Under Construction!

Most of our readers have probably already heard about PMG and Flat Branch Mortgage joining forces. With this move coming at year end and the during the holiday season, it has been hectic to say the least. We have chosen to temporarily suspend our daily blog postings and our newsletter. We have had a few inquiries about this and we just ask everyone to be patient. We are working on the new website etc. and they are under construction. We should have it up and running ASAP. We just have a few more kinks to work out that have been a little more difficult than expected. If you have any questions, please call the Flat Branch office at 573-442-3850 or email eric@flatbranchmortgage.com.

Happy Holidays!

Brought to you by:
Flat Branch Mortgage

EXCITING ANNOUNCEMENT!

We are using this Blog as one way to pass along some exciting news! If you haven't heard yet, Professional Mortgage Group, Inc. and Flat Branch Mortgage Inc. are joining forces! That's right, Two of Columbia's Top Mortgage Lenders are now ONE! Starting January 1st, 2009 we will be one in the same and will operate under Flat Branch Mortgage. This is a move that ownership on both sides have been discussing off and on and the time is finally right! Flat Branch has the same goals in terms of growth and market dominance that Professional Mortgage Group has. We both finally came to the conclusion that during a market like this joining forces is the best way to achieve our goals. Flat Branch has built a great foundation and has the infrastructure that will be crucial to dominate the Columbia market. The In House Underwriting operation will allow us to work hand in hand with the underwriter. Gone are the days of waiting 72+ hours for a loan commitment! This means faster and better service for our clients and our referral partners.

For those of you who enjoy and benefit from reading this blog, receive our newsletter, and utilize our website, don't worry. All of these items will stay intact. http://www.pmg-inc.net/ will soon become http://www.flatbranchmortgage.com/. We will just work to grow them and make them bigger and better. This site will continue to be a great source for mortgage and market information to all that use it! There will be a transition period for this, but we will work hard to get the final product up and running as soon as possible. In the meantime the site will still have the basics to get the job done. In addition to these items, PMG brings our reputation, experience, expertise, and a large loyal client base.

Once Spring rolls around be on the lookout for a kickoff event to celebrate this exciting time and the upcoming buying season!

It is safe to say that 2009 will be an exciting one for Flat Branch Mortgage! To be growing during the worst mortgage crisis we have ever seen is pretty amazing!

On Another Note:

MBS Price skyrocketed last night and so far today. What does this mean? This means that as long as lenders pass along these gains, we will experience history yet again. For once this will be good history. We will have the LOWEST MORTGAGE RATES OF ALL TIME! Talk about a way to kickoff 2009! I have a feeling our In House Underwriters will come in very handy since the Underwriters and Processors at all of our competitors will be experiencing unprecedented backlogs!

Happy Holidays"

Professional Mortgage Group, Inc.

Are Mortgage Losses Near an End?

Are we near an end to the massive losses in the mortgage world? If any of you caught "60 Minutes" this past Sunday, you already know the answer. The answer is a resounding NO. I hate to say it, but I have wondered if this was the case. As a mortgage broker we know full well what products were being offered by lenders. Some were ultra aggressive and downright stupid. They were destined for failure. This is why we very rarely did subprime loans and never once marketed or closed a Pay Option ARM! Our clientele did not fit these products anyway, but it didn't take a rocket scientist to know these products were bad for borrowers. Fortunately our area was not hit as hard as others. Areas like California, Florida, Las Vegas, etc.. were playgrounds for risky loans like this and this is evident in what is taking place there. Numerous foreclosures are overtaking those markets!
The "60 Minutes" piece was a good one and I have included the link below. The gist of the article centers around how this 1st wave of defaults (Subprime) is nearing its end. This amounted to about $1 Trillion! Instead of the end that most people hoped, we are now predicted to enter a 2nd wave! This is the ALT-A and Pay Option ARM phase. This wave totals more than the 1st, around $1.6 Trillion! Pretty scary. This pool of toxic mortgages are expected to default at an astounding rate of 70%! If that happens, we are in for a few more years of this mess! Luckily this really won't hit Columbia or Missouri too much. We are mainly talking about these major firms and the national market. Unfortunately it ultimately comes back to affect us in some form or fashion. With all the Government is doing, lets just hope something can be done to help fight off this problem before it take full effect!

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

Brought to you by:
Professional Mortgage Group, Inc.

Politics...How Funny

What happened late Thursday evening and into Friday was instigated by one thing.....politics. I wish I could say that politicians looked out for their constituents and the general public but the reality is they simply look out for themselves. I'm not one to get into political discussions on a mortgage site but the issues that affect the U.S. economy and for that matter the global economy affect the mortgage industry and what transpires moving forward. Headline news is always on it's toes in affecting mortgage rates and many other aspects of our industry.

Case in point.....look at Illinois and Governor Blageovich. I could go on and on about things that politicians have done out of sure greed, devine right or because of some power trip. The difference between them and the others is they (the former) got caught. Just like everything else in life there are good seeds and bad seeds. Unfortunately what gets advertised the most are the bad seeds and how they sprouted!

Ok....back to my point. The lower states (i.e. Alabama, Tennessee, Georgia and others) are "right to work states" meaning they are non-union. They voted against the bill (all republicans) in essence to hurt the union workers and in particular get back at UAW (United Auto Workers) and protect the foreign auto makers like Toyota, Hyundai and Honda who have several plants in the lower states. Let's see where this takes us moving forward.

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

What We Could See Soon

We have seen history unfold right before our eyes over the past 12 months. We have witnessed companies that have been operating for over 150 years either get bailed out or file for bankruptcy protection. We have seen absolutely huge companies get billions of dollars from the U.S. government only to be back at the front door knocking just a few weeks later. We have seen massive layoff, closures, and cut backs from just about every company in every industry.

Financial institutions are now converting themselves to bank holding company's just to get access to Federal Aid in order to stay afloat. States are having real issues making payroll moving forward because they cannot sell state debt to fund their projects. Guess what.....this morning there was another huge announcement that is going relatively unnoticed. GMAC the auto and consumer lending company failed to meet the capital requirements to become a bank holding company. Per regulations they need $30 billion in capital to complete the transition however, less than 25% of the GMAC existing debt has been tendered to raise the capital required. It is projected that in order to meet this requirement they must have a commitment of about 75% participation in order to meet this requirement. Could we see another failed financial institution?

I recently spoke to a close friend of mine who exited the industry about a year ago and the news that he told me is shocking. Just yesterday his company (industrial) let go over 180 employees one of which had a tenure of over 35 years. He was very nervous about his own job and for the first time in his life was scared. No industry or profession is safe! Hospitals are laying people off because the economic crisis has people putting off health issues to save cash. Professional sports are reeling because they are scared fan support will be significantly decreased because of the economic times. Let's get this mess behind us and move forward being better people, parents, friends and professionals!

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

How Will Local Businesses Prevail?

