Maybe this month I will not make my mortgage payment. Then, skip January and February too, and then I’ll be 90 days late so I can qualify for the homeowner’s assistance that was just passed through Congress. At that point, my mortgage payment will be reduced to 31% of my gross monthly income (good news if I lost my job). My rate will be set as low as 3% for five years, and amortized for as much as 40 years. Apparently there are 2.2 million borrowers that would benefit from this just like me. DO NOT GET ME WRONG here, I am all for helping out those in need. Those that have had the misfortune of a real estate market gone bad, a layoff , etc. Sometimes, however, the consequences are hard to process in my brain. I pay my bills, and , if I get laid off, I would work at Wal Mart if I had to , or wait tables, or something, in order to feed my family. Where does the buck stop between those of us that are ‘taking a bat for the team’, and those that will manipulate the system to benefit themselves? We saw it happen with FEMA assistance after Katrina (remember that?), and we will see it again. How will we be able to differentiate between those people that are really in need, or looking for a handout? Didn’t we all at some point benefit from (a) subprime, (b) stated income (c) high debt to income ratios, etc…………Are the people that foreclosed the ones that had those types of loans? Probably. But we will never know.
In the last couple of weeks, I have advised several people to contact HOPE NOW, the non profit agency that was formed in June 2007, to help persons renegotiate with their lenders. They have helped 2.5 million people avoid foreclosure since then. Even if temporarily. When you do foreclose, your credit will be affected. You will not be able to obtain another conventional loan for 5 years, or an FHA loan for 2 (FHA loans are limited to $270,050, currently). If you do a short sale, you will still fall into the same category. You are settling for less than the owed amount. In leiu of foreclosure. It is like a collection. So where will all these people go? They will be renters….time to buy a rent house! IT is a great time right now to be an investor…….If you can get the loan.
INVESTORS, in my opinion, have been hardest hit by the credit crunch. Maximum 4 properties financed, 20% down (rate is MUCH better if you do 25%), and full documentation of income. There are a lot of investors that do not meet that criteria. Who will buy these homes? The answer is, the investors that have cash, or form investment groups where they have multiple partners to qualify on the application. Or hard money for 14% and 5 points origination. Seriously. Hopefully some smart and savy financier will invent a product to service this segment of the market to allow these homes to be bought. That could be why much of the inventory is sitting there. In the past, the programs available allowed for investors to gobble up properties at a record pace. They balanced the market. Or did they? I have been searching for statistics on how many foreclosures were investment properties. I have not found it yet. But will keep you posted. So would we have been in this situation before now, or ever, had they never been able to get 0% down, stated income on an investment property? It sounds preposterous, doesn’t it?
Lastly, I would like to comment that RATES ARE DOWN THIS WEEK! The mortgage market continues to stay steady, and loans are definitely available. If you have CASH, CREDIT AND INCOME, you will have no problem at all. The key word is proof , proof, proof. Sometimes I wonder how we even deviated from that?
Friday, November 21, 2008
Friday, November 7, 2008
Last week’s article caused a few dissenters from our recipient list. There were a few comments I made alluding to a particular party, and some found it distasteful. My sincere apologies, and we wish you well. For those of you that have stayed (and are reading now) thank you! It is important for all of us to be able to reach across party lines, regardless of our beliefs, and embrace opinions of others. Also, I would like to say that politics has EVERYTHING to do with interest rates. The markets. All of it is based on feeling, cause and effect, and predicting behavior. Now that the election has passed, I am happy to report that the mystery is over, and the mortgage rate markets settled DOWN .375% in a 24 hour period following the election.
As an optimist, I would like to comment that there seems to be a spirit of renewed hope in the air, and for that I am thankful. Although I did not vote for the Democratic Party, I am encouraged and hopeful that our new President will serve our country with best interests at heart. He has proven that he gave a majority of our country (37 million persons!) the prospect of change. If that is what my peers call for, then I am here to accept that. And it seems the market is too!
ARE WE IN A RECESSION?
Can we just call it a national recession already? The ONLY authority over making this call is the National Bureau Economic Research. Not the Prez, not the Fed Chairman. According to the NBER's Web site, a recession "is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." We lost a total of 1.2 million jobs (October to date), which puts unemployment at 6.5%. National home sales continue to decline. In 2008, hundreds of major banks, 5 of them being large household name banks, have gone capput. (Ex: Wachovia, WAMU, Indy Mac). When will this branch of government stop avoiding the inevitable?
IS MORTGAGE JUSTICE BLIND?
