Now most of my writing is not about how bad things are. In fact it was I who said, "If you think the market is so bad get the hell out and let the rest of us make a living." Well, I'm thinking about getting back into Internet Services - I programmed the online catalogs (shopping cart systems), message boards [an old name for blogs], online contact management and information delivery systems, online databases for The NRA, Loomis&Fargo, Hunter Engineering, Shari's Restaurants, CrossGen Comics and many more - in fact, I programmed and developed one of the first online video streaming sites back in 1999 for a company called PCVision - bug I digress.
It's bad today from a finance standpoint. It's very difficult to get funding even for decent credit, income and asset folks. Many lenders just flat out say "no real estate agents with stated income at all".
It's about to get worse ... maybe much worse. Unless ...
Ben Bernanke and the Fed Board have control over Fannie and Freddie wherein lending guidelines are concerned. One of the many lines of "sweeping changes" they are planning on making whether you like it or not is the complete elimination of stated income loans. Shhhhh, if you oppose them you don't know what their real purpose is but I'm about to hit you with an exact scenario from my office this morning.
My client makes $60,000 per year that she can demonstrate on her taxes. Her husband makes $80,000 per year that he can demonstrate on his taxes. The home mortgage is in her name, his truck is in her name, he pays all of the utilities and contributes to the other cost of living expenses in the home. He has a middle score in the mid 500's and just came out of bankruptcy - basically nothing really available to him as a borrower. In fact, if we put him on a loan application it would cause the application to be denied because of his credit history. Now if she can state her income as her salary plus 1/2 of what he contributes to the expenses (1/2 of the house payment, the truck payment, living expenses) then she can qualify for the refinance they need to get out of the ARM they are in.
Do you think it's fair to deny her or should she be able to state her income to include her husband's contribution to expenses?
Either way the Feds plan on eliminating Stated Income loans for any purpose or reason within a very short time.
Down Payment Assistance for FHA Homebuyers. I know, some of you just went, "Well, Ken, what's the problem with that? If they can't save enough to make a 3% down payment they don't deserve to own their own home!"
Consider this: Mary and Phil are renting an apartment for $1200 per month. They have no tax advantage at all from renting. They have built no equity and no mortgage credit history. I know, that genius Kyosaki or whatever his name is tells you this is smart ... why does he own his own home then? But again, I digress.
Mary and Phil have never owned their own home but a nice Realtor™ who is also an Active Rain member has found the perfect home for them. It is a nice 3 bed, 2 bath ranch right in their area and it's a steal because it was a foreclosure. They can get it for about $110,000 and all the comps are in the $140k range. Best of all their principal and interest payment will be only $688 per month!
But wait, they haven't been able to save any money because they've been working so hard to pay off their cars and student loans and they've been paying such high rent. Their DTI will be only 31% with the new home but they have NO DOWN PAYMENT.
Still think it's a good idea to deny them the opportunity to own their own home because they haven't been able to save when they can get the home for pennies on the dollar, have great credit, good income but no down payment?
The government, by it's very design, cannot make regulations that treat everyone fairly. The best they can do is to make regulations that either treat the majority fairly or punish the majority equally.
A year ago or more I wrote "The Baby, The Bathwater, And The American Dream". It's somewhere on AR.
Lastly, at least for this blog post, interest rates are Going To Go Up. It's a necessity. Inflation is in the process of running away. Fuel costs are out of site, unemployment is up sharply, Americans are using their credit cards to buy gas and food, housing values have tanked and loans are difficult to fund. The balance is to raise interest rates. I don't have time to explain why just Google rates vs. inflation or something.
It's not going to get better soon and, in fact, it's going to get even worse before it gets better.
I wrote this to tell you to act now, urge you clients to act now. If you know anyone who has not refinanced who currently needs to or soon will need to they better do it NOW. I mean N.O.W.
Peace, ya'll
I am available for public comment. 678-946-0100
THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.
EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.
Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors
Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender
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