Let's Get Ready To Rumble!* Fixed Rate Vs. Adjustable Rate

By
Mortgage and Lending with Bank of England (NMLS#418481) NMLS# 1046286

Announcer One:  Welcome to the BBO's (Bob's Box Office) coverage of the rubber match between the reining worldBBO's sport Cap champion Fixed Rate Mortgage vs. the challenger, a scrappy not to be put down roust about, the Adjustable Rate Mortgage.

Coming into today's bout both competitors have had their day in the sun.  The Adjustable Rate Mortgage experienced a meteoric rise in popularity during the recent boom in real estate values, but has been experiencing a strong downturn in consumer sentiment as housing prices have stagnated and interest rates have risen.

During this same time period, while still making up the majority of home loans made, the Fixed Rate Mortgage lost some of it's luster in the eyes of the public due to the cost associated with having the interest rate fixed.

Announcer Two: That's right Bob.  Many folks were simply too impressed with the Adjustable Rate Mortgage's low payments to even consider the down side risks involved.

adjustable rate mortgageAnnouncer One:  Good point Bob, wasn't it also true that with the rise in home prices, particularly on the coasts, that an Adjustable Rate Mortgage was the only way that many people were able to qualify to purchase a home?

Announcer Two:  True Bob, but, correct me if I'm wrong, but isn't it these very people who are in the most trouble as the loans that they took in order to keep their payment down have entered into the adjustable phase of the loan.  That many of these people can no longer afford the new, higher payment?

Announcer One:  Another excellent point Bob!  To make matters worse, many of these home owners who used an Adjustable Rate Mortgage to qualify to buy the house now own houses that are worth less than what they were when they bought the house and are stuck between a rock and a hard place.

Announcer Two:  Exactly Bob!  They no longer can afford to own the house, but since it's value has gone down, they cannot afford to sell the home to get out from underneath the debt.

Announcer One:  That brings us to an excellent time to introduce a very special guest.  Former world heavy weight champion, Payment Option Arm!   Payment Option Arm, welcome to our telecast of today's fight.

Payment Option Arm:  Thank you bery much. I'm appy to be ere.Punch drunk boxer

Announcer One:  So, Payment, it sounds like you've still been getting beat up here lately.  Is it true that even Congress is looking into allegations that you're the cause of the recent troubles in the real estate industry?

Payment Option Arm:  Yeah, it's tru.  Everybody wants to blame me.  Day say that I wasn't honest with da people.  That I didn't tell dem wat to expect.  That I ripped da people off.  And it's just nat tru!  Everybody that took me out knew wat 2 expect.  I didn't lie to nobody.  I even sent dem forms in da mail!  IN DA MAIL I TELL YA!  IN DA MAIL!

Announcer Two:  Okay big fella, it's alright.  Calm down.  So, who do you think is going to win today's battle?  The favorite, the Fixed Rate Mortgage or the underdog, the Adjustable Rate Mortgage?

Payment Option Arm:  IN DA MAIL! I tell ya.  I didn't do nything wrong!  I warned dem!  I truly did!

Announcer One (as Announcer Two directs Payment Option Arm away from the cameras):  Well folks, sorry about that.  It seems that Payment Option Arm has taken quite a beating here recently and might be ready for a rest.

Announcer Two (returning from sitting Payment Option Arm down - we can still hear him in the background though - I was robbed!  Look at my low payment!  IM DA BEST!  IM DA BEST!:  It's really sad Bob, Payment used to be one of the most popular loan programs around.  I wonder if just too many people abused the poor ole program?

Announcer One:  Well, that might be true, but for now, both fighters have entered the ring.  Let's hand it off to our ring announcer, Ben Bernanke.

Ben Bernanke

 

 

 

 

Ring Announcer Ben Bernanke:  LET'S GET READY TO RUMBLE!*

 

*("Let's Get Ready To Rumble" is a copyrighted trademark, it is used here as a parody) 

 

 

 

 

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

 

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Rainmaker
589,067
Cyndee Haydon
Charles Rutenberg Realty - Clearwater, FL
727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes
Bob I loved it - very creative and well done - now are you a realtor and a loan officer/mortgage lender? I know some people do both.
Jul 23, 2007 07:13 AM #1
Rainer
155,621
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)
Cyndee:  I do both.  I got into real estate in 1984 and in to the mortgage business in 1986.  I combined the two when I started ValueList in 1995.  Thanks for the comment!
Jul 23, 2007 07:17 AM #2
Ambassador
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Very creative take on this Bob!  I had the sound effects going off in my brain as I was reading.
Jul 23, 2007 08:00 AM #3
Rainer
78,499
Kim Murphy
Draper and Kramer - Lombard, IL
Mortgage Loans in DuPage, Kane, Cook, Lake, Will C
Great job on this!  The competition is already tough!  You have set the bar pretty high!
Jul 23, 2007 04:58 PM #4
Rainmaker
183,200
Janet Guilbault
Guild Mortgage - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender
Bob, this is SO funny! I love all 3 of the characters. Hey, you are pretty creative! (And I even felt sorry for the poor miserable option ARM)
Jul 24, 2007 02:26 AM #5
Rainer
155,621
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Jason, Kim and Janet:  Thank you for the kind words. I purposefully left the judgment of which was better out because I think that is like asking a false choice.  It depends upon the situation, even with poor, ole, beat up Option Arm!  Thanks for the compliments.

