USDA "Rural Development" the only 100% Financing Left!

I posted a "synopsis" of this product several months ago however in light of the ever changing lending environment and increased lending guidelines I thought it wise to go over this again with perhaps a little more detail.

What program am I talking about? Could there still be a 100% lending program? The answer is a resounding YES and it's called the "Rural Development" loan backed by the United States Department of Agriculture or (USDA). It's currently the only 100% financing that can be achieved in today's lending environment. This loan has it all; 100% financing, NO PMI (Private Mortgage Insurance) and an interest rate of 6.5% FIXED for 30 years (today @ 12:00PM CST)! I have provided financing via this venue for quite a long time and I can tell you that this program is simply amazing. You can actually escrow for "improvements" should the home you are looking at be in need of siding, furnace, roof, flooring etc. I know you are saying this is too good to be true or what's the catch? Well there are two areas of qualification that must be met. First, the home must be located in an "approved" USDA area (i.e. Rocheport, Ashland, Boonville, Fayette, Harrisburg, Fulton, Auxvasse, Mexico, Montgomery City, Hallsville, Centralia, Moberly and any other area that's not Columbia or Jefferson City). Second, there are "maximum" income limitations, for instance for a single person with no kids the maximum amount of annual income he/she could make in Boone County Missouri is $49,900. Now with that being stated I have had several instances where the borrower has made over $76K a year, however they had dependents to help "off-set" the income limitations. For instance, USDA will allow the borrower to deduct annual daycare expenses from their total income thus reducing the amount of "eligible" income. For instance say an individual made $60K a year however had 3 dependents for which they paid $250 a week and was not married. Their "eligible" income for qualifying purposes would be $47K ($60K-$13K) hence this person would qualify under USDA guidelines. Each county in every state has a "maximum" income guideline and the "eligibility" requirement and determined by marital status, both applicants current employment situation and how many, if any dependents they have.

I have outlined below some of the "key" highlights concerning this great program. Missouri ranked 3rd in the nation in Guaranteed USDA financing! Should you have any questions or simply want to know if you are eligible simply contact a representative of Professional Mortgage Group for the answer.

• No Down Payment
• No Monthly Mortgage Insurance Required
• No Cash Reserves Required
• No Minimum Credit Score
• No Maximum Loan Amount or Purchase Price Limit
• No Limitation on source of closing costs
• Repairs and Closing Costs can be financed into the loan
• Seller Concessions Allowed
• Affordable Fixed Interest Rate with 30 Year Term
• Premium Pricing Available
• Prompt Review by Rural Development within 2 business days
• Past credit issues OK (Bankruptcy and Foreclosure)
• Acreage OK
• Modular Homes OK

Brought to you by Professional Mortgage Group, Inc.

Your Columbia Missouri Mortgage Broker

More Industry Shake-ups!

I hope everyone reading this has had a great week. June was a very strong month for Professional Mortgage Group. We want to thank all of our clients and referral partners that made this possible. July will hit us next week and we will back at it to try and do it again!

As always PMG will move forward with a full head of steam even though the Mortgage Industry continues to throw us cureveballs. Anyone who has read this blog in the past is aware of all of the industry changes that have taken place in the past 2 years. We continually adapt to these changes, but I would be lying if I said it wasn't frustrating! By looking at the news today you can read about the Bank of America purchase of Countrywide. The takeover price is now only $2.6 Billion instead of $4 Billion. They are also laying off 7500 employees! WOW! This is on top of the 12,000 Countrywide already announced back in September they were cutting. It is pretty scary when the #1 lender is having problems like this! Indymac is also on the ropes. Their stock is now trading under $1! Not looking so hot. It doesn't look like they will be able to weather the storm much longer. Lastly, at least 2 small mortgage broker offices in Columbia are closing down as well. All of these changes have really made it hard for small businesses and it is sad to see!

Along the same lines, Stewart Title Insurance also has had a tough time. They reported a 1st Quarter Net Loss of $25.2 Million and has continued to down size. Since 2005, 2500 have been let go. To help combat the housing downturn that has obviously affected their bottom line, they are forming Stewart Default Services. This is aimed to capitalize on the increase in foreclosures.
They will offer loss mitigation, foreclosure processing, bankruptcy / eviction referral and monitoring, vacant property insurance, post-sale conveyance, and of course, title and escrow services.
This definitely looks to be a good business move. There is no doubt a shortage of these types of services during a time that foreclosures are at the peak!

