Are we living in a new era of nuts and bolts?

By
Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

 

Nuts & bolts

 

Does our government just have nuts and bolts for brains? Can one be so blind to the issues at hand in regards to our economic status, to how much further we are falling into debt, yet they keep announcing rays of hope?

Let me pose a question to everyone. What has happened to common sense and logic? Is common sense not so common anymore? 

 

Before I get into the gist of my gripe, frustration, and fear... yes, FEAR... Whenever I always debate a situation, a fact, or an issue, I always try my hardest to look at it from both sides and not just from my emotional state of mind.

 

 

 

Chaos Erupts

As we venture into 2010, I see more chaos on several horizons. Let's attack 3 important issues that I see will bring much chaos, frustration, and fear.

1. The New Good Faith Estimate. Not only is this form much longer, could delay settlements because of the new MDIA law (Mortgage Disclosure Improvement Act), but it could impose misleading mortgage shopping to consumers.  Gerry Suarez gives you his opinion and a good example to why this could cost the consumer more when shopping for a mortgage. Please read : The Road to Hell and the new mortgage disclosures.

 

2.  Foreclosures : There have been estimations that we could see another 1-2 million foreclosures by the end of 2010. One thing that seems to be talked about is the fact that many of the foreclsoures are due to the loss of equity. I know there are reasons for this, but I see the major problem being the huge unemployment numbers and loss of jobs. Why is this not talked about as much?  The government spoke so highly about the 2009 stimulus package that was partially structured to help with new jobs.  Hhhmmm, inquiring minds want to know what they were smoking.

 

3.  Immature government spending.  I will go on the record to state that I have seen so many smoke screens in regards to free government spending, making it sound like the main solution is to keep printing money, and this will help our current economy rebound quicker. But who will pay for this printed money?  Let's take a closer look. What about the Tax Credits for first time homebuyers?  I know many of you think that this has helped sell real estate, but seriously, who are we fooling. Again, if you take a much closer look at these tax credits, which were first established in 2007, it has not done as much as it was intended. My guesstimating would be less than 5% of all homes bought since 2007, were the direct reason for new homebuyers. Many people were going to buy anyhow. Secondly, because of the lack of government prevention, this tax credit has led to billions of dollars in fraud now. Please read these :


My summary on the tax credit & free gov't spending : In 2007, there was a stipulation for the homebuyer to pay it back in 15 years. You didn't make a payment until year 3 and in the 13 years, it was only going to cost you about $43 a month to repay the tax free loan. I am soooo confused to why we couldn't go back to this.  Again, what is the government thinking?

What about the billions of dollars that were spent on the MBS's to keep interest rates down?  People bought with 6% and 7% rates.  This has been wasted money only for the good of keeping consumer confidence riding high, when in reality, it will hurt us in the short and long term. Yes, Billions of dollars, to keep rates in the low 5's.

 

 

 

Crumbling Economy

Okay, the economy has been crumbling in the last 2 years and new predictions are now saying possibly 2011 before a true recovery starts to happen. Don't get me wrong, I do believe that we need to tighten some lending requirements, but do we seriously think another 2% for a downpayment would work? Do we seriously think 620 and 640 credit scores will truly make people pay back their mortgages? I know there have been studies done on the different levels of credit scores, but have certain factors been taken in consideration such as :

1. Loss of job

2. Death in family

3. Higher property taxes

4. General cost of living

 

I wrote a blog at the end of 2007, talking about the fact that we are in a slight recession.  My 2007 review and 2008 predictions. I think several of us saw this coming, but it wasn't until 2008 that we were actually told that we are in a recession. You have to understand the true definition and that this definition varies amongst different experts.

Overall, we need to re-look at certain things and to why borrowers miss mortgage payments. What ever happened to the ability to repay vs the credit score?  Keeping in mind that things happen that aren't in ones control.  Here are a few posts that I wrote about these current issues.

 

 

 

Economic Meltdown

(for those that can't read the name on the desk, it says Chief Bean Counter)

 

Let me cut to the root of our current problems and why I don't see any relief in sight. This is based on my opinion of watching our government closely for the last 12 months.

