I recently read a book called Time Traps by Todd Duncan a true real estate and mortgage professional. It's basically a book about how to de-clutter your day in order to free up time to do more productive (i.e. money making) tasks. There is a section in the book that I found particularly relevant to individuals that I would like to share. It's called the "Daily Dozen" each morning review these items in order to help you gain perspective and increase the odds of success. They are:
My Faith gives me peace.
My Family gives my harmony and stability.
My Fitness gives me stamina and energy.
My Friends give me counsel and comfort.
My Finances give me options.
My Future gives me direction.
My Focus gives me growth.
My Feelings shape my attitude.
My Faithfulness gives me serenity.
My Freedom gives me choices.
My Fun gives me renewal.
My Fulfillment gives me joy.
It's not often I share my reading with the audience of this blog however, I thought this verbage to be very relevant given the economic woes we now face.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Wednesday, September 24, 2008
Tuesday, September 23, 2008
Does Your Broker Explore All Options?
Does your mortgage broker explore all the available options for your given loan scenario? If they don't then they are doing you a disservice! This really came into play on 2 recent loans we closed and another one we are working on. Here is a brief synopsis of 2 scenarios.
Borrower #1
We were approached by a local realtor who uses us from time to time. Unfortunately he had a previous relationship with one of our competitors and he uses them primarily. They are a solid company so I really don't have much to say other than I am glad he still uses us from time to time. However, in this case his buyer was sent to our competitor first and couldn't gain an approval. After having him apply with us, I found he did qualify for a USDA loan. The trick was that he had no credit score. This obstacle requires us to build non-traditional tradelines in order to generate a brief credit history and then move forward. This is a step that takes some added work and is a bit of a pain. Either this other lender wasn't aware of it or simply didn't want to mess with it. This is just one example of how putting in the hard work by doing a bit of digging can gain you a client! Not to mention help the borrower out of a jam!
Borrower #2.
This borrower received an FHA loan commitment from a very large/well known bank. The bank required the borrowers to rent our their current home that they couldn't sell. Otherwise they would not debt to income qualify for the loan. They did so and they were all set to close on a Friday and the tenants would be moving into their previous home that weekend. 40 minutes before closing they get a call and say that due to the Hurricanes taking place, the closing would need to be moved. (the bank apparently had a processing/underwriting division there). The closing was moved to Monday and the sellers allowed the buyers to move in. This was done to accommodate all parties, but was only done after the bank gave them a 2nd loan guarantee that this transaction would close on Monday. Come Monday, guess what? That's right, the loan was declined! This was due to a very simple item, the borrower had an FHA loan on his previous home that he now rents out! So after all this mess and inconveniencing everyone, these borrowers were hung out to dry and had no place to live! All it took was some very simple underwriting and fact gathering in the beginning and this problem never would have materialized! Luckily the sellers were very generous and allowed them to rent the home for 1 month while they searched for a new loan. This was a very tough loan to get done. We had to run numerous scenarios and restructure his debt ratio in order to make the deal work. However, after it was all said and done they got a USDA loan. This was a better loan than the FHA loan. It came with no down payment, no mortgage insurance, and a lower interest rate than they were previously locked in at! Not too bad! I can't speak for them and say all the stress they went through was worth it, but it all worked out in the end!
I have to say this scenario is very sad. How in today's market can a lender or loan officer continually sugar coat things and guarantee thing are fine when it couldn't be further from the truth! You simply can't do business that way. I always tell it how it is and let the borrower know up front any and all obstacles that need to be overcome or that could come up. The borrower deserves this respect and will remember you for it!
So you can see it pays off to explore all available options. Yes it is more work, but a true mortgage professional knows it must be done!
Brought to you by:
Professional Mortgage Group
Borrower #1
We were approached by a local realtor who uses us from time to time. Unfortunately he had a previous relationship with one of our competitors and he uses them primarily. They are a solid company so I really don't have much to say other than I am glad he still uses us from time to time. However, in this case his buyer was sent to our competitor first and couldn't gain an approval. After having him apply with us, I found he did qualify for a USDA loan. The trick was that he had no credit score. This obstacle requires us to build non-traditional tradelines in order to generate a brief credit history and then move forward. This is a step that takes some added work and is a bit of a pain. Either this other lender wasn't aware of it or simply didn't want to mess with it. This is just one example of how putting in the hard work by doing a bit of digging can gain you a client! Not to mention help the borrower out of a jam!
Borrower #2.
