on the property. One of the biggest mistakes made by people getting into private money lending is to lend the money personally and not forming a legally incorporated entity whose only line of business is to loan commercial money.

Why on earth could it matter (other than the obvious liability exposure). One of the first things to happen when the loan goes into default is that the taxes and homeowner's insurance is probably not getting paid either. When the insurance lapses on the property, you, the lender, no longer have your interest protected in the property. Should the home burn down or whatever, the buyer walks and you are pretty much out the money. Especially if the buyer goes bankrupt.

What has to happen at the time of lapse is that a force placed or lender placed insurance policy has to be placed by you to protect your interest in the property. The problem? You will have a VERY difficult time finding this type of policy through personal lines. This is typically a commercial lines product, which means very simply that an individual would typically not qualify for coverage. The alternative? You could get a standard homeowner's policy, right. Wrong! It will be difficult to get homeowner's insurance on a property that you don't technically own. You won't be able to do that until the foreclosure process is complete. In most states that is a very lengthy process. That is a very long time to have no coverage on the property and hope that nothing happens.

A little planning up front can save a lot of agony in the long run. Set up a legal entity and only lend through it. This makes the whole process much easier, if the dreaded worse case scenario happens. It may not be impossible to find coverage as an individual for this, but it will just seem like it is.

REO Property and Liability Insurance - The forgotten costs of foreclosure.

Mon, 04 May 2009 08:58:01 -0500

With and ever increasing number of foreclosures in the market place, lenders are trying to contain costs that they incur in the whole foreclosure process. Most people fail to realize the numerous costs involved with maintaining a portfolio of foreclosed properties. One of these costs, that can be significant with a large portfolio of properties, is Real Estate Owned property and liability insurance.

Real Estate Owned (REO) Property Insurance provides lenders with physical damage for any portion of their portfolio of owned properties, foreclosed properties, and properties in the process of foreclosure. Coverage may also extend to properties held in trust for others.

You will find that most REO Property Insurance programs offer a wide variety of limits, deductibles and coverage options. and are generally customized to meet the specific coverage needs of the lending institution. REO Property Insurance may be purchased on either a stated value or total insurable value and also may be purchased on either a replacement cost or actual cash value basis; with or without co-insurance penalties.

REO Property Insurance coverage may be term, annual, monthly with various billing options.

Some other common optional coverage to basic REO products include:

Broad Form or All Risk Commercial Perils
Flood and Earthquake
Demolition Expense
Pollution Extraction and Removal
Ordinance or Law
Mine Subsidence
Freeze, Discharge and Leakage
Builders Risk
Real Estate Owned Contents

There are many ways for lenders to keep the cost of this coverage down, through the diligent monitoring of their coverage amounts and the timely deletion of properties when they are sold. Working with the right insurance agent and carrier who deal specifically with these products and understand the importance of good portfolio management, could reduce a lender's insurance costs by 20% and in some cases as much as 50%.

It is good to be back

Thu, 30 Apr 2009 20:24:18 -0500

After a brief leave of abscense here on AR, it is good to be back. In August of last year I was asked by my then employer to stop blogging, as is common with many fortune 50 size companies. I have taken a different direction with my career and have been presented an opportunity to enter into an entirely different sector of the market.

I am proud to announce my recent appointment as Underwriter of Financial Institutions in the National Specialty Programs unit of All Risks, LTD.

All Risks, Ltd. was formed as an excess and surplus lines facility in 1964 in Baltimore, Maryland. They have since expanded into additional territories and product lines over the past 40 years. All Risks business is written exclusively through retail agents and brokers. They are independent. All Risks has been the fastest growing, and one of the largest privately held wholesale brokers in the country for over 10 years.

As Underwriter, I am responsible for developing the Financial Institution programs such as the REO and Lender Placed Insurance services as well as developing new markets.

More exciting than my new career path, though, is being able to be part of such a wonderful and embracing community such as Active Rain once again. I have missed those countless hours of commenting and blogging. Sharing information that is useful to other's careers is extremely rwarding time spent.

I look forward to the differnce that my contributions make as well as the difference that all of this community's contributions will make in my career.

Great News for Senior Downsizers

Wed, 27 Aug 2008 09:39:27 -0500

If you are 62 years of age or older and have been considering downsizing, shortly you will be able to downsize without cleaning out the bank, or having to have a mortgage payment every month.

As part of the Housing and Economic Recovery Act of 2008, Reverse Mortgage will now be acceptable for purchases. The guidelines are unclear and a Mortgagee Letter from HUD (this is a letter that spells out the guidleines) is anticipated before the end of the year and possibly as early as September.

What does this mean for seniors? Simply stated, you will now be able to purchase a new primary home without having to use all of the proceeds of your sale, or clean out your bank account and retirment funds to pay cash, or have to take out a mortgage with an expensive monthly payment.

Many seniors have already found the benefits of reverse mortgages by utilizing them to stay in their family homes and rid themselves of the costly monthly mortgage payments, but for some taking care of that big old house with 3 flights of stairs is no longer an option. This new financial vehicle will open the doors for these seniors to be able to purchase the new smaller home and maintain a respectable quality of life.

For more information on these great new products stay tuned for more details, or contact me directly anytime. Thanks again and may you enjoy retirement to it's fullest.

Super Sizing Seniors: Working the golden years at the golden arches.

Tue, 26 Aug 2008 23:23:24 -0500

The baby boomer generation is headed for a shock as it nears the finish line known as retirement. As the day of reckoning grows near, boomers will discover that they are long on life expectancy and short on cash. They are more likely to be asking if "you would like fries with that" than traveling the world and enjoying their retirement.