It's called greed and selfishness. I am sorry, but many in our government only care about themselves and obtaining new votes for the new elections. Some have even admitted to this which I have written about. They tell us what we want to hear and make this immature spending sound like it will work. Yes, these individuals have common sense, but they don't use it, because selfishness super-cedes this thought process. We can change this by voting for others, or rise up and to protest harder and louder. It can be done, but we need these changes to start in the trenches. I gave some of my thoughts and opinions in this blog from the summer. Call to Action : We must fix the real estate market ourselves!!

 

 

 

 

Conclusion: I am just fed up with the misleading information that circles from the government, to the media, and then to the consumer. I don't want to make this political, but there are some major political issues and this free spending will put us deeper in the hole. What we need is less government interaction and more small business interaction and private investment.  What do you say?  Think?

 

UPDATE : 12/28/09 - 1 pm - I just came across this post by JP Lowry and I think it hits some points that I didn't dwell on, trying to keep my blog short.

Why Banks can't loosen lending.... it's just not up to them.

 

 

 

 

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_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

 

Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc

 
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______________________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Bill Ladewig 12/28/2009 07:16 AM
  2. Dana Devine 12/28/2009 09:55 AM
  3. Tom Davis 01/23/2010 01:00 PM
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans


EYEMARK Realty aka MARK..... . you make two excellent comments in regards to why this is happening. It's funny... my always said that I should be a politician, because for the most part I am direct and honest.  And I said.... with whose money?  lol 

Overall, I also like your solutions... as several have stated, have a term limit and maximize funds from contributors. The problem I see is... which politician is going to vote this into congress?  lol Especially the term issue.  But hey, we need to start some where, right?  One thing though about the lower interest rates?  It will hurt everyone down the road, even those that got the low rates.  We will all be paying for this some time soon.

 

PAUL.... . I hate to say this, but the President doesn't need to wake up.  He is smart enough to know what is going on. The problem is, he has an agenda and he simply just doesn't care.  Come on people, the writing is and has been on the wall by the Presidents actions.  I hate pointing fingers, but I have talked to some very smart people about this and we need to stop giving him the benefit of the doubt. He won't change and he is bringing us down just for his own ways and those pulling his strings, because of previous promises and handshakes.  And thanks for the warm welcome back...

GENE.... . I agree and many have basically stated the same thing. The question is, how do we get these corrupt politicians out by next term?  And who do we trust not to do the same and sell their souls to the devil per se.

JEFFREY.... . two excellent answers... and in regards to the revolt... ask my parents about my thoughts on this?  I need to be careful because of big brother.... but this could be a solution.. but the consequences if caught nowadays are much worse than back during the revolutionary war time.  Ps... to many ears out there to listen in and disrupt any such revolt.

JOHN & JANIS.... . sure, the vote.  But that vote is corrupt on many levels by those lying or buying votes... or misleading until it's too late. We need to wipe the slate clean of all politicians and start over.  But how?

CURT.... . yes, we are partially to blame ourselves... and many believe that if you vote, you can make a difference... but sorry, choice A or B usually suck now. So then what?   One nail that you hit on the head and I am a firm believer on is that ... yes, they don't care about us Americans anymore... and this is sad and pathetic.  SO how do we go about this?  Yes, I agree, we need to limit the terms. But again, how can this be done?  You think Congress is going to vote this in?  hhhhmmmm... Me thinks not... so then what?  How?  Thanks for your feedback, input, and for the polite compliment.

 

RUTHMARIE..... . I do thank you for your comment... but I am trying to get a good read on it and to understand it. I think you are saying that I am stating the same things as a solution as the Hoover administration has stated?  And then you go on to say, "If the government had increased the deficit and helped the populous, and poured money into institutions you wouldn't have had people starving in the streets."....