We have talked quite a bit about the economy as a whole. It is bad, really bad. We all know this. The one positive is that the government is working hard to fix the problem. Not all that has been done has worked or will be the end all be all in the future, but it is progress. It is much better than sitting idle and watching everything crumble! They will eventually get it right, it is just going to take some time. While we wait for all strategies to take effect, what companies and small businesses will make it. By reading the national news we have seen numerous companies go out of business or file bankruptcy. We are talking 100 year old companies that have made enormous profits during all of the great years and they are crumbling due to 2 bad ones! Now that is amazing. It shows how much these large companies rely on debt to survive. They need it for their day to day operations and payroll among other things. As the credit markets dry up, they cannot operate! Scary! Now how will our local businesses fair? Our local economy is not nearly as bad as many others, but it is still reeling. We have seen many small businesses and restaurants close down. We have also seen other long standing businesses either merge with someone else or become a franchise. Others have chosen to layoff employees or put a hiring freeze into effect. It is really astounding to see all of the shuffling around and changes being made. This is simply going to happen though. Some of these companies rely on debt as well, but they also operate in the real world unlike these Wall Street Firms and other large conglomerates. Small businesses are much more cash based businesses. Money comes in, money goes out, and you goal is to make enough to earn a good living. If the money isn't coming in or if your expenses spike, it doesn't take long for an owner to realize a change must be made fast! If these large companies would have been smart they would have stocked away tons of reserves during the good years in order to sustain the bad ones. Instead they got greedy or just didn't make smart business decisions. Times will not always be good so you cannot run your business as if they will be. Lets hope Wall Street will take a page from the small business finance book and will do a better job moving forward.
For the most part I think Columbia will be ok, however I do see some further changes in the future. I would guess that more restaurants will shut down before all this is said and done. This iis an industry that is tough with lots of competition. Ask anyone who has had their own restaurant and they will tell you this! The core places will make it that have loyal customers. I also envision some additional layoffs in town. Nothing too crazy at this point, but Columbia has a lot of misc small companies or independent employees working in this area that could be affected. Lastly I see a handful of small companies going out of business. These will probably be companies that have a few direct competitors that have been around longer and are bigger versions of themselves. Many consumers are cutting back. With this, the same thing could happen to these small companies that happens in the restaurant world. If a family decides to cut back on eating out, but still want to go out occasionally they will probably stick with their 2 or 3 favorite places. They will not use one of the few times they splurge on a big meal to try a new place. As I said before, for the most part Columbia is doing pretty well considering all the adversity out there! I am also not writing this post to get everybody down. We all know what the economy is doing to businesses everywhere. If you have a favorite restaurant or business in the local area that you want to support, I urge you to do so. What better way to keep the money right here in Columbia. Even if we all did this, some companies still will not make it. Many times it isn't the economy either. Bad business models and other factors could have been their downfall. We can't keep all businesses afloat, but supporting our local economy will benefit us all!

Brought to you by:
Professional Mortgage Group, Inc.

Where to Start?

It looks like "The Big 3" are very close to working something out in hopes the government will give them a hand out of $25 billion or more. On another note it looks like a BIG company will look at bankruptcy to resolve it's financial woes....Tribune Company is short cash to pay it's creditors interest payments coming due on $12 billion in debt and has now hired a company to look into a possible Chapter 11 bankruptcy filing. This news has simply been shoveled "under the rug" on Wall Street as the DOW has opened up triple figures on the auto bail out plan and President Elect Barrack Obama's infrastructure plan.

The hits keep coming for other major employers in the U.S. as both 3M and Dow Chemical cut their earnings outlook and in turn slashed jobs and possible plant closings. I only hope as we near 2009 we have a wholesale list of good news to talk about. I am optimistic that 2009 will be better but by how much and how quickly are the key questions. Let's hope our soon to be President has the answers!

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

4.5% Mortgage Rates?

Yes you did read the headline correctly. Don't get too excited, because rates are not there yet. However, there is hope. First rates already dropped significantly on the news of the governments cash injection into the MBS market. This money has not even hit the market yet and they are already discussing injecting more money. There is also a group of lobbyists pushing the Treasury with a proposal on how to bring rates down to 4.5%. All the details of this are sketchy and I have read different news articles that each put a slightly different spin on the details. I read one article that said the proposal was for purchases only and not refinances. That would be a bummer and I can't see how that would work. Not only is it not Fair, with this scenario I could see many people trying to sell their homes just to upgrade and get the lower rate. More bang for he buck. I don't think this would be what we want. I even read about a "Fix Housing First" plan by a group that is pushing for 2.99% Mortgage Rates! Now that would be something! I question this idea, but it shows people are really trying to get this industry healthy again. It will be interesting to see. One nice thing is that just like the drop we saw last week, we don't need a special program or proposal to get rates low. Once all this money hits the MBS market we could see rates at 4.5% anyway. Is this a certainty...NO, but it is very possible.
All good news at a time when our industry lacks it! Please check back. I am sure more details will continue to be announced.

Brought to you by:
Professional Mortgage Group, Inc.

Rules of the Game Changing

We all know what is happening with the economy and just how far the fox hole goes. Or do we? I am in utter amazement as to the volatility we still face even in light of the government guaranteeing everything that contains a pulse! For instance, just Monday we saw 30 year mortgage rates hit 5.375% and yet today we will see rates at 5.75%. Though the former is still a fabulous rate what is intriguing to me is the fact that nothing has changed in the MBS environment to warranty this type of swing. In all my research, studying, and speaking with people the only thing I can gather is that "flows" (meaning the flow of money from the selling and buying side) have recently switched to being one-sided. Keep in mind the $500 billion directed by the government for the sole purpose of buying Agency MBS has not even hit the market yet.

On another note advertising by companies linked to the real estate industry is down over 62%......wow what a shock! Companies are doing everything imaginable to cut costs just to stay afloat during these very tough times. How about a hand out for the little guy? This just in.....Countrywide / Bank of America is being sued.......AGAIN! It's no secret that they have been actively trying to modify as many as 400,000 loans to help borrowers stay in their homes. However, some of the "investors" in these pool of mortgages are now suing Countrywide Financial for the losses they will take on their mortgage holdings. With reduced rates, write-downs and cheaper terms investors are set to lose billions and want Countrywide Financial and in turn Bank of America to fit the bill for their lost investment.

Brought to you by Professional Mortgage Group
Your Columbia Missouri Mortgage Broker

Lender Paid Mortgage Insurance

Now that mortgage rates have finally dipped, refinancing is on the minds of many. This is especially the case in this ailing economy. If a family can save $50 a month or more, they are taking a close look at the numbers to see what makes sense for them. We are happy to analyze this for you. Rates are awesome right now, but only by applying will you truly be able to see what is available to you. Each person's scenario is different. We all have different credit scores, equity positions, etc. The rates you hear advertised are "best case scenario". Once the lender sees your credit score and LTV they will institute the appropriate pricing hits for your loan. This could take 5.375% and make it 5.675%! After running the numbers we can calculate your savings and weigh this versus the cost to refinance. Lastly we will look at how long you plan on staying in your home. Our goal is to leave no stone un-turned! The title of this post is Lender Paid Mortgage Insurance for this reason. This may be the best option for you. Instead of you paying a monthly mortgage insurance premium that can be painful, you elect a higher interest rate and the lender pays it for you. You of course are paying for it with higher monthly interest, but you get the point. The big difference is shown in your monthly payment. In many cases your payment is lower with Lender Paid MI instead of taking the lower rate and then tacking on the higher monthly MI premiums of today's lending environment! I just worked on 2 scenario's yesterday where Lender Paid was the way to go.

Scenario 1 - The couple bought a home using the once popular 80/20 option to avoid MI. Now they want a lower rate and they qualify. The problem is that even though they can drop from 6.625% to 5.5%, their payment doesn't drop a ton due to their smaller loan balance. Then add in the monthly MI they are paying, and WHAM! Their monthly payment would be higher! By electing TAMI, they take a higher rate .50-.75 higher but no monthly MI. This option provided more monthly savings.

Scenario 2 - A client bought a home in Kansas City under the now defunct 100% program. He will be at a high LTV (95%), but he can drop his rate to 5.5%. The problem is that his MI at the time of the purchase was $82 per month. Under new MI rates he is looking at $130 per month. This is due to the high LTV and the increased risk in the MI business. So even if he elected to stay with borrower paid MI his monthly payment would go up or stay the same after it offsets the monthly savings obtained from the lower rate. With Lender Paid he came out with a larger monthly savings.

Now if you absolutely will be in the home for the life of the loan or close to it, then monthly savings is not the only item to look at. During this long time period you can benefit from the lower rate over time and you come out ahead. The problem is that this is a rarity in todays world. People just don't stay in their homes very long. Especially in a community like Columbia that lends itself to lots of turnover.

While I realize it is tough to see 5.5% and end up taking a Lender Paid rate of 6.25% for example, just step back and analyze it. It may be the right choice for you!

Brought to you by:
Professional Mortgage Group, Inc.

Enjoy The Holidays

It's always a pleasure to see the snow trickling through the sky and hitting the green lawns this time of year. If your like me then you truly love December and what comes with it! We all know about the economy, mortgage market, housing crisis and what is going on at Capital Hill. Step away for a minute and appreciate what you have, the family that surrounds you, and the friends that always seem to remind you of what is important in life!

Enjoy the holidays, enjoy your family, and enjoy your life. We only get to live it once so we better stand up straight, dust off our boots and get back up! The individuals, families and companies that can get back up after repeatedly getting knocked down will be the ones that truly succeed in life.