How can this be you ask? It has been a culmination of economic issues that has brought an entire generation into this financial crisis. In addition to social security benefits, the foundation for retirement income has traditionally been corporate funded pensions and/or employee managed 401k or similar plans.

Boomers have found that they can not depend on the pension being there for them when they need it most (during retirement). With pension cuts, corporate bankruptcies and corporate downsizing, most major companies have foregone the pension plans for the much more cost effective employee managed 401k plans. This has allowed them to push as much as 50% or better of the cost of the plans off onto the employee themselves.

What's wrong with that? Well, to start off let's look at what the average employee knows about managing stocks, mutual funds and the like. NOTHING. I was watching a special regarding this issue and the reporter ask a CEO of a large company if he would let the company janitor manage his retirement portfolio. He said absolutely not. As I am sure we would all reply. So why then do we expect the average employee to be able to properly manage their own retirement funds?

This has proven disastrous for much of the boomer generation. Most of them just went forth with the "set it and forget it" attitude and kept putting money in like the loyal employees that they are, fully expecting for the funds to be there when they retired. The market crash of 2001-2002 took a hefty toll on many of these accounts, nearly wiping some of them out completely. Without the years left for recovery of the funds before retirement, many boomers were left with the tough decision of whether to retire or not. Many felt jaded and disappointed by the not knowing or understanding what was going on with their money. Most people do not have a degree in finance to be able to keep up with the markets and manage their own funds.

The sad reality is that many baby boomers have to sideline their retirement dreams, due to their harsh financial picture headed into retirement. You will see more and more seniors working part time and even full time well into their golden years slowly letting their retirement plans melt away and fade into the distant past.

If you or someone you know falls into this category, then I urge you to get financial advice from reputable, proven professionals. You should be talking with a reverse mortgage consultant, elder law attorney, financial planners and a CPA to determine if there is a way to restructure things no, before it is too late and retirement is upon you or your loved one. Many of these situations CAN be reversed and the outlook can be very positive.

If you or someone you love would like more information regarding Reverse Mortgages, you can request it by email at telder@metlife.com, Or click on the "BOOK NOW" button under my picture and choose Reverse Mortgage Consultaion option, pick a date and time you would like it sent or a call, and provide your contact information and the FREE info will be on the way. I will provide a Free DVD and tons of valuable information that you must know before considering these loans.

Housing and Economic Recovery Act of 2008

Thu, 31 Jul 2008 15:29:23 -0500

This information is meant to be a continuation of my previous blog: http://activerain.com/blogsview/616062/President-Bush-Gives-OK

There are many aspects of this new bill that are both confusing and controversial. In order to provide the facts and allow my loyal readers to draw their own conclusions I am providing a link to the Bill itself in all of its 260 page splendor.

If you are interested in reading the final version of the bill, you can read it by clicking here. Please take a moment and leaf through it. It is important to understand how these changes will effect you and how they will change the industry once again.

President Bush Gives OK to Housing Bailout Plan

Wed, 30 Jul 2008 08:44:35 -0500

Wednesday, July 30 2008

By Tom Elder

It was an early morning for President Bush and top administration officials Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.

After threats of VETO, minor revisions and a housing crisis for the record books, Bush said that troubled homeowners can wait no longer for relief.

In the early morning hours Bush approved, by signature, what is being deemed the most significant legislation for the housing markets in decades. This new legislation will allow struggling homeowners, who are unable to afford their payments to refinance into government backed loans which are much more affordable.

This legislation will offer struggling Fannie Mae and Freddie Mac temporary financial help. The relief for these agencies will come through the Treasury department having unlimited authority to lend money to Fannie and Freddie or purchase their stock should they need to. This help comes with a price though; The Federal Reserve will assume the new role overseeing the companies.

The plan will also spare an estimate 400,000 struggling homeowners from foreclosure. A large majority of these homeowners owe more than the house is worth. Under the new plan they would qualify for a new loan with FHA with much better terms. The participating lenders would have to take huge losses in the payoffs in order for the new loan to be issued. For many in extreme declining markets, this relief comes too late, as the losses will be too high for lenders to absolve.

The most significant highlight of this legislation is the permanent increase in the lending limits to $625,000 for conventional (Fannie and Freddie) and FHA mortgages. It would also allow them to buy and back mortgages 15% higher than the median home price in specific areas.

The plan also includes $15 Billion dollars in tax breaks. There will be a low housing tax credit and a credit of up to $7500 for first time homebuyers for houses purchased between April 9^th, 2008 and July 1^st, 2009.

One of the most noted oppositions to this legislation if from the Conservative Republicans themselves. They criticize the efforts of the government to bail out Fannie Mae and Freddie Mac who enjoyed the profits of the boom era, fighting legislation with their considerable influence and then turn around and depend on the Government when the fail.

Angry Realtors, Extended Closing Dates, Oh My! - Letters from the Field

Wed, 09 Jul 2008 07:52:17 -0500

To set the tone for this blog, I will tell you that below is an actual email to a loan officer on my team. They encountered an issue on a purchase money loan that was well "less than perfect" credit. It was a manual underwrite and most of the people in the transaction were upset to say the least. This is in response to the loan officer telling me that the listing agent has informed her in a NOT so nice way that they are pulling the contract "if it doesn't close tomorrow" because their client has to settle on another home this coming Monday (5 days from now), and they need the HUD from this transaction to settle on the other.

This email is not to point blame, as I feel the true culprit is a total breakdown in communication and proper expectations being set from the get go. I am proud to say that we do not have many of these incidences, but any company that tries to tell you this NEVER happens is probably trying to hide something. I feel it is a good learning ecperience for all of us.