Is that what the Hoover administration said?  What our current gov't has said?  I will say this... I don't believe in that thought process and I argued that same point above, in my post. I don't believe that kind of spending will solve our problems..  It might be a very quick fix... which will prolong this economic problem for more years to come. Again, just my opinion....  but we have nothing else to fall back on to actually drag us out of this mess. We don't have anything close to a World War II in the near future to help us... so then what?  How?   thanks

 

Dec 29, 2009 06:37 AM #30
Rainmaker
153,944
Kathy Opatka
RE/MAX CROSSROADS - Ocean City, MD
Serving Ocean City, MD, & The Delaware Beaches

Jeff,

I love how you write; no mincing words with you!  My answer is..... there are NO BOLTS holding things together..... we just have an overabundance of NUTS!!!

Dec 29, 2009 07:03 AM #31
Rainmaker
1,574,869
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Jeff, we're doomed. I can't think of anything positive to say.

Dec 29, 2009 07:32 AM #32
Rainer
80,995
Gene perez
Greater Mortgage Solutions & Valley Hills Realty - Santa Maria, CA

I guess you did not get the memo I think it was in August when Bernanke declared the recession was over ???????????

Dec 29, 2009 10:05 AM #33
Rainmaker
225,638
Mark Watterson
Salt Lake City, UT
Utah Real Estate

I wished you were wrong.  

I have been become more and more convinced over the last couple of years our country's is in deep trouble and direction we are headed is only changing for the worse.

Dec 29, 2009 11:09 AM #34
Rainmaker
52,501
Roy Paeth
Keller Williams Inspire - Geneva, IL
Just a regular guy helping real people!

Mark i completely agree with you. I think we had this little conversation about the seller down payment assistance program that was in place (little to no cost to the American tax payer) vs the homebuyer tax credit program (huge cost to the tax payer). The artificially low rates have already started their creep higher and cost the tax payer billions. What is going to happen to the rosy economic reports that some in the current administration would have you believe once rates move higher. I wrote a post about the increased down payment and higher score not meaning squat if someone loses their job. Add of this in with more and more regualtion imposed by people who have no knowledge about our business and i think you have a recipe for disaster.

By the way have a Happy New Year!!

Dec 29, 2009 03:59 PM #35
Anonymous
joseph

Great post Jeff. I luv it when the real meat and potatoes are thrown out there and people are challenged to face the nonsense that encompasses our economy. Obviously common sense and logic do not keep politicians in office and pay for their campaings/paychecks. I am disgusted to no end to know that NO ONE in office gives a rat's rear about what the vast majority is screaming about. Making things better is not what they want. It looks like they are doing something when they add more garbage and rules. Just enforce the law's we have. They just dont care about the irreversible damage they are leaving behind for others. Don't get me started. Again great post!

Dec 29, 2009 03:59 PM #36
Rainer
85,892
_ _

Jeff, welcome back!  I really enjoyed this post.  The sad truth is that the govt is keeping the rates artificially low to try and prop up property values and delay a contraction that needs to happen.  Since the majority of this country operates paycheck to paycheck, property values are directly tied to how much a buyer can pay on a monthly basis.  If rates went to 7%, there would still be buyers, but they couldn't afford to pay today's prices and values would probably drop another 20%-25%.  Ouch.

I agree with you that the govt. seems to be kicking the can on this, but what worries me is that they can't kick it forever and economic forces will eventually roll this stone over to reveal all the nasty squirmy grubs underneath.  Unfortunately most Americans are content to be ignorant until that day.  I'm scared of what happens after everyone figures it out.

"You mean the Government has been conspiring to fleece the wealth of it's own citizens?!"

Dec 30, 2009 12:51 AM #37
Rainer
288,529
Thomas McCombs
Century 21 HomeStar - Akron, OH

There seems to be a consensus building that we need to impose term limits on our politicians.  Go easy on this!

We need to discriminate between the good ones and the bad ones. Vote the bad ones out but leave the good ones in. It takes a lot of time to learn to be a good legislator. If we are indiscriminately throwing them out we will wind up spending all our time training and getting very little else done.

