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Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, January 2013
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In Issue 58 We Touch On:
Top 10 Cities For Housing Deals
Home Prices Increasing
Can Facebook Affect Your Credit?
A hint of stability has come to light in both the U.S. and European markets. Whether it is sustainable remains to be seen. In the meantime, mortgage rates are on the rise as investor dollars are flowing into more risky, but potentially profitable opportunities. Things may not be getting better, but there are signs that things are not worsening, especially in Europe where banks have found themselves not needing emergency cash injections to stay afloat.
It only takes one event to reverse this sentiment. There are several economies, including our own, that face significant challenges regarding debt. Any sort of default or other crisis in confidence could easily cause investor sentiment to reverse and then rates would head back down.
The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family. You can make your own comments and feedback as well. Time for the news…
Mortgage Market: New Government Mortgage Rules Cripple Consumer Choice
Last month I reported that by January 21, 2013, the CFPB would have to finalize a bunch of new mortgage rules. This requirement resulted in another 541 pages of changes impacting the mortgage world. For example, a rule was enacted that prohibits mortgage professionals from being compensated in a dual manner where part of the fee comes from the consumer and part from the lender that the loan is brokered to.
This rule limits consumer choice considerably because in the past consumers could choose to pay more money upfront in exchange for a lower rate (which would benefit them if they planned on owning the property for many years). Mortgage professionals are handcuffed in the pricing options they can offer to consumers. The entire idea of wholesaling has kind of been obliterated and mortgage professionals are less competitive in the marketplace versus banks as a result.
Wholesaling used to work like a sliding scale. For example, I could offer a competitive retail rate of 7% and no out of pocket fee, a wholesale rate of 6.25% and some fee or something in the middle. That model gave the consumer the power to choose whatever combination of rate and fee that fit their pocketbook. It made no difference to the mortgage broker. If their fee was 3% of the loan amount, the sliding scale would mean they earned some combination of fee that added to 3% depending on the pricing option that the consumer chose.
The new rule is an all or nothing scenario which eliminates most choices except to pay no out of pocket fee (and bury it in the rate) or to pay the whole fee upfront. There is no middle ground. The mortgage broker can get paid by either the lender or the consumer, no hybrid combination of the two.
Personal Credit: How Does Social Media Affect Your Credit?
Do you post pictures from vacation on your Facebook page? Is your LinkedIn profile updated with your current job information? These may sound like innocent enough activities that are common in today's world. But have you ever considered how that information might affect your personal credit?
Debt collectors are hip to social media too. Debtors crying poor and seeking to settle an unpaid credit card bill for pennies on the dollar will have a hard time earning sympathy if their Facebook page reveals lifestyle information that indicates an ability, but unwillingness to pay, such as photos from a recent trip. In the eyes of a collection agency, that vacation money should have been used toward debt repayment.
Expect legislation to come in the future that implements rules for lenders to follow when making credit decisions and how they may use social media in that effort.
Ask Me Your Credit Score Questions
Have you been given credit score advice that you are not sure about or read an article that has conflicting credit score information from what you believe to be true? I am here to help. Submit your question and I will be happy to respond. For more free and easy to read credit score tips visit the DailyDollar and click on the Credit Score and Credit Monitoring sections.
Economy & Financial Insights: Housing Prices Continue To Climb
It is reassuring to witness the economic laws of supply and demand that we all learn in high school economics continue to work. Last year we saw some record sale prices of waterfront properties. No matter what is happening with the economy, waterfront property supplies remain the same. There isn't any coastline being magically created so supply is fairly constant.
More recently, this trend has migrated inland. Builders are still slow on new construction. The investor frenzy of buying foreclosure "deals" has also tapered off. There is less housing inventory to go around. As a result, prices are climbing. In Southwest Florida for example, 2012 resulted in double digit percentage increase in home prices - anywhere from 10-20% depending on the neighborhood.
Question of the Month: Are There Any More Great Housing Deals Out There?
It is harder and harder to find a great deal on a home due to supply and demand forces. However, in certain markets there is still a lot of inventory which means that discounts are available. If you are looking for where the best deals are, here is a list of the Top 10 Highest Foreclosure Markets as reported January 31, 2013 by the Loss Mitigation Training Institute:
MarketMonths SupplyAvg Discount
| Palm Bay, FL |
34 |
28% |
| Rochester, NY |
78 |
26% |
| Albany, NY |
56 |
35% |
| New York, NY |
97 |
40% |
| Lakeland, FL |
33 |
15% |
| Tampa, FL |
32 |
27% |
| Jacksonville, FL |
34 |
32% |
| Poughkeepsie, NY |
92 |
28% |
| Orlando, FL |
28 |
19% |
| Chicago, IL |
36 |
46% |
Giving Back: If You Haven't Joined Upromise Yet, You Are Leaving Money On The Table
We have shared information about Upromise in previous newsletters and there is a new way to earn money to fund your Upromise account. I have accumulated over $1,300 which will be gifted someday to family. As a refresher, Upromise helps students and family start planning and saving for college, with tools, resources and the ability to receive money back in a college savings account when shopping smartly. Upromise President David Rochon said. “Half a billion dollars earned through Upromise represents tuition and fees for 76,000 students to attend a public university and a tremendous start.”
The program now has about 40,000 retailers, gas stations and restaurants as partners, as well as hundreds of online retail shopping sites. When members spend money at participating retailers, a portion of what they spend is credited to a college savings account. It is free to join and easy to use. 
Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
Whether you are pulling for the 49ers to return to glory or the Ravens to send retiring Ray Lewis out Jerome Bettis style, or even if you don't care but want to see some good commercials, I hope you all enjoy our national holiday this Super Bowl Sunday.
Randy
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Mortgage by Randy newsletter, Copyright 2008-2013 Randy Mitchelson. All Rights Reserved.
Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
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You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson is an entrepreneur, author and community activist with almost 20 years experience in financial services. Mitchelson has served in leadership roles for Fortune 500 firms Bank of America, KeyBank and CIBC.
As a licensed mortgage professional and member of National Association of Mortgage Brokers, Mitchelson educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy.
He founded of Estero, Florida based National Web Leads, LLC, (NWL) in 2005, an internet marketing and lead generation services company. NWL merged with Reach Media Group in 2012 where Mitchelson is co-owner and CMO. Reach drives new customer acquisition through email, web display, social media, keyword search strategies, mobile devices and more.
Reach distributes customers' marketing campaigns via it's network of publishing partners. Clients include payday lenders, auto loan lenders, educational institutions, legal services, health and beauty product distributors and more. Lead generation companies utilize end-to-end lead generation software solutions provided by Reach's technology affiliate company Applied Cognetics.
Mitchelson also writes the DailyDollar™ personal finance newsletter. U.S. News and World Report named DailyDollar to its list of 8 Savvy Personal Financial Podcasts.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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