Dear LO,

I guess I am confused. If the seller needs this HUD to close on their loan on Monday of their new house, then how are they able to kill the deal today and not expect delays on that closing. Sounds like ,and I could be wrong, the old Realtor I am pissed and will bluff. If you want to know for sure, just call them and tell them you have no positive confirmation that this will close today, but it did get CTC and that you have advised the lender to kill the loan at the request of the listing agent. See what they tell you then.

I never cease to be amazed at the power of lack of communicaton. They honestly think we are still in the height of a boom and they can just send their client to another lender who will close it in 1 day. Even in that part of SC where the market is still moving, the lending market has still been affected the same way. THEY JUST DON'T GET IT. There are a multitude of people busting their humps to get this file to the table

There are two lessons to be learned here:

Stop messing with the high LTV low credit score manual underwrites. These are the investors that are going to take forever to underwrite a file (they are busy, they have laid off half the staff, they are still advertising that they can get garbage loans closed, their people are SOOOO busy wading through not a chance loans to get to the ones that qualify, .....you get the picture) Unless the loan to value is low and there are some very serious compensating factors, these loans are standing less and less of a chance of getting approved. On a side note, I predicted that manual underwrite would be phased out. With a corporate Giant like Indy Mac going out of business, you will see this happening faster and faster. What I mean is that they revised DU 7.0 so that many tolerable manual underwriting guidelines were built in. MOST lenders have already made the switch that if the credit score is sub 580 that it has to be approve /eligible in DU to get final approval. In a very short period of time you should expect ALL lenders adhering to this policy. (For good reason)

ALWAYS CONTROL THE TRANSACTION BY SETTING THE RIGHT EXPECTATIONS UP FRONT. We are the money people and nobody gets paid without us to provide funding. Work with your Realtors as a team. Do not candy coat things or omit things going on in the process for fear of looking bad. It will usually come back and do just the opposite. DO NOT take a contract for less than 30 days in this credit market. There is just way too much that can go wrong, and people will generally drag their feet on getting you everything that you ask for. It is human nature. It is also a lack of understanding of our process by the borrower.

Example: how many times have you had someone get you the final condition that you have been waiting on for a week? As soon as they get it to you what is their question (99% of the time)? Can we close tomorrow? (or some form of it, right)

This is because when you ask for the final condition you also HAVE to make it clear of what the next steps are.

Example: Now that we have your bank statement it will have to go to underwriting and be reviewed and signed off on. This is generally taking 36-48 hours. This means that there is no reasonable way that we are going to hit our closing date. I need you to call your Realtor and ask them for a 15 day extension and if they have any questions they can call me. Have your Realtor fax that extension to me as soon as they get it so as to avoid any other possible delays. Thanks.

By following these two tips, you will definitely close many more loans and have FAR FEWER angry and disappointed relationships. There is a certain reality that ALL real estate professionals have to get used to ( as much as it sucks) and that is the fact the underwriting guidelines are stricter and files are being looked at much closer these days. This creates longer turn times and MUST be accounted for in the sales cycle. It is that simple.

I hope that these tips help you in your future originating endeavors and as always give me a call if you need anything else to get this file closed.

Tom

Reverse Mortgages: Are they safe for you?

Mon, 23 Jun 2008 11:20:01 -0500

With the recent and DRAMATIC drop in loan volume for many mortgage companies, there is an increased level of interest in the Reverse Mortgage market.

With an aging population there has been a sharp increase in the popularity of the reverse mortgage product. It has allowed over 100,000 "Baby Boomers" that are struggling financially to gain access to their equity and add additional income to their household.

In 2007 seniors took out more than 132,000 reverse mortgages. This number represented a 50% increase over 2006 and a jump of over ten times more than just 5 years ago.

The reason for the recent growth in popularity of these loans is that it allows you to utilize the equity in you home without having to repay it, as long as you are 62 or older, alive, and remain in the home.

Many seniors are finding (or should I say funding) relief by the extra money allowing for help with living expenses, home improvements, travel and many other things that their otherwise fixed incomes could not provide for.

No matter how beneficial these loans are for the seniors that are taking them, the increased demand for Reverse Mortgages is providing for a negative by- product, sure to adversely impact the market permanently., fraud and predatory lending practices.

The high origination fees of these loans are attracting the aggressive and unscrupulous loan officers intent on getting you to take out a reverse mortgage whether you need one or not and may even try to talk you into investing the equity from your home into overprices investment products such as annuities only further adding to the profits for themselves.

It is hard to speculate on how widely used these deceptive sales practices are, and most companies will openly say that they do not condone such conduct. The reality is that in an AARP survey conducted in 2006 (before this major increase in demand), it was reported that 1 out of every 10 reverse mortgage customers was pitched another financial product along with their loan. The two most common products were deferred annuities and long term care policies.

So what is wrong with that? Although on the surface and most certainly throughout the sales presentation, this might make sense, Investing in an annuity with the proceeds of this mortgage very seldom ever makes sense. An annuity is not likely to out perform the interest and fees being charged on the reverse mortgage, not to mention the penalties and fees should you need to access the money from the annuity. (surrender charges can sometimes cost up to 20%).

The issue has raised enough concern to get the attention of the Senate Special Committee on Aging, who held a hearing on this topic in December. An investor alert regarding these practices was issued in March by the Financial Industry Regulatory Authority.

If you or someone you know or care about is considering a Reverse Mortgage, understand that these are beneficial loan products and that they do serve the fundamental benefit of providing seniors with another planning option towards retirement. There are a few safe guards that you can use in order to ensure that you will not get taken to the cleaners.