The opportunity to stay in office provides an incentive to do good work.  What kinds of incentives would there be if everyone knew that he/she would be gone after two terms? It takes time and effort to study the issues and the office holders but if we are not willing to do this, we deserve what we get. Throwing them all out on a strict time schedule is not the answer IMHO.

 

Dec 30, 2009 06:35 AM #38
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

CK Mortgage aka MICHAEL..... . sure, the number of loans done by mortgage brokers is way done... sure, they are being forced out of the business. But you know what?  My argument isn't about that. Sorry, I have been a mortgage banker 16 of the 17 yrs that I have been in this industry. Sorry, but I don't give a rats ass about that argument... and sorry, but i knew more mortgage broker companies that were sweat shops, that were unethical.We need to hold the broker more accountable. Yes, there are always a few rotten apples in each bunch. But in many cases, the broker didn't care as much once the loan closed, because they weren't held liable for the loan on their warehouse line. Bankers, well,they have a lot more responsibility... and they have more skin in the game.

But seriously...  we could argue that all day. I am not a Bank of America or a Wells Fargo... we are a mid-sized banker, and yes, we don't have to show yield spread.  But come on...  it's way too easy to explain the difference, even if I had to share it or not. Look at the rate, the APR, and the total costs to the borrower. The YSP is not factored in that. An excellent loan officer can explain both sides of this. Not saying you can't... but I really hate this argument.  Let's focus on the rest of the new GFE and how this will affect shopping... the MDIA... and now, that there are 6 trigger points in order to give out a GFE, which will hinder good mortgage shopping.. no matter if you are a broker or a banker. In my opinion....these are the issues that we need to address.

Now, I will agree.... the licensing fees for many states have increased big time... and this will even hurt the good loan officer and or mortgage company. The gov't finding a way to make more money, and giving false hope to the consumer, thinking that they will be protected.  False Hope... something that our gov't is great at.  Deception... I am soooo tired of it.

Lastly... I agree... no more gov't... just better use of what we have... and stop this crap of selfishness and greed... And thanks for that polite compliment... much appreciative.

jeff belonger

Dec 30, 2009 07:01 AM #39
Ambassador
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Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

Ha ! He's back ! ... and didnt skip a beat :o)

I cant make head nor tail of why the new GFE requirements will do anything other than slow the whole process to a crawl, and then throw in the HVCC mandates that caused havoc with out of region appraisers not being as accurate as maybe they should, and we finished the year off on a terrific foot huh !?!?!?

lol

Oh well, I got an iPod Nano 16 gig with video player for Christmas, so some good came from the end of the year ....

Cheers brutha !!!!

Dec 30, 2009 08:10 AM #40
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

JOHN.... .  a few things... I think they will extend it in July...  not sure why it was extended for such a short time this time...  but they are just trying to see what it does, again?   lol  Or that they are trying to phase it out?  In regards to about undoing some of this?  That would have never happened... sorry, these politicians are smart enough and know what they are doing.  They are either being stupid about it, or just greedy and selfish. And this is very sad...  Yet, we will pay for these mistakes and these politicians are basically safe on many matters. A life time pension and lifetime health care.... things need to change and change now. In any case, no,not busy... just got burnt out after 3 years of blogging. And thanks for the warm welcome and for the polite compliment.

JP.... . I like that, a warning label... lol  Kind of like the smoking warning labels. And in regards to your comment, I think many of us see this, that many of these new rules and regulations aren't protecting the consumer...  just more work and some smoke screens. In any case, thanks for that awesome compliment...

KATHY.... . thanks for that compliment. I hate to be and or sound negative... but I think that is our problem. So does the gov't and media, hence when so much misinformation is given out there...  we need to hear thr truth.  With the truth being told, then maybe we can come up with real solutions...  thanks

LYN.... . I agree... and just as I told Kathy above you, I hate writing about the doom and gloom.. but you know what, someone needs to and we need to wake up the average consumer that keeps falling for the government's "hope" speeches... especially the president's. I am tired of hoping... I really am. Let's do something about it and stop being stupid in these decisions that take us down the wrong paths.