Brought to you by Professional Mortgage Group and Wishing You A Happy Holiday Season!
Your Columbia Missouri Mortgage Broker

The Recap!

We finally have some good news to talk about! If your an avid reader of this blog you will recall that I made it known that the U.S. Government needed and wanted to help mortgage rates become "more attractive" (see blog dated 10/15/08). Well yesterday we finally saw "the hustle behind the muscle" with an unprecedented $800 billion dollar commitment to consumer borrowing costs.


They (U.S. Govt.) created the Term Asset-Backed Securities Loan Facility (officially known as TALF). This entity (not operational until February 09) will purchase $100 billion in direct debt from Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Another $500 billion will be directed to Agency TBA MBS (Mortgage Backed Securities).....that's great news for mortgage rates! The remaining $200 billion will be vested into asset backed securities involving student loans, auto loans, credit cards and SBA (Small Business Association) loans. No matter how you look at this, these moves are much needed, overdue and outright awesome for our industry! The caveat to this will be the long-term repercussions of this cash influx into the U.S. financial system? What do I mean? The U.S. Government is taking extraordinary albeit necessary risks to free up market liquidity and promote key economic growth (GDP down .5% for the third quarter). How will this never-ending tale end up? Will there be huge defaults, will we have to print money, what will the U.S. debt load look like 3 years from now, and how will we pay it off?

The answers to these questions are unknown however, the one certainty in all of this are these actions are necessary and I am very much glad to see them coming!


Those of you that do business with PMG, Inc. noticed that I not only predicted these types of moves but I also sent this information out over five and a half hours before my closest competitor. Will these gains and low rates hold? I would like to think so especially since this rally didn't even involve the $500 billion yet to come from the U.S. Government. This money has yet to hit the MBS market rather the gains we did see were from pure speculators and other financial institutions like Hedge Funds, Asian Banks and U.S. wholesale institutions. I like our chances to hold some modest to impressive gains albeit we will see some continued choppiness . That will not go away on such news but at least we had great news none the less.


On another note you may have seen that GM recently pulled a $7 million a year contract with Tiger Woods. Can I say "I told you so" (see blog post dated 11/12/08)? Professional sports, teams and franchises are having extremely difficult times in justifying the huge amounts of money they pay to advertise on this front! We will continue to see companies pull out of the sports arena because they simply cannot afford the expenses associated with today's economic environment. In turn we will continue to see large changes in sports like golf, Nascar, football, baseball and many other popular sports as the owners of these teams deal with the reality of today's environment!



Brought to you by Shawn Von Talge of Professional Mortgage Group, Inc.

Your Columbia Missouri Mortgage Broker

Typical Monday...But Extraordinary Tuesday!!!

While yesterday was just another run of the mill Monday that brought more bad news, Tuesday is something FAR different. We woke up today with the News that the government is pumping extraordinary amounts of money into Mortgage Backed Securities and other instruments to help bring out economy back to life! $500 Billion of this money is going directly into MBS's and this will bode well for mortgage rates. We are expected to see rates in the mid 5's when these move take full effect. Remember when MBS prices go up, mortgage rates go down. So this is great news. If the past 2 years have taught us anything, we know now to not just sit back and see how it all plays out. The rate drop could very well be here and gone in short order! We just can't predict our markets in their current state even with such a swift kick in the butt like this cash injection! So if you are a prospective buyer or in the market for a refinance, I would get your application in right away! If you are an agent with some clients on the fence, I would recommend informing them of this news! Details of this program along with President Elect Obama's economic plan are still coming out so check back here for updates. There should be plenty of new information as the day and week progresses. This post could get very lengthy if I went into all the details of this, but I know you don't want to hear it. Rates are improving and that is the important thing! After all, we have some applications to start working on!

Brought to you by:
Professional Mortgage Group, Inc.

Typical Monday....Another Bailout

Over the weekend the U.S. Government again opened its hand to another failing financial institution otherwise known as Citigroup. It received a $20 billion capital injection (on top of the $25 billion it has already received) plus a collaboration among the Treasury Department, Federal Reserve and Federal Insurance Deposit Corporation to absorb $306 billion in "troubled assets", although Citi is responsible for the first $29 billion in losses and possibly more.

On another note GM said that the board is not opposed to considering Chapter 11 bankruptcy to help itself through the global credit crisis. Congress rejected the auto makers "begging" for at least $25 billion to stay afloat. Representatives asked that the "Big Three" draft a detailed "layout" of their operating infrastructure, innovations and commitment to fuel efficient auto's before any money would be given. The auto makers have until December 2nd to provide the draft before Congress will reconvene on the matter. I am on record has stating that the auto industry is simply to big to let it fail (1.25 million would lose their jobs almost immediately) however, to think that these executives can fly to Washington on Lear Jets and simply get a "hand-out" is almost insulting to the American Taxpayer! These companies are very poorly run as they simply do a lot of things that are both inefficient, senseless (i.e. paying someone working a manufacturing line over $80K a year), and irrational.

Let's see how all of this mess shakes out. The more this drags on and the more I research about it the more I am convinced that 2009 will not be a very good year for the economy and real estate industry for that matter.

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

More of the Same......Shockwaves!

What to talk about.....there is so much happening so fast that this post cannot keep up! Let's start with Treasury Secretary Paulson deciding that the $700B appropriated by the government for the specific use of "purchasing toxic assets from financial corporations" thus freeing up their capital to lend has essentially been thrown out the window! He stated yesterday that by the time TARP was approved and passed the global situation had deteriorated to such a degree that he believed the asset purchase program would not be effective enough. "Therefore we exercised the authority granted by Congress to develop and quickly deploy a $250 billion capital injection program, fully anticipating we would follow that with a program for troubled assets purchases." I'm confused...we have been told since day one and for the week and a half leading up to the TARP bill passage (for which I was a big fan of) that the funds WOULD be used for the purchase of "toxic" assets from financial institutions. Mr. Paulson even outlined and deployed a structure to hire, facilitate and implement staff for the valuing, booking and purchasing of these assets. Now we are being told that the time and energy of this move is essentially wasted at least for it's primary purpose! I tell you what I honestly do not know what to believe, opinionate on or read for that matter when it comes to the financial market system and the U.S. government for that matter. They certainly are not doing themselves or the economy any favors by wavering on such decisions. Don't get me wrong the markets, credit availability, and economy for that matter are changing at faster speeds but to have this type of swing in philosophy because of "market conditions" is a little hard to fathom.





The bottom line and I will say it again.....YOU MUST STABILIZE HOUSING if you want to see a turn around in the economy. In fact the NAHB (National Association of Home Builders) Chairman Sandy Dunn said that yesterday's home builders sentiment "shows that we are in a crisis situation. If there's any hope of turning this economy around, Congress and the Administration need to focus on stabilizing housing." Again, there are people on Capital Hill more intelligent than I but one thing I do know is that if you want a housing uptick and if you want that uptick to sustain itself for any period of time three things must happen. First, you must have mortgage rates lower than where they are currently. A 30 year fixed rate mortgage must hover between 5.25% and 5.5% for borrowers "sitting on the fence" to be enticed to take advantage of extremely low rates. In order for this to happen we need bulk buying of Mortgage Backed Securities and more than likely Asian and U.S. Government involvement to solidify confidence in this fixed income sector. Two, there must be "make sense" loans available. Sub-prime is gone, Alt-A is nearly gone and conventional has tightened so much we have gone from one extreme (loose guidelines) to the complete opposite (very tight guidelines). By "make sense" I mean do they have the ability to pay, do they have a track record of solid timely payments (even if there were extenuating circumstances that led to late pays or even bankruptcy), do they have money in the bank for a "rainy day" and does the loan (from a risk perspective) simply make sense. Yes.....these scenario's are out there I see them every day! Third and finally you must have an availability of lenders and money to access. Large financial institutions/lenders are really scared of buying back loans currently so they are really making sure they get the cream of the crop borrowers even to the point that some lenders are offering incentives if we have borrowers with 800+ fico's and send them their way.



