Information about mortgage

Obama Likens Subprime Mortgage Fallout to Enron Case (Bloomberg via Yahoo! News)

2007-09-18T00:09:00.011-07:00

Sept. 17 (Bloomberg) -- Democratic presidential candidate Barack Obama likened the fallout from defaults on subprime mortgages to the collapses of Enron Corp. and WorldCom Inc., saying it could lead to a ``crisis of confidence'' in the markets.

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[Source: Yahoo! News Search Results for mortgages]

Question Du Jour: .25 or .5 - what are your rate cut predictions?

2007-09-18T00:09:00.009-07:00

Everyone is buzzing about tomorrow’s Fed meeting. The question seems to be will there be a .25% or .5% cut to the Fed funds rate (currently at 5.25%)? Most are weighing in at .25% but some are predicting Bernanke goes big with a .5% cut. Personally I question the effectiveness of any rate cut in smoothing out problems in the credit markets. And I’m not alone. While most Wall Street firms are calling for at least a .25% reduction (wonder why with the CDO meltdown?) some cooler-headed folks question the help it will provide to the market:

The odd man out is Scott Anderson, senior economist at Wells Fargo Economics.

Anderson argues that the Fed should not lower the Fed funds rate, but said they will just for the “psychological effects it could have on financial markets.”
“A Fed Funds cut will not bring back the U.S. housing market. A Fed Funds cut will not bring back the commercial paper market,” Anderson said.
If the housing market remains depressed, the markets “will ask for another rate cut, and another, and another, and another…and then what?” he asked.

Well put.

According to John over at Shadow Government Statistics the effective Fed Funds rate is already around 4.75% reinforcing the idea that any cut will be more for show.

From one of the bazillion Market Watch articles on the conjecture:

Most economists think the central bank will cut by a quarter-percentage point to 5.0%, but some are attracted to the somewhat strong move of a half-percentage point.
“While the arguments favoring a bold move are compelling, we believe the chances of a 25 basis point cut carry a higher probability,” said Michael Moran, chief economist at Daiwa Securities America Inc., in a note to clients.
Moran gives three reasons for a smaller move. First is concern about the appearance of the Fed being too quick to protect lenders and investors; second are doubts that the economy will weaken sharply and last is nervousness about inflation.

So my call would be that we are going to see a quarter-point reduction to 5.0% but question its ability to help anything, and wonder aloud what greater risks it may flirt with. What are your thoughts?

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[Source: Blown Mortgage]

What are Interest Only Loans?

2007-09-18T00:09:00.007-07:00

An interest only mortgage is a relatively new way to finance your home that has been gaining strong momentum lately. When you originally take out a mortgage your payment consists of two parts: interest and the principal. The principal is how much your house actually costs and the interest is how much extra you pay on top of the cost of your house to take out the loan, which is based on the interest rate you receive. The interest is basically the price of taking out a mortgage. You will pay both the interest and the principal based on an amortization schedule in which at the beginning most of your payment will be interest and towards the end most of your payment will be principal.

Interest Only?

An interest only mortgage takes out your premium payments for certain length of the loan. This usually happens at the beginning and lasts about five years. The first five years of your mortgage you will only pay the interest on your mortgage. Once those five years are up your mortgage will be re-amortized to include the principal on your mortgage. What is the point of this? For the first five years of your mortgage your monthly payment will be much less then it would be with a normal mortgage. Once those five years are up your monthly payment will be higher for the remainder of your mortgage. This is a good option for people who dont have a lot of money now but could see themselves getting more money via raise or investments in the future.

A Gamble?

Deciding on an interest only mortgage can be gamble because if you do not receive a raise in income like you expected after a few years then you could be stuck looking at high monthly mortgage payments after your initial few years of interest only payments has come up. Hopefully the money you saved during your interest only payments was managed wisely and you wont have this problem. An interest only mortgage basically comes down to whether or not you want to save some money at the outset of your mortgage.

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amortization schedule, Interest, interest only mortgage, interest rate, Mortgage Payments, Mortgage Planning, Mortgage Rates, mortgages, mortgage payments, Uncategorized

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[Source: Mortgage Blog]

Do you think Chinas gonna forget?

2007-09-18T00:09:00.005-07:00

It’s amazing what a few beers and a trip to New York City can get you these days. In a recent conversation with an unnamed employee of an unnamed big NYC firm that is huge in the mortgage backed securities game I got a feel of just how bad it is on Wall Street. This person worked on the front lines - packaging and selling CDOs (collateralized debt obligations) to big-time investors. How big you ask? How about China, Austria, and a ton of other countries as regular customers?

His take seems to me to be right on. When asked if the housing market is going to “come back” he frankly said, “never.” The reason? “Do you think China’s gonna forget [how screwed they got]?” As he tells the story he could get anything he wanted rated AAA by the agencies with just a bit of alchemy and some statistics. Take a pile of subprime mortgage debt and slice and dice and voila - an AAA rated CDO. His firm would turn around and sell millions and billions of dollars worth of AAA-rated CDOs that turned in to 10 cents on the dollar, almost overnight. China, a huge buyer of our mortgage debt is holding paper that is worth no more than 10 cents on the dollar; and they hold a ton of it.

If you think lead-tainted toys are a big deal, how about being conned in to a bunch of bad subprime mortgage debt reformulated to look innocuous by the wizards (nay, snake oil salesmen) of Wall Street? The housing market will never return because China will never forget how screwed they got in this whole deal. Do you really think in 3 to 5 years China is going to take another blind plunge in to mortgage debt? Do you think other countries are going to come rushing back saying give us more crap? Not a chance.

Consumer sentiment doesn’t matter, lower rates don’t matter, these countries got burned by the billions and they won’t forget any time soon. The fuel for the American housing market run-up is not coming back. The question is now - how closed off is America and Wall Street to funding from these countries? Will they believe the ratings agencies and Wall Street houses when they tout their latest offering as AAA rated? What else will suffer as these countries keep their money on the sidelines, out of markets that have proved lucrative for US firms hawking their wares?

He said at least you mortgage guys can keep writing refis, but the CDO market is dried up. People [investor customers of the Wall Street firms] are really, really unhappy. And one last thought? You ain’t seen nothing yet.

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[Source: Blown Mortgage]

E-Trade Exits Wholesale Mortgage, Revises 2007 Guidance

2007-09-18T00:09:00.003-07:00

E-Trade Financial announced today that it was exiting wholesale mortgage as part of its move to return to “core businesses” that benefit its retail customers. The company is also upping its amount of loan loss reserves as a result of “charge-offs expected as a result of the disturbance in the credit markets.” The aggregate loss reserve provision is $245 million. From the release:

With this additional reserve, allowance for loan losses as a percentage of non-performing loans is expected to increase to 75 percent based on assumptions for the second half of the year, up from 45 percent on June 30, 2007. Within home equity loans, where the Company and the marketplace have seen the most significant stress, the coverage will be approximately 100 percent, up from 51 percent as of June 30, 2007.

As a result of the actions outlined above, the Company is revising its earnings outlook for 2007 to account for 1) higher provision for loan losses; 2) potential securities impairments; 3) slower balance sheet growth and composition expectations; and 4) exit and other restructuring charges. For the full year 2007, E*TRADE FINANCIAL expects GAAP net income of between $450 million and $500 million, and earnings per share of between $1.05 and $1.15 per share. This is down from its previous range of $1.53 to $1.67.

No word on the number of jobs affected; but I imagine it is significant. Just another sign of the times, and certainly not the last notice like this. If you think of all of the companies like E-Trade, AIG, H&R Block that got in to mortgage as an adjunct to their core business models there is still a decent list left of those that will probably make the move out of the sector to preserve liquidity and earnings in other, more profitable business units.

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[Source: Blown Mortgage]

Mortgages in aisle 9 (The Washington Times)

2007-09-18T00:09:00.001-07:00

CINCINNATI (AP)

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[Source: Yahoo! News Search Results for mortgages]

Countrywide Layoffs Gear Up

2007-09-17T00:16:00.013-07:00

My sources just informed me that the entire Anaheim subprime wholesale production office was given 60-day notices as the Countrywide layoffs announced last week apparently get underway in earnest. I am not sure of the size of the Anaheim production office but it was a sizeable division.

Please email me if you have more information about the sure-to-be ongoing Countrywide layoffs.

PS. I’m still on vacation but finally have high-speed internet - finally!

