real estate commentary: Freezing Adjustable Rates is Like Rent Control: A Disaster Waiting to Happen - 12/03/07 05:51 AM
Hey, I have an idea. Let's freeze all those adjustable rate mortgages for seven years at those low rates we had 2 years ago. Don't you agree those people "deserve" to keep their lower payment? Don't you think the lending industry somehow stuck it to those poor souls and "deserves" to be punished? Wouldn't the whole world just be a nicer place if we made this whole mortgage mess JUST GO AWAY?
Well, that's what the politicians want you to believe, anyway. Let's tinker until we get it right. Why wait for the free market to take care of things? People are … (73 comments)

real estate commentary: The Single Most Important Thing When Shopping for a Mortgage (No, It Isn't the RATE) - 11/30/07 02:25 AM
Tomorrow is December, a month dedicated to the great American sport of SHOPPING. Yet even the most confident super-shoppers, the ones who know every angle and tactic to snag the best deals, crumple and hide when it comes to shopping for a mortgage. Either that, or they simply revert to something that gives them the most comfort: shopping for the lowest rate.
I understand that "RATE" is a number, it is measurable (a 5.99% mortgage MUST be better than one that is 6.25%, right?), and therefore rate shopping brings a certain level of comfort. Well, here's the scoop: you can shop till you drop, but comparing mortgage rates by looking … (10 comments)

real estate commentary: Easy Rider: Will the Real Subprime Please Stand Up? - 11/25/07 02:05 AM
After attending my first round of holiday parties this week I realized it isn't just us real estate geeks that have the mortgage crisis on our minds. People used to run the other way when I said I was in the car business. Now they seek me out with the following question: "What about this subprime mess?"
**Sigh** Can't a girl have a pinot grigio and a bite of the cheese log without having to explain the mortgage mess? (Answer: yes, by listening to their opinion and taking mental notes for next blog)...continue sipping pinot and nodding. They may need to vent and could care less … (6 comments)

real estate commentary: Here's A Concept: Let's Just Do Nothing About the Mortgage Crisis - 11/24/07 05:15 AM
Inspired by the discussion taking place about the current mortgage/foreclosure crisis, I pose the following question: What if we just did nothing? That's right. Nada. Zip. Zilch.
No government intervention. Stop playing the blame game...   (what does it matter?) What would happen if we just plain old sat back and let the market take care of the problem?
Oh, boy. What a concept.
Let's see. Has anyone thought about the fact that when a house goes into foreclosure something else happens BESIDES the borrower losing his home? That's right, the lender loses his shirt (read: loses money big time). Have we forgotten what the "short" … (39 comments)

real estate commentary: The Secret to Better Rates NOW: Divide And Conquer - 11/15/07 03:05 AM

Mortgage brokers have been the whipping boys of the lending industry this year. Ouch, still stinging, still getting bad press. We're battered, we're bruised, but guess what? The real estate world needs smart, creative mortgage brokers more than they ever did before.
Why? Because putting loans together in a way that gets the BEST LOAN for the borrower requires thinking outside the proverbial BOX these days. What has changed?
The difference in a jumbo loan ($417,000 and above) and a conforming loan is much greaterLenders place limits on the amounts they want to loan on first loansEvery aspect of a loan is subject to much tougher scrutiny from appraisals to credit … (6 comments)

real estate commentary: Is The Mortgage Crisis OVER? Or Are the Buyers Just OVER IT? - 11/13/07 12:03 PM
Here come the buyers. They have lurked in the shadows all year while the headlines screamed "MORTGAGE CRISIS". Mind, you, they have no idea WHAT a mortgage crisis is, but this much is clear:   Who wants to buy a house (which means getting a mortgage)  in the middle of a crisis?   Did "The Mortgage Crisis" keep buyers from buying houses? Absolutely. It scared them off, plain and simple.
How do you think the mortgage crisis sounded to the average potential homebuyer? How about this: Blah, blah, blah, FORECLOSURE. Blah, blah, blah, VALUES DOWN. Blah, blah blah, NO MORE GOOD LOANS.  Okay, that sounds like a … (8 comments)

real estate commentary: Buy Here, Finance Here, At Your Own Risk - 11/06/07 02:44 PM
In response to the discussion about Realtors being "encouraged" to use their affiliated lender, I would ask this: What do you think happens in the Toyota dealership when you are ushered over to the finance department and walk out with a Toyota Motor Credit loan or lease? That's right, you have just been referred to the "affiliated lender". Does it work to add profit to the dealership? Of course...especially since you are in an altered state of mind from being under the influence of new car smell.  Is it the best thing for the consumer? Not by a long shot. 
"Buy here, … (70 comments)