This borrower received an FHA loan commitment from a very large/well known bank. The bank required the borrowers to rent our their current home that they couldn't sell. Otherwise they would not debt to income qualify for the loan. They did so and they were all set to close on a Friday and the tenants would be moving into their previous home that weekend. 40 minutes before closing they get a call and say that due to the Hurricanes taking place, the closing would need to be moved. (the bank apparently had a processing/underwriting division there). The closing was moved to Monday and the sellers allowed the buyers to move in. This was done to accommodate all parties, but was only done after the bank gave them a 2nd loan guarantee that this transaction would close on Monday. Come Monday, guess what? That's right, the loan was declined! This was due to a very simple item, the borrower had an FHA loan on his previous home that he now rents out! So after all this mess and inconveniencing everyone, these borrowers were hung out to dry and had no place to live! All it took was some very simple underwriting and fact gathering in the beginning and this problem never would have materialized! Luckily the sellers were very generous and allowed them to rent the home for 1 month while they searched for a new loan. This was a very tough loan to get done. We had to run numerous scenarios and restructure his debt ratio in order to make the deal work. However, after it was all said and done they got a USDA loan. This was a better loan than the FHA loan. It came with no down payment, no mortgage insurance, and a lower interest rate than they were previously locked in at! Not too bad! I can't speak for them and say all the stress they went through was worth it, but it all worked out in the end!
I have to say this scenario is very sad. How in today's market can a lender or loan officer continually sugar coat things and guarantee thing are fine when it couldn't be further from the truth! You simply can't do business that way. I always tell it how it is and let the borrower know up front any and all obstacles that need to be overcome or that could come up. The borrower deserves this respect and will remember you for it!
So you can see it pays off to explore all available options. Yes it is more work, but a true mortgage professional knows it must be done!
Brought to you by:
Professional Mortgage Group
Monday, September 22, 2008
Good News........Bad News!
Let's start with the good news! The Federal Housing Finance Agency announced Friday that Fannie Mae and Freddie Mac will start purchasing MBS (mortgage-backed securities) immediately hoping to instill some strength in this ever volatile and crazy market lending some insight to better rates in the near term future. FHFA Director James Lockhart stated "We also expect each company to continue to increase its direct support to the mortgage market through their ongoing securitization activities." As this seems to lend some support long term for mortgage rates someone forgot to let the traders know this "tid-bit" on Wall Street as we have seen far worse rates on Thursday, Friday and more than likely today. The MBS' they are referring to have lost 160 bps since last Tuesday. What else can be done to help shore up the mortgage market and in particular mortgage rates. The government already came out and explicitly backed the mortgage-backed securities of Fannie and Freddie yet we have seemly been hit blows with worsening rates!
On another note October 1, 2008 begins a new fiscal year for the government and in particular the USDA (United States Department of Agriculture) / "rural development". More than likely there will be no funds for approximately two weeks after Tuesday September 30th and perhaps longer depending on when the 2009 budget comes out. Congress has yet to pass a budget for the fiscal year 2009. Hopefully they will act quickly and supply ample funds to keep this crucial housing program operational as it is the only 100% financing alternative available in today's market place!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
On another note October 1, 2008 begins a new fiscal year for the government and in particular the USDA (United States Department of Agriculture) / "rural development". More than likely there will be no funds for approximately two weeks after Tuesday September 30th and perhaps longer depending on when the 2009 budget comes out. Congress has yet to pass a budget for the fiscal year 2009. Hopefully they will act quickly and supply ample funds to keep this crucial housing program operational as it is the only 100% financing alternative available in today's market place!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Thursday, September 18, 2008
Refinancing...It Will Work Differently Than In The Past!
If you are in the market to refinance, you surely have noticed mortgage rates have taken a turn for the better. With this comes increased application volume and many happy customers. It is also inevitable that some people simply cannot be helped. It has always been this way, but with all of the extreme changes, turndowns are becoming more prevalent. Aside from just turndowns we are seeing people ready to refinance, but the rate isn't as low at they thought due to all of the new pricing hits they are receiving (see previous blog).
I bring this up to make one simple point. For everyone who is preparing to apply for a refinance, please set your expectations. Don't take it personal if something can't be done. It more than likely will not be as simple as the last time you refinanced. This doesn't mean it will be a painful process, but the days of anything goes are gone. The one exception is for people who have plenty of equity and are on the very high end of the credit score ladder. The products and options simply are not there to allow us to be flexible and work out a creative scenario for each and every applicant. We wish they were, but they aren't. Remember, we are in the business of doing quality loans. We want to be able to help each and every prospective borrower, but we must play within the rules we are given. Now, don't take this the wrong way and feel like applying for a refinance is a waste of time. We are very good at what we do and if there is a way to save you money on rate or payment, we will find it. You will know straight up what your options are and there is still a good chance that you can be helped. Just be very careful in your personal finances. It is extremely unwise to be sloppy and careless with your finances and assume a refinance will bail you out! The only people getting bailed out these days are large corporations and I am guessing this isn't you! Without the help of a government bailout,many individuals have been able to live carelessly knowing a refinance will save them. Now this philosophy is catching up to them. I absolutely hate breaking it to an applicant that nothing can be done and they are stuck in the situation they are in. Yes, you could have done what you are trying to do 1-2 years ago, but not anymore! It isn't fun, but it is reality.