Why do mortgage lenders not rush to rework and renegotiate mortgages with homeowners? It is easier said than done. The world of securitization has changed dramatically. The loans are pooled together, and sold on the secondary market, with minimum rates of return guaranteed to investors. These pools are sold to a ‘master servicer’ which now holds the power to rework the loans. The bad news is, that the master servicers have an obligation to the investors. Should they rework the loans, the investors would suffer major losses on rates of return. Innocent bystanders that invested in these mortgage pools, much like your 401K fund or investment portfolio. Many of us are /were invested in these types of pools, and did not even know it! So my point of this commentary is: Easier said than done.
ARE BANKS LENDING MONEY?
Yes, they are. The mortgage market is running status quo. Tighter requirements, but money is flowing, and steadily. Rates are low (5.75% on a 30 fixed!) . If you have good credit, money for at least 3% down, and can prove your income, you are fine! The markets that have really tightened are commercial /business loans. Regional as well as national banks have severely tightened their guidelines, that has resulted in companies’ ability to do business and grow is drastically impaired.
The largest sector close to our hearts that I have seen affected is builders. Spec loans are becoming a thing of the past, or very difficult to obtain. Smaller spec builders I am not sure how they will survive. The larger ones, are cutting back tremendously. If you have current inventory on the ground, you must sell before starting new projects. There are some deals to be had I imagine, as the end of the year approaches, and builders need these loans off their books. As for Patriot Bank Mortgage, we are stronger than ever. Our conservative approach to lending over the past year has paid off. We do deals that make sense. We are awarded by our investors in the form of reduced rates and streamlined requirements. We are small enough to serve and know our customers each by name, but large enough to serve them with the most rapid, competitive and courteous service in the industry. We hope you will give us an opportunity to earn your business!
As an optimist, I would like to comment that there seems to be a spirit of renewed hope in the air, and for that I am thankful. Although I did not vote for the Democratic Party, I am encouraged and hopeful that our new President will serve our country with best interests at heart. He has proven that he gave a majority of our country (37 million persons!) the prospect of change. If that is what my peers call for, then I am here to accept that. And it seems the market is too!
ARE WE IN A RECESSION?
Can we just call it a national recession already? The ONLY authority over making this call is the National Bureau Economic Research. Not the Prez, not the Fed Chairman. According to the NBER's Web site, a recession "is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." We lost a total of 1.2 million jobs (October to date), which puts unemployment at 6.5%. National home sales continue to decline. In 2008, hundreds of major banks, 5 of them being large household name banks, have gone capput. (Ex: Wachovia, WAMU, Indy Mac). When will this branch of government stop avoiding the inevitable?
IS MORTGAGE JUSTICE BLIND?
Why do mortgage lenders not rush to rework and renegotiate mortgages with homeowners? It is easier said than done. The world of securitization has changed dramatically. The loans are pooled together, and sold on the secondary market, with minimum rates of return guaranteed to investors. These pools are sold to a ‘master servicer’ which now holds the power to rework the loans. The bad news is, that the master servicers have an obligation to the investors. Should they rework the loans, the investors would suffer major losses on rates of return. Innocent bystanders that invested in these mortgage pools, much like your 401K fund or investment portfolio. Many of us are /were invested in these types of pools, and did not even know it! So my point of this commentary is: Easier said than done.
ARE BANKS LENDING MONEY?
Yes, they are. The mortgage market is running status quo. Tighter requirements, but money is flowing, and steadily. Rates are low (5.75% on a 30 fixed!) . If you have good credit, money for at least 3% down, and can prove your income, you are fine! The markets that have really tightened are commercial /business loans. Regional as well as national banks have severely tightened their guidelines, that has resulted in companies’ ability to do business and grow is drastically impaired.
The largest sector close to our hearts that I have seen affected is builders. Spec loans are becoming a thing of the past, or very difficult to obtain. Smaller spec builders I am not sure how they will survive. The larger ones, are cutting back tremendously. If you have current inventory on the ground, you must sell before starting new projects. There are some deals to be had I imagine, as the end of the year approaches, and builders need these loans off their books. As for Patriot Bank Mortgage, we are stronger than ever. Our conservative approach to lending over the past year has paid off. We do deals that make sense. We are awarded by our investors in the form of reduced rates and streamlined requirements. We are small enough to serve and know our customers each by name, but large enough to serve them with the most rapid, competitive and courteous service in the industry. We hope you will give us an opportunity to earn your business!
Wednesday, November 5, 2008
We Close Loans in 2 Days!
Have any of these happened to you lately? ·
Is your buyer getting last minute conditions they can’t satisfy? ·
Are lenders letting your buyer fall through the cracks making you miss close dates? ·
Are processors sitting on conditions causing you to have to push close back?
All of these create fallout! And when fallout occurs, buyers don’t close, AND YOU DON’T GET PAID!!!
Let me tell you a quick story… We had a realtor call yesterday and explain that the lender they were using denied her buyer’s loan last minute due to extra conditions that couldn’t be met. Those buyers were in my office at 10:00 yesterday morning for the first time. We took the application, processed it, underwrote it, and SENT DOCS TO TITLE AT NOON TODAY!!!! That’s right , 26 hours and we had docs!!!