Consult your "Trusted Advisor"

If you do not already have a relationship with a good mortgage planner, then ask the people you trust financially in your life if they have somebody that they would recommend. This could be your financial planner, your CPA, tax planner, family attorney, etc. In this case ask them if they know of someone who is knowledgeable and understands the ins and outs of reverse mortgages. Also discuss other options and if you truly need to be considering a reverse mortgage. Ask them if they would be willing to have a conference call with you and the mortgage planner to determine a need. This step alone will scare off the most questionable of loan officers. If your mortgage planner is not willing to discuss the planning of this with people you trust, such as financial planner, CPA and Attorneys, use someone else immediately.

Mandatory Counseling

Anyone considering a reverse mortgage is required by the federal government to meet with an unbiased third party reverse mortgage counselor. This MUST take place BEFORE you are asked to pay for an appraisal or incur ANY financial charge whatsoever. If you are asked for ANY money prior to this you should find another more experience or ethical institution to deal with. Be sure to listen to what your counselor is telling you and take notes. You should also feel free to ask as many questions as you like. If you feel rushed, ask your counselor to slow down and take the time with you to be sure you understand things.

All counselors are not created equal. There is a variance in quality of counseling from counselor to counselor. If you are not happy with the counselor your are talking to and just can't seem to get on the same page with them, end the call and request another counselor to perform the session. HUD (Department of Housing and Urban Development) is working on rolling out a new set of standards and will be making it mandatory within this counseling to specifically address the implications of using your loan proceeds to purchase annuities.

If you have specific questions regarding reverse mortgages or any mortgage products, please email questions to tom@eldermortgageteam.com and I will be happy to respond.

Sales Training Blog Is Moving:

Tue, 17 Jun 2008 13:02:49 -0500

I am moving my sales training blog to an outside location in order to utilize this blog for customer related Real Estate Blogs. If you are interested in following this bog I will be happy to give you the new address. In good taste I will not post it here, but do encourage you to email me If you would like the new address to continue to enjoy my training blog. I am sorry for any inconvenience that this has caused and appreciate your patience. Thanks again and I can be contacted through my profile here on active rain.

Selling Strategies - Part 3, No Pain, No Gain

Mon, 19 May 2008 03:05:38 -0500

Welcome back to week 3. The week I would like to call the breakthrough week. If you are like most sales people, you are talking with people and presenting your offers on a regular basis, but you wonder why your conversions are down and you are getting no where.

One of the reasons could be lack of pain, or lack of emotional attachment by your customer. This is what we will focus on this week.

There needs to be several things present for a sale to be made. It is the old acronym

A ttention

I nterest

D ecision

A ction

The step we are focused on this week is the decision step. Once you have their attention and they have generated interest, then what? Most sales people ask the same questions as everyone else:

How many do you want? , Why Are You Buying? , Will You Buy Today? , Ect.

These questions are an ok place to start, but that is where most people leave off. They accept the answers to the questions as the REAL reasons that someone will not make a decision or buy from them. Remember from last week REASONS = EMOTIONS!

The reality is that nobody walks on the lot lest they want to buy. I train a lot of sales people and believe me, if a customer has you on the phone or are in front of you, THEY ARE INTERESTED IN BUYING NOW! This applies to ALL sales. So why aren't they buying from you?

You have to get to the TRUE emotional reason behind why they need your product or service. This is not to save money, or put a deck on the house, or drive a new car, or to own your new medical equipment for their practice. The TRUE reasons are ALWAYS emotion based, plain and simple..

Here is an example played out in Q&A:

Your customer tells you they want to save money,

There is the Rookie sales person's answer: Ok I can save you $500 per month. (No Sale, if you can do it that easy then so must everyone else, right?)

Then There is the Experienced Closer's Answer:

Q: How much were you hoping to save?

A: At least $500

Q: Why is it important for you to save $500?

A: It would be nice

Q: What would it do for you?

A :give us some breathing room

Q: Are things tight?

A: Yes

Q: HOW DOES THAT MAKE YOU FEEL?

A: frustrated, panicked, sad, and depressed

Q: Would $500 make this sadness go away?

A : Yes, it would give us room

Q: If I could give you $500 or more per month, would we be working together?

A : Yes

This is a simple example of getting to the pain and solving the emotional problem. If you are selling anything, the most important question to ask is some version of "How Does That Make You Feel?" There is an emotional connection between the buyer and the product. If YOU get to that emotion and are able to provide a clear path to the solution (make sure YOU are the path), then you will start closing more deals.

Stay tuned, next week we will cover the Traits of a Successful Sales Person.

Have a great week and Happy Selling.

© 2008 Tom Elder, Tom Elder is available, on a limited basis for one on one and group sales training. To contact Tom directly, email him at telder@tomelder.com. More information is available at TomElder.com

Finding Balance and My Motivation

Fri, 16 May 2008 13:43:36 -0500

I have and always will possess a desire to work all of the time. It fundamentally is how I am made up and fighting it would be futile. Some people like sports and have hobbies or whatever. I enjoy building companies and marketing and well, just about anything that has to do with business. That is my hobby.

About three years ago my life changed dramatically for the better. My son was born and he has been the best thing ever for me. They say children are miracles and that is true of my son in so many different ways.

He is the red headed reason that I don't work weekends anymore and the reason for having a quitting time now (even though I sneak in that couple of extra hours after he goes to bed ). He is the reason for balance in my life.

I usually blog and rant about a little of this and a little of that, but today for a change I am going to exercise balance and simply say thank you to my wonderful son for coming into my life and allowing me the joy of being his father. HE is my motivation in life and will ALWAYS win over work.

Everyone have a great weekend and let YOUR motivation know how special they are from time to time.