Unfortunately from reading this you can see that industry shake-ups and change are still taking place at a high rate. Lets just hope all of this starts cooling down a bit! As always please check back. We will keep you posted.

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

Mortgage Broker Licensing "On the Way"

I've been an outspoken advocate of this for a very long time, even before the "mortgage meltdown". Why and what is the National Mortgage Licensing System? Let's start with the latter. The National Mortgage Licensing System is a "web-based" system that which allows mortgage brokers, loan officers and lenders to apply for, manage and renew licenses using a uniform application process. There are 8 states currently using this system; Idaho, Iowa, Kentucky, Massachusetts, Nebraska, New York, Rhode Island and Washington. However starting July 1, 2008 another 6 states have committed to joining the NMLS and these include; Connecticut, Louisiana, Mississippi, North Carolina, New Hampshire and Vermont.

Now onto the former; the why. I am in 100% support of this system because we are one of the few "non-licensed" (at least from an individual broker standpoint) entities in the business community. Realtors, title agents, appraisers, inspectors and others all must apply for and maintain licenses for their respective industries. Aside from the company requirements individual mortgage brokers do not have to be licensed. What does this lead to? Uneducated people giving advice, recommending products, and putting together the necessary information tied to the biggest decision most people and families will ever make; their home purchase! Unfortunately in this industry their were and to some extent still are "unethical and shady" mortgage brokers/lenders. I want these people either educated on doing things the "right way" or out of the industry all together. It hurts my professions reputation and creditability when these people simply give bad advice or do things the "wrong way".

I take this career and my business very seriously and in turn my clients loans and financial situation very seriously and I believe it shows in my client testimonials and the reputation I have built for myself and Professional Mortgage Group, Inc. However, many brokers are "transaction based" just trying to make a quick buck and willing to do whatever they have to in order to achieve it. I truly believe myself and Professional Mortgage Group are "relationship based" and want what's best for our clients first and we become secondary. The fallout in the mortgage industry has will and has actually helped businesses that have and continue to do things the "right way" and I want to see this trend continue. The NMLS will hopefully lead a path down the right direction in achieving this.

Currently the NMLS manages 5,145 companies, 3,557 branch locations and 16,867 loan officers nationwide. What's a little comical is that the states that have really been hit hard by the "mortgage meltdown" (i.e. California, Florida, Nevada, and Ohio) have yet to commit to the NMLS, let's hope this changes.

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

Operation Malicious Mortgage

If you have not yet heard, the department of Justice and the FBI announced last week that "Operation Malicious Mortgage" has been a success. Over 400 individuals are being charged for mortgage fraud. This operation focused on 3 main types of mortgage fraud. This includes lending fraud, foreclosure rescue scams, and mortgage related bankruptcy schemes.
The most common of these types is lending fraud. Misrepresenting someones income, altering documents, forging documents, etc.. all fall into this category. It is sad to say it, but apparently this was widespread. Not only were lenders making risky products available to the masses, fraud was being committed by loan originators who were putting people who don't qualify for these already risky programs into them anyway. This was done by altering the loan to fool underwriters! If that isn't a recipe for disaster, I don't know what is?

This effort to crack down is much needed. However, don't let this give you the idea that all lenders, brokers, and the like are crooked. This couldn't be further from the truth. Most of us do things the right way. There was just too much money out there to be had during the booming market. Fly by night lenders were coming out of the woodwork to do loans in order to capitalize. The problem is that these types of lenders were greedy and took advantage. The down market over the past couple years has already weeded the majority of these crooks out. With "Operation Malicious Mortgage" and other like it, the others will surely follow. This will definitely help in bringing respect back to the lending industry. It is just sad to say there is no doubt a long way to go!

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

This Should Be an Interesting Week.

This should be an interesting week. Aside from the FED meeting, it is a pretty light week.
One thing to watch are the earnings reports of some food companies. Ag commodities and the flooding will surely make their mark. How much of a dent will be reflected this time around remains to be seen. The FED meets this week and they are expected to take a tough stance on inflation. With the current state of the economy, it may be very tough for the markets to take such a stance because with this comes an interest rate increase! A rate increase is not expected this time around, however one is predicted in the Fall. It remains to be seen how such an increase will help things, but nevertheless that is what looks to be coming our way. Based on the way mortgage rates have been responding lately, such an increase could help us in this department. Inflation kills fixed assets like Mortgage Backed Securities and these are the primary indicator of mortgage rates! As far as the overall economy, who knows what will happen but it should be interesting to follow!

