I shouldn't be surprised by the ebb and flow in this business. Real estate markets have always been cyclical, driven by local economic forces and demands. Driven by migration trends related to those demands and forces. Driven by Acts of God. I know this - I've EXPERIENCED these many times over!

But what a roller coaster ride we seem to be on today! Weeeeeee.... Home Affordable Refinance and Modification programs are rolled out to help struggling homeowners refinance to today's interest rates or modify their terms in order to help them stay in their homes and stem the tide of foreclosures! Whooosh, if homeowners have private mortgage insurance or second mortgages on their loan/homes they may or may not be APPROVED by their existing insurer/mortgage servicer to refinance or modify no matter how much more stable the borrowers' financial positions will be after refinancing/modifying their terms.

I have had a really hard time coming to terms with having to tell credit worthy, financially strong borrowers looking to survive and thrive in this economy, people who have adapted and changed when mergers/acquisitions/company sales have eliminated their jobs, people who exhibited the entrepeneurial spirit to survive, with the assets to pay their loans off 5+ times over, clients I have worked with over and over again on their different transactions over the years of our professional relationship this: 

"Hi XXXXXXXXX-

Good to hear from you. Congratulations on your new venture, and the release of your application. I wish you lots and lots of success!

On refinancing, the challenge we encounter with you (and xxxxxxx, and your other partner) is your being "newly self employed". When you own 25%+ of a business, we have to qualify you using a two year employment/income history. Because you launched your new company, we will need a tax return filed to base your income on. Typically, a start up's first tax return is loaded with expenses and income is artificially low, but it is what we would be forced to use to qualify you.

If you happened to buck this trend, and your 2008 1040/1120s are filed reflecting profits and officer salary that are sufficient to qualify you, yes indeed - refinancing would benefit you at today's market rates (4.75-4.875), and even with appraised values artificially deflated, because the new "Home Affordable Refinance" programs rolled out on 4/6 will let you borrow 80-105% of today's value. We can only use your current income from this source, not the severance package you received because it is not ongoing for at least 3 years.

We're back to the "old ways" of underwriting, with the tool of "stated income programs" having been removed from our tool chest. This is the loan program the self-employed borrower would use, as we frequently encounter qualification hurdles with these folks. It may come back one day, in its original form of 20-30% equity/ down payment required, but we don't have it right now.

After having successfully closed so many transactions with you and your family and friends, I hate to tell you I cannot help you after so many years of being able to tell you "how" we could reach your goals and objectives! So, I'm really hoping your response is your 2008 returns reflect piles of profits. If they don't yet, I'm still rooting for the same on your 2009 returns...and that interest rates stay this low while property values stabilize so you'll still have this opportunity next year. In the meantime, my best to you and yours.

Warmly,

Karen Cooper
American Pacific Mortgage
(661)478-7564"

I guess after being in the real estate/finance industry since 1983, I shouldn't be surprised by the ebb and flow in this business. And as with previous cycles, I WILL adapt and change accordingly to survive. But, do I don't always have to like it do I?

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant - www.Quality4Loans.com