Hey, Send Your Crap Somewhere Else

Wed, 14 May 2008 16:21:38 -0500

For those of you that work at real estate brokerages that require loan volume to be steered towards in house lending and title, make sure you are aware of the effects of what you are doing.

Self Employed? Not hardly!

You are the cheapest advertising and marketing employee (lead generator) that your broker has. If you are being required to send your clients to in- house lending or title, then more than likely either that broker or company has an ABA (Affiliated Business Arrangement). This is basically an agreement that allows for profits from the mortgage and title companies to be paid to the real estate brokerage from the loans that are closed. YOU ARE THEIR LEAD COMPANY.

That's ok; everyone has the right to make profit, right?

If making a profit at the expense of your client and negating your efforts to build a database of satisfied customers is ok with you then it is ok with me too. (not) Wonder why some clients are never heard from again?

Try on the fact that after they closed, they were told by their friends, family or credit union, that the 7.5% interest rate that they got with a 740 credit score and the EXTRA $2000.00 in lending and title fees were excessive compared to what they should have paid. Why is that? How could that be? Their realtor, who took all that time to build a relationship with them and who they trusted, referred these companies to do the work. These companies have to increase the cost of the loan to your client so they can pay the additional fees to the real estate broker and maintain their profitability in the loan.

In my research with people, when they are asked, "what is the reason that you would return to a professional to use their service again ?" The top answer is always trust. Guess what? YOU just lost their trust! Sorry you only get one shot!

My advice would be, as it always has been, to build a network of professionals that you can refer your clients to, that you KNOW (WITHOUT A DOUBT) , will take care of them just like you would. Don't look for the guy who is going to pay you the most for the referral, or the one that will send you a deal for a deal or even the prettiest one out there. IF YOUR CLIENT'S RECEIVE THE BEST EXPERIENCE FROM SOMEONE YOU REFERRED THEM TO, THEY WILL TRUST YOU and they will do business with you again. They will also refer their friends to you and your network. The network will in turn get them back to you when it is time.

Don't abuse a relationship with a loan or title professional who has the experience to get your tough deals done. They are helping you, so they can build a relationship with you. If you have no intentions of EVER sending them your "easy" business, then I say send your CRAP somewhere else.

IF YOU ARE SERIOUS ABOUT BUILDING A BOOK OF BUSINESS, THEN START DOING WHAT IS RIGHT BY YOUR CLIENT FIRST. The money will follow and keep coming back again.

Happy Selling and treat those customers like the gold that they are. (Fact: It takes far less money to keep a customer than to find a new one).

Selling Strategies - Part 2, Handling Objections Like a Pro

Mon, 12 May 2008 13:19:53 -0500

Overcoming objections is far easier than you might imagine and I can boil down to 4 easy steps for you.

Hear the Objection
Repeat the objection back
Ask questions to get to the "Pain" of the objection.
Give solution to the pain.

Let me address each of these steps briefly:

Hear objections: Whenever an objection occurs in the sales process, don't let it catch you off guard and get you flustered. ALWAYS take a few seconds after the objection to absorb what you have just heard. In some cases the client will actually start talking again and give you further insight into what the true "pain" of the sale is.

Repeat the objection back: after a few seconds, pause repeat the objection back to your customer and make sure you truly understand what they are telling you. Ex. "So what you are telling me is that __________". By doing this you are accomplishing several things. First your customer feels that you care enough to make sure you understand them and you are giving them the opportunity to add something or correct you if you are misunderstanding. This is a big step in building the right rapport with your customers.

Ask questions to get to the "Pain" of the objection: An objection is never as it seems. If someone is telling you that the payment is too high, it is not the payment that is keeping them from buying; it is the true emotion behind the payment being too high that is. This is called the pain. IF YOU ARE NOT GETTING TO THIS EMOTIONAL ATTACHMENT, YOU WILL RARELY OVERCOME THE OBJECTION. You must ask questions to get to the "pain" EVERY TIME THERE IS AN OBJECTION. (We will cover this more in depth next week in Part 3).

PAIN IS NOT A REASON IT IS AN EMOTION!

Give solution to the pain: This is where the objection is overcome, or the sale is lost. Once you determine what the emotional "pain" is, you MUST link yourself to the solution. If the pain is sadness, then you must be the answer for happiness. If you can't provide this solution, then you are not going to close the deal and it is time to move on.

Keep practicing these steps on every sale this week and notice your conversions start to increase.

Tune In Next Week: We are going to cover the way to get to the true "pain" of a customer and how to use that to leverage you over the top and win the sale.

If you would like to receive these FREE tips in your email inbox CLICK HERE to subscribe now for FREE.

Happy Selling and have a great week!

Selling Strategies -Part 1, Are we Listening to our Clients?

Mon, 05 May 2008 14:26:22 -0500

This blog will be a continuing series of short informational excerpts from my sales training arsenal designed to help you SELL MORE and have MORE HAPPY CLIENTS.

In my training classes and seminars I am often asked about how to handle the many client objections that come up in the sales process. The answer is very simple, ask questions, listen to the answers, and qualify upfront. The sales profession is not about making EVERYONE want to buy your product through some secret voodoo magic. It is about finding a fit between the right client and the right product quickly.

You will see the most experienced salespeople in any industry flow through sales almost seamlessly and most people new to the sales game often wonder, in amazement, about what secret mystical things that the veteran is saying to get all these people to buy his product.

I am going to share the HUGE MAGICAL SECRET of the TOP PRODUCING sales people.

Ready?