Do you have fallout? SEND IT TO ME NOW!!!
If you know of someone who could benefit from my services, please give me their name and number, and I will be very happy to contact them
Is your buyer getting last minute conditions they can’t satisfy? ·
Are lenders letting your buyer fall through the cracks making you miss close dates? ·
Are processors sitting on conditions causing you to have to push close back?
All of these create fallout! And when fallout occurs, buyers don’t close, AND YOU DON’T GET PAID!!!
Let me tell you a quick story… We had a realtor call yesterday and explain that the lender they were using denied her buyer’s loan last minute due to extra conditions that couldn’t be met. Those buyers were in my office at 10:00 yesterday morning for the first time. We took the application, processed it, underwrote it, and SENT DOCS TO TITLE AT NOON TODAY!!!! That’s right , 26 hours and we had docs!!!
Do you have fallout? SEND IT TO ME NOW!!!
If you know of someone who could benefit from my services, please give me their name and number, and I will be very happy to contact them
Saturday, November 1, 2008
YOU are going to fix the economy, not some politician
Some days I wish we could just turn back the time to 2003. Life was great. Everyone was prospering. But then again, we learn the most from our failures by hitting bottom, unfortunately.
Recently, I have become somewhat of a Dave Ramsey junkie. He is that off the wall financial guru that has a ‘tell it like it is’ attitude. He is honestly blunt, kind of like my internist. That is why I like both of them! I am not much of a sugar coater either. Just tell me how it is. Well, this week, his blog had some really great thoughts I wanted to share. “ I am here to remind you that YOU are going to fix the economy. Waiting for money to be taken from others and given to you is a spirit of envy, and its wrong”. Wow. That is pretty strong stuff. We do like handouts, don’t we? As a society I mean. The easy money. The 20% annual returns on our home values (for unlimited years in a row), or the 12% annual returns on our stocks, or , how about this one….buying a foreclosure and expecting that you will get 50% of the value just because it is owned by a bank.
Come on fellow Americans. Whatever happened to working hard for our money and embracing the free market philosophy? Isn’t that what our country was built upon over 200 years ago?
Speaking of handouts, there is a presidential candidate who has referred to households earning over $250,000 a year as ‘rich’ and that “they can afford to give up a little of their money so the less fortunate can have more tax breaks and prosper.” SAYS WHO???????????? Just because you work hard and take risk and have made sound decisions for yourself, you should give up some more of what you have earned ? By the way, there are many persons that make $40,000 a year, that have more savings than those earning $500,000. Where will it stop, this sharing of wealth and prosperity? Should we all have equal returns on our investments too? Should college students that have a 4.0 give up 1.0 so that the 2.0 average students can have equal opportunity for their careers? Of course not.
Like Dave Ramsey said, YOU control our destiny. YOU make your choices. YOU will turn this country around by your individual actions. Should the corporations that took the risk to leverage themselves on mortgage backed securities take the handout from the government so they can now prosper? Is it ok for the banks to be relieved, but homeowners still struggle? Shouldn’t we, the people, get some relief too? Or how about digging a little deeper, folks. When a possible Foreclosure Aid package is given (in the works now), where will be the differentiation between those foreclosures that were caught in bad times at no fault of their own (layoffs, sickness, etc) , and those persons that took advantage of the system either by fraud or lying about their income on their loan application?
You see, I am a bit harsh and opinionated on this subject. I agree with Dave Ramsey. Each of us chooses our path. If you can’t pay the mortgage, get a paper route to help pay for it. We have all made choices along the way, that have shaped our lives we live today. We chose the adjustable rate mortgage because the payment was $150 lower than the fixed. We chose not to pay attention at closing when we signed the paperwork (I still do not understand how that one is possible), we chose to take a family trip when things were tight and now cannot pay the mortgage. The list really could go on. Ultimately, we only have ourselves to blame.
How does all this relate to mortgage rates? Well, rates are determined by the sentiment of the economy. Wall Street reflects the feelings of you and I. They react to news, to reports, to indexes. They (traders) get scared and worried just like we do, and that reflects in buying habits. That is what moves the rates up and down. Uncertainty is not good. That is for sure. Yes, things will improve after the uncertainty of the election is gone. Regardless of who wins.
