Mortgage Market Slowdown

I am an avid reader of our local newspaper, the Columbia Tribune. Every Saturday in the Business Times section they publish Deeds of Trusts that were recently recorded, all of which are public record. Well last Saturday September the 1st I saw something that absolutely astonished me! What was it? For the first time in 5 years of me actively reading this paper I noticed that there were only 22 Deeds of Trusts recorded for Boone County Missouri. Normally on a given Saturday there are at least 2 pages of recordings and in peak market conditions there have been as many has 4 or more pages. However, this past Saturday the Deeds of Trusts section only required about 1/5 of one page. This shocked me to say the least, have home sales fallen that much, is the Columbia market in this kind of shape, what has happened?

I have said time and again that both nationally and locally the mortgage market has seen better days. However, I had no idea we (Columbia, Missouri) were in this kind of predicament. What can we attribute this slowdown to; a large inventory of homes, the sub-prime meltdown, rising interest rates, slow job growth, a slowing economy, a stigma tied to the overall market, rising gas prices? To be honest with you this market is a little scary right now. The good news is the Federal Government finally recognizes the issue at hand and I believe will take the necessary steps to correct the housing meltdown. They have already begun the process of creating liquidity in the market place by reducing the discount window .5%, they are beginning the process of relaxing FHA guidelines to help individuals that have gotten caught in the sub-prime mess get on their feet again, they are planning reform for the sub-prime mortgage market, they have issued statements to help the secondary market relax. Will this be enough and is it too late?

You just can't "flip a switch" and correct the housing market. It will take time and consistent follow-through by the government, banks, wholesale lenders, mortgage companies, builders, real estate agents, appraisers and anyone else involved in the real estate community. Hopefully, the fed will reduce a key interest rate (federal funds rate) by at least .25% and maybe even .50% to help the market place. The next move is to reduce our inventory of homes currently on the market. The problem I see here is that it has been my experience that individuals who are in the market have a home to sell. The secondary market must make a concerted effort to purchase "mortgage backed securities", hopefully with the tightening lending guidelines and the influx of liquidity potential hedge funds will again start purchasing these mortgages. We has brokers must also be aware of what the market can bare and do our job professionally, ethically, and honestly. This means thinking of our clients first and our pocket books second. Much like Professional Mortgage Group's business model "The client for life" mentality.

Job growth and economic expansion are a leading attribute in fixing this problem. We must continue to build on our community both at the city, state and national level. Tax cuts for corporations, lowering gas prices, an ending to the war in Iraq what a nice thought that would be. How can average everyday people pay close to $3.00 a gallon for gas while quarterly profits for these companies are over $1 billion? How can we constitently give $50B-$300B in a war when we have real issues here in America. I do not know what the answer is that is left to individuals much smarter than me but am I the only one thinking of this? The American spirit has taken a blow and we must do our part to get it back! I've gotten a little off track here but you get my point. The American economy is VERY sensitive and "the American dream" of home ownership is at the very heart of what makes us a nation. I and Professional Mortgage Group are determined to be here for our community to help individuals achieve this dream!

Brought to you by Professional Mortgage Group

Your Columbia Missouri Mortgage Broker

The Mortgage Loan Process

If you are a first time home buyer or even if it has just been a long time since you were in the market to get a mortgage, the process can seem intimidating. The news is filled with doom and gloom about the mortgage and housing markets. So many companies that were here last year have gone out of business or been sold. And, who can you really trust anyway?

I'll give you several ways to ease your mind about this decision. First, you must understand that, in this world of 24 hour news, sensationalism is key for news organizations to survive. If a story doesn't grab attention immediately than it is more than likely going to be lost in cacophony of all the other "news" stories. So, when the housing market slows (like it inevitably would) and investors lose some of the enthusiasm for high risk loans (like they inevitably would) the only way to make the story last is to blow it completely out of proportion to how it affects normal everyday people's lives. And if some companies pay the price by going out of business or get hurt by unfounded rumors that the media itself starts, so much the better for the news outlets.

I'll give you two clear examples: 1) Countrywide was faced with confidence questions mearly on a media rumor that it had extreme liquidity issues. This was incorrect information blared out by many media outlets and thank goodness that other large lenders stepped in to reaffirm the public's confidence in a major mortgage lender before permanent damage was done. 2) Stories have gotten so ridiculous that I saw an article blaming the sub prime crisis for slow auto sales. If you can figure that one out, please let me know...especially since the auto market has been slowing for the past 4 years! So, take your hysterical news with quite a few grains of salt.

Next, where did all the mortgage companies go? In this free market the strong companies survive and the weak or dishonest companies disappear when the market slows down. This is actually a good thing. It is better for the consumer and it is better for the strong companies. We are here because we are good at what we do.