There is no magic and there is no secret J

Let's first talk about handling objections. Why is it that veteran sales people get far less objections than a rookie? One of the reasons is QUALIFYING their client. A veteran appreciates EVERY relationship they can nurture, but understands that not every person will be a good fit for their product or service. Qualifying falls under the 80/20 rule: Ask questions for 20% of the time and listen to your client answer for the other 80%. If you listen to your clients and potential buyers they WILL give you the information you need to close the sale or move on. In order to succeed at a career in sales, you MUST get good at qualifying and quickly determining if there is a fit for this person and your product or service.

Here are some examples of qualifying questions.

•· "How long have you been looking for a ________?"

•· "How has the search gone so far?. "

•· "What have you done up to this point to accomplish your goal? "

•· "What EXACTLY are you looking for? "

•· "Have you had any luck finding it? "

•· "Does _______have everything you are looking for? "

I think you get the point. Qualifying questions are those that find out quickly if the product/service you are selling and the potential buyer are a great fit. If they are not, you can part ways and let that person off the hook. How does this benefit you? By getting to the point quickly and parting ways, you take any UNECCESSARY pressure off of the potential buyer. More than likely they will appreciate that and send you referrals of those that might be qualified. Just because they liked the way you treated them. Getting to the point quickly with those that are qualified will allow you to focus your sales activities on them. After all they are the clients that are most interested and are a great fit for your product or service.

The next time we will talk about a sure fire process to overcome objections like a pro.

Happy selling and remember "Coffee is for Closers" (Glengarry, Glen Ross)

Commercial Mortgages - Headed for a Meltdown?

Mon, 31 Mar 2008 23:58:56 -0500

With the steady decline and continued erosion of residential mortgage lending guidelines, the question lingers- will the commercial mortgage market follow?

The answer would appear to be "yes" to the average American seeing the economy screeching to a standstill. But as Mr. Miagy said in the Karate Kid, "Things are not always as they appear".

Commercial mortgages are not likely to see the crash that the residential markets have seen. There are several reasons for this.

Historically commercial mortgages have been approved with a much higher level of diligence. Low document loans and stated loans are the exception as opposed to the rule. The borrowers have had to have much higher credit scores and combined with other factors have demonstrated a much higher likelihood to repay their loans. This has been proven through the commercial mortgage default rates that were just reported for 2007. These reported figures show the numbers at only a fraction of the current residential rates and posting at record commercial lows.

Another reason for the stability in the commercial mortgage market is the fact that these mortgages are secured with income producing properties and even though the current real estate market may be declining, these properties will still produce sufficient cash flow for the owners. The approval process makes sure that these properties have a sufficient NOI (Net Operating Income) to sustain the property.

Lastly, the loan to values have been, and will remain, much lower than those allowed in residential real estate. This allows for absorption of the declining market with equity already invested. Should the bank have to foreclose on the property, there is the ability to recoup the bulk of the mortgage balance through a sale, thus maintaining investor confidence in making the lower loan to value mortgages associated with commercial lending.

With the economy slowing to a grinding halt we have and will continue to see a decrease in new commercial construction. There is currently an excess of vacant commercial space in most US markets due to failing businesses and downsizing of major corporations. This vacancy rate will continue to grow as the US dollar weakens and inflation mounts. This will most certainly slow the growth of the new commercial construction significantly over the next 24 to 36 months.

This economic downturn will also open the door for new growth to emerge in commercial refinance applications. Many businesses will have to utilize the equity that they have built to weather the storm and make improvements to remain competitive. I am already seeing a consistent increase in the number of business owners that are utilizing the equity in their commercial properties to better position themselves to ride the rough waters. These are folks who have been through this cycle before at least once.

I would love to hear your comments and opinions on this topic. To get the latest on Maryland Commercial Mortgages, subscribe to my weekly blog or for commercial mortgage questions, you can contact me directly through the email me function of this blog.

Mortgage Lenders Keep De-Stimulus Plan Alive

Wed, 05 Mar 2008 17:23:10 -0600

At a time when the economy needs a shot in the arm to revive, it would seem that the government and big mortgage lending seem to be at odds. As the "mortgage meltdown" continues to grow, lenders are continuing to tighten guidelines at a record pace.

As fast as the government can find ways to relax FHA and conforming guidelines and lending limits, the big lenders are finding ways to protect their interest and tighten the things they have control over. The net effect: a continued de-stimulation of the housing market.

The Government wants lenders (and their shareholders) to continue to write down the problem. The lenders want the government to step in and bail them out. Neither side is moving nor is the housing market, which finds itself in a stalemate.

Some of the rumored changes that lenders have in the works, which will negate the intended effect of these governmental "Stimulus Plan" changes, include tiered pricing on loans above $417,000 for instance.

The government, as part of the economic Stimulus plan, approved the increasing of the lending limits (TBD on March 14^th) above the former conforming limit of $417,000. Initially it was thought that a large number of people would benefit from the lower conforming interest rates. WRONG again if the lenders have their way. They have been kicking around the idea of having tiered conforming pricing (NOT JUMBO) on loans between $417k and the new conforming limit. This would significantly reduce the benefits of the higher limits.

It would look something like this:

Today's Interest Rates from You Friendly "Not Jumbo" Lender: (this information is for demonstration purposes only and not an indication of available rates) (Fun Legal stuff)

Conforming 30 Year Fixed Rates

Up to 417,000 5.875%

"Not Jumbo Tier 1 up to $450,000: 6.250%

"Not Jumbo Tier 2 up to $500,000: 6.500%

"Not Jumbo Tier 3 up to $550,000: 6.750%

And then there would be "Real" JUMBO loans: 6.875%

Another example of guideline changes to counteract looser lending guideline is FHA loans in general. FHA Loans have NOT been credit score driven in the past. WELL, now YOUR CREDIT SCORES MATTER. If you have below a 580 credit score you will now be penalized by higher interest rates than everyone else. Sounds obvious right? Historically a borrower's credit score did not matter, and as long as they were able to prove the ability to repay the loan they got the FHA rate of the day, the same as everyone else. Not anymore.

