Sell While You Can, Bank Your Equity. Ride Out the Storm as a RENTER - 08/30/07 09:51 AM
I own 400 shares of Intel stock. On August 31, 2000, this stock reached its all time high: $74.87 a share. Today it trades at around $25 a share. Do I wish someone would have told me to SELL THAT STOCK while the value was still this high (and then buy it back when it plummeted to twenty bucks a share?)  Is it possible we may look back some day and regret NOT CAPTURING THE EQUITY WE HAVE IN OUR HOUSES NOW? Should we all sell our real estate and wait out the storm as (gulp!) RENTERS??????
Yesterday, I was invited to a workshop being given by a respected colleague of … (15 comments)

Far Flung Suburbs and Commuting: An Idea Going BUST - 08/27/07 11:08 AM
Within the past decade, thousands of homeowners made a decision that they have come to regret:Instead of buying expensive real estate near their jobs (and modest, older homes) they were lured to bigger, much cheaper new homes (McMansions) in outlying areas. This required the bread winner to spend several hours each day COMMUTING. Was it worth it? Clearly, many have decided the answer is NO.
If you look at the latest foreclosure rates, some of the highest concentrations are in these newer outlying neighborhoods, where there are parks, schools, a small shopping center for essentials, and row after row of similar houses, painted beige and gray. Nice places to raise … (49 comments)

One Brown Eye, One Blue Eye, and the Mortgage Still Blew Up - 08/23/07 08:22 PM

Just when we found the one buyer the bank would approve, you know, that guy with one blue eye, one brown eye, an 850 score and $300,000 down? Yeah, that guy. Guess what? The bank takes one look at the appraisal (of a property that appears to be a give-away price) and slashes it by $100,000.
I guess mortgage lenders have a different idea of what UNDER MARKET is. Can you say ULTRA CONSERVATIVE????? Read: We're still scared stiff the value of this property will go down even more. So what if it sold for more than this 2 years ago? So what if someone is willing to … (38 comments)

Mortgage Lenders Never Considered Anyone Would Be UPSIDE DOWN - 08/22/07 12:09 PM

There is a place where being upside down in a loan is the NORM. It doesn't create a crisis. Lenders don't close their doors because of it. Borrowers accept it, and still willingly buy. Where is this place? It is none other than your SECOND biggest asset: Your car. Your truck. Your SUV. That big hunk of steel that plummets in value the minute you drive it over the curb at the dealership. Even if you make a down payment, you are probably going to be UPSIDE DOWN.
It is very hard to pay down a car loan faster than that car depreciates.
There a very … (23 comments)

Mortgage Advice: Keep Your Big Fat Assets to Yourself - 08/20/07 11:17 AM
 
I have clients who are asset rich. They want to tell me about jewels, gun collections, vehicles, boats, side businesses, land, and secret cash. They want me to write this on their credit application so the lender will feel all warm and fuzzy about the loan application. No, no, NO!  Never, ever document more than you absolutely positively need to.
I always recommend to my clients that assets beyond what the bank will require SHOULD NOT BE DISCLOSED. Here's why:
Your assets should remain privateDisclosure of these assets will not enhance your chances of approval. In fact, they could open the … (5 comments)

Why A Rate Drop Won't Save the Real Estate Market - 08/16/07 06:10 PM

Let me get straight to the point: It isn't about RATES. Rates could go MUCH LOWER, but if no one can MEET THE REQUIREMENTS to buy or refinance a house, it just doesn't matter. What will drag real estate down in the near future is not getting better and won't get better for a long time: the ability of borrowers to qualify for a real estate loan.
Remember the potato story? One farmer is selling potatoes for 5 cents a pound, but he doesn't have any potatoes. The other farmer is selling potatoes for a quarter a pound, and has lots of potatoes. When … (19 comments)

Wecome to Stated Loan Rehab (How to Document Your Income) Part 1 - 08/13/07 12:11 PM
 
Okay, I know for sure there are mortgages out there that need surgery. There are credit scores that need to be diagnosed. And some of you wish I could prescribe a remedy for your adjustable rate loan. But the DOC in FULL DOC means something else. Heads up, home buyers, refinancers and investors. Welcome to the brave new world of FULL DOC (short for fully documenting your income in order to get a loan.)
It ain't pretty.                                                                                                     
 For those of you that have become accustomed to simply riding along on your good scores instead of explaining to the underwriter exactly how you intend to … (3 comments)

Outsmart the Market Mentality and Emerge A WINNER - 08/11/07 03:35 PM

Market mentality is an interesting thing. In today's Internet era, it moves as fast as wildfire and seems to grip our brains and cripple our thinking. It explains why very few people are able to buy low and sell high. With very little effort, it is easy NOW for all of us to look back on the recent real estate boom, and see it for what it was: an out of control feeding frenzy.
But it wasn't so easy when we were in the middle of it. You see, the tendency when you are living the market mentality is to think of it as "NORMAL".  Clarity … (13 comments)