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[Source: Blown Mortgage]

Wachovia unit sued over option-ARM mortgages (BizJournals)

2007-09-17T00:16:00.011-07:00

A lawsuit filed against Wachovia Corp.'s mortgage unit and World Savings Bank alleges the bank was less than honest in explaining its option-adjustable-rate mortgages to consumers.

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[Source: Yahoo! News Search Results for mortgages]

New Zealand Bank Defends Plan To Offer Low-Cost Mortgages (Nasdaq)

2007-09-17T00:16:00.009-07:00

(RTTNews) - New Zealand's state-owned Kiwibank is defending its move to offer cut-rate mortgages, despite government wishes to cool the housing market.

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[Source: Yahoo! News Search Results for mortgages]

Countrywide tries to assuage broker fears with latest email

2007-09-17T00:16:00.007-07:00

In the latest broker letter from Countrywide attempts are made to reduce anxiety building in the broker community about the onslaught of bank closures and strategic changes away from the wholesale and correspondent lending models. Clearly with WaMu shuttering correspondent lending, and lots of chatter about the need to improve quality by focusing solely on retail origination, brokers are rightfully worried about their place in the industry when all is said and done.

From Countrywide:

Dear Business Partner:
As we continue to adapt to challenges in the mortgage market, this communication is the second of a series from Countrywide, America’s Wholesale Lender. In these ongoing communications, my goal is to present open and direct assessments of the current state of wholesale lending, and the measures we can take collectively as originators and lenders to successfully evolve the wholesale lending channel.
My first communication in this series, emailed to you on August 28, was met with a wide range of reactions from the broker community as expected. I’m pleased that so many people took the time to share their views as it demonstrates how engaged and passionate we all are about this business. Truly productive communication should inspire dialog that airs points of agreement as well as honest differences of opinions.
Undoubtedly, these communications are about looking forward and about helping to define what success will look like for all of us tomorrow and in the future. To flourish, all players in the wholesale lending channel lenders and brokers alike must work together to evolve and prosper in today’s ever-changing environment. As a former loan originator who once operated as a mortgage broker, I couldn’t believe more in the vital role that strong, high-quality, and service-oriented mortgage brokers play in the mortgage lending process.
Adapting for Change
In this virtually unprecedented period in our industry, it is clear that we must all take decisive action to ensure the long-term health of our business and of the wholesale lending channel. Given the current soft housing market conditions and the tighter credit standards that are in place today, we already know that 2007 will produce lower origination volumes than expected. We are now estimating that these variables will reduce the size of the originations market in 2008 by 25% or more from 2007 volumes. In addition to these forecasts, Countrywide is now only offering non-prime financing options that are eligible for sale or securitization under programs supported by the GSEs (Fannie Mae, Freddie Mac) and FHA.
Despite these and other reductions to our product guidelines, Countrywide, America’s Wholesale Lender continues to offer among the broadest product menus in the industry. Nevertheless, we must evolve our business model to adapt to these significant changes in the market.
Accordingly, we recently announced our plans to integrate our prime and non-prime sales forces into a single, industry-leading sales organization dedicated to supporting our extensive product line including Non-Prime, Government, Custom Construction, and Reverse Mortgage*. This evolution of our organization truly strengthens our commitment to our One Source lending strategy and provides you easier access to the home loan solutions that can help drive your business.
As a result of this integration, we made a difficult decision and, earlier today, reduced the size of our sales organization across the country. It was necessary to make these adjustments to ensure appropriate broker account assignments in light of the projected lower size of the overall mortgage market.
Your One Source for Success.SM
In spite of these actions, Countrywide, America’s Wholesale Lender is well positioned to continue its leadership role in the channel and remains relentless in our pursuit of achieving a dominant status among wholesale lenders.
Our new sales force and structure is designed to better meet the needs of our Business Partners as we work together to evolve and strengthen the wholesale lending channel. Our distributed Account Representatives and fulfillment resources are truly devoted to helping you drive your success with one simple goal in mind delivering responsive and knowledgeable service each and every time you call upon them for assistance.
As a result of today’s changes, we are quickly working to restructure our account assignments across our existing sales force. If you have any questions regarding this process, please contact your Account Representative or the Area Sales Manager in your market. You may visit www.cwbc.com or call 1-800-877-POWER if you need assistance with contact information.
Looking to the Future
At Countrywide, America’s Wholesale Lender, we remain steadfast in our commitment to our broker Business Partners and our goal of providing solutions that can help drive your business. Working together, I am confident that we can successfully evolve the wholesale lending channel to adapt and prosper in the new market paradigm. To do so, however, we must all be willing to constantly examine our business strategies and practices and to affect change where change is needed.
In my next communication, I plan to address the ongoing importance of the mortgage broker “value proposition” in today’s mortgage lending environment. I also plan to share observations on the topics of strengthening consumer loyalty and enhancing the broker role as a trusted advisor in the housing finance industry.
Together as originators and lenders we can and will revitalize the wholesale lending industry. Thank you once again for your time.
Todd A. Dal Porto
Senior Managing Director & President
Countrywide, America’s Wholesale Lender

My thoughts? Well in the last communication there was quite an uproar from the broker community from what appeared (not to this recipient however) that Countrywide was looking for a way to ease the news that less production would be coming from the wholesale (broker) channel in the future. While not implicit, the first message seemed to raise that concern among brokers.

This is clearly an attempt to show that Countrywide is not running for the wholesale aisle - yet. However, it must be in context with the layoff scheme to reduce the workforce by 20%. Will they be concentrated in wholesale or evenly between all origination channels? From early accounts it seems they are taking their most drastic steps in reducing wholesale capacity. However, this is just my opinion and we have yet to see the final strategy revealed from Countrywide.

I will say though that they are at the mercy of the secondary market like everyone else. If investors only want retail loans, retail loans is what they’ll get - regardless of what Countrywide may or may not say now.

Personally I’ve seen staff layoffs, account reassignments and more that make it look like a paring down of wholesale is well underway - but I could be wrong.

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[Source: Blown Mortgage]

Do you think Chinas gonna forget?

2007-09-17T00:16:00.005-07:00

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[Source: Blown Mortgage]

A brief history of your Blown Mortgage Scribe, Part 3

2007-09-17T00:16:00.003-07:00

A lot of people ask me about my background and how and why I am in mortgages. Most people want to know why someone in the mortgage industry has a web site like Blown Mortgage. I guess its a little weird having a site that is primarily focused on the negative aspects of the industry in which I work. So with out further ado, for those of you that care about who is writing this blog please enjoy this autobiographical article that should shed some light on who I am and why I write Blown Mortgage.

Part 1
Part 2

PART 3

A New Day

Like being dunked in cold water you realize right away that sitting behind a desk dreaming up customer experience is a whole lot cleaner than the messy business that is running a company. Marketing theory and strategy that look good on paper can quickly fade in the face of overwhelming reality. But we continued to force the issue of quality and writing good loans. We focused on customer service, developed a 10-point customer service pledge, and took an oath to try to rewrite the ending of the bad story that so many home owners had come to expect of our industry. You can see our 10-point pledge online.

It wasnt easy. A constant battle to retrain employees that had come from corrupt backgrounds was a veritable turf war over right and wrong. We learned that our best people were those that were educated, friendly and decent who had the unique trait of never having been in the business. These untainted individuals were by far the most successful. For there is something truly refreshing about working with someone who actually has your best interests in mind. It was common to hear in our office in the early days I dont need to make that much money on that loan, a sign that our employees heads were in the right place.

As we grew (and grow we did) it became an ongoing struggle to weed out the bad apples (we did) and train the ones with promise (I have so many power point files you wouldnt believe) to model their business behavior after the idealized way we wanted things done. We didnt always succeed. One of the biggest misgivings I have about starting my company is that I know 100% that there are people out there that hate my company; who feel defrauded and lied to and cheated by another unscrupulous mortgage company, and it breaks my heart. I tried hard to keep that from happening, but in the end, it is impossible to 100% satisfy everyone. Even in an environment of exceptionally loose credit, not everyone can get what they want.

We spent every dime (virtually) on building the company, obtaining licenses for more states, investing in people, hardware, compliance, consultants, marketing, employee benefits, you name it. We didnt want to be a fly-by-night company working off of plywood desks but all driving Ferraris. We put it back in the business to be able to serve our customers better. I drove a 1997 Lincoln Town Car as the owner of a mortgage company (with 147,000 miles on it) while at the drive through I was surrounded by 911s and Sypder convertibles. We were singularly focused on becoming better at what we did and hopefully making a difference for the people we helped.