And that brings me to the final point of who you can trust. You should ALWAYS work with a reputable company. A reputable company should be able to produce statements and names of satisfied customers. A reputable company should come highly recommended by people in the real estate industry like Realtors and title companies. And finally, a reputable company should be able to answer your questions competently and in such a way that you understand the whole transaction.

You will find the process easier and more enjoyable if you keep your ears closed to doom and gloom reporting, understand that strong companies survive market downturns and do business with someone you can trust.

Your comments are welcome!

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

Foreclosures

Everyone knows now that the high times that buyers, builders, lenders, realtors, and investors have experienced the past few years is long gone. Now the market is in a downswing and these same people are scrambling to stay afloat. Hopefully you didn't get caught up in the madness and think you were immune to losing money! As an investor / lender I want to take this time to discuss the investing end of things. Not all is bad if you positioned yourself correctly!

By this I mean you stayed safe with your investments and you didn't jump in head first. If you were smart, you are primed to take advantage of the rise in foreclosures. Banks are not in the business of holding on to property. You can take advantage of this. Your options are to negotiate with struggling homeowners (if you can) and try to make it a win-win for both, negotiate with banks, or wait until the home hits the courthouse steps. Either way there are deals to be had. You can do some quick work to the home and flip it or pick up some nice investment homes to rent. Just don't get emotionally attached to a property and pay more than necessary and only spend what is necessary to improve the home. Keep in mind what price ranges are moving in Columbia and stay within these brackets. If you are flipping, why buy a home that you will have to hold on to forever due to the slow market!

Remember you are a smart investor! If you weren't you would not have the liquidity to be able to shop right now! You would be cash strapped like so many others! Just follow a game plan , start small, and be smart and you should be fine.

Please keep in mind that real estate investing and flipping houses is not for everyone. Talk to some people who have done it. Don't just read a "Get Rich Quick" book and think you are an expert! Happy Hunting!

Brought to you by:

Professional Mortgage Group, Inc.

"Your Columbia Missouri Mortgage Broker"

Mortgages in Columbia, Missouri

Well we have seen and heard plenty of bad news lately concerning the current state of the housing market both from selling property and being able to obtain financing to purchase a property. Hopefully this blog will shed some light on the good things that have been taking place over the past couple of months.

First, both banks and brokers are still doing loans. Just like anything else the good lenders will still be in business after this mortgage valley is over. That's good news for both homeowners and borrowers. In the past borrowers have been taken advantage of by unethical and "shady" brokers. This slowdown in the housing market should weed out those "bad seeds" and let the good brokers who take pride in their clients financing do what they do best, which is letting the clients needs come first. Professional Mortgage Group is such a broker! We will be here for you when this mortgage slowdown turns. We have and will continue to put your needs first from our Buyer's guides, Service Guarantee's, On-line loan status, and superior communication. To our explanation of the Good Faith Estimate, Loan Documents, Payment, Rate and "Unknowns" Professional Mortgage Group will set the expectations so your mortgage process goes smoothly.

Second, mortgage loans are still available. Yes, some programs have disappeared and yes others have been modified but a good portion of programs are still out there. This blog will hopefully shed light on the current "highly used" programs that are still available.

- 100% Financing (Yes this program is still readily available for both borrowers with excellent and fair credit)

- Stated Income and Asset to 95% LTV (Yes, if you have at least a 680 score and are putting 5% down you can get a conforming loan without having to verify income or assets.)

- USDA (Yes, the Rural Development program is still alive and well.)

- MHDC (Yes, the Missouri Housing program for first time home buyers is still readily available.)

- N/O/O (Yes, purchasing investment properties is still fairly easy to get done.)

- Student Housing Program to 100% LTV (Yes, this program is still out there for "enrolled" students.)

- Sub-Prime Loans (Yes, these loans are still available for individuals with less than perfect credit.)

- Jumbo Loans (Yes, these loans are still readily available and fair market rates.)

Hopefully this will shed some light on the current state of the mortgage market. With all of the media giving bad news concerning this area of the economy there is and will continue to be areas that are good. Professional Mortgage Group, Inc. is here to answer your questions and give you honest and ethical mortgage advice!