Banks have a right (a duty in fact) to protect their investors interest and our government has the onerous task of trying to keep our sinking economy afloat. Until the interests of these two parties are aligned, we will not see notable improvement in the housing sector of our economy.

The entire housing market was having a lot of fun in the frenzy of the last boom and the entire US economy benefited from the" HAPPY DAYS". Now it seems like a battle of who should pay to clean up the mess after the party is over.

You need a reputable and trusted advisor in the mortgage business to help you navigate the rough waters ahead. If you or someone you know has any question you can contact me anytime (telder@tomelder.com) and I would be happy to assist you. You can also visit our Virtual Loan Department Online at http://www.tomelder.com/, where you will find many useful resources.

STAY TUNED FOR NEXT WEEK"S RELEASE OF THE NEW MORTGAGE LENDING LIMITS. FRIDAY THE 14TH, 2008 * SUBSCRIBE TO THIS BLOG NOW SO YOU DON"T MISS IT!

EXTRA!, EXTRA! Last Mortgage Lender Goes Bust! (Humor)

Wed, 05 Mar 2008 12:11:57 -0600

AS I sit here and receive another URGENT BULLETIN from yet another hurting mortgage lending institution (Chase Bank) about discontinuing the A Minus product line as of today, I realize this is one of a dozen or so that I have received in the last week or two. I allow myself to drift off into the daydream land of the future...................

The Headline reads:

Extra! Extra! Last Mortgage Lenders Go Bust!

The article goes on to say that the the Government has instituted an emergency lending institution going by the name of The New World Order Of Mortgage Lending!

____________________________________________________________________

Below are their guidelines:

NEW WORLD ORDER OF MORTGAGE LENDING GUIDELINES

Max LTV (Purchase or Refinance) = 75%

Minimum Credit Score= 780+

Maximum DTI: 20%/32%

Minimum Seasoning: 5 years

Income Documentation: FULL DOC W-2 ONLY

Must provide 10 years previous w-2's and written VOE's from ALL employers
If there is an employment gap of more than 12 hours you must provide a detailed letter of explanation to be approved by our senior board of directors prior to file submission.

Excluded Professions/ Industries:

Mortgage, real estate, banking, stock broker, insurance agent, appraiser, retail employee, restaurant worker, day laborer, or any other profession determine by our risk assessment department to be way too volatile of an industry. (We reserve the right to refuse any profession/industry based on nothing)

Occupancy Types: Owner Occupied Primary Residence Only

Approved Property Types: SFD homes with 1 acre or more of land.

Appraiser experience: 5 years or more licensed in that state and living within 2 miles of the property.

Appraisal conditions:

Must provide a minimum of 12 comps within .25 miles of the subject property that have sold in the last 3 months.
Must submit a minimum of 2 appraisals by appraisers who fit the above appraiser guideline.
Appraisal subject to review by s senior appraisal committee of not less that 12 licensed appraisers who must all be present and have a secret vote on whether to approve the appraisal or not. This secret vote must then be voted on by a separate and independent panel of 5 appraisers who have 55 years of appraising experience. All 5 members must be physically present (and alive) to give final appraisal approval.

All conditions must be sent in triplicate (all originals please) and in three separate submission packages (due to a high level of misplaced documents). Please reference the loan number on every sheet of paper submitted. Electronic submissions will not longer be accepted, as this method is way too efficient and would not allow us to lose stuff and delay the loan closing.

If the loan package is not submitted in exactly the manner listed above AND on Tuesday before 1pm and after 12:58pm, the entire package (all three of them). This will be sent via international ground and will be getting sent back from India, so please allow 4-6 weeks for return delivery.

We look forward to a lasting relationship with you and appreciate you thinking of us.

________________________________________________________________________________________________________

As I clicked my ruby red loafers 3 times and said "There's no place like home", I woke up only to realized that I have recieved 3 more bulletins of discontinued loan products in that short period of time.

Here a Stimulus, There a Stimulus, Everywhere a Stimulus, Stimulus

Wed, 27 Feb 2008 17:07:11 -0600

To be frank (or T om as in this case), if I hear the word "Stimulus" one more time I might very well run from my office completely naked in hopes of being taken to a home for the criminally insane and placed in a padded room with no contact to the outside or the New World Order of The Stimulus.

I exaggerate a little, but I am sure that you have all been overwhelmed with Stimulus this and Stimulus that in the media over the last several weeks since President Bush has signed the "Original" Stimulus plan of 2008.

Since then there has been one state, county, and local government after another rolling out their own "Stimulus Plans" for 2008. We are seeing everything from tax break stimulus for businesses, road repair stimulus, school aid stimulus, job stimulus, wage stimulus to everything in between that needs a stimulus. Everyone has a "better" "Stimulus Plan" than the last one that came out. They have even proposed a 2^nd Stimulus Plan, before the first one has even taken effect!

I see this frantic scrambling as a last ditch effort to right the trembling economy that just 3 months ago had no visible signs of recession according to all the reported numbers.

What does all of this stimulus mean?

In the months to come the true effects of these Stimulus plans will truly be seen. In the here and now, however, this mad dash to stimulus everything not bolted down has caused a tremendous amount of confusion and a loss of America's confidence in knowing that the economy is under control.

From the mortgage industry end, the new lending limit deadline is fast approaching, March 14^th. These new limits would increase the conforming loan limits significantly in some areas. As I said in my previous writings (on this blog) all of the limits that are being talked about out there are complete speculation. The true limits will be known by no later than March 14^th. I will keep my readers up to date as the Stimulus news continues to roll out. Feel free to subscribe to my blog for the latest information.