There is a caveat to all of this and that involves risk. There will be defaults but the question is have the loans been structured in such a way to limit the default risk, do the rates being charged on these loans warrant the inherit risk and was the loan originated in the right fashion. I'm not talking about 580, 100%, stated products. But let's face it borrowers, at least at times see a rocky road. I mean there are companies that have been around for over 150 years that have been cliff diving lately. One of my main concerns about even talking about this subject is my opinion on FHA origination. In my mind we are setting ourselves up for another windfall of problems if FHA continues to originate and guarantee the volume of loans that it now sees. Just yesterday it was announced that during fiscal year 2008, the FHA endorsed over 1.2 million single-family mortgages. That's up from 532,000 in 2007! HUD credited the recent rise in FHA lending to the fall of sub prime lending, plentiful adjustable rate mortgage resets, higher FHA loan limits, and more affordable housing prices. Did you get the part that said the fall of sub prime lending? As of June 2008 the FHA's share of mortgage origination's rose to 22% skyrocketing from under 2% in early 2007. However, all that new lending has put a strain on the FHA's capital ratio, which fell to just 3% (1% above the minimum requirement) this year, down from 6.4% in fiscal year 2007. What does that mean? Bottom line they are lending more money, collecting fewer interest payments in connection with that money because default rates/foreclosures are going up! I'm not quite sure what the answer is to all of this but what I do know is that FHA will need to make some changes because the WRITING IS ON THE WALL.



Brought to you by Professional Mortgage Group, Inc.

Your Columbia Missouri Mortgage Broker

We May Need Your Help At Times!

With every passing day we encounter new obstacles in the lending business. As a borrower this is nothing to be scared about. If we pre-qualify you, you are in good shape. Just keep informed about the changes and how the effect you. Many people who haven't kept informed have been abruptly caught off guard. In some cases they have totally changed someones plans. In other cases those plans had to be altered slightly. Just imagine someone shopping for homes for months only to find out when they find one that there are no 100% options out there for them anymore! It has happened!
We feel we do a very good job updating everyone on the changes that have and will take place. Once you do start the loan process you just need to set your expectations properly. Our goal is to make the process as easy and pain free as possible for you. Even with this goal in mind, the numerous changes taking place make this a little more difficult than it used to be. Now don't get me wrong, the loan process is not difficult or anything to worry about. I bring this up for one reason. Don't be surprised if we need your help a bit more than we used to. Your patience and timeliness with us during these volatile times is crucial. Underwriters are asking for more and more information and continue to be super picky. If there is a document that was faxed or scanned that is tough to read in the slightest, they want a better copy. They are executing 4506T's where they didn't in the past, verifications of deposit and bank statements are being looked at a little closer too. Pretty much all aspects of the file are subject to a closer eye. On top of this, Privacy Laws are being strictly followed. In the past I could call around on your behalf to help with past collections and other odds and ends. Even though we have a signed authorization from the borrower, some companies are now not accepting these! This means we must have you make the phone calls and work on items that we normally do behind the scenes.
It is too bad it took a total collapse for lenders to realize that details were important, but they are! In the past they were so busy with loans that they overlooked items and therefore didn't condition us for them. This made the process super easy for you, but now we are all paying for it! This was of course not the only problem, but it added to the fire. We inform every client of ours what to expect once we start the loan. This way there are no surprises! We will only contact you to help us out if it is absolutely necessary. Just be prepared in case something comes up that we need a little assistance.

Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"

Shockwaves Keep Coming Part II

Well, I finally get one day out of the office (Friday) and what has changed....nothing! In fact this morning Citi announced it would cut 52,000 jobs in the very near term. Citi, who employs around 352,000 as of the end of September also said it would try and reduce expenses by 20% although I have to believe the job cuts will be where the blunt of that expenditure will lie.

The bottom line in all of this economic windfall is we (you, I and the U.S. economy) are hurting! That may be the understatement of the year. Are we at the bottom, is there still room for us to fall? The answer to that question is....nobody knows. However, I will try and answer it none the less....yes and no! I truly feel things are at or near the bottom. However, I think financial analysts, traders, and even heightened professionals are gullible to say the least to think that the worst was over a year ago like many believed. We are in uncharted territory that most of the U.S. population ,with the exception of the more "seasoned" citizens have never experienced. Folks we are on VERY shaky ground right now with some laws that are going to take affect and perhaps hurt a battered industry (mortgages) even more. After watching a ton of hearings/meetings on capital hill over the past year I really do not have faith in the politicians making the calls when they can't even pronounce individuals names correctly or do not have the slightest clue on how intricate our financial system is. Even with this being the case they sit on a committee that directly impacts the decisions made!

Our system is flawed and the radical changes taking place are going from one extreme to another and the more troubling thing about it is nobody is talking about it! Yes changes need to be made, yes confidence MUST be restored, yes we need regulation but the U.S./World economy is not what it was like in the 1920's. We are far more complex with systems that are so far more intricate that it takes a manual of pages from the earth to the moon to make heads or tails of it! That's why when I see the unemployment rate hinting at 7% and I see it going to possibly 8-9% it scares me! When I see two of the most prominent indicators of the economy (real estate and auto's) struggling so mightily even in the face of Billions of dollars being thrown out every window....yes it scares me. When I see huge corporations who simply made bad business decisions get bailed out, file for bankruptcy and then get billions of dollars. While at the same time a small business owner who is great at what they do can have their occupation yanked out from underneath them!
All of this scares me! Let's see where this all shakes out, but the longer this carries on the less likely I see relief even in 2009.

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Your Columbia Missouri Mortgage Broker

That's Right....Shockwaves Keep Coming

Where do I start we have already been in uncharted waters for quite some time. But it seems that simply isn't enough these days as history seems to happen every day! American Express is now operating under a bank charter so it can have access to the discount window operated and controlled by the Federal Government. Otherwise, god knows what would have happened to that company. Folks this is just the beginning when it comes to these huge credit card companies that seem to do everything imaginable to keep individuals and families in debt. When families stop paying their mortgage, guess what? Their credit cards have already ceased getting payment or are not far behind. We will see a lot more news on this front in the coming months...guaranteed!

The auto industry looks to be getting some consideration from the U.S. Government in regards to some sort of bailout. Now let me go on record as saying I think this must take place. Think about how many thousands upon thousands the auto industry employs. Not just Ford, GM and Chrysler themselves but what about the companies that supply parts, technology, and materials to these companies? The auto industry, much like the housing and mortgage industry is critical to the U.S. economy! In fact if you look at history when the housing industry suffers so does the auto industry. Whether we like it or not these two industry's operate hand in hand and when one suffers the other isn't far behind. The housing industry has gotten and continues to get the much needed financial assistance from the U.S. Government and as much as I hate to say it the auto industry will need to stick it's hand out as well otherwise our problems will worsen to an extreme that would rival the Great Depression.

AIG gets ANOTHER $40B from the ever charity known as the United States. As if the first $80B wasn't enough and many analysts at that time projected they would be back for more. These huge financial companies operated on a credit basis only it seems as they all were extremely leveraged. No cash reserves considering the size, operating capacity and significance to the financial sector. It is simply baffling to me, STILL that companies that have been around for over 150 years (i.e. Bear Sterns) cannot make it through even two years of turmoil. Believe me I know things are bad perhaps worse than most people think but what happened to good fiscal accounting and savings plan?

Another item just hitting the news although not nearly as much as other happenings around the globe is the economy's affect on sports. MLB, NFL, NBA, Nascar and others are all feeling the pain as they plan for free agent signings, sponsors and their budget. Keep in mind they rely on us (the fan) to make their payroll and when we lack money to attend these events, they will lack the revenue to go out and pay huge dollars to these athletes. It's already being seen in Nascar as Ford and Chevy have "hinted" at the possibility of significantly pulling back in this ever growing popular sport. At the same time teams are having some what big problems in obtaining sponsors for their cars. In fact, some teams may have to have multiple sponsors for a single car because of the lack of cash that these companies are now spending to advertise. We truly are witnessing history with every passing hour, day, week and month. The economy is ripping through every facet of what once was seen as untouchable entities. Stay tuned things are going to get very interesting.

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Your Columbia Missouri Mortgage Broker

Thank You!

I wanted to take the time to thank some of our very loyal and valued business partners. Our business, industry and company model completely revolve around the realtor and the clients they refer to us. In a time when clients/buyers are hard to come by I feel extremely grateful that we have such loyal business partners/friends. We truly value your business and friendship and will continue to do everything possible to earn your referral. A special thanks to....