On a completely different note, I watched a news piece that was shocking!
Did you know that as many as 40% of all mortgages that are transferred are missing the actual note! That's right! 40% of you are paying on a mortgage and the lender doesn't even hold the actual document that says you owe them the money! Some people are actually using this fact in their favor when it comes to fighting foreclosure! They are simply asking the lender to produce the note. If they can't do it, the courts are holding up the foreclosure process entirely until one is produced. The courts are determining now how to proceed if one cannot be produced. It sounds like many times this is the case. When these documents and loans are transferred from place to place, they simply get misplaced or thrown away! Unbelievable! Here is a link to the story.

Brought to you by:
Professional Mortgage Group, Inc.

Mortgage Applications Slump!

As of the week ending June 13, 2008 mortgage application volume dropped 8.7% on a "seasonally" adjusted basis. On an "unadjusted" basis the index was down 9.6% from one week earlier and over 21% compared to this same week one year ago. This all comes when the industry is already "waist deep" in a slump!

Refinance applications really took a beating falling a ridiculous 15% for the week. Any guesses as to why? That's right mortgage rates have "skyrocketed" over the last 2.5 weeks. However, purchase applications rose 4.3% and FHA loans were up 4%.

Prior to the end of January refinance applications accounted for 75% of all application volume. However, that portion of mortgage related transactions now only accounted for 37.4%. On the same note the ARM portion of the index fell to just 9.7% of all mortgage activity.

Rates and the application volume are "at times" and "more often than not" tied directly to mortgage rates and as they have recently increased we have seen the "total" application volume decrease. All of this en light of a struggling national housing slump, increased inventory of homes and much tighter lending standards. Have you seen the movie "The Perfect Storm"? Well hopefully we end up better than the brave men aboard that vessel?

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

Will Mortgage Rates Retreat Back to Respected Levels?

The honest answer to the above question is "I don't know"; however I am very much leaning toward yes! But with that being said we have a lot of factors working against us right now. For instance;

1) A weakening dollar vs. other currencies (Our money is buying less goods)
2) Record Oil Prices (Ridiculous pain at the pump)
3) Continued struggles by financial firms ("Wobbling" views among investors)
4) National housing issues are very much alive and well (Less confidence in a "timely" recovery)
5) Inflation, inflation, inflation (This kills the "value based asset" of the MBS)
6) Overnight lending rate still VERY low (This has done nothing but help BIG business!)

There are a few issues working in our favor right now, however none of them are a "clear and distinct" advantage for Mortgage Backed Securities! For Instance;

1) Hopefully we are closer to a financial markets recovery (Confidence back in this sector)
2) Hopefully rising "short term" lending rates in the Fall (Adds value to the dollar and reduces inflationary risks)
3) Increased confidence in the housing sector recovery (Adds faith in MBS with strong performance and less delinquency)
4) Hopefully a decline in oil prices (This will be a direct reflection of a stronger dollar and financial systems recover)

As you can see from the list and the verbage included in the list that optimism in the "near-term" is lackluster. Hopefully over time the financial systems sector will recover and that will lead to a rising value of the dollar, weakening inflation and decreased oil prices all of which would be great for the economy and in-turn should translate into better interest rates!

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

When It Rains It Pours

To put it bluntly this has been the worst two week period for mortgage rates that I have seen! Ben Bernanke pulled the "Inflation Boogie Man" out from behind the curtain (as if it wasn't there already or since August of 2007' for that matter) and what has happened? Two FULL weeks of rising mortgage rates. As stated in earlier posts inflation kills any fixed income asset/coupon and MBS (Mortgage Backed Securities) are no different.

It seems traders are more apt to find other avenues to put their money. Even as I type this the DOW is up 170 points, oil is down over $4.50 and gold is down over $20.00. What is surprising to me is that inflation more often than not triggers buying of commodity items such as gold and oil. So why is it trading lower? The honest answer is "I don't know"; to often "experts" feel the need to rattle off verbage when in actuality it would be much more realistic and true if they simply stated "I don't know".