In the mean time I am calling for each and every one of you to implement your own Stimulus Package. Have some fun with it. I challenge you to use the word Stimulus at least once in every conversation that you have. You can even get together with some friends and sign into effect "The 2008 Car Pooling Stimulus Act" you can try to encourage more minivan drivers and Huge Gas guzzling SUV drivers to get involved so they can put 14 people in there at a time. Or Maybe the "Lunch Buffet Stimulus Plan" is more your speed. Whatever works for you? Have some fun and get creative. The Government is why not you?

New Mortgage Limits Causing Inaction through Confusion. 2-18-08

Mon, 18 Feb 2008 12:13:45 -0600

Is the Economic Stimulus Bill (H.R. 5140) that President Bush signed into existence last week temporarily un-stimulating the jumbo housing market? The shotgun approach to implementing this new legislation has left many hanging in limbo.

The new legislation will raise the conforming mortgage loan limits up from the $417,000 to as much as $729,750 in high cost housing markets. Uncertainty rings out in the country as consumers are overloaded with contradicting news on the subject. One client told us "I spoke with [my current lender] and they can't help because the information has not been disseminated to the front lines". Lack of information and mis-information have led to an even further temporary slowdown in the higher end housing market as people are not sure when they will be able to get the lower conforming rates. Even consumers that are in escrow on new purchases, affected by the new limits, are attempting to get their contracts extended. These people know that refinancing, when the new limits take effect, will be costly and difficult.

These delays and extensions do come with their own inherent risks. Many of those that delay could see interest rates rise which would negate any potential savings and lenders could continue to tighten up on lending guidelines. This would leave many people that would no longer qualify for a loan.

The Stimulus bill has HUD (Department of Housing and Urban Development) on a deadline of March 14^th to come up with a published list of new conforming loan limits. The new limits are expected to be based on the median home price in the county where the property is located, except for properties that lie in multi-county metropolitan areas. In those areas the limits would be set to the highest cost county.

What should you do now? If you are thinking about refinancing a loan that will be affected by these new limits, It may be worth waiting and see where things go. If you are in the process of purchasing a home that is affected by this bill; you will want to check with your team of real estate professionals to look at your options and see what the best course of action will be for you.

The news and speculation will continue to be confusing and in some cases contradicting. As with anything, time will tell. Until March 14^th all that anyone can do is to speculate where the new limits will be. I will continue to post updates here on this topic. Comments are always welcome.

If you are interested in following HR 4150 Stimulus Bill information, regarding mortgage lending limits, as it unfolds, then please subscribe to this blog or email me at telder@tomelder.com requesting to receive updates. HUD Maryland Bush Bailout -see more about me here. Call Toll Free 1-800-431-8348 x701

President Bush Signs Stimulus Bill to Increase Mortgage Limits- 2/12/08

Wed, 13 Feb 2008 00:38:05 -0600

The Mortgage Meltdown- spells savings for many. We have all seen it on the news and read about it in just about any newspaper you pick up. It is "The Mortgage Meltdown" and unless you have been living under a rock you know it is ever present in today's financial world.

By all news accounts the sky is falling and the end is near in the housing market. This is a sad reality for many Americans who took out risky loan products during the "boom".

For many Americans, though, the meltdown may have a much more positive effect, an effect that will come in the form of savings. President Bush signed the Stimulus Bill today (Wednesday 2/12/08). There are several pieces to this legislation and this article will focus on the mortgage portion that will allow millions of Americans to refinance their current mortgage and save thousands of dollars in interest.

The package temporarily raises the maximum size of mortgages that government-sponsored lending companies Fannie Mae and Freddie Mac can purchase and market as securities, from $417,000 to as high as $729,750 in expensive parts of the country such as New York and California.

The Bill will also make very similar changes to FHA loans. FHA loans are government insured loans to borrowers with lower credit profiles.

This legislation will allow for people who have taken out Jumbo loans or very expensive 80/20 loans over the last five years to be able to refinance into one 30 year fixed loan within the conforming loan limits. The rates on these loans will be anywhere from 1-3% below what the borrowers are currently paying, meaning huge savings every month on the mortgage payment. The FHA portion will allow for those with less than perfect credit to take advantage of these new limits as well. The First time homebuyer will also benefit from the higher limits, especially in the higher cost housing markets.

You won't want to wait around to see if rates drop again and play the gambling game with the market, though, these increased limits are only proposed through the end of 2008. This means a 4 to 6 month window of opportunity that could be gone forever, if it is not voted as a permanent change.

Even though the President has given the final ok, it is likely to be several months before we see the actual increases. The industry analysts will need to study the long term effects of loans and default rates above the current 417,000 conforming limit. The investors will also need to come up with a plan of how to package these loans for sale on the secondary markets.

With the anticipation of this Bill and the record low interest rates, we have already seen an increase in purchase contracts and refinance applications in our area.

People are already starting to line up to get their application in for when these new limits officially take effect. I encourage you to contact us now if you want to take advantage of any of these programs. We are currently getting client's information so we can move their applications through quickly to closing once the limits increase. You can apply online at http://www.tomelder.com/. Or call toll free 1-800-431-8348 x 701 Make sure you specify that you are applying for these programs.

These changes are viewed as overall positive by the experts and the President and Congress want to be seen as doing something about the current "housing crisis" in an ever watchful election year.

Don't miss your window of opportunity to turn the tables on the "Mortgage Meltdown" and come out a winner.

I am available on a limited basis to speak on this and other mortgage related topic. Feel free to contact me.