A report came out this week that consumer confidence is at an all time low. Well of course, the media does a great job of blasting it every breath they get! But it really is reality that we as a nation are in a recession. There are pockets of the economy, like Houston for example, that are doing fine. Adding jobs!!!!!!! But for the sectors of our economy that are suffering and affecting us all (like the stock market) did we bring it on ourselves? The small actions of years ago compounded, that brought us here today? The over spending, the ridiculous returns on investment, the choice to turn a blind eye to warning signs. I have always been somewhat of a glutton for punishment. If I deserve something , for my actions or lack thereof, I face the music. Suffer the consequences. Move on. Take control of your destiny. Don’t let the government or anyone for that matter (even your in laws!) tell you how to live your life or spend your money. Do what you think is best for you and your family. If you make sound decisions, the rest will fall into place.
Last but not least, I would like to thank all of you that reply with your comments, your praises, and your material! There are a few of you that send me articles constantly (you know who you are), and for that I am thankful! It really helps me see what topics are important, and helps me decide what you want to hear. Please keep sending them!
Recently, I have become somewhat of a Dave Ramsey junkie. He is that off the wall financial guru that has a ‘tell it like it is’ attitude. He is honestly blunt, kind of like my internist. That is why I like both of them! I am not much of a sugar coater either. Just tell me how it is. Well, this week, his blog had some really great thoughts I wanted to share. “ I am here to remind you that YOU are going to fix the economy. Waiting for money to be taken from others and given to you is a spirit of envy, and its wrong”. Wow. That is pretty strong stuff. We do like handouts, don’t we? As a society I mean. The easy money. The 20% annual returns on our home values (for unlimited years in a row), or the 12% annual returns on our stocks, or , how about this one….buying a foreclosure and expecting that you will get 50% of the value just because it is owned by a bank.
Come on fellow Americans. Whatever happened to working hard for our money and embracing the free market philosophy? Isn’t that what our country was built upon over 200 years ago?
Speaking of handouts, there is a presidential candidate who has referred to households earning over $250,000 a year as ‘rich’ and that “they can afford to give up a little of their money so the less fortunate can have more tax breaks and prosper.” SAYS WHO???????????? Just because you work hard and take risk and have made sound decisions for yourself, you should give up some more of what you have earned ? By the way, there are many persons that make $40,000 a year, that have more savings than those earning $500,000. Where will it stop, this sharing of wealth and prosperity? Should we all have equal returns on our investments too? Should college students that have a 4.0 give up 1.0 so that the 2.0 average students can have equal opportunity for their careers? Of course not.
Like Dave Ramsey said, YOU control our destiny. YOU make your choices. YOU will turn this country around by your individual actions. Should the corporations that took the risk to leverage themselves on mortgage backed securities take the handout from the government so they can now prosper? Is it ok for the banks to be relieved, but homeowners still struggle? Shouldn’t we, the people, get some relief too? Or how about digging a little deeper, folks. When a possible Foreclosure Aid package is given (in the works now), where will be the differentiation between those foreclosures that were caught in bad times at no fault of their own (layoffs, sickness, etc) , and those persons that took advantage of the system either by fraud or lying about their income on their loan application?
You see, I am a bit harsh and opinionated on this subject. I agree with Dave Ramsey. Each of us chooses our path. If you can’t pay the mortgage, get a paper route to help pay for it. We have all made choices along the way, that have shaped our lives we live today. We chose the adjustable rate mortgage because the payment was $150 lower than the fixed. We chose not to pay attention at closing when we signed the paperwork (I still do not understand how that one is possible), we chose to take a family trip when things were tight and now cannot pay the mortgage. The list really could go on. Ultimately, we only have ourselves to blame.
How does all this relate to mortgage rates? Well, rates are determined by the sentiment of the economy. Wall Street reflects the feelings of you and I. They react to news, to reports, to indexes. They (traders) get scared and worried just like we do, and that reflects in buying habits. That is what moves the rates up and down. Uncertainty is not good. That is for sure. Yes, things will improve after the uncertainty of the election is gone. Regardless of who wins.
A report came out this week that consumer confidence is at an all time low. Well of course, the media does a great job of blasting it every breath they get! But it really is reality that we as a nation are in a recession. There are pockets of the economy, like Houston for example, that are doing fine. Adding jobs!!!!!!! But for the sectors of our economy that are suffering and affecting us all (like the stock market) did we bring it on ourselves? The small actions of years ago compounded, that brought us here today? The over spending, the ridiculous returns on investment, the choice to turn a blind eye to warning signs. I have always been somewhat of a glutton for punishment. If I deserve something , for my actions or lack thereof, I face the music. Suffer the consequences. Move on. Take control of your destiny. Don’t let the government or anyone for that matter (even your in laws!) tell you how to live your life or spend your money. Do what you think is best for you and your family. If you make sound decisions, the rest will fall into place.
Last but not least, I would like to thank all of you that reply with your comments, your praises, and your material! There are a few of you that send me articles constantly (you know who you are), and for that I am thankful! It really helps me see what topics are important, and helps me decide what you want to hear. Please keep sending them!
Subscribe to:
Posts (Atom)