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

Featured Agent

Professional Mortgage Group, Inc. is beginning a new weekly blog segment titled Featured Agent. This week we would like to feature Brooke Sydenstricker McCarty with Weichert Realtors. Brooke is an agent who goes above and beyond the call of duty. We recently had the opportunity to work along side Brooke during a closing and she not only made every step of the sale smooth but she also brought to the table a very refreshing sense of enthusiasm. When Brooke entered the closing room she had a personalized binder for our clients with information about the newly purchased property. This personalized binder contained; tax information, warranty information, and contact information for all parties involved. During the closing Brooke also had a house warming gift for our new clients. From the beginning Brooke returned phone calls promptly, always responded to emails, and was willing to help out in any way necessary. These are the agents Professional Mortgage Group, Inc. likes to work with and this is the way we conduct our daily business. Thank you Brooke for being such a professional and taking so much pride in your work. We look forward to working with you again in the near future. Congratulations Chris and Elizabeth on your new home!!!


Brought to by Professional Mortgage Group, Inc.
Columbia, Missouri
573-777-1198
www.pmg-inc.net

It's Great To Be In The Mortgage Business

Now, I know that headline got your attention. The surprising thing is that it is true. Now is the perfect time to be in the mortgage business, but only if you are professional, knowledgable, and have positioned yourself stratigically to succeed. We at Professional Mortgage Group have done all three.

You may ask how I can say this is a good time to be in this business. Well, the simple ugly truth is that it has been too easy for unqualified, unprofessional brokers to be in business. I'm talking about the mortgage brokers who didn't return phone calls, were unethical to their clients, and were not much of a partner to the Realtors that supplied them with referrals and were still able to stay in business. Those types are being left behind on a daily basis along with the lenders who allowed them to flourish. I say good riddance to the bad apples.

As all of the mortage market debacle unfolds (as with any market correction) you will find that those left standing are the quality brokerage companies that did and still do business the right way. I'm proud to say that when the dust has settled, Professional Mortgage Group will be there.

So, I say again that it is a great time to be in the mortgage business at least for those of us that do things the right way! Always work with someone you trust.

Your comments are always welcome.

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

Lender Pre-Approvals

I recently received a question on one of my past blogs regarding lender pre-approvals and commitments. This made me realize that I need to update our readers on this process and how it has been affected by today's turbulent market!

You can look back into our blog archives to read the full post, but here is a quick summary.

Pre-qualification -
After reviewing the nuts & bolts of the transaction and if a lender has a loan
program that can accommodate the applicant and their goals, they are
pre-qualified.

Pre-Approval -
After we verify all necessary information and everything checks out, we can
issue a pre-approval letter to the borrower and realtor. These letters are
contingent on certain details and it means they will have a loan if all are met.

Commitment -
Once we submit the file to the lender, we are issued a formal loan
commitment. This commitment will have a list of conditions that must be
met in order for them to offer a "clear to close". Once this "clear to close" is
issued we can close your loan.

Please keep in mind conforming programs and rates are stable and can be locked far in advance. These loans will not run into the issues I will list below. I will primarily focus on sub-prime loans because they are much trickier and are the cause for most of the headache closings or broken real estate contracts!

Now that I have refreshed your memory on the differences, lets talk about some things that can happen in today's turbulent market. As a broker we offer a pre-approval based on the programs that are available through the lenders we use and the current market rate. Notice I said "current". This is of course what is available the day we pre-approve you! With the market the way it is, programs and rates change daily! There have been times where a program is available one minute and gone the next. There are some scenarios where there is only 1 lender that can loan on a particular borrower. If this lender cuts the program, goes bankrupt, or ups the rate drastically due to increased risk in the market there is nothing we can do about it. If this occurs, the pre-approval can become worthless! We are unable to lock a sub-prime loan until it is actually "cleared to close" and this is something many people do not understand. Your sub-prime rate is floating until we can clear the file and lock. Unfortunately market conditions can change and it can negatively impact some people.

I bring all of this up because if any of these scenarios take place, the broker takes the blame. As brokers we must meet with each client and make all of this clear. Borrowers need to know the current market conditions and what can happen. Now I have only mentioned extreme cases, but these are the ones that make the news or get borrowers and realtors in a frenzy! Brokers are looked down upon and are thought of as giving "false" pre-approvals and that is just not the case. I cannot speak for all brokers and their practices, but more times than not it is out of our control. We take the application and provide a pre-approval based on the tools we are given on a given day. Then if things go bad and something can't be verified, a program changes, rates jump up, or a lender goes bankrupt the deal can be dead. All of these events can turn a one time commitment and soon to be done deal into nothing! From the outside it is easy to say that Broker X lied and said I was good to go and had a commitment. In reality they did have a commitment or pre-approval, but circumstances arose that had to be dealt with and this is what will bring the Quality brokers to the top! How one deals with adverse situations in this business is what sets them apart!
You can now see that brokering loans in today's market can be tricky and as always do your homework and go with a broker that has a track record of success. They will know how to deal with tough circumstances and get you the loan you deserve!

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