Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, May 2009
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In Issue 14 We Touch On:
Politicians Write Bad Mortgage Legislation
Americans Put Away Credit Cards
Buying Credit Scores
April ended with another seminar and more homeowners getting educated with the latest news about the property insurance, real estate, self-directed IRA, mortgage and credit markets. Feedback from the Estero, Florida audience was favorable and many thanks to fellow presenters Jerry Elliot (Oswald Trippe Insurance), Dina Cecere (Dina Cecere Realty), Paul Cecere (Centennial Lending Solutions) and Austin Hardy (Entrust). On to the news....
The current newsletter and all prior newsletters are archived at the MortgageByRandy blog space. 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: Politicians Endangering Consumers & Mortgage Professionals
Mortgage rates have bounced in a tight range since March and there is not anything on the horizon to make them deviate one way or the other in the short-term. This steadiness of low rates helps make new home purchases more affordable and homeowners with adequate equity can refinance into a lower rate. The damage caused by loose underwriting rules, overly optimistic home buyers and some shady mortgage originators is not forgotten. New legislation continues to be debated which has the good intention of better regulating the industry. However, there are components of several pieces of legislation which, if passed into law, will hurt consumers, small businesses and appraisers.
One example is Senate Bill 896. This bill contains an amendment which outlaws the consumer's ability to finance, including through rate or principal, any origination fees or costs permitted. This means that consumers will no longer be able to obtain a no point loan or no point/no closing cost loan and will be forced to bring money to the closing table! The major ramifications of this amendment are:
1. Significantly increase consumers' costs
If mortgage brokers can no longer occupy a competitive place in the market, consumers will be forced to other competitors, which will cause upward pressure on pricing because these entities will find themselves in a position to charge consumers even more.
2. Legislatively pick winners and losers
Consumers who are unable or unwilling to come to the table with a 20% down payment and all of their closing costs and origination fees will be forced to turn to other financial institutions that may not be local or easily accessible, or will be denied access to mortgage credit altogether.
3. Destroy small business
Mortgage brokers are small business professionals who rely on yield spread premium (YSP) as a tool to provide consumers with the no-cost mortgage loans they typically demand.
Just as the pendulum of greed and spending dominated consumer behavior a few years ago, now the pendulum swings too far in the opposite direction. Elected officials are trying to put their own personal stamp on legislation which on the surface demonstrates to voters that they are doing something about the mortgage crisis. Unfortunately, too many of these politicians lack the knowledge to understand the repercussions of their actions.
Personal Credit: Take Steps to Check Credit History with All Three Credit Bureaus
Reviewing your credit history regularly is just as important as changing the batteries in your smoke detectors every six months and getting the car oil changed every 5,000 miles. If you neglect to do these things you increase your risk for bigger problems later on. Remember to check your credit with each of the three major credit bureaus.
"Looking at one is a useless endeavor; you need to look at all three," says Howard Dvorkin, president of Consolidated Credit Counseling Services in Fort Lauderdale, Florida. "People tend to pull one and think everything is the same on all of them. That's not normally the case."
The reports will have different information because it's a voluntary system, and creditors subscribe to whichever agency they want -- if any at all. If you have not checked your credit history at all, then get all three reports to ensure accuracy. Otherwise, consider looking at one of the three every four months to monitor changes.
Economy & Financial Insights: Notice Your Mailbox is Lighter These Days?
A recent study by Mintel Comperemedia revealed two significant findings. First, Americans are using their credit cards less. Instead, 43% of Americans are using their debit cards more often. The second finding is that banks have reduced the number of credit card offers sent to our mailboxes. In the first quarter of 2009, lenders cut solicitations in half (compared to 4Q 2008) in response to rising delinquencies and chargeoffs. While the lenders save a few trees, consumers are continuing to improve spending discipline. Although spending is a key driver of our economic growth, these behavioral changes by banks and consumers are a necessary building block to better financial health.
Question of the Month: Is it Possible to Obtain Your Score on AnnualCreditReport.com for a Fee?
First, always use AnnualCreditReport.com to access your free reports. This is the only site where you can get the free reports guaranteed to you by law. Television and other ads for "free" credit reports all have a catch of some sort that require you to pay money. The law does not entitle you to free credit scores.
When you visit AnnualCreditReport.com and progress through the screens to order your free report, there will be an attempt to upsell you to purchase scores. Typically it's about $10 per bureau. If you are committed to spend about $30 to acquire all 3 scores, you might want to consider getting a monthly subscription for credit monitoring which includes the scores and also provides the additional peace of mind of being notified of any changes.
Giving Back: Supporting Our Communities - Mitchelson Scholarship Foundation
High school graduation season is upon us. Once again, the Larry Mitchelson Scholarship Foundation will be selecting an aspiring art student to receive a cash award to help them pursue higher education. Previous winners are profiled on the foundation web site. As the students progress in their career they can post updates and pictures of their art work. Your generous donations can be conveniently made securely on the foundation Facebook page or use the mailing address on the web site.
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.
Nashville in July! If you love great live music, celebrating with fun people and a contributing to a great cause, join us the weekend of July 17 for a one of a kind concert at The Listening Room in downtown Nashville. Only 200 seats are available so contact me now to reserve!
Randy
Mortgage by Randy newsletter, Copyright 2009 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, of Estero, Florida, is a business professional, entrepreneur and author with over 15 years experience in financial services. Mitchelson has served in leadership roles for Global & Fortune 500 firms like Bank of America, KeyBank and CIBC.
As a member of National Association of Mortgage Brokers, Randy has earned the Lending Integrity Seal of Approval. He 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 as well as the Daily Dollar Newsletter. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.
He is owner of Estero, Florida based National Web Leads, LLC, an Internet lead generation service matching consumer finance lenders with customers. Through its network of partners, National Web Leads delivers innovative Web 2.0 software solutions such as lead generation platforms and real time desktop widget and mobile reporting tools for lenders and internet marketers.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member and Finance Chairman 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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