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[Source: Blown Mortgage]

Chase Eliminates Stated & No Income Alt-A Loan Types

2007-09-17T00:16:00.001-07:00

In another case of “what took so long?” Chase has announced the elimination of their no income and stated income ChaseFlex loan types. The change, announced yesterday, goes in to effect on the 19th. Just the latest in a long line of investors who find that secondary market buyers want to see proof of capacity to repay; something that was minimized in favor of credit score over the last few years. As we’ve maintained - “FICOs can’t make your mortgage payment” and the market seems to finally be agreeing.

From the announcement:

As a responsible lender and investor, we continue to monitor the lending environment and make changes as necessary. The security of our customers, employees, and shareholders is our highest priority, and as such, we are charged with ensuring that our products and policies remain prudent and further support our commitment to help borrowers sustain home ownership.
When reviewing product performance, we find adequate documentation is a key risk driver in loan repayment. From a financial standpoint, we need to take this risk component into account when making loans in this environment.
Consequently, we have decided to eliminate the ChaseFlex No Doc and No Ratio programs from our Alt A product suite effective September 19, 2007.

While there will be hold outs it appears a certainty that lack of capacity will only be tolerated on low LTV and high FICO loans - and little else. Seems to me like we’re getting back to “common sense” in a hurry - which has to be seen as a good thing.

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[Source: Blown Mortgage]

Chase Eliminates Stated & No Income Alt-A Loan Types

2007-09-16T01:04:00.003-07:00

From the announcement:

As a responsible lender and investor, we continue to monitor the lending environment and make changes as necessary. The security of our customers, employees, and shareholders is our highest priority, and as such, we are charged with ensuring that our products and policies remain prudent and further support our commitment to help borrowers sustain home ownership.
When reviewing product performance, we find adequate documentation is a key risk driver in loan repayment. From a financial standpoint, we need to take this risk component into account when making loans in this environment.
Consequently, we have decided to eliminate the ChaseFlex No Doc and No Ratio programs from our Alt A product suite effective September 19, 2007.

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[Source: Blown Mortgage]

Mortgages for the Common Man

2007-09-16T01:04:00.001-07:00

Should I rent a house or should I buy a house? Anyone who has managed to move out of their parents home has had this question pop up in their heads. As we all know renting a home can be a very easy and painless process, unless you are not getting the best deal possible. Purchasing your own home has always been the best decision for individuals because it gives them the ability to put money towards their investments. It was once said that renting a home is putting your money in the trash can, while buying a home is putting your money in the bank. To some extent this is very true, when you move out of a home that has been rented; you have nothing to show for it. However, when you sell you house after you move out you will gain a good amount of the money back that you put into it, adjusting for the markets inflation of course. Buying a home is the better alternative.

It All Comes Down to Monthly Payments

Houses cost a lot of money today which is why we need mortgages. Mortgages allow us to pay for our house over the course of 15 to 30 years, instead of entirely upfront. When it comes right down to it, you are paying a monthly payment for a house no matter if you are renting it or buying it. A mortgage payment could cost you over $1,000 a month but so does a nice house to rent. The only difference is the landlord pays for the repairs if you rent a house. But with a mortgage you have ownership of a house, so when you move out you can sell it. If you choose not to move you, then you have a free home to live in when your mortgage payments are up.

When renting a house you never have a guarantee that you can stay in that house for a long period of time. You will most likely sign year to year leases but at some point your current landlord could tell you that they do not want to rent out the house any longer. You never run into this risk if you have your own house. Another big reason to buy, without trying to sound too sentimental, is memories. Sure you can have nice memories in a rental house but your own home is a sense of place, and it is a place for your family to gain and share memories.

Get a Mortgage Online?

Sometimes mortgages are not the easiest thing to get, especially if ones credit score is not flawless. The common man can get mortgages with us on the web for less then any of the competitors lenders can offer. You might be curious how; we do all of our business through a variety of the worlds largest home lenders. We pit the best rates out of the total lenders and then match it with you. So, when you are ready to get the best mortgage for your new home, let us know!

Additional Resources

buying a home, Mortgage Payments, Mortgage Planning, mortgages, mortgage payment, mortgage payments, renting a home, renting a house, rent a house

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[Source: Mortgage Blog]

New laws target mortgages, sex offenders (The Arizona Republic)

2007-09-16T01:03:00.005-07:00

From making mortgage fraud a felony to more closely tracking sex offenders, laws enacted by the Legislature get legal legs Wednesday.

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[Source: Yahoo! News Search Results for mortgages]

A brief history of your Blown Mortgage Scribe, Part 3

2007-09-16T01:03:00.003-07:00

Part 1
Part 2

PART 3

A New Day

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[Source: Blown Mortgage]

Reverse mortgages an option for seniors (The Springfield News-Leader)

2007-09-16T01:03:00.001-07:00

Using a home equity line of credit, David Casey and his wife Joyce made some much-needed improvements around their house. New carpet. Updated plumbing. But the credit line's interest kept jumping, pushing their monthly payment to nearly $1,000 from $600.

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[Source: Yahoo! News Search Results for mortgages]

Rates on 30-year mortgages drop sharply (AP via Yahoo! News)

2007-09-15T00:20:00.005-07:00

Rates on 30-year mortgages dropped this week to the lowest point in four months, providing some relief for people hoping to refinance their existing mortgages.

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[Source: Yahoo! News Search Results for mortgages]

Profit Warning by Merrill (New York Times)

2007-09-15T00:20:00.003-07:00

Merrill Lynch warned yesterday that shaky credit markets forced it to reduce the value of securities linked to risky subprime mortgages and other products, a move that could hurt third-quarter profit.

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[Source: Yahoo! News Search Results for mortgages]

Rates on 30-year mortgages drop (The News & Observer)

2007-09-15T00:20:00.001-07:00

Rates on 30-year mortgages dropped this week to the lowest point in four months.

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[Source: Yahoo! News Search Results for mortgages]

Mortgages to people with questionable credit histories could be dangerous to US economy (Pravda)

2007-09-14T00:20:00.009-07:00

Alan Greenspan failed to predict that an explosion of mortgages to people with questionable credit histories could pose a danger to the U.S. economy.

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[Source: Yahoo! News Search Results for mortgages]

Freddie Mac Seeks to Get Mortgages' Paperwork (Washington Post)

2007-09-14T00:20:00.007-07:00

Freddie Mac has gone to court to protect its interests in a $796.8 million portfolio of home mortgages issued by a financially troubled lender, according to papers filed in U.S. Bankruptcy Court.

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[Source: Yahoo! News Search Results for mortgages]

Rates For 30-Year Mortgages Dip (The Tampa Tribune)

2007-09-14T00:20:00.005-07:00

WASHINGTON - Rates on 30-year mortgages dropped this week to the lowest point in four months, providing some relief for people hoping to refinance their mortgages.

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[Source: Yahoo! News Search Results for mortgages]

Greenspan acknowledges he didn't initially grasp risks of 'subprime' mortgages (The Capital Times)

2007-09-14T00:20:00.003-07:00

WASHINGTON (AP) - Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to see early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy. In an upcoming interview, Greenspan said he was aware of "subprime" lending practices where homebuyers got very low initial rates only to see them later jacked up, causing severe ...

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[Source: Yahoo! News Search Results for mortgages]

Greenspan acknowledges he didn't initially grasp risks of 'subprime' mortgages (The Times of Northwest Indiana)

2007-09-14T00:20:00.001-07:00

WASHINGTON | Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to see early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.

