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Shop Shop, tisk tisk, oh what a relief it is? -- Mortgage shopping -- Part 1 of 2

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Just as easy it is for buildings to fall from demolition or that of a category 4 or 5 hurricane, so are mortgage companies falling by the waste side. Just two more large lenders closed their doors in the last two days, GreenPoint Mortgage of 20 years and First National Bank of Arizona. This makes for 130 lenders to close their doors since the end of 2006.

There is a company called the Mortgage Lender that runs a web site called the implode meter. This site uses their expertise in the mortgage industry, their knowledge, and lots of research in regards to these companies financials. This web site has been a highly visible tool for many lenders in today's market. Not only has it been useful, but very accurate when it places companies on their ailing/watch list. (please click here for that list) Both Greenpoint and First National Bank of Arizona were placed on this list about 1 1/2 months ago. Now? They have closed their doors.

Countrywide Financial is now on this ailing/watch list. I am not here to knock Countrywide Home Loans, but here to educate. I have a few good friends that work for them and several that I know from ActiveRain that work there also. I want to take this time to wish them and their families all the best and hope that everything works out.

The point of writing this is to not only educate the consumer, but to give my insight and opinion to those in the mortgage industry. There have been some great blogs written on the topic of Countrywide and others on today's market. I spoke to Nima Rezvan back in December and January and mentioned some concerns that I had. Giving him my 14 years of experience in this business that there is never a guarantee. Nima went on to write this. Countrywide Home Loans: The Real Story (Informative Blog) I have all respect for those that stand up for their company. But when a company sends out a memo just to try to keep fear at a minimum, this is when you need to step back and look at the writing on the wall. I am not here to say that I know it all or even that Countrywide will close their doors. I think Robert Ashby did a great job at explaining what is really taken place with Countrywide : Will Countrywide be the Next Victim of the Mortgage Market Meltdown?

I also spoke to Brian Brady in March telling him that I think Countrywide could close their doors by the end of the year and my reasons why. With Brian's financial background from the stock market, he agreed and since then has written a few good articles on this. Brian went on to write this : A Realtor's Guide To Surviving the Countrywide Crisis One thing that Brian does talk about that I slightly disagree with is that he states if Countrywide closes their doors, that we will be in trouble. We are already in trouble. Yes, Countrywide is the largest lender in the United States. But what so many people fail to mention is that a good part of their production was obtained through other mortgage bankers and brokers. These lenders would sell to Countrywide's wholesale side. Reality? There are still other lenders buying A paper loans. My company and myself positioned ourselves over 4 months ago not to rely on a large company such as Countrywide. Some people place all their eggs in one basket.

So, what is the point of this post? Thomas Weiss wrote That Mortgage Sounds great right, you better think twice, First!! Business is very slow for many lenders and loan officers. There is a lot of fear in the market. Some loan officers are willing to make promises to clients that just will not happen. Why? They are willing to take that risk, especially if they have nothing to lose. I wrote about this a few days ago, that some loan officers and or lenders don't even know what they are doing. This can be especially scary for the first time homebuyers out there. I am seeing clients being lied to because they don't know what to look for or what to ask sometimes.

Okay, so how do you go about choosing a credible loan officer. If you can't ask family, friends, or co-workers for a worthy referral, there is always your realtor. Even if you find a loan officer online, which is where I get about 20% of my clients, you need to feel a connection. But you need a lot more than just a connection and someone that might sound honest. In my 2nd part in regards to referrals and shopping, I will give you my opinion on what to look for and those red flags that so many consumers don't know about or even think about.

Summary : Yes, we are in a bad market. There are troubled times now and ahead of us. Yes, the media can sometimes make things sound worse than they actually appear. Two pieces of advice. When speaking with a loan officer, if they don't ask many questions and don't seem to spend about 20 to 30 minutes with you when first speaking to you, this is sometimes a red flag. There are important questions other than just your credit, income, and assets. They should be talking to you about locking or floating the rate and your goals. If this is not mentioned early, this is a red flag. The 2nd thing that I wanted to mention is that you might want to talk to a mortgage banker that can act as a broker. A lender that not only holds onto their own loans, but one that can sell to other lenders. This goes back to putting all of your eggs in one basket. A larger lender usually only has this one option. I am considered a mortgage banker in which I still sell your loan to other lenders. We work with 50 plus lenders and this is especially helpful in case another lender closes their doors. Just keep this in mind when speaking to your loan officer.

Shop Shop, tisk tisk, oh what a relief it is? -- Mortgage shopping -- Part 1 of 2

Mortgage Shopping -- The Educated or Uneducated Borrower -- Part 2 of 2

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For more information on FHA loans, please go to this link. The FHA Expert You can also go to this group : The FHA Mortgage Group

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 08/21/2007 08:30 PM

Comments (12)

fear, market, countrywide, fha, countrywide in trouble, liquidity crisis, implode meter, mortgage meltdown, first time homebuyers

This post has been included in New Jersey Information Camden County, NJ Information Cherry Hill, NJ Information

12 Comments on Shop Shop, tisk tisk, oh what a relief it is? -- Mortgage shopping -- Part 1 of 2

AUG

2007

I commented on Matt's a little while ago....broker's can submit the file to a few lenders....the one I'm working with on a transaction right now submits to three. His doors to his own business is opening next week...the same day he is finished with the company he's working for now.

This is only a dream, this is only a dream.....

Good information, I'm working through the links in your post to educate myself on the current state of things. On a positive note, I was speaking with an experienced Realtor® today who was a part-time agent in the early '80's. He remembered that time as a time when the only way buyers could get into a home was to buy a property with an assumable loan or one offering seller-financing (at 15%-19% rates). He said he wished he had gone to work full time as an agent during that period. Those who can weather the storm will come out ahead in the end. Here's to getting out my umbrella!