Jumbo, Please Come Home - 08/10/07 09:55 AM
 
Out here where prices are high, and there is still competition to buy $1.5 million digs in San Francisco, we're begging: Jumbo, will you please come home?
Somehow or other, JUMBO got swept up in the whole subprime mess, and is now MISSING. Gosh darn it, what did JUMBO DO WRONG?
JUMBO isn't one of those nasty subprime loans, or some kind of alternative financing.  JUMBO is just a regular old loan that is used when houses need loans of over $417,000. WHICH COVERS A HELLUVA LOTTA HOUSES here in COASTAL CALIFORNIA.
Oh, we mortgage brokers see how you banks are offering up what you call JUMBO. But … (5 comments)

Equityline Lenders Seize the Opportunity to Slash Limits and Demand Pay Off - 08/09/07 03:53 PM

As borrowers flock to refinance out of adjustable rate mortgages (before any further mayhem in the mortgage industry), we are seeing a NEW ISSUE that is causing loans to fall apart: equitylines that are having limits slashed, or requiring borrowers to pay them off.
How can they do this, and what does an equityline have to do with a refinance of a first mortgage? EVERYTHING. By refinancing your first mortgage, you give the holder of any second mortgage the ability to change their terms, or demand you pay it off. Unless the second lender gives you permission to keep the second loan (equityline) in … (1 comments)

The LOVE/HATE Relationship of Husbands and Wives that Work Together - 08/09/07 01:29 AM
 
Husbands and wives who work together, please confess: How in hellfire do you do this? I was always the boss's pet, and a shining star wherever I worked. That was until I landed in my husband's office where I was demoted all the way down to the lowest position in the company: "the boss's wife".
In my opinion, there is only one good thing about being married to your business partner and that is JOB SECURITY. That's right, you can't get fired, but you'll sure FEEL fired up about 99% of the time. 
It became clear very quickly that we had different styles of working. He likes details, I see the big … (6 comments)

A Day In the Life of a Mortgage Crisis (As panic and tumoil take hold) - 08/06/07 07:52 PM

A sampling of E-mails, all from different lenders, to this California mortgage broker on August 6, 2007, (Black Monday?) Word of the day: TURMOIL
10:03 AM              "Please note that our rates have worsened today." (RATES ARE GOING UP)
11:52 AM              (Subject line reads "This is SERIOUS") "As many of you may now know, another lender has imploded, Agegis! The industry is going through a major transition with many investors backing out on a daily basis, leaving borrowers without financing options." (ANOTHER ONE BITES THE DUST)
12:35 PM              "Effective immediately we are implementing the following guideline changes:  Maximum loan to value/combined loan to value on all doc types … (6 comments)

Mortgage Crisis: An Unprecedented Chain Reaction is Bringing Real Estate to Its Knees - 08/04/07 10:31 AM
 
As summer has worn on, and with very little fanfare, a crisis has been developing in the mortgage industry that will CHANGE THE REAL ESTATE INDUSTRY FOREVER. This is far more than simply "the summer of discontent" for loan officers. It is imperative that all of us understand these developments and what they mean to our business and the United States economy as a whole. Here is a synopsis, along with how I expect this to play out.
 What is Happening?
With few exceptions, the mortgage market has evolved to become almost entirely dependent on the saleability of loans through secondary markets comprised of Wall Street based securitization … (26 comments)

Buy Real Estate NOW: 5 Keys to Taking Advantage of a Down Market - 08/03/07 11:42 AM

Just when you became convinced prices were low enough to buy some real estate, along comes the mortgage meltdown. No more 100% financing. Highly restricted stated income. Higher rates than last year. Bad things happening to people with adjustable rate mortgages. Stop waiting. Now is the perfect time (while everyone else is trying to figure out what to do) to snag yourself a LOW PRICED HOUSE and a GREAT MORTGAGE.
DO NOT MISS THIS WINDOW OF OPPORTUNITY. They don't come around that often, so try to gain some perspective and see the forest, instead of the trees. You have the luxury of TIME that … (5 comments)

A Big Fat "I TOLD YOU SO"...Why Stated Loans are Nearly Extinct - 08/01/07 10:35 AM
 
"LOOK FOR STATED INCOME LOANS TO SALARIED BORROWERS TO BE SEVERELY RESTRICTED OR ELIMINATED."
The above statement was written in my blog on June 1, 2007. Here we are on August 1, and as any mortgage broker will tell you, the above statement has come true in a big way. Stated income, so casually used by the mortgage industry (especially in California and other high priced areas) has become the scapegoat for all the ills of the mortgage industry, and is pretty much extinct for salaried borrowers. Restrictions are much tougher for self employed borrowers, and stated income loans could disappear altogether.
Just like … (45 comments)