GREATER MORTGAGE aka ...... .  lol.... the problem with this kind of talk is that the definition of recession is not that good in my opinion. All is takes is one quarter to be .001% in the positive... and this flip flop mentality is what says if we are in a recession or not.  A recession is normally the drop in spending.  And gee, around this time of year, every year, doesn't spending increase over the past, no matter what the activity has normally been?  And all of this is not explained.. yet, the writing is on the wall... it's bad out there.  But we are led by these types of numbers, just when something is slightly good, it is suppose to give us "hope"...  don't get me started on that word and who started to use it often in the last year.  ;o)

MARK.... . hell, this is one time that I wish I was wrong also...  I love being right, and this one sucks in my opinion. How come we have to dig very deep for that news that says that it's bad out there and has gotten worse?  Because the gov't and media controls it and wants us to hear what we want to hear... "hope"... thanks

 

Dec 31, 2009 12:15 AM #41
Rainer
295,550
Stephen Kappre
KW Hometown - Mantua, NJ
Helping You Home

Interesting that the explosion of equity got us into this mess, and the lack of equity is at the center of the problem. Butt-ugly loans were masked under double digit equity increase, because even those who defaulted could quickly sell in a hot market, so foreclosures were rare - not becasue of good loans, but due to "false equity". Jobs would make a huge difference. And helping people with equity issues probably a much better choice then loan mods (even though they cross lines).

Jan 01, 2010 03:19 AM #42
Ambassador
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Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services

Jeff- I came by to wish you a very happy new year! Your posts are very detailed and full of information. Thank you for a year of very well written and passionate posts. Katerina 

Jan 01, 2010 02:53 PM #43
Ambassador
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Tracy Santrock
Fonville Morisey/Santrock Realty Group, Inc. - Cary, NC
Raleigh - Cary Realtor/Broker In Charge

Jeff, Keep up the good work and fabulous posts!  You are like the energizer bunny and the market certainly has changed over the past few years!  Best wishes in 2010!

Jan 01, 2010 03:36 PM #44
Rainmaker
1,062,144
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Hey Jeff just wanted to stop by and wish you a Happy New Year. I just told a local mortgage broker that they should get into blogging and gave them your blog as an excellent reference point for other successful mortgage brokers who do well with it:)

Jan 02, 2010 02:49 AM #47
Rainmaker
107,841
Dana Devine
Charles Rutenberg Realty - Apollo Beach, FL

i saw the new screwed up 2010 GFE on Friday...4 pages....how can going from 1 page(which the average consumer/buyer could not understand) to 4 pages suppose to help the buyer?

and it does not show PITI...who makes these decisions

Jan 10, 2010 07:27 AM #48
Rainer
100,401
Dianne Bartlett
Brightside Realty, LLC - Austin, TX

Jeff:  Great post.  I was listening to Caroline Myss yesterday, and she talked about how human beings are "needy and greedy."  I think that applies to our government, too.

Jan 11, 2010 01:13 AM #49
Rainer
334,480
Tom Davis
Harrington ERA,DE Homes For Sale, $$ Save $$ Buy Today ! - Dover, DE
FREE Delaware Homes Search!, $$ Save $$ - Find Homes! Delaware Realtor

I just think all this recent stuff is non-sense.... I don't understand why this merry go round of issues... I think things need to be well thought out before the government goes releasing changes. 

This is a terrible thing to always be reading and applying negative info to my business...it is trying to drown me alive...

I am floating .... but like all thinks that float... it can sink if you don't take good care of the float.

Real estate agents, lenders, and amercans need to be UNITED and stand up to this.... I've been emailing and following up with representatives. 

ARE WE BEING HEARD or WHAT???

Jan 21, 2010 02:54 PM #50
Rainmaker
343,891
Don Wixom
RE/MAX Executives Nampa, ID - Nampa, ID
"Looking out for your next move..."tm

Jeff, great post! I wish we had more answers to the problems.  There are immediate economic needs which can be "band-aided" in a way that will hurt us all in the long term, but yet something needs to be done for the nasty now and now...

Jan 23, 2010 01:09 PM #51
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