The markets and traders in particular seem to be operating on emotion, physcology, and "scared" buying and selling. An irrational market place (much like we have seen for the past several months) is almost impossible to put a pulse on. So in essence everything is an educated guess because "technical" factors no longer can be relied upon and we have come to that point in time today and for that matter yesterday! Only time will tell if some sort of rational thinking will begin to take place.

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

Getting Hit Hard by Rising Rates

The Dow on Friday lost over 400 points and all the while; that's right you guessed it we had zero change in mortgage rates. This is quite disturbing as usually with a swing like we saw on Friday in the DOW we would have seen a big swing in mortgage rates (usually for the better). However, there was very little movement in MBS (Mortgage Backed Securities) and that scares me! Where were investors putting their money? Well I can tell you without reservation that it was Oil ($11 gain on Friday), Gold (also up over $23.00 on Friday) and more than likely (under the mattress) a money market account.

Mortgage Backed Securities have definitely lost their "glow". Investors are less likely to buy MBS when the value of the dollar continues to hurt, mortgage delinquencies continue to rise and financial firms who are having to continue to sell stock to raise capital in order to weather the storm. I believe in the long term rates will get better however my view on short and mid-term rates have definitely changed. Unfortunately for a person looking to purchase in the next 30 days they may be forced to bare the bad news of rising mortgage rates. Let's hope I'm wrong!

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

Another Downturn in Mortgage Rates

Well you might have noticed (if not you will when rates get released today) but we have taken a dive off a cliff the last two days as it relates to mortgage rates. Mortgage Backed Securities have dropped over 120 bps points since open yesterday morning or 1.2% in the Fannie Mae required yield. What does all of this mean? Look for the 30 year fixed rate (when released this morning) to be 6.375% or perhaps even higher.

Why the huge increase in such a short time span? I could point to numerous reasons or influences as to why but the raw reality is simple; continued losses by big financial firms (i.e. Lehman Brothers Holdings) and a ever growing inflation concern. Combine these to negative factors with MBS and you will have a "fire sale" for Mortgage Backed Securities and therefore higher mortgage rates. This comes all while the DOW has traded sideways or even down. Some of you may have even heard reports that mortgage applications are at a 6 year low. Coming from the mortgage bubble and refinance boom that does not surprise me but you would think that mortgage applications would have at least held steady over April? This just goes to show what tightening lending standards, continued negativity in the media and volatile mortgage rates will do to an already fragile housing market.

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

VA Loans Coming Soon!

We wanted to inform our readers and our clients that it won't be too long before we are able to offer VA loans. We at PMG are constantly trying to add to our product offerings and this is one way of doing it. While we do not run across a high amount of eligible borrowers for VA loans, we do from time to time. In the past we have had to refer them to other lenders, but no more!
We will no doubt update this blog and our program offerings on our website once it is official, but it should be any day now. If you are in the market for a VA loan and have been referred to PMG, please go ahead and apply. This is just one of the many enhancements to our program offerings that PMG hopes to make in the coming months. Continue to check back from time to time for any additional changes, but for the time being PMG is very excited to be able to serve you in the near future for all your VA loan needs!

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

Way to go Boone County Missouri!!

Well in case your not a number watcher I thought I would go ahead and give you some good news in the real estate market for a change. First, Boone County Missouri currently (at least as of Monday June 2nd at 8:15am) has 1,493 listings of single-family residences and condominiums. In connection with this approximately 23% of our listing base or 345 properties are currently under contract!

I periodically review this number with agents and appraisers and can say that we have slowly climbed between 1-2% per month for the past 3-4 months. Boone County Missouri also had 228 closed transactions within the last 30 days. What a turn around from a year ago? We really seem to be getting a firmer grasp on our real estate market with the movement of inventory, less desperate sellers, and more apt buyers. I know we are just kicking off the 2008' real estate season, however I am already looking forward to see what 2009 has to offer! Our local real estate agents, title companies, appraisers and yes lenders have really done well working together to educate our builders, market politicians, and community on our real estate market and what makes it "tick".

We still have 3 solid months left to buy and sell real estate, at least according to past statistics for the most opportune time to dive into the market. What will the future hold? Well based on our already "pending" sales and my conversations with other sellers and buyers I believe the best is yet to come. Only time will tell but when you get a free moment be sure to spread the word and pat yourself on the back!

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