real estate commentary: Desparately Seeking Thanksgiving - 11/04/07 04:26 AM
As I closed up the Sunday paper this morning, I felt more than a little sad. It was filled with a kind of desparation advertising for all things Christmas. Fifty-two days before Christmas and the commercial onslaught has begun. Is there anyone else out there that remembers when Christmas lasted only a few weeks? When Thanksgiving was not something completely overshadowed by all the Christmas hoopla?
I have a couple of issues with the whole "HOLIDAY SEASON".  One is, a 2 month Christmas is just too darn long. The second is, Thanksgiving has been lost. 
When I was growing up, Christmas was about a 3 week event. People didn't moan … (17 comments)

real estate commentary: The Future of Mortgage Brokers Is Questionable - 11/01/07 03:17 PM
As the year comes to a close, the mortgage crisis is taking on a different spin. Slowly, yet steadily, banks are closing their wholesale divisions. When this happens, a borrower must go into a bank and deal directly with a bank employee to get a mortgage. He will have no option to use his mortgage broker to get a loan from that lender. THE LENDER ELIMINATED MORTGAGE BROKERS, and more and more lenders are heading in this direction.
When a major player such as Bank of America decides to drop their entire wholesale division, they are sending a message: "See, investors? Now we have gotten rid of the … (14 comments)

real estate commentary: Buy Stupid, Sell Smart (The Forrest Gump Way to Buy Real Estate) - 10/16/07 04:30 AM
                                                                            "BUY LOW" is the classic advice for buying real estate.  But how low is low enough?  I say, a BETTER STRATEGY is to just BUY STUPID. Funny thing, you can get rich much faster being stupid.  Just ask Forrest Gump.
When you buy stupid, you don't need to wonder when the market will bottom out. Nope, all you need to do is announce your intention to buy real estate at any gathering. If every one else in the room thinks you're stupid, your timing is perfect. Go ahead and let them tell you all the reasons NOT to buy real estate, and why you are stupid.
BLAH BLAH BLAH....the economy. BLAH … (12 comments)

real estate commentary: The Stairway to Heaven Needs a Ramp - 10/14/07 09:37 AM
Caught in a time warp between their kids finally finishing college and their elderly parents needing help, is that huge bulge in the population known as THE BABYBOOMERS. Although it remains to be seen how their retirement will change the face of our economy, I can tell you one thing for certain: They do not want 2 story houses with STAIRS.
Friday night, as my friends and I sat around the fire, listening to gently falling rain and sipping wine, the conversation (as usual) drifted towards real estate.  My friends, like so many others their age, are exasperated in their quest to buy real estate. 
Here was their RANT: "Where the hell are all the … (51 comments)

real estate commentary: Newsflash to Politicians: Brad Pitt Isn't The Only One Who Owns More Than One Home - 09/29/07 09:19 AM
Hey, I have a great idea. Let's help everyone with those 500 credit scores "fix" their credit. They can't help it if they can't manage their finances. Let's just take everyone that has a 750 score and GIVE 100 of their points to everyone that has a 500 or less score. There! Is everything fixed now?
If you think this strategy is flawed, then you may ask how it makes sense to REWARD those that are facing foreclosure by forgiving their taxes, then making those that own second homes pay for the whole thing by paying MORE tax. Excuse me, what's the connection? … (9 comments)

real estate commentary: Rest In Peace, McMansions - 09/06/07 05:28 AM
                
American's Most Opinionated Mortgage Broker asks us, "Who the hell is going to buy all those McMansions?"(if not the babyboomers, and not the new generation of homebuyers who seem to prefer the urban life?) Funny thing is, he isn't the only one asking this question here in California, where a fundamental shift in housing preferences is happening.
My own twenty-something daughter, who will graduate with an MBA next June, spent her summer in the Los Angeles area as an intern for a large biotechnology company. Some of the brightest kids from all over the country were in this program, most of them hoping … (42 comments)

real estate commentary: Far Flung Suburbs and Commuting: An Idea Going BUST - 08/27/07 04:08 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)

real estate commentary: Mortgage Lenders Never Considered Anyone Would Be UPSIDE DOWN - 08/22/07 05:09 AM

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)

real estate commentary: Why A Rate Drop Won't Save the Real Estate Market - 08/16/07 11:10 AM

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)

real estate commentary: Outsmart the Market Mentality and Emerge A WINNER - 08/11/07 08:35 AM

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)

real estate commentary: Mortgage Crisis: An Unprecedented Chain Reaction is Bringing Real Estate to Its Knees - 08/04/07 03:31 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)

real estate commentary: Buy Real Estate NOW: 5 Keys to Taking Advantage of a Down Market - 08/03/07 04:42 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)

real estate commentary: A Big Fat "I TOLD YOU SO"...Why Stated Loans are Nearly Extinct - 08/01/07 03:35 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)