1) Mikki & Karl Starmer: Re/Max Fulton / Fulton, Missouri
2) Mike Hill: Weichert Realtors-First Tier / Columbia, Missouri
3) Jason Thornhill: Weichert Realtors-First Tier / Columbia, Missouri
4) Amanda Lee: Weichert Realtors-First Tier / Columbia, Missouri
5) Joy Keith: Century 21 Peak Dye / Mexico, Missouri
6) Donna Peak: Century 21 Peak Dye / Mexico, Missouri
7) Dennis Jordan House of Brokers / Columbia Missouri
8) Jay Wilson Weichert Realtors-First Tier / Columbia, Missouri
9) Tim & Nikki Kuchta 3D Realty / Columbia, Missouri
10) Elaine Swaney 3D Realty / Columbia, Missouri

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Your Columbia, Missouri Mortgage Broker

A Note To Prospective Buyers

Are you a prospective buyer in the market right now? If so, then this post is for you. We pre-qualify people everyday who are looking to get in the market. I am amazed at the uncertainty and hesitancy of many buyers today! The hot question is, "Is it a good time to buy?" While we have no idea when we will hit an absolute bottom, I wanted to point a couple items out. Columbia and the Mid-Missouri area is going through a tough time, but it is not as dire as many other areas. We did not see the high times of crazy appreciation, therefore we are not seeing the depreciation that you see in areas like Florida or California . There are deals to be found out there, you just need to set your expectations a bit. Aside from foreclosures, the last time I checked homes are selling very near their asking price in this area. It IS a great time to buy now in this area. Just do your homework to make sure you are not overpaying. As long as you do this and work with a reputable realtor you will be in good shape.
One other item that really doesn't help are the abundance of "Flip This House" concept shows on the air today. These profile investors or families negotiating a great price, completing some renovations, and then either selling the home for a nice profit or moving in themselves to enjoy the nice deal they just took advantage of. These are great and I can't stress enough how these types of opportunities are more plentiful in other parts of the country. I have actually had some success and some failure with these types of deals right here in Columbia. It can work, but these shows get people excited and I feel really offsets someones expectations. You simply cannot expect to walk in and negotiate a deal in Columbia that has a $50,000 sales price reduction, fix it up, and expect to sell it for a huge profit. Like I said there are some isolated opportunities out there, but they are hardly ever for the average joe looking to buy their primary residence. So if you are shopping for a bargain deal for your own home, just set your expectations and start shopping. It is a good time to buy and Columbia has alot to offer. While loan guidelines and pricing criteria have tightened, loans are still readily available. So happy hunting. If you are an investor, please be careful and do your homework as well. Make sure you get accurate estimates so your budget doesn't get out of whack! I am telling you now, in flipping there will be surprises and you better be ready for them!

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Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"

Tips in Avoiding Foreclosure

If you are facing problems making your mortgage payments there are options available to you. To help avoid losing your home to foreclosure the following highlight some important steps that you should take.

1) Call your mortgage company right away to talk about your situation.
- It's important to act quickly because if you fall further behind in your payment,
there are fewer options to avoid foreclosure.

2) Understand your options.
- Repayment Plan: If you have missed some monthly payments, you may be able
to catch up by creating a schedule for repaying the past-due amount.

- Advance (Home Saver Advance): If your mortgage company tells you that your
loan is owned by Fannie Mae, you may be eligible for an unsecured personal loan
to help you catch up on mortgage payments.

- Modification: In some cases, mortgage loan terms can be changed on a temporary
or permanent basis to make the payment more affordable.

If you are unable to achieve or negotiate the above scenario's it may be wise to consider selling your home or perhaps the following two alternatives.

1) Short-Sale: If you cannot sell your home for the amount that will pay off the loan, talk to your mortgage company about a short sale. Depending on your situation the mortgage company may be willing to accept a payoff amount less that you owe.

2) Deed-in-Lieu: If you cannot sell your home in a reasonable period of time, your mortgage company may be willing to accept a deed where you voluntarily transfer the property to the mortgage company.

The following are some foreclosure prevention resources:

- Home Loan Learning Center
- Home Preservation Foundation
- HopeNOW
- National Foundation for Credit Counseling
- NeighborWorks America
- HUD - Tips for avoiding foreclosure
- Consumer Concerns for Older Americans

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Your Columbia Missouri Mortgage Broker

Election Day Is Here

We all know today is Election Day. I voted early this morning and I encourage everyone to get out and do the same. This is a landmark election and your participation is as important as ever.
Most of you reading this are more than likely part of Mid-Missouri's real estate community and our nation's economy has a direct effect on our industry! Whoever we elect this evening will be in charge of leading us in a new direction. One in which we all hope will help us recover from the mess we are currently dealing with. There are many important issues out there, but it is no secret that the economy hits home for all of us! This topic has been the driving force in this election and while I know it will not happen overnight, I hope our new leader will deliver on his promises and help us return to a bit of normalcy!
I wanted to keep today's post short and sweet. We will have much more to discuss tomorrow once the results are in!
With that being said, GO VOTE!

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Your Mortgage Loan.....Be Prepared

We have touched on a lot of different topics on this blog but I recently thought of a topic that we have yet to address in detail. What should you be doing in order to prepare yourself for what lies ahead when applying for a mortgage loan? The following points will hopefully make the process easier to understand and help you index the items that you will need to consider.

1) Know your credit score and what's on your credit: This should be the first item you look into when considering to apply for a mortgage loan. Are there any reporting errors, collection accounts that need to be resolved, or just derogatory information negatively impacting your score? You would be amazed how many reports have medical collections that individuals didn't even know were there! There are also reputable credit repair companies that for a small fee will help you address and tackle the issues of repairing or erasing derogatory or erroneous information on your credit report.

2) Locate and organize your financial documents: You will need to have two year's taxes, pay stubs, bank statements, savings statements, 401k, IRA and any other investment information readily available. You may be asked to provide a divorce decree, bankruptcy documents, Social Security Award Letters and Pension Statements as well. The bottom line here is stay organized and have this information where you can readily find it without difficulty. Should you be missing anything I would suggest you contact the necessary party (i.e. Accountant, Bank, Social Security Office, Employer, etc.) to get a copy of what you are missing.

3) Get a Good Faith Estimate and talk with a very reputable lender: The most important thing to remember here is knowing what's involved in the mortgage process, what you will be charged and where it all goes. Be sure to look at the entire package (i.e. interest rate, APR, fees, education, ethical background and knowledge of the market). The lowest rate lender in town may not be the best option for you if they don't know what their doing.

These are the three main aspects in dealing with getting home financing. The process can be much easier if you are prepared and work with a company and individual who continually educates him/herself and guides you to the options that best fit you!

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Your Columbia Missouri Mortgage Broker

Obama To Speak In Columbia Tonight.

Barack Obama will be in Columbia, MO this evening speaking on the Campus of The University of Missouri. While everyone reading this may not be an Obama supporter I encourage everyone to go and check this out. It isn't everyday you get to have an opportunity like this. You will be witnessing history and I wouldn't want to miss this. If you are on the fence on who to vote for, I highly encourage you to attend. You can see first hand what Barack Obama has to offer. He is really making a hard final push and Missouri is a critical state for both Obama and McCain. McCain must win Missouri to have a chance in this election and Obama is trying hard of late to win over the state. He held a rally in St. Louis recently that drew around 100,000 people! He and his supporters have been all over the remainder of the state as well. By choosing the Quad on MU's campus, you can see he is really trying to win over the young voters. I think it is a great strategy. It will just be interesting to see how the votes really shake out. The polls show Obama with a large lead, but I wonder if this is actually the case. Everyone still must get out and vote and actually vote the way they say in the polls. Something we know just doesn't always happen.
The gates open at 7:30 this evening and the event starts at 9:30pm. I hope many of you can make it. Whoever our next President is, he will no doubt play a large roll in orchestrating the change our County needs in order to get our economy back on track. This is something that professionals in the real estate and mortgage industries surely want!

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What Will The Fed Do #2?