I hope this information helps and we look forward to hearing from you. Again, don't take this post the wrong way. If you set your expectations correctly, you should be in good shape!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
I bring this up to make one simple point. For everyone who is preparing to apply for a refinance, please set your expectations. Don't take it personal if something can't be done. It more than likely will not be as simple as the last time you refinanced. This doesn't mean it will be a painful process, but the days of anything goes are gone. The one exception is for people who have plenty of equity and are on the very high end of the credit score ladder. The products and options simply are not there to allow us to be flexible and work out a creative scenario for each and every applicant. We wish they were, but they aren't. Remember, we are in the business of doing quality loans. We want to be able to help each and every prospective borrower, but we must play within the rules we are given. Now, don't take this the wrong way and feel like applying for a refinance is a waste of time. We are very good at what we do and if there is a way to save you money on rate or payment, we will find it. You will know straight up what your options are and there is still a good chance that you can be helped. Just be very careful in your personal finances. It is extremely unwise to be sloppy and careless with your finances and assume a refinance will bail you out! The only people getting bailed out these days are large corporations and I am guessing this isn't you! Without the help of a government bailout,many individuals have been able to live carelessly knowing a refinance will save them. Now this philosophy is catching up to them. I absolutely hate breaking it to an applicant that nothing can be done and they are stuck in the situation they are in. Yes, you could have done what you are trying to do 1-2 years ago, but not anymore! It isn't fun, but it is reality.
I hope this information helps and we look forward to hearing from you. Again, don't take this post the wrong way. If you set your expectations correctly, you should be in good shape!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Wednesday, September 17, 2008
The Government to the Rescue....AGAIN!
Well its out and everyone saw the writing on the wall; AIG (the huge insurance giant with over $1 trillion in assets) was rescued or in other terms bought out by the government. The U.S. government gets a 79.9% stake in the company and in return will lend $85 billion over two years at 8.5% over the LIBOR. This was something that needed to be done however, I'm not a big fan of the terms although the details have yet to be released.
Let's rehash what exactly has transpired over the last several months. There is no specific order to these events and I am recalling strictly from memory but you will hopefully get my point. First, let's start out with The Federal Reserve and U.S. Treasury Department initiating, negotiating, and backing the Bear Sterns buyout by JP Morgan Chase. Let's move on to once again The Federal Reserve opening its discount window to other outside sources besides commercial banks to help free up liquidity. This means these huge companies could simply walk up to "the window" and borrower billions of dollars at 2% interest for a short term (30 days) which they later increased to ninety. Oh, let's not forget the take over of Fannie Mae and Freddie Mac where it's been rumored that they will have to contribute over $100 billion to each company to keep them solvent. It almost slipped my mind but the government also holds coupon/liquidity auctions worth billions for banks and other large commercial institutions to once again have access to money they would otherwise not have. I'm not quite sure but employees and executives at Lehman Brothers must be bathing in the sun right now as the government decided not to help facilitate their buy-out or take over even though they had been around 158 years and were larger and more diverse than Bear Sterns. How is our U.S. government deciding who to save and who to let fail?
What has the government done for the average Joe? Oh, they have given us $300-$600 "gift" to go out an by gas with for three weeks. We have seen lending standards slashed across the board as the banks hoard the cash that the government has given them to improve their own balance sheets, what about our balance sheets? You have HUGE companies failing left and right over 117 banks on the "watch-list" and that number is grossly under estimated and some how I am very surprised that they have yet to figure out that the citizens of this great country do not have access to these funds, mergers or acquisitions. Many are seeing their jobs cut or downsizing continue (just look at the unemployment numbers and unemployment rate). What is in store for the general public, what is their master plan, do they have one, or are we "causalities of war".
