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