At 1:15 CST we will know but most predict the benchmark rate (Federal Funds Rate) to be cut by .50% to 1%. Some think that unless significant recovery signals are seen in the near future the borrowing costs for large financial institutions could be at 0% by June of next year. One of the disturbing factors concerning this unprecedented move not seen since the Eisenhower administration is the fact that many of these banks are still hoarding the cash or looking for other opportunities to buy "distressed" banks instead of lending for which these moves were intended. Washington voiced a stern message yesterday to banks looking at doing this!

KEEP IN MIND....that mortgage rates WILL NOT be affected by any cut or hike to the benchmark lending rate! More over it's how the overall macro economic environment reacts to this cut that will determine mortgage rates fate. Mortgages rates are directly related to the buying and selling of Mortgage Backed Securities (MBS) which are like riding an insane roller coaster ride with their volatility. Typically in a "normal" financial environment (keep in mind we are not in any sense of the word in a normal environment) a rate cut would lend itself to higher inflationary concerns thus diminishing the value of fixed income assets (i.e. MBS) and thus their luster would be tainted. What am I saying? Bluntly in a normal world MBS would be hurt by a rate cut because of inflationary pressure thus leading to higher rates. However, with that being said I highly doubt we will see that affect. Why? Because the economy is contracting and commodity prices have tumbled leading to less of an inflationary issue and more about an economic rebound concern.

We are living through unprecedented times folks! There are no models, past experiences, graphs, or scientific projects for what we are experiencing! Anyone who tells you any differently is simply wrong. With every passing day we see new records in the DOW, huge swings in mortgage rates, further signs of a recession and other negative factors. Hang in there, buckle up and be smart. Do business with the right people, do your homework and educate yourself and things will work out.

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Your Columbia Missouri Mortgage Broker

Quick Recap Of Today's Market News

There are a few items I just wanted to briefly touch on.

Mortgage Rates
Mortgage rates have have spiked a little bit from the lows we saw last week, but as always it should turn back around again in time for people to lock in before they start the cycle again! Just refer to our rates section on www.pmg-inc.net.

Stock Market
The stock market as I type this is up 471 points so if this holds true it is a great day. The problem we have been having is sustaining these rallies. We have been having 1 great day followed by 4 bad ones, etc.. Not a good recipe.

White House Warns Banks
One problem we have blogged about and in the past is the common trend of banks hoarding cash. Ever since turmoil hit, banks have been taking advantage of their lower borrowing costs and opportunities to shore up their balance sheet instead of using these funds for their intention, lending! Lending is how these institutions make money and they are hoarding the cash instead. The new trend is taking the bailout funds and trying to use it to acquire lesser banks! Again, not the intention of the bailout. I think it is a good sign of the government voicing their displeasure. The problem is that very few strings were attached to the bailout money. We will have to keep a close eye on what develops! We really need lending to pick up and rates to come down in order to help the housing market!

Keep a lookout for our Newsletter that comes out tomorrow. This will summarize these stories and much more. If you are not currently on our distribution list and want to be, please email us.

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What Factors Affect The Interest Rate I Get?

One of the major components of any home loan is the interest rate. Some clients have realistic expectations and others do not. With so much volatility in the market place right now I thought I would touch base on what factors affect the interest rate you could receive on a mortgage loan.

1) Credit Score: Anything below a 740 will get "hits" to their interest rate. Meaning you will get a higher rate if you have a credit score below 740.

2) Loan-to-Value / Down Payment: All things being equal someone putting 5% down will get a higher rate than someone putting 20% down.

3) Loan Amount: Any amount below $140K (at least with most brokers) will get a higher rate than someone borrowing more than $140K.

4) Escrow Account: When lenders quote a rate they are assuming you will establish an escrow account (taxes and insurance included in your payment). However, if you would like to pay them separately and "waive escrow" you will get a higher rate.

5) Occupancy Type: A "primary residence" transaction type will get a better rate than say lending on an "investment" property.

6) Documentation: The ability to document your income (i.e. pay stubs, W2's, taxes) will warrant you the ability to get a better rate than someone that has challenges doing this.

7) Loan Program: The type of loan program you are eligible for will help determine your rate. FHA, USDA, Conventional, VA all have different rates and qualifying factors.

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Your Columbia Missouri Mortgage Broker

What Sets PMG Apart?

It is no surprise that consumers today are shopping around. Why wouldn't you? With the mortgage industry taking such a hit on its reputation, it only makes sense. You don't want to settle on that 1st call you made from the yellow pages. Ask around for a referral and look for testimonials. These items are very important! At PMG we do our best to set ourselves apart from our competition. We all are very similar in terms of the products we offer, it is just critical how they are delivered! What do you get when you work with PMG? Ultimately you get the best mortgage product that fits your needs, but during the process you get superb service and professionalism. We put our knowledge and expertise to use in order to make your experience a memorable one. What better way to get repeat and referral business ,right? Not only do we have the experience that matters, we utilize technology to stay on top of this wacky market! Your loan status is kept online so you can view its progress at all times. You and any realtors will be kept up to speed. www.pmg-inc.net is you one stop shop for information that pertains to your loan and the current market. We also track mortgage backed securities like a hawk! This is vital in our business. Anyone who doesn't do this or can't explain what influences mortgage rates is doing you a complete disservice! How else will they be able to take you rate expectation and make it a reality? If I quote someone 6%, I want them to get 6% or better! By tracking the market the way we do, we deliver on our promises! It is always possible for an unforeseen circumstance and no system is 100% full-proof, but we have proven time and time again that our system works wonders for our clients! Take the last 2 weeks as an example. Rates fluctuated a full 1%! Can you imagine how mad a client would be if that dream home they have under contract was locked at 7% out of fear and then a week later it was back to 6%! Sometimes time is not on your side, but in this case it was clear a rebound would occur and we took advantage of it for our current customers. Lastly, it may sound simple but we meet with almost every client in person to go over their loan and disclosures. It is amazing how many times this is not done in the mortgage world. I feel it is important to sit across from who you are doing business with and see exactly how your loan is being structured. You want ZERO surprises at closing! I would venture to guess if this step was taken on all transactions the past several years, there wouldn't be as many people out there that didn't know what they were signing! Unfortunately we are all paying the price for it now.

We approach every loan with professionalism and it shows. You don't deserve anything less!

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Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"

Some Good News For A Change

It's not often we get to talk about a "hint" of good news with today's market woes, struggling households, and a heated election. However, I wanted to bring up two points that have or soon will be helping the average Joe get through this unprecedented year.

First, in case you haven't noticed the price of gasoline has come down from a high in Missouri of $3.99 a gallon to $2.59. So if you have a automobile with a 17 gallon tank (standard on some auto's) then you will notice a savings of $23.80 every time you visit the pump. Crude hit an all time high this year at $147.27 a barrel and now stands at $68.97 ($78.30 decrease!) Most of this due to a stronger dollar, weakening demand, and struggling world economy.

Second, it seems the "bail out" bill may be finally trickling into the financial market sector in which it was intended. We have seen overnight lending rates between banks fall, we have seen more confidence in bonds and in particular Mortgage Backed Securities (MBS). This has helped mortgage rates come down .875% to 6.0% currently on a 30 year fixed. On a $140K loan that's a monthly savings of $79.32!

I truly believe this "bail out" money will end up in the right places doing the right things to help the broad economy. The question is at what price and what will be the final implications of such drastic government intervention. But at least we have seen some changes "leak" into our everyday lives that should assist us in getting through the 2008 year and well into 2009. This is going to be a slow paced change and it will take some time to recover however, it seems we have at least started down the right path. Let's just hope we don't come to a "T" and take a left when we should have taken a right.

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker

Local Banks and Lenders

I have read a few good articles lately about our local economy and our local banks. Despite all the gloom and doom out there, this community is holding on pretty well. I am taking the data reported in these publications to be accurate, but from the looks of it we are pretty stable! Our Nation's large banks and financial institutions have bee reeling, but Mid-Missouri Banks remain strong.
There are always exceptions and some are stronger than others, but this is normally the case. For the most part local banks stuck to traditional lending practices and are not faced with the tough times that Wall Street is. Subprime was a huge factor in their troubles and our local banks didn't dabble in this. Now some did get pretty aggressive with commercial lending and are paying for it, but for the most part they are ok. Currently all financial institutions will see some sort of decline as a result of the housing downturn and the economic struggles we are all facing. Deposits are suffering on top of the bad debt and loss of loan production. These are just par for the course and will be managed until thing turn back around.