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Let's rehash what exactly has transpired over the last several months. There is no specific order to these events and I am recalling strictly from memory but you will hopefully get my point. First, let's start out with The Federal Reserve and U.S. Treasury Department initiating, negotiating, and backing the Bear Sterns buyout by JP Morgan Chase. Let's move on to once again The Federal Reserve opening its discount window to other outside sources besides commercial banks to help free up liquidity. This means these huge companies could simply walk up to "the window" and borrower billions of dollars at 2% interest for a short term (30 days) which they later increased to ninety. Oh, let's not forget the take over of Fannie Mae and Freddie Mac where it's been rumored that they will have to contribute over $100 billion to each company to keep them solvent. It almost slipped my mind but the government also holds coupon/liquidity auctions worth billions for banks and other large commercial institutions to once again have access to money they would otherwise not have. I'm not quite sure but employees and executives at Lehman Brothers must be bathing in the sun right now as the government decided not to help facilitate their buy-out or take over even though they had been around 158 years and were larger and more diverse than Bear Sterns. How is our U.S. government deciding who to save and who to let fail?
What has the government done for the average Joe? Oh, they have given us $300-$600 "gift" to go out an by gas with for three weeks. We have seen lending standards slashed across the board as the banks hoard the cash that the government has given them to improve their own balance sheets, what about our balance sheets? You have HUGE companies failing left and right over 117 banks on the "watch-list" and that number is grossly under estimated and some how I am very surprised that they have yet to figure out that the citizens of this great country do not have access to these funds, mergers or acquisitions. Many are seeing their jobs cut or downsizing continue (just look at the unemployment numbers and unemployment rate). What is in store for the general public, what is their master plan, do they have one, or are we "causalities of war".
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Tuesday, September 16, 2008
The Circus Continues
As we touched on yesterday, Monday was a wild day! The stock market ended up falling more that 500 points yesterday. We haven't seen a drop like this since 2001 after September 11th! Lehman Brothers filed for Bankruptcy. Merrill Lynch is being bailed out by Bank of America. Goldman Sachs posted a decrease in earnings of 70%! Washington Mutual is on shaky ground. And lastly for now, AIG is reeling big time and it doesn't look good. Their shares have dropped 42% and It looks like it will be very tough for them to raise the capital they need to stay afloat.
For those of you that don't realize how huge AIG is, then brace yourself. They have 1 Trillion in assets and if they can't make good on their obligations, watch out. This will rock Wall Street and it could be the worse blow we have been dealt so far. We will have to see. I find it hard to believe that Bear Stearns gets bailed out, but a company like AIG gets left behind. If AIG falls, there will be so many more people affected that the Bear Stearns fiasco! AIG offers life, auto, and home insurance as well as annuities. These are critical items in a families financial foundation that they count on. Yes, these can be moved to more stable companies and I suggest these people act fast. However, this will only send them sinking further. It is safe to say I don't see this one ending well. A bailout of some kind seems like the only option.
We will all just have to wait and see!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
For those of you that don't realize how huge AIG is, then brace yourself. They have 1 Trillion in assets and if they can't make good on their obligations, watch out. This will rock Wall Street and it could be the worse blow we have been dealt so far. We will have to see. I find it hard to believe that Bear Stearns gets bailed out, but a company like AIG gets left behind. If AIG falls, there will be so many more people affected that the Bear Stearns fiasco! AIG offers life, auto, and home insurance as well as annuities. These are critical items in a families financial foundation that they count on. Yes, these can be moved to more stable companies and I suggest these people act fast. However, this will only send them sinking further. It is safe to say I don't see this one ending well. A bailout of some kind seems like the only option.
We will all just have to wait and see!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Monday, September 15, 2008
The Monday Madness Nightmare!
What a morning/weekend! Lehman Brothers (a 158 year old company) files for bankruptcy protection after suitors failed to cut a deal mostly due to the Federal Reserves desire not to back some of the bad debt, funny they didn't have a problem when Bear Sterns was involved. Merrill Lynch became another big part of the ever growing conglomerate called Bank of America, who agreed to purchase the company for $50 billion or $29 a share a 71% premium based on Friday's trading. To further help the markets go a rye oil has tumbled over 5% to $96.00 a barrel yet the price at the pump is still $3.39.
What does all of this mean? The Dow is down almost 300 points, treasuries have skyrocketed as a flight to quality has become apparent, and MBS's (Mortgage Backed Securities) have had a modest gain of 56 bps points. Rates should improve today and hopefully sustain throughout the week. Only time will tell but in my personal opinion we are experiencing first hand an absolute market meltdown for the ages on Wall Street.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
What does all of this mean? The Dow is down almost 300 points, treasuries have skyrocketed as a flight to quality has become apparent, and MBS's (Mortgage Backed Securities) have had a modest gain of 56 bps points. Rates should improve today and hopefully sustain throughout the week. Only time will tell but in my personal opinion we are experiencing first hand an absolute market meltdown for the ages on Wall Street.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
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