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!
Brought to you by:
Professional Mortgage Group, Inc.
Thursday, October 16, 2008
Wednesday, October 15, 2008
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!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
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!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Tuesday, October 14, 2008
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!
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Brought to you by:
Professional Mortgage Group, Inc.
"Your Columbia, MO Mortgage Broker"
Tuesday, October 7, 2008
"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!
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
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!
Brought to you by Professional Mortgage Group, Inc.
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!
Brought to you by:
Professional Mortgage Group, Inc.
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!
Brought to you by:
Professional Mortgage Group, Inc.
Monday, October 6, 2008
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.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
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.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
Wednesday, October 1, 2008
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.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
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.
Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker
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