As far as lending goes, I wanted to point out that yes banks and mortgage brokers can still loan money for mortgage financing. This is a big misconception right now. Lending standards are tighter that they were previously, but money is still available. One big shift with banks that is more prevalent than in previous years is that banks broker loans just like we do. It is scary for them to hold on to loans in house these days and as a result brokering is their option. So when you are shopping around, keep this in mind. Some local banks will house high quality loans in house and you can receive some added flexibility. Otherwise, they are on the same playing field with us and we have more products and lenders to access.

I just wanted to briefly point out these items. Have faith in our local banking institutions and local lenders. Your money is safe and we will both work hard for you!

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USDA Funds Now Available

The news is in and USDA applicants WILL be happy! Late Friday October 17th the fiscal year 2009 budget passed and USDA funds are now available. As posted on this blog on September 22nd (well ahead of our competition I might ad) we reported that USDA funding would cease starting October 1st. This process happens every year as the following year's budget must be approved in order for future USDA funds to be available. This process usually takes 2-3 weeks and can vary greatly at times.

It is crucial for these funds to be available as the USDA/"Rural Development" loan is one of the last 100% financing options available. The timing is excellent as most closing will take place between now and the end of the month. It's nice to finally give some good news for a change! Continue to check back for the most pertinent and current information concerning the housing market.

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Your Columbia Missouri Mortgage Broker

Who Will Be Our Next President?

We all know that the Presidential Election is fastly approaching. Last night was the final of 3 debates. In my opinion it was by far the best. The questions asked were the most relevant and there was much more back and forth. Based on polls and viewer's response it looks pretty clear that voters could care less about the back and forth bickering and name calling. We care about the issues and most importantly the economic crisis. No matter who you are for, I think most can agree that Barack Obama was dead on when he brought up this point. Americans care about the problems at hand instead of negative ads. We will see through that stuff and form our own opinion! I know I do. I also feel that people need to really focus hard on the most important issues like the economy, health care, war, and energy. While issues like abortion, gay marriage, and other odds and ends are important they are hardly important enough to sway your vote! Voters need to focus on the issues at hand that will impact "you" the most! I have formed my opinion already and I feel very strongly about it. However, I do see good in both candidates. As I have stated in previous blogs that I will not use this blog as a platform to voice my political preference. After all, I own a mortgage company and am not a politician! Nor am I even close to being an expert in this field. I only write about this today because this is an extremely crucial time in American History. Please get out and vote and voice your opinion on what matters to you. Most importantly voice in on the key issues at hand that will impact us all!

Please click here if you want to cast your vote on who you want as our next president!

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Houston We Have A BIG Problem!

If it isn't bad news we have no news in today's environment. Let me put this bluntly, aside from January we have gone from the best mortgage rates of the year to the worst in just over 30 days. Since September 8th we have lost almost 400 basis points in mortgage rates. Essentially that is well over a point (actually over 1.25%) increase in mortgage rates in just over 30 days! If you are an avid reader of this blog you may remember my post earlier in the year about seeing the biggest volatility in mortgages rates in over 10 years. Well, this just crushed that synopsis!

If we want to have ANY hope of getting out of this economic mess we need the housing market to turn. You CANNOT have a housing market recovery if mortgage rates are approaching 7%. Donald Trump said it best yesterday, "the biggest impact on the economy is the housing industry not auto's, government, infrastructure or energy it's the darn housing industry." It's simply too bad that something like this has to happen in order for the average citizen, city, state and national government to realize that the housing market is the driving force behind all that is good in a "normal" operating vibrant economy! The MBS market must regain some confidence in order for these rates to turn around. (The good news is as fast as they have turned bad, they can turn around). We need rates to get more in line with what is going on in the economy in order to pull out of this mess! Technically I understand why they are going the other way, but it makes no sense for the powers to be to let them continue down this path. Not while they are making monumental strides to fix the economy! It only makes sense to address the MBS market and mortgage rate issue if you want Housing to begin a comeback!

As if this news isn't bad enough, we also learned more today. Retail sales fell off a cliff recently with almost every entity seeing significant declines. Retail sales fell 1.2%, core retail sales (excluding building materials, autos and gas) fell by .7% the largest decline since September 2001. Sales at furniture and home furnishing stores fell by 2.3% in September, the fourth straight monthly decline and the largest single monthly drop in more than five years! Discretionary items fell by 1.1% for sporting goods, hobby, book and music stores. Restaurant patronage fell .5% the most since January 2007 (-1.1%). The auto industry continues to struggle, although a it's on the back burner compared to the housing crisis, as sales declined another 0.6%.

We are now at higher mortgage rates, spreads (between treasuries and MBS) and bank borrowing costs than we were pre-conservatorship of Fannie and Freddie. It's a very tough time to be even associated with this industry as today is the 8th straight day of rising rates and the horrible news that always seems to be associated with it.

Let's all pray this trend doesn't continue!

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Your Columbia Missouri Mortgage Broker

Can We Sustain The Rally?

Unless you have been hiding out in a hole, you are aware of last weeks historic drop in the stock market! We saw a 20+% drop! I guess everyone had a really good weekend, because upon the news of a worldwide effort to shore up banks investors decided to pour in on! The market surged 936 points (11%)! Now that is what I am talking about! This is apparently what investors have been looking for. This morning we have seen even more of an increase and at the moment we are up 146 points. The Dow sits at 9534, but I would suspect today to be another wild day. I sincerely hope we can sustain this rally. All investors need to realize that smart minds all across the world are now working together to do everything possible to regain some solid footing and fix this mess. Rest assured knowing things will get better. We are a mortgage company and have no industry knowledge or licenses to advise you what to do with your money. I just recommend you have an in depth meeting with your financial advisor to formulate a plan. Make sure you are diversified and in the best position for you right now. Other than that I would imagine you just need to keep funding your account and wait this out. It will get better. Just realize this money is money that you won't need for quite some time. If you are closer to retirement, then you must look at your nest egg a bit differently. This is where it gets much more complex and your advisor can direct you to your goals. I bring this up because as a investor your confidence in the market and our economy is crucial! I feel sorry for all the people that bailed because they couldn't take the stress and missed out on yesterdays rally! This is going to take a worldwide effort by all to get out of this mess and I know we can do it. I am sure you can see how crucial the housing and mortgage market is! A huge part of this recovery is stabilizing these areas! The more confidence you and all investors have, the better. Much has and is being done to stabilize Mortgage Backed Securities. With this being the case I hope yesterdays renewed confidence will work its way to these bonds! These are what impacts mortgage rates. If these bonds don't rally in order for rates to improve, it will be much harder for housing and mortgages to recover! As long as investors have faith in the market and MBS's and this new initiative to capitalize our banks is effective, we should be able to make it happen!

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"Your Columbia, MO Mortgage Broker"

"Bailout Bill" or H.R. 1424

I spent most of yesterday morning reading through the 451 page document trying to decipher exactly what this bill encompasses. I have a desire to be more educated and a scholar of my trade, therefore the right thing to do was to "brush up" on my Washington lingo. Reading through this bill accomplished three things. First, it gave new meaning to the word boredom. Second, it truly opened my eyes to just how scary these types of powers truly are. Third, it uncovered what kinds of "little" (very loose term) laws our congressman threw into the bill.



We all know the big points of the bill? The $700 billion at Paulson's disposal, the increase in insured deposit limits from $100K to $250K, and congressional oversight throughout the whole process. However, did you know that the $250K limit expires on December 31, 2009? Did you know that although there is a ton of oversight and monthly, quarterly, and annual reports due but that the Treasury Secretary or in this case Henry Paulson basically has TOTAL autonomy on who he hires to oversee the buying and selling of the "toxic" debt? These hedge fund managers although much smarter than I will be spending billions of dollars both in valuing the "un-valued" assets and spending the money to get them off balance sheets of investment banks and other financial institutions. Mr. Paulson has total autonomy with whom, when, how much and who is involved in these transactions. To put it bluntly folks Mr. Paulson has unlimited power to do and practice as he best sees fit to free up liquidity in the market place.