Sally... thanks, I went over there and read Matt's blog. In my honest opinion, I don't need to put multiple files out there because of the lenders that I use. Yes, we can't predict what could happen to any company out there. But in regards to A paper, there will always be a lender to sell that type of paper too. And since I am a banker and I control the closing package and the funding, all I need is a company to sell it too. When it comes to Alt A companies, I have two that are very solid financially and this is because of who backs them on Wall Street. So, I feel very comfortable with this market. I hate to see people lose their jobs, but this market will flush some out that just don't belong in this business.

Joan.... click those red heels. As I have said, for the most part and as Matt said, the strong will survive.

Chrissy.... I can't say that I remember those years. ;o) But I have heard the stories and you are correct, those who can weather the storm will come out ahead. Thanks for your input....

Jeff, thanks for the post. With the 100% mostly a thing of the past, are you seeing an increase in FHA loans in your mortgage practice in South Jersey?

Mike in Tucson

AUG

2007

Jeff maybe I just do not want to believe the company that has been able to do what others could not for me is going down.... maybe I want to see the rainbow and not the rain in this - I sincerely hope that you are all proved wrong but I will continue to read and stay informed... thanks for the info

Mike..... there is still 100% financing out there. It just has become more strict in guidelines depending on credit scores and reserves. And yes, I have been seeing an increase in FHA and not just in New Jersey. I have one in PA closing in 2 weeks and 1 in Florida closing next week. Both purchases.

Thesa...... I didn't figure that this post would get many comments, because it was somewhat negative. But these are just facts and reality. And from talking to so many people in this industry, so many want to turn their heads. I am trying to help, but it seems like not too many want to listen.

And a company that has been able to do what others could not is just because of the lack of skills a loan officer has and knowledge. That loan that you wrote about could be done by several companies. It just comes down to the loan officer fumbling the ball and or not having options. What ever the big boys can do, the little ones can do also, but sometimes with more options. You just need to know where to go.

Again, this was not a knock on Countrywide, but opinion and some info for not only the consumer but the real estate/loan officer.

I know a lot of people from the wholesale side that are out of work.

I pray that they survive this.

I agree with you, Jeff. That the industry will not crumble if CW fallas.

Jeff,

I think you did a much better job, explaining whats going on in our Market, is it really worth the chance? going through all of the costs and troubles, just to find out you have been lied too..

Great, Great, Post!!!

I am passing on a 5 because I think it should be featured, for everyone to see and read,

Tom Weiss

I have never been a believer in putting all my eggs in one basket. I don't think that Countywide will go under any time soon though. With the vote of confidence by Bank of America and rumors that Buffet might make an investment you never know. Lenders are looking dirt cheap right now. You never know.

Tom B. ...... my heart also goes out to all that will lose jobs. But I truly think it's a 50/50 for so many to say that Countrywide won't go down and the other 50 will say they won't be around. And if they aren't around, that the industry will crumble. Okay, if they are 13% of the market, that is a hit. But others will pick up the pieces. I just think it wasn't properly watched and managed in the last 3 years and they got greedy like so many others. Greedy with the subprime, but most of all, with the pay option arms.

Why was I able to keep an eye on this and say back in January and more so in March that they will be hurting? Because I received inside news from someone high up about 3 years ago that Countrywide tried selling over 25 million dollars worth of Pay Option Arms to Worlds Savings. World Savings said no.... this showed me that they had already gotten over their head and didn't know how to manage these. It was going to hurt their liquidity. Well, here we are, 3 years later. They just weren't cut out for some high risk loans that don't perform well if the client doesn't use this product in the right fashion. 2nd...on top of this, Countrywide got aggressive and paid good money for high margins. And off course, most lenders sold the high margin to make more money, but would hurt the client more.

Overall.... as long as there are lenders that are willing to buy loans and service them, we will get through this. Everyone keeps talking about those 11% to 13% or even the 18% rates.... people still bought, but not in records numbers. It will bounce back some, but when.

Thomas W. ...... thank you very much. It's hard to tell if anyone felt the same way, considering the lack of comments. I was wondering if I ticked some people off... lol Or if they just got tired of reading this stuff... or lastly, that this was either boring, confusing, or over their head. oh well.... I wanted to explain it from a different angle and with flat out honesty. If I offend the Countrywide lovers, sorry, but I just don't write fluff to get a Gold Star/feature or for people to like me. I write what is real and what should be hear, but as my opinion, but with some facts. thanks for those compliments. Besides... this was a little long and so many people want short... lol oh well...

Christopher...... yes, Warren Buffet just entered the picture. Does that mean Countrywide would still not go down? Since he has a lot of money, it would just be another project for him and his name. But would Countrywide keep their name? Not sure... I do know that the CEO would not have a job. How can you respect someone that has been dumping his stock the last 6 months, but say that the company is okay. Not only with a company memo last week, but now a commercial telling everyone that they are fine. Sorry people, but read the writing on the wall.

Sure, some people borrower money to make money. But then again, some people rob Peter to pay Paul. It's the 2nd part that is happening here. Now making the 5 yr CD better, giving a better rate of return? Again, borrowing more money essentially to fix their short term problem. Read this... this is a great read :Did the Feds Already Bailout Countrywide?

AUG

2007

Jeff - I believe as you mentioned that one should never put all their eggs in one basket, just like an Investment Advisor is going to help you diversify your portfolio, all LO's should diversify their relationships with lenders.

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