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Jul 24, 2007 02:31 AM #6
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert
Bob, I really enjoyed reading this, it was very well done and creative.
Jul 24, 2007 12:41 PM #7
Rainer
73,981
Sarah Eubanks
Hill Valley Financial Services - Oregon City, OR
Preferred Oregon Loan Consultant & Notary Public

Bob,

What a great laugh.  I enjoyed it thoroughly.  I must disagree with you, though Janet, as I despise the option ARM.  Oh well, somebody has to be the sympathetic type.  :-)  Looking forward to reading the rest of the classes thoughts and ideas.  :-)

Jul 25, 2007 06:08 PM #8
Rainer
155,621
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Thanks George and Sarah.  Sarah:  I read your profile and admire the 1 hour guarantee on calling back.  I used to offer something similar in that I would give $100.00 to a charity if I didn't call back within the hour.  You could have made a fairly humorous video of me scrambling for a phone coming out of the dentist office and such!

And I'm sympathetic to poor ole Option.  I even originated a few.  I liked to use them for people who were pretty bad off with consumer debt and didn't have the equity to do a cash out.  I would put them on the payment option arm with them paying the minimum and then taking what would have been the house payment and throwing it towards paying off the debt.  After the debt was paid off, the borrower could then throw what had been going towards charge cards towards the mortgage.  It worked most times, but I also saw people lose focus and simply incorporate the extra money into their spending..

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Jul 25, 2007 06:45 PM #9
Rainer
83,422
Rey Gallegos
Supreme Lending (NMLS ID #2129) - Las Vegas, NV
FHA, VA, Home Loans Las Vegas, NV
Bob,  I haven't laughed that hard in a LONG time!  In DA MAIL!!!  I love it.  You just got another subscriber to your blog!  This was a great way to present for the Carnival.
Jul 26, 2007 07:01 AM #10
Rainer
155,621
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Rey, thank you!  I'm glad that you enjoyed the post.  I enjoyed writing it!

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Jul 26, 2007 10:42 AM #11
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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

Bob....  this was very well done. It was funny and entertaining, while still giving us an idea of what has happened in the last 3 to 4 years. 

My only question is if I am reading this as a consumer, are you telling me to stay clear of Arms? Again, don't get me wrong, I like how you did this. But I feel as though something is missing for the public. Just my .02.

Sarah....  I am not going to talk about the guarantee that Bob mentions, but why do you despise the pay option arm?  Just curious...  usually when I make a statement, I give reason. But that's just me.

Bob.. again, nice layout.

jeff belonger

Jul 27, 2007 04:35 AM #12
Rainer
155,621
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Jeff:  I kind of left it open because I really don't feel that there is a "right" answer.  It all depends upon the borrower.  For the right borrower an ARM would be the way to go, but for other's the fixed rate is the way.

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Jul 27, 2007 06:32 AM #13
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Well done.  That was fun.

 

Jul 27, 2007 07:18 AM #14
Rainer
71,002
Thomas Weiss
Thomas R. Weiss - West Palm Beach, FL

Bob,

I really liked your post, you made it fun and interesting, by the way who's face was that middle guy :0) I am sorry I had to laugh...

Good Job,

Tom Weiss

Jul 27, 2007 12:07 PM #15
Rainer
155,621
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Thomas:  He was just some random guy that I found on the internet.  I thought that he looked like a punch drunk fighter, so I used his pic.   Thanks for the comment.

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Jul 28, 2007 02:26 AM #16
Rainer
229,296
Sarah Cooper
Real Estate Shows - Hurricane, WV
Incredibly creative twist for the contest!  Very good, Bob!
Jul 29, 2007 05:48 AM #17
Rainer
155,621
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Sarah:  Thank you for the positive feedback!

 

Bob Mitchell

ValueList 

Aug 01, 2007 02:32 AM #18
Rainer
39,748
Shane Sarae
Honolulu, HI
Thank you very much for sharing, I need to share this with the rest of my office.
Aug 19, 2007 05:11 PM #19
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