Did you know that there is verbage in the bill, specifically Sec. 308 "Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands"? I bet you didn't know that there are "tid bits" or "amendments" to things like tax law, motor racing tracks, railroad tracks and disaster relief? Although the majority of this bill was to address the "toxic" debt and liquidity issues there was also a ton of changes to tax law, tax code and accounting practices; not to mention research and reports due on the "mark to market" accounting rule that many believe is the root cause of disguising balance sheet woes.



I was and still am a big proponent of this bill (H.R. 1424) however, I will say by reading this "monster" it truly opened my eyes to the fact that the United States and for that matter the worlds economies are in the hands of one man; Treasury Secretary Henry Paulson!



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Your Columbia Missouri Mortgage Broker

One Frustrating Loan Scenario!

If you have followed our blog recently you probably have noticed us venting more often than we probably should. This blog was started to provide helpful information to our readers. In the past we have added numerous daily posts that offer some great content and insight into the mortgage and real estate market. Lately, we have focused more on the woes of the economy and how this impacts mortgages and real estate. These woes have led to all the frustration and the following is an example that clearly illustrates how goofy this mess is!

In early July I started working on a refinance for a client. This client was trapped in a subprime mortgage that carries a rate of 12.6%! They desperately wanted out of this mortgage and I could save them over $1000 per month! This wasn't an easy loan. They were self-employed and it was a $345,000 home in a rural area. Comparables were tough to come by and the appraisal was not an easy one to get approved. I sent the loan to several lenders. To no surprise many didn't accept the appraisal. One lender paid for a second review appraisal and it came back supporting value. At this point we thought we were home free. This is where the file got interesting. I had asked the client for their 2006 and 2007 taxes, they gave me what they had and said nothing further. The lender executed a 4506T and found that they 07 return was not filed yet! It turns out that they filed an extension on their 2007 taxes and were working towards some extra deductions. She also informed me that they were on a payment plan with the IRS on some of the back taxes they owe. They informed me that the return she gave me for 2007 was not filed yet and it was the most recent draft of the return that their accountant had given them!
She meant no ill intent, she simply didn't know. I should have been more clear, but usually when you ask for a return that isn't done, they tell you this. She just happened to get the latest version of it and thought that would work. I explained the mix-up to the lender and they said the return must be filed before a loan could be done. Due to the stimulus payments, the IRS was backed up 8 weeks! After waiting we started the loan process up again, only to find out that they now weren't interested in doing the loan. This was extremely frustrating since they wouldn't use some common sense and see what took place here. It was an honest mistake by the borrower. Had she told us there was an extension filed, we would have provided the 05 and 06 taxes along with a copy of the 07 extension. The lender would have been fine with this, they just flipped their lid when they got a return that wasn't filed. It wasn't like we trying to get credit for more income either! These clients made plenty of money for the loan, it was just a matter of giving the lender the appropriate documentation so we could move forward and close.
Now we were back to square one. I updated the file and sent to a new lender. This is something that could have been done a long time ago if we wouldn't have been strung along by the last lender! While updating the file we were dealt one last blow and this one was critical! The IRS filed a Federal Tax lien on the back taxes they were currently paying on! This put an end to any hope of a refinance since this must be paid first! Had the lender just been reasonable in the first place and looked outside the box to see what really took place, this client could have gotten out of this horrible loan prior to the Tax Lien being placed! Now they are stuck! Yes it is ultimately their fault, but it is still a tough pill to swallow.

So aside from this whole scenario being frustrating from an underwriting standpoint, let me tie it all together this way. I had to call this customer and tell them that they could not refinance and get out of their crappy subprime loan because they have to pay the IRS the money they owe first! This is of course so the Government can take their tax money and fork it over to these FAT CAT lenders in order to BAIL THEM OUT for giving you this crappy loan in the first place! Make sense? I thought so.

Just because the Bailout was a necessary step in the long road to recovery for our economy, this scenario sure doesn't make it any easier to explain how it is better to the people that are being hurt by the problem!

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Professional Mortgage Group, Inc.

On To Rounds 3, 4, and 5

Stock losses continue to mount even after the $700 billion was signed into law on Friday. The Dow is down over 2% within the first minute of trading this morning. The roller coaster ride continues and only time will tell when the so-called "rebound" will take affect. The Mortgage Backed Securities (MBS) that the government has aimed to shore up have had very little impact. In fact most traders are still preferring Treasuries! This is not a good sign for mortgage rates. We have seen mortgage rates improve slightly, however not at the pace expected post Fannie and Freddie bail out.

Even as I type this the market is approaching a loss of almost 300 points. Let's hope there is a rabbit in the hat somewhere and someone pulls it out ASAP! I have spoken to several individuals much older and wiser than I and all have said that this is the worst economy that they have witnessed. The market in general lacks confidence and optimism and both are crucial to turning this thing around.

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Your Columbia Missouri Mortgage Broker

Two Jobs Whether We Want To Or Not

Whether you are a real estate agent, mortgage broker, banker, appraiser, inspector, title company, or even a dentist we all must have clients in order to flourish. You can be the most knowledgeable real estate agent out there with all kinds of certifications, but if you lack the ability to generate clients you will not be in business very long. To succeed in real estate you must have client leads, period! Until you can master the art of lead generation, whether that's from referrals, cold calls, mailing lists, or perhaps many other avenues there is no other issue for you to address. No matter what your profession doctor, lawyer, entrepreneur, or advertising everyone has two jobs; your chosen profession and lead generation.

Of course the longer you are in a given profession the easier the task of lead generation should be. So much that it should not even feel like work anymore. You will have your referral/business partners that will continually refer business to you because of your past performances, hard work, and ethical practices and you will have your past clients that you have kept in touch with via quarterly newsletters, happy birthday cards, annual reviews or perhaps just a timely phone call. However, to "break the ice" and truly succeed in any field client/lead generation is crucial and should not be taken lightly.

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Your Columbia Missouri Mortgage Broker

What's Next?

I am sure if you are reading this you already are aware of what took place yesterday. By looking at yesterday's blog title "Witnessing History", we couldn't have been more on the money! After yesterday's Bailout was rejected by the House, we saw our stock market drop 777 points! This is the largest drop we have ever seen in a single day! Not the type of history I want to witness, but history none the less. This is an extremely frustrating topic for me. I by no means am an expert on our economy. As a result of the industry I work in, I feel I have a broader understanding than the average Joe because we follow it daily. Unfortunately I have come to realize that this broad understanding of our financial system is even greater than many of our politicians! Now this is sad, but it is a reality. I have read numerous quotes from congressman that either voted for or against a bailout and many of the quotes are a joke! Quotes like "I think we all want it to pass, but we just don't want to be the one to vote for it!" This type of behavior needs to take a back seat during times like this. This is a big enough problem that political ties need to be set aside. For a politician to try and further their career at this juncture is out of place! This shouldn't be their focus. I completely understand many of the arguments on the pros and cons of such a bailout. Many are valid. However, these are dire times and they call for swift action! You can clearly see what happened in just a few short hours yesterday! What do you think will happen if our system fails even more as a result of no bailout? It could be scary and nobody knows what could come next!
Let me say this, I hate the fact that these large corporations are getting a free pass! They made stupid business decisions and they should pay for them! I wish we really knew how everything would be affected if we just let them fail. However, this is a pretty risky game to play. I think the FED Chief and Treasury Secretary have a bit more knowledge and insight into how everything will go down! Do you think they enjoy this mess under their watch? Do you think they want to stick their neck on the line and be in charge of this bailout? If it works I can imagine they wouldn't mind being the hero who fixed this mess, but I am fairly certain they would give this up to not have the stress of having our entire financial system fail if it doesn't work! Bottom line is that they are very smart and experienced at what they do. I think you, me, and mainly politicians need to open up and listen to these people! If the politicians don't know much about this, unfortunately they are going to have to take their word for it! I know that is scary after all of the funny business that has gone on lately, but suck it up! I could go all day on some of the reasons some congressman are balking at this bill. However, I don't have enough time to write a book. This problem is widespread affecting lending, payroll, you name it! Things are bad. I don't think we want them to get worse! So lets all keep our fingers crossed that some type of compromise can be made on this bailout!

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Professional Mortgage Group, Inc.