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[Source: Yahoo! News Search Results for mortgages]

Countrywide tries to assuage broker fears with latest email

2007-09-14T00:19:00.007-07:00

From Countrywide:

Dear Business Partner:
As we continue to adapt to challenges in the mortgage market, this communication is the second of a series from Countrywide, America’s Wholesale Lender. In these ongoing communications, my goal is to present open and direct assessments of the current state of wholesale lending, and the measures we can take collectively as originators and lenders to successfully evolve the wholesale lending channel.
My first communication in this series, emailed to you on August 28, was met with a wide range of reactions from the broker community as expected. I’m pleased that so many people took the time to share their views as it demonstrates how engaged and passionate we all are about this business. Truly productive communication should inspire dialog that airs points of agreement as well as honest differences of opinions.
Undoubtedly, these communications are about looking forward and about helping to define what success will look like for all of us tomorrow and in the future. To flourish, all players in the wholesale lending channel lenders and brokers alike must work together to evolve and prosper in today’s ever-changing environment. As a former loan originator who once operated as a mortgage broker, I couldn’t believe more in the vital role that strong, high-quality, and service-oriented mortgage brokers play in the mortgage lending process.
Adapting for Change
In this virtually unprecedented period in our industry, it is clear that we must all take decisive action to ensure the long-term health of our business and of the wholesale lending channel. Given the current soft housing market conditions and the tighter credit standards that are in place today, we already know that 2007 will produce lower origination volumes than expected. We are now estimating that these variables will reduce the size of the originations market in 2008 by 25% or more from 2007 volumes. In addition to these forecasts, Countrywide is now only offering non-prime financing options that are eligible for sale or securitization under programs supported by the GSEs (Fannie Mae, Freddie Mac) and FHA.
Despite these and other reductions to our product guidelines, Countrywide, America’s Wholesale Lender continues to offer among the broadest product menus in the industry. Nevertheless, we must evolve our business model to adapt to these significant changes in the market.
Accordingly, we recently announced our plans to integrate our prime and non-prime sales forces into a single, industry-leading sales organization dedicated to supporting our extensive product line including Non-Prime, Government, Custom Construction, and Reverse Mortgage*. This evolution of our organization truly strengthens our commitment to our One Source lending strategy and provides you easier access to the home loan solutions that can help drive your business.
As a result of this integration, we made a difficult decision and, earlier today, reduced the size of our sales organization across the country. It was necessary to make these adjustments to ensure appropriate broker account assignments in light of the projected lower size of the overall mortgage market.
Your One Source for Success.SM
In spite of these actions, Countrywide, America’s Wholesale Lender is well positioned to continue its leadership role in the channel and remains relentless in our pursuit of achieving a dominant status among wholesale lenders.
Our new sales force and structure is designed to better meet the needs of our Business Partners as we work together to evolve and strengthen the wholesale lending channel. Our distributed Account Representatives and fulfillment resources are truly devoted to helping you drive your success with one simple goal in mind delivering responsive and knowledgeable service each and every time you call upon them for assistance.
As a result of today’s changes, we are quickly working to restructure our account assignments across our existing sales force. If you have any questions regarding this process, please contact your Account Representative or the Area Sales Manager in your market. You may visit www.cwbc.com or call 1-800-877-POWER if you need assistance with contact information.
Looking to the Future
At Countrywide, America’s Wholesale Lender, we remain steadfast in our commitment to our broker Business Partners and our goal of providing solutions that can help drive your business. Working together, I am confident that we can successfully evolve the wholesale lending channel to adapt and prosper in the new market paradigm. To do so, however, we must all be willing to constantly examine our business strategies and practices and to affect change where change is needed.
In my next communication, I plan to address the ongoing importance of the mortgage broker “value proposition” in today’s mortgage lending environment. I also plan to share observations on the topics of strengthening consumer loyalty and enhancing the broker role as a trusted advisor in the housing finance industry.
Together as originators and lenders we can and will revitalize the wholesale lending industry. Thank you once again for your time.
Todd A. Dal Porto
Senior Managing Director & President
Countrywide, America’s Wholesale Lender

Personally I’ve seen staff layoffs, account reassignments and more that make it look like a paring down of wholesale is well underway - but I could be wrong.

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[Source: Blown Mortgage]

More minorities denied mortgages (Boston Globe)

2007-09-14T00:19:00.005-07:00

Blacks and Latinos in the Boston area were denied mortgages at the highest rates since the early 1990s, when minority loan rejections sparked charges of racism in the city's lending industry.

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[Source: Yahoo! News Search Results for mortgages]

Guest Post: The Front Lines

2007-09-14T00:19:00.003-07:00

This post was removed at the author’s request as the guest author felt that it was being misconstrued and therefore I have honored their request. — Morgan

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[Source: Blown Mortgage]

Countrywide Layoffs Gear Up

2007-09-14T00:19:00.001-07:00

Please email me if you have more information about the sure-to-be ongoing Countrywide layoffs.

PS. I’m still on vacation but finally have high-speed internet - finally!

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[Source: Blown Mortgage]

Report finds higher rejection rates for home mortgages in 2006 (The Standard-Times)

2007-09-13T00:39:00.001-07:00

WASHINGTON Applicants for home mortgages were turned down for loans at a slightly higher rate in 2006 than the previous year and significant disparities continued to exist between white applicants and minority applicants, the government reported...

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[Source: Yahoo! News Search Results for mortgages]

Abbey will raise rates on tracker mortgages (Independent)

2007-09-12T21:38:00.011-07:00

The effects of the credit crunch started to trickle through to the prime end of the consumer mortgage market yesterday, as a handful of the UK's largest lenders announced plans to raise the interest rates on their tracker mortgages for new customers.

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[Source: Yahoo! News Search Results for mortgages]

Report finds higher rejection rates for home mortgages in 2006 (WOOD TV 8 Grand Rapids)

2007-09-12T21:38:00.009-07:00

WASHINGTON -- Applicants for home mortgages were turned down for loans at a slightly higher rate in 2006 than the previous year and significant disparities continued to exist between...

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[Source: Yahoo! News Search Results for mortgages]

Era of cheap mortgages and loans has to end, warns bank chief (The Scotsman)

2007-09-12T21:38:00.007-07:00

THE era of cheap credit for mortgages and personal loans must end or Britain will face financial turmoil greater than the recent market crisis, the governor of the Bank of England warned yesterday.

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[Source: Yahoo! News Search Results for mortgages]

Lenders denied mortgages at higher rate in 06 (MSNBC)

2007-09-12T21:38:00.005-07:00

Applicants for home mortgages were turned down for loans at a slightly higher rate in 2006 than the previous year and significant disparities continued to exist between white applicants and minority applicants, the government reported Wednesday.

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[Source: Yahoo! News Search Results for mortgages]

High Adjustable Rate Mortgages (WTVY Dothan)

2007-09-12T21:38:00.003-07:00

Many homeowners with adjustable rate mortgages are finding their rate too high to keep up with the payments. This problem is really hitting home owner in the Wiregrass for some people.

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[Source: Yahoo! News Search Results for mortgages]

Guest Post: The Front Lines

2007-09-12T21:38:00.001-07:00

Our latest guest post is from the writer of TheTruthAboutMortgage.com, sharing insight on his past experiences as a wholesale Account Executive:
Weve all heard about the mortgage mess, the subprime blowout, the bankrupt lenders, the sharp increase in foreclosures, and the declining home prices, but how many people actually know what it was like working on the front line?
I can tell you first-hand what day-to-day operations were like, and Im sure any other Account Executive would echo this. I worked for a wholesale lender that rose quickly, and fell sharply to its demise, all in the matter of a few years. It kicked off with company cruises and concluded with $2 bottles of champagne.

I worked as an Account Executive, the intermediary between the loan officers/brokers and the wholesale lender. My job was to originate loans, though the job detail was more about lies and fraud above all else. There were so many instances of it, in so many forms, and on so many levels, that after a short time I became numb to it all.

Looking back, it shocks me that so much of this went on, and was so seemingly normal. And when things finally began to tighten up, people got irritated, mainly because doing the right thing wasnt nearly as easy as doing it any way you pleased.

I remember one specific situation where a loan was nearly funded and the Account Manager had called the borrowers employer to verify employment information.
The employment information on the 1003 (loan application) said something to the effect of Real Estate Executive earning $20,000 a month, but a phone call to the employer revealed a much different account.

It turned out the borrower was actually employed as a loan processor, undoubtedly making less than $240,000 a year (sure some may have been making that during the boom, but that was not the case here).

In any event, you would think the loan would be dead, considering the borrower lied about their income and employment on a legal document.

Well, not the case in the mortgage industry. Instead of the file being declined, it was uplined to the VP of Underwiting who massaged the loan, probing and searching for some way to make sense of a lie. After all, the loan was worth $1.5 million, so clearly the company had no intention of throwing it away. And if it could be cleaned up a bit and sold to the investor, no one would be the wiser.

After some research, it came to the VPs attention that the borrower was a licensed real estate agent, and just like that the 1003 was miraculously changed to state that the applicant was a loan processor and a real estate agent, earning the originally stated $20,000 a month.

So in essence a file that shouldnt have closed was on its way to the funding department. And had the investor ever known about the series of events that transpired the loan would have been sent back to the lender in an instant. But how would they ever find out, or even assume anything was wrong with a seemingly well put together loan?

I could tell you a thousand similar stories, but Ill highlight some more common fraudulent practices that took place frequently.

On a daily basis I saw Account Executives change information on borrowers applications and other loan documents, whether it was taking a signature from one document, cutting it out and Xeroxing it onto another, forging a signature, changing a date, or manipulating information in the computer systems.
In fact, instead of being supplied with the proper income on stated deals, many Account Executives would work backwards, inputting estimated monthly income to find the appropriate debt-to-income ratio for a loan. Remember, it wasnt about the truth; it was about what would make sense to the underwriter, which in turn would make sense to the investor.

I cant even tell you how many times I would see bank statements faxed over with payroll figures littered all over them, sharply contrasting the income these borrowers would state on their loan applications. Of course that wouldnt matter, AEs could always request a different set of assets, tear out a page, request a verification of deposit, or simply black out the payroll numbers.

And if all that failed, you could always change the borrowers documentation type from stated income/verified assets to stated/stated. Just like that, problem solved. And if that didnt work, take the borrower down to no doc and trash the income and assets docs entirely.
All of these practices were highly illegal, but were so commonplace that many looked the other way, and after awhile, likely became so desensitized that they didnt even realize they were breaking the law.

It was these very practices that perpetuated the problem, because anyone whos worked in the mortgage industry knew there was always a way to get a deal closed. There was always a solution, someone they could talk to in order to make things right.

Lets face it, the mortgage industry didnt know how to digest the word No, and now were all paying the price.

TheTruthAboutMortgage.com is a mortgage blog covering the latest industry news and gossip, while providing practical mortgage advice and helpful homeowner tips.

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[Source: Blown Mortgage]

Half pay 25% of income to mortgages (East Valley Tribune)

2007-09-12T03:34:00.001-07:00

More than half of Arizonans are paying at least a quarter of their income in monthly mortgage payments. And 20 percent are having to write a check equal to at least 40 percent of their household income.

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[Source: Yahoo! News Search Results for mortgages]

Guest Post: My lender is toast- do I need to pay my mortgage now, and to whom?

2007-09-12T00:26:00.007-07:00

Today Twist from Housing Doom shares with us some information on an all-to-common question in light of the recent spate of mortgage company closures. Thanks Housing Doom!

With Tucson based First Magnus filing for Chapter 11, the Arizona Daily Star thought it would cover the very pertinent question of “What do I do about my mortgage payment now?” On September 4th the Mortgage Implode-o-meter was reporting 145 imploded lenders, so obviously this is a question of interest beyond the borders of Tucson. Of particular note was the importance of HELLO and GOODBYE letters:

Some borrowers [might be] wondering what might happen to their loans, and where they should be mailing their future monthly checks.

Luckily, there is a document probably buried somewhere in borrowers’ packets of closing materials that addresses situations like this.

The document is usually called a “servicing disclosure statement,” and it explains the notification requirements for companies that buy and sell loans, of the right to collect payment for them, under the federal Real Estate Settlement Procedures Act.

The law requires that loan servicers the companies that collect payments provide written notice to borrowers at least 15 days before loans (or servicing rights) are sold, according to the disclosure statement. Meanwhile, the new servicing company must mail a written notice no more than 15 days after the transfer, according to the statement.

There is also a 60-day grace period following the sale during which borrowers cannot be penalized if they mail payments before the due date to the previous mortgage company.

The notices are known as “goodbye” and “hello,” or “welcome,” letters, providing names and contact information of former and new servicing companies, mortgage industry members said. Borrowers should make sure they get both letters to ensure that the transfer is legitimate, the industry members said.

Scam artists could try to send fake “hello” letters in hopes of getting hold of mortgage payments, said Gary Franks, president of the Southern Chapter of the Arizona Association of Mortgage Brokers.

“That’s why the ‘goodbye’ letter is so important,” he said.

<When in doubt, borrowers can check with the original mortgage company, said Stan Lund, president of the Arizona Association of Mortgage Brokers. Lund also recommends that borrowers make sure after sending payments to a new company that their checks are cashed by the proper party.

“I would check to make sure they received the payment and it was posted correctly to your account,” he said.

Bankruptcies can complicate the situation, however, Franks said. Instead of the standard “goodbye,” and “hello” letters, companies in bankruptcy can take up to 30 days after a transfer to notify borrowers of the change.

“People may not get their ‘hello-goodbye’ letters because it’s happening so quickly,” he said.

It might be tempting just to blow-off the payment until someone runs you down. Your loan however, is an asset of your lender, and SOMEBODY is going to end up with it.

The terms of your mortgage like those of other bonds are fixed in the original agreement. Thats also why even if your lender goes broke youre still on the hook to pay it back to whoever buys it.

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[Source: Blown Mortgage]

Tips for Getting Property Without Using Your Own Money

2007-09-12T00:26:00.005-07:00

We all want to buy property. Especially now when it is in such high demand. But the money that is required to do that might not be something you have. So how can you go about buying property without using any of your own heard earned money? Here are some tips you can use in order to get that property you have always wanted. Hopefully these will help you.

Tricky Tips, Just for You

Use your other assets

If you have some other assets you will more than likely be able to borrow money from those. It really depends on the strength and stability of those assets however. The reason this is able to work is because those assets will be a security blanket to fall back on in case of a missed payment. Plus it shows the companies that you have built up other strong assets.

Get some to guarantee the loan

Your first choice should be to try and get an unsecured loan. This may not be an option the bank will want to accept. So then next you should make sure you try to get someone to act as a guaranteer for the loan. This means that they are responsible for the loan as well in case any unforeseen circumstances arise. But this is also a way to sneak by high interest rates.

Mortgage type 100% mortgage

If you can still find someone that will do this type of mortgage then you should look into it. Although the requirements will probably be a little tougher. But it does not hurt to find out. Because you always need to make sure you find the best deal for you situation.

0% credit cards

These no interest credit cards are very great. This is a situation where you probably want to use one to further your property buying experience. Zero interest should be taken advantage of in times like this.

Do Not Get in Over Your Head

Now the key thing is that you only buy property at a time when you can afford to do so. The last thing you want to do is find yourself in large debt because you were unable to pay off any mortgages. Have a plan, and follow it. Know that you will be able to fill these properties with people who will be able to help you with rent.

Additional Resources:

100 mortgage, high interest rates, interest credit cards, Mortgage Payments, Mortgage Planning, mortgages, mortgage type, rates mortgage, unsecured loan, zero interest

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[Source: Mortgage Blog]

Blown Mortgage on Vacation: Yes, But Can You Afford It?

2007-09-12T00:26:00.003-07:00

My friend and colleague, Morgan Brown of Blown Mortgage, is basking on a beach in Fairfield County, CT, watching the leaves turn colors. Morgan’s given me the opportunity to hijack his weblog and speak to his audience.

Mortgage veterans will often refer to the Three C’s of Lending when explaining how lenders view potential borrowers when underwriting a mortgage loan:

1- Credit- How does the borrowers pay his obligations?
2- Collateral- Is there sufficient equity protection if the loan defaults to recover the loan amount?
3- Capacity- Does the borrower have the income to make the payments?

Pay attention the the final factor, capacity. In short, the question is “can they afford this house?”. In Southern California, among other fast-growing markets, the honest answer is a resounding “No.” The go-go years of SoCal real estate and lending displayed an utter disregard for this simple factor. The prevailing thought was that the first two factors, perfect bill paying history and a rising real estate market, would trump the principle of affordability. Good credit displayed prudential money management and the improved collateral would bail out the tangential mistakes made in underwriting.

It got so bad that in the summer of 2005, underwriters would call me and instruct me to adjust the loan applications in order to “dress up the package”. That summer, as I approached my 40th year on earth, I realized something very bad could happen in Southern California.

We do a bit of business in private lending . That’s mortgage banker talk for “hard money”. It’s a rewarding business as we are able to offer “Band-Aids” to temporary life problems and capital for opportunistic investors buying unique properties.

The California Department of Real Estate, offers a pretty hard and fast rule for owner-occupied, private mortgages (trust deeds) - no stated income. The DRE requires originators and private mortgage investors to document an ability to repay the loan. They’re pretty liberal in their guidelines. Bank statements, trailing spousal income, co-signers, and future contractual agreements are all acceptable. The income you disclose on your MySpace profile will not be sufficient documentation for the California Department of Real Estate. Still, borrowers and co-operating brokers shop hard money lenders like a retiree shops rugs at a Saturday morning swap market. Here’s the difference between my 40th and 42nd summer; that crap ain’t cuttin’ it no mo’.

Southern California borrowers, aided by greedy mortgage originators, threw caution to the wind and jumped into the real estate market woefully unprepared for the worst-case scenario. Mr. Murphy flew in to LAX and left behind his legacy in the form of declining housing prices. The old adage that you are only lying to yourself holds water today. Especially in the high-wire act of Southern California real estate.

Party Responsibly. The hangover is a bitch.
Brian Brady is a Managing Director of World Wide Credit Corporation in San Diego, CA. He is a 20 year veteran of financial services with 6 years on Wall Street and 14 years in lending. Mr. Brady writes a weblog called “America’s Mortgage Broker“, has been cited on CNBC, Google Finance, and Yahoo ! Finance, and is published in Mortgage Originator Magazine and Broker Magazine.

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[Source: Blown Mortgage]

Sector Snap: Mortgages (AP via Yahoo! Finance)

2007-09-12T00:26:00.001-07:00

Thornburg Mortgage Inc. led a mixed day of trading Tuesday for mortgage companies after a UBS analyst upgraded the jumbo mortgage lender to "Buy."

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[Source: Yahoo! News Search Results for mortgages]

Agencies agree to rules on subprime mortgages (The Philadelphia Inquirer)

2007-09-11T04:48:00.003-07:00

Fannie Mae and Freddie Mac, the biggest sources of money for U.S. home loans, officially adopted rules intended to discourage funding of high-risk subprime mortgages, the Office of Federal Housing Enterprise Oversight said yesterday.

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[Source: Yahoo! News Search Results for mortgages]

Helping out seniors: Reverse mortgages being used to escape toxic home loans and lines of credit (South Bend Tribune)

2007-09-11T04:48:00.001-07:00

Using a home equity line of credit, David Casey and his wife, Joyce, made some much-needed improvements around their house. New carpet. Updated plumbing. But the credit line's interest kept jumping, pushing their monthly payment to nearly $1,000 from $600.

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[Source: Yahoo! News Search Results for mortgages]

Guest Post: Emergency Response Team: Tools to Prepare Yourself for Buying in the Future

2007-09-11T00:22:00.009-07:00

Today Dr. Housing Bubble shares with us some tips on buying a home in a bear market. Thanks Dr. HB!

There is no question that we are living in a multi-year housing bubble. All you need to do is take a look at some of the Real Homes of Genius in Southern California and youll quickly realize the magnitude of this housing mayhem. Is there any doubt that lax lending standards played a part in supporting this housing market especially in overpriced metro areas? As we are facing depreciating markets, rising inventories, and tightening credit what can a prospective buyer do to prepare for a housing bear market? There are a few tips that you can do to prepare yourself for the coming years; playing house, maintaining your credit score, and buying when fundamentals make sense.

Playing House

Most people jump into an overpriced home only to realize they bit off more than they can chew. In an appreciating market, you are given a get out of jail card because all you need to do is list the home and it will sell. But in a declining market this luxury, as most homeowners are realizing, isnt available. Many homeowners are finding themselves underwater and one paycheck away from being foreclosed. So how can you plan for your home purchase? You should play house. That is, if you expect to buy a home for $400,000, you should set aside each month the difference between your current rent and the hypothetical PITI and save it for your down payment. This way, you are doing a dry run of owning a home. Of course you wont have the other unforeseen factors such as maintenance costs but youll have a better sense of the cost of owning a home.

Keep up The Credit Score

The difference between a 9.5% loan and a 7% loan is enormous. In markets with a tight credit supply, having solid credit is absolutely important. So what can you do to improve your credit score? For one, you want to avoid reaching the maximum limit on your credit cards. If you can, pay off your card every month. So what if the credit companies see you as a dead beat. Another important factor is call up your credit card companies and lower your rate. It really is that simple. Let them know that you are being offered a lower rate somewhere else and you are ready to take your business elsewhere if they dont work with you. It isnt like there is a lack of companies if they call your bluff. In addition, credit card companies do not want to lose credit worthy customers in tighter markets. This will help you in getting a mortgage thatll save you tens of thousands over the life of your loan.

Buy When the Numbers Work

How can you figure out if it is the right time to buy? I wrote an article on real estate valuation techniques. You want to factor in local rental/lease rates, neighborhood statistics, and the projection of future prices. In most stable markets price is set by the sales comparison valuation model but in inflated markets, you should also use an income approach just in case you had to sell. Plus, if all homes in the area are inflated like multi-color party balloons, what is the use of comparing a bubblicious home with another? Many in the industry will say this is a bad approach since your own home will never be a rental. Look at this as insurance. If the market is down, and unforeseen circumstances hit you or your family, how much can you rent your house for? This is a worst case scenario. One of the main things that got us into this bubble and the rampant rise in foreclosures is now that people need to sell, they are stuck and need to short-sell or face foreclosure. The numbers are so out of line. But if you followed the previous steps of playing house, having a good credit score and going into a conventional mortgage, and buy a place that is reasonably priced you will have the most vital thing of all, peace of mind and a sound investment.

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[Source: Blown Mortgage]

Victoria Mortgages to go into administration (Money Marketing Online)

2007-09-11T00:22:00.007-07:00

Victoria Mortgages has announced that it has gone into administration today and will not be able to complete outstanding mortgage offers. In a statement is says that disruption in the capital markets is to blame for its closure.

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[Source: Yahoo! News Search Results for mortgages]

More seniors are turning to reverse mortgages (MSNBC)

2007-09-11T00:22:00.005-07:00

Democrats step up pressure over mortgages (FT.com via Yahoo! News)

2007-09-11T00:22:00.003-07:00

Democrats on Monday stepped up pressure on the Bush administration to let Fannie Mae (NYSE:FNM) and Freddie Mac buy more mortgages than their portfolios currently allow to forestall an "October surprise" of subprime mortgage resets.

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[Source: Yahoo! News Search Results for mortgages]

Skipton Building Society launches two new capped rate mortgages (Money Marketing Online)

2007-09-11T00:22:00.001-07:00

Skipton Building Society has launched two new capped rate mortgages. The new three and five-year base rate tracker capped mortgages are capped at 6.44 per cent and 6.49 per cent respectively.

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[Source: Yahoo! News Search Results for mortgages]

UK subprime lender Victoria Mortgages goes into administration (Sharewatch)

2007-09-11T00:21:00.001-07:00

LONDON (Thomson Financial) - British subprime mortgage lender Victoria Mortgage Funding Ltd on Monday went into administration after funding was withdrawn.

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[Source: Yahoo! News Search Results for mortgages]

Subprime woes inflict pain on some Triad stocks (BizJournals)

2007-09-10T01:31:00.009-07:00

Most Triad public companies have little, if any, direct exposure to subprime mortgages, but their stocks are still being affected by the turmoil in the equity markets.

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[Source: Yahoo! News Search Results for mortgages]

As Mortgage Industry Adjusts to Credit Crunch, So Do Borrowers (Washington Post)

2007-09-10T01:31:00.007-07:00

Mortgages are complicated, and lending markets are in flux right now, but savvy, well-positioned consumers can still get the loans they need to buy, build or refinance a home. They just need to pay attention to what's going on, says David Reed, a lending veteran based in Texas and co-author of "Mortgage Confidential." To find out more about what's going on in the mortgage industry, The Post's ...

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[Source: Yahoo! News Search Results for mortgages]

Ariz. posts increase in delinquent mortgages (The Arizona Republic)

2007-09-10T01:31:00.005-07:00

More Arizona homeowners fell behind on their mortgage payments this summer, indicating foreclosures will keep climbing.

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[Source: Yahoo! News Search Results for mortgages]

Banks, developers express confidence in credit quality (BizJournals)

2007-09-10T01:31:00.003-07:00

RALEIGH - While the housing market has been reeling from the effects of subprime mortgages and tightening credit, commercial development in the Triangle remains vibrant.

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[Source: Yahoo! News Search Results for mortgages]

More Tennesseans fall behind on mortgages (The Tennessean)

2007-09-10T01:31:00.001-07:00

LaToya Tramill's hopes of homeownership have turned into heartache.

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[Source: Yahoo! News Search Results for mortgages]

50-year mortgages aren't getting many takers (Austin American-Statesman)

2007-09-09T00:09:00.001-07:00

Demand could change eventually, but market is currently sour. In the past decade, mortgage borrowers have been able to choose from a fast-growing array of loans. But now that investors have soured on mortgages, that situation has changed.

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[Source: Yahoo! News Search Results for mortgages]

Blown Mortgage on Vacation: Yes, But Can You Afford It?

2007-09-09T00:07:00.001-07:00

Mortgage veterans will often refer to the Three C’s of Lending when explaining how lenders view potential borrowers when underwriting a mortgage loan:

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[Source: Blown Mortgage]

Guest Post: Housing Wire on Mortgage Reform

2007-09-07T12:34:00.001-07:00

Unless you’ve been living under a rock, you know that Senator Dodd has come out firing in favor of industry reform — what you might not know (yet) is that the legislation he intends to propose will seek to legislate a fiduciary relationship between borrower and broker. It’s an idea that has become the Holy Grail of mortgage reform on Capitol Hill as of late, with Democratic Senators Hillary Clinton and Charles Schumer having recently made their similar agendas known in this area.

What is a fiduciary relationship? From Wikipedia:

A fiduciary duty is the highest standard of care imposed at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom they owe the duty: they must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents. The fiduciary relationship is highlighted by good faith, loyalty and trust …

At Housing Wire, I get all sorts of press releases sent my way each day. When I read Senator Dodd’s proposal, I couldn’t help but think about an earlier release I’d seen from the National Association of Mortgage Professionals — which called for brokers to be voluntarily held to just such a standard.

The battle here should be intense. I know the MBA has come out against having brokers held to a “suitability standard,” which in part includes a fiduciary responsibility to borrowers ( see my post on this from January). I also seem to recall a regional spokesperson from the Colorado Association of Mortgage Brokers pushing back against a mandated fiduciary relationship as recently as a month or two ago.

IMHO, what will be more interesting to see in coming months will be the public versus private debate that is already beginning to take shape. Organizations like the NAMP want the industry to police itself and establish a fiduciary responsibility standard privately, while numerous legislators are out to use their public powers to force such a relationship into play.

Who wins? Time will tell, but two things seem certain to me: first, the NAMP will have some well-known industry company on its side soon, and the active broker lobby will finally be letting go of its inane “we aren’t in the business of looking out for borrowers, we’re in the business of providing access to funds” line.

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[Source: Blown Mortgage]

Taking Out a Loan: What to Watch For

2007-09-07T12:33:00.001-07:00

Getting a loan is something that many of us will need to do at some point. When that time comes we need to make sure we are truly only acting in our best interest. That way we know that we will not be hurting ourselves with this loan. So what do you need to look out for? Here are some things to pay attention to when you go to get that loan. Make it as quick and painless as possible.

What To Do and What Not To Do

Dont make a big purchase

You do not want to risk any mistakes right before you take out a loan. If you make a large purchase then you are running the risk of using up all your credit. Then you will not have enough to save some on the interest and down payment. You want to go into the process with all your available resources. Anything that might happen that could negatively affect you in any way should be avoided for the time being. When you get all the loan detail squared away, then you can look into the purchase you want to make.

Do pay everything right on time

You do not want any delinquencies to show up on your report. This will really hinder your ability to get a loan that really helps you. If you show that you are not responsible with your bills then that will scare lenders off. They will make you pay more in order to ensure that they get something in return if you forget to pay them. So it is in your best interest to make sure you really buckle down and make sure everything gets in on time. Otherwise you will find that you are shelling out more interest charges then you had previously planned.

Dont use the loan on too much of a home

We all want as much of a house as possible. But you need to make sure that the home you get does not cripple your finances. You need to use a loan on something that you know you can pay off and do so in a timely manner. You can also work your way up to another larger house over time when you know that you have a more stable situation. But for the time being, make sure the house you choose will not come back to hurt you. Your finances will really thank you.

Get That Great Loan Right Away

The goal is to get a loan that truly helps you more then it hurts you. If you are lucky enough to find that, then take advantage of it. But make sure you are doing everything in your power possible to have everything go good before you get the loan. The less mistakes you have, the better off you will be.

Additional Resources:

available resources, best interest, General, getting a loan, Interest, interest charges, Interest Rates, Loan, Mortgage Rates, take out a loan, taking out a loan

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[Source: Mortgage Blog]

Guest Post: Predicting the unpredictable: How far will prices fall?

2007-09-07T03:11:00.011-07:00

In our continuing series of guest posts Peter Viles, writer of the L.A. Land blog for the LA Times is gracious enough to share his thoughts on housing prices. We interviewed Peter a while back, you can listen to him here.

How far will home prices fall? Seven percent? 15 percent?? 30 percent??? 50 percent??? On my housing blog at the LATimes, I put up a post over the Labor Day weekend linking to a post at a favorite LA blog of mine, Manhattan Beach Confidential, that collected various predictions of how far prices will fall from their bubble peaks. Here is my post on LA Land.

The comments I received were, as always, enlightening: Pat wrote, “Pricing is completely dependent upon the neighborhood. Auctions have shown 30% price drops already in parts of Riverside, San Bernardino, and San Diego counties. Other areas, like the Westside have shown drops of less than 10%.”

Amir wrote, “Anybody who read Fooled by Randomness or The Black Swan knows that most predictions (especially economic ones) are usually wrong. Not some of the predictions wrong, all of them!” (I liked that comment because Morgan recommended “The Black Swan” to me, and I’m enjoying it).

Lastly, investorguy wrote, “75.3% of all statistics are made up on the spot.”

My thoughts: I agree with all three of the above. When all of this is over — 10 years from now — there will still be no clear answer to the question, “How far did prices fall after the great 2005 real estate bubble popped?” There are too many ways to measure prices. There will be no single answer.

But I’m also starting to believe the crash will not be an equal opportunity destroyer of home values. Areas and neighborhoods where sub-prime borrowers were plentiful will be hit much harder. Think it through: who’s the natural buyer of a home previously owned by a sub-prime borrower in a neighborhood full of homes that last sold to sub-prime borrowers? The natural buyer is another sub-prime borrower.

Except: that loan isn’t available any more. Sadly, I see a downward spiral of prices in those areas. It’s quite likely some of the single family housing stock becomes rental housing. My guess is we’ll see “foreclosure clusters” where prices will fall further, and the government will focus its efforts, once it decides what those efforts will be.

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[Source: Blown Mortgage]

PSA: Go FHA!

2007-09-07T03:11:00.009-07:00

Hey everyone, a friendly mortgage tip. Let me know if this sounds like you:

Your credit scores are 620 or below
You haven’t had any late mortgage payments in the last 12 months
You have a loan amount under $362,760
That loan balance is less than 97.15% of your home value
You have an adjustable rate mortgage set to adjust

If that sounds like you, and you are looking for a way out, how does this sound?

30-year fixed loan
No prepayment penalty
In the mid-upper 6% range
1% origination fee
No junk fee charges

Sound good? You might be a potential candidate for FHA financing. And if President Bush’s plans for FHA secure go through these great loans will be opened up to more people. If you had a subprime mortgage loan and need to get out of a loan that is about to adjust to a payment you can’t afford try FHA. It may be the best way for you to find an affordable monthly mortgage payment plus add some stability to your life as well.

Subprime adjustable rate mortgages are ticking time bombs, if you are in one and are near the end of the fixed period inquire about FHA refinancing.

Not every lender is FHA approved. If you are a subprime borrower (loosely defined as having a credit score of less than 620) the first question out of your mouth when talking to a loan agent is “Are you FHA approved?” and don’t let them tell you “FHA isn’t that great” if they aren’t. It is worth your time to determine if you qualify.

If the above sounds good to you, and you’d like to talk with an FHA approved lender, why, you can call me. Morgan 866-363-9329 (the rest of my contact info is in the sidebar).

**Please note the bullet points above do not represent the entire qualifying guidelines or benefits of the FHA program. To learn more please contact me directly.

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[Source: Blown Mortgage]

Risky mortgages crisis getting worse (Tucson Citizen)

2007-09-07T03:11:00.007-07:00

WASHINGTON - A record number of homeowners got an unpleasant notice in their mailboxes this spring that their mortgages were being foreclosed.

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[Source: Yahoo! News Search Results for mortgages]

Vacation Time - Guest Posters to the Rescue

2007-09-07T03:11:00.005-07:00

Hey gang - your blogger is taking a breather. I’m off to the wonderful Northeast, back to my roots, to spend time with my Mom & Dad, and celebrating my Grandmother’s 80th birthday. I’m going for two weeks - with a week planned in Maine (at my Dad’s) and a week in Connecticut with my mom.

They, while excited to see me, are more thrilled at spending time with their first grandson.

Fear not readers - I have lined up the BEST bloggers in the housing and real estate blogosphere to contribute guest posts almost daily here at BlownMortgage.com. I am incredibly honored that these folks have taken time to share their insight with us over here at BlownMortgage.com and we will all be better for it.

Look for the first one later today and every day thereafter. I will continue to post news items as they come up, so keep the emails coming. I won’t be far from the computer, but not chained to it.

Here is just a sampling of the authors contributing: Bloodhound Blog, Housing Wire, Brian Brady, Housing Doom, L.A. Land, Dr. Housing Bubble, and more. If you’d like to contribute while I’m gone - shoot me an email and we’ll get you in the rotation. I’m excited.

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[Source: Blown Mortgage]

Lehman Announces Layoffs, Name Change

2007-09-07T03:11:00.003-07:00

LehmanBrothers, who earlier closed its sub-prime lending arm, BNC Mortgage, announced further changes and consolidation of its mortgage unit. The Wall Street firm, owners of AuroraLoan Services, announced the closing of one of its Regional Operating Centers and renamed its mortgage operations Lehman Mortgage Capital. If you received the Mortgage Lender Implode-O-Meter premium service you’d already know this by now.

In an email to affected brokers the company wrote:

Today Lehman Brothers announced the completion of the restructuring plan for its residential mortgage origination business. The plan sizes the business appropriately for the current market environment. The Firm also announced that it will rename its existing mortgage origination and servicing businesses in the U.S., Japan and Europe, including Aurora Loan Services, Lehman Mortgage Capital.
Changes at Aurora Loan Services
Challenging financial markets and the uncertain mortgage landscape have caused us to make proactive changes to our business model. As a result, we have made the decision to restructure the locations of our Regional Operating Centers (ROCs). Specifically, we have decided to close our Gaithersburg, MD ROC. Our Denver, CO, Florham Park, NJ and Sunrise, FL ROCs will continue operating business as usual.
If you are currently assigned a Gaithersburg Operations team, within the next few weeks, you will receive information on your new Operations team at one of our existing ROCs. In the interim, continue to send your loan files to our National Capture Center in Scottsbluff, NE and work with your existing Operations team using the current telephone numbers, fax numbers, and team mailboxes.

No word on the specific number of people affected by this move to “size thebusiness appropriatelyfor the market” but we’ll do our best to stay on top of it from the sticks of Maine.

If you have any additional information please post in the comments.

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[Source: Blown Mortgage]

Seniors Money Canada to market reverse mortgages (Toronto Star)

2007-09-07T03:11:00.001-07:00

A subsidiary of Seniors Money International of New Zealand will market reverse mortgages in Canada under the name Seniors Money Canada. A Sept. 1 column incorrectly used the name Seniors Income.

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[Source: Yahoo! News Search Results for mortgages]

Lehman Announces Layoffs, Name Change

2007-09-06T22:11:00.003-07:00

In an email to affected brokers the company wrote:

Today Lehman Brothers announced the completion of the restructuring plan for its residential mortgage origination business. The plan sizes the business appropriately for the current market environment. The Firm also announced that it will rename its existing mortgage origination and servicing businesses in the U.S., Japan and Europe, including Aurora Loan Services, Lehman Mortgage Capital.
Changes at Aurora Loan Services
Challenging financial markets and the uncertain mortgage landscape have caused us to make proactive changes to our business model. As a result, we have made the decision to restructure the locations of our Regional Operating Centers (ROCs). Specifically, we have decided to close our Gaithersburg, MD ROC. Our Denver, CO, Florham Park, NJ and Sunrise, FL ROCs will continue operating business as usual.
If you are currently assigned a Gaithersburg Operations team, within the next few weeks, you will receive information on your new Operations team at one of our existing ROCs. In the interim, continue to send your loan files to our National Capture Center in Scottsbluff, NE and work with your existing Operations team using the current telephone numbers, fax numbers, and team mailboxes.

No word on the specific number of people affected by this move to “size thebusiness appropriatelyfor the market” but we’ll do our best to stay on top of it from the sticks of Maine.

If you have any additional information please post in the comments.

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[Source: Blown Mortgage]

Rates on 30-Year Mortgages Edge Up (AP via Yahoo! Finance)

2007-09-06T22:11:00.001-07:00

Rates on 30-year mortgages edge up (Lexington Herald-Leader)

2007-09-06T22:10:00.005-07:00

After falling for two weeks, rates on 30-year mortgages edged up slightly this week. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.46 percent this week, compared with 6.45 percent last week. The rate last week was the lowest since 30-year mortgages averaged 6.42 percent the week of May 31. Analysts attributed the basically unchanged reading to ...

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[Source: Yahoo! News Search Results for mortgages]

Rates on 30-Year Mortgages Edge Up (Washington Post)

2007-09-06T22:10:00.003-07:00

WASHINGTON -- After falling for two weeks, rates on 30-year mortgages edged up slightly this week.

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[Source: Yahoo! News Search Results for mortgages]

US mortgages in foreclosure at record high (Stuff)

2007-09-06T22:10:00.001-07:00

The rate of US home loans in foreclosure rose to a record high in the second quarter of 2007 as more homeowners in California, Florida and other states could not refinance their adjustable-rate mortgages.

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[Source: Yahoo! News Search Results for mortgages]

Adjustable-Rate Mortgages Fuel Foreclosure Crisis (NPR)

2007-09-06T22:09:00.001-07:00

More and more homeowners are in danger of losing their homes after falling behind on their mortgage payments. According to the Mortgage Bankers Association, new foreclosure filings hit an all-time high this spring. Trouble in the credit market since then has likely made things worse.

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[Source: Yahoo! News Search Results for mortgages]

Should You Pay Off Credit Card Debt With a Home Mortgage Loan?

2007-09-06T13:03:00.003-07:00

One way to approach mounting credit card debt

Many Americans find themselves in over their heads when it comes to credit card debt. They have difficulty making their payments on time and find that their credit lines are stretched to the maximum limits. But even if you are able to make your monthly card payments on time and still have at least a 30% cushion available on every credit line, you should still consider taking out a home mortgage to pay off your credit card debt. This is certainly not appropriate for every consumer. But if your credit card debt is substantial, if you can only pay the monthly minimums, or if you find yourself spending 30%50% of your monthly income paying credit card bills alone, talk to a lending institution about taking out a home mortgage loan.

Reduce your interest rates

If your credit card debt is substantial and you can only afford to make the monthly minimum payments, paying off your credit card accounts immediately through a home mortgage can save you significant sums of money, especially in the long. For example, the average American has $5000 in credit card debt at 16% interest. Depending on your level of income, cost of living, and personal financial obligations, paying down $5000 may or may not be a problem. But for many families, five grand is a challenging sum to amass overnight. If you stopped charging anything to your cards and made only the minimum monthly payments, it would take you 12 years to pay off $5000 in credit card debt. And at 16% interest, you would pay the credit card company an extra $2500 dollars. Most personal loans derived from home mortgages are more competitively priced than your average credit card. It is not unrealistic to find a home mortgage loan for as low as 10%, which will save you money if you use the loan to pay off your credit cards.

Increase your credit score

Transferring your credit card debt to a personal loan from a home mortgage gives you the opportunity to improve your credit. By transferring your debt from a multitude of revolving credit accounts to a single home loan mortgage, you have demonstrated two things to the credit bureau that can increase your credit score. First, you have shown that you can manage your debt by paying down your credit cards. Secondly, you have diversified the different types of debt you can manage.

Access to extra cash in a matter of days

While access to extra cash to pay off credit card debt quickly can give you greater control over your bills and put on the path to financial freedom, only you can control the financial decisions you choose to make in the future. After paying off your credit cards, use no more than 3 of them on a monthly basis. To capitalize the most on your credit history, select the three oldest accounts you have. Make sure you dont fall back into old habits. Charge no more than you can pay in full at the end of every month. If one month you cannot pay the balance in full, immediately stop using the card until you have.

Additional Resources:

card payments, credit card accounts, credit card bills, credit card debt, credit cards, Credit Score, home mortgage loan, home mortgages, lending institution, mortgages, personal loans

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[Source: Mortgage Blog]

Adjustable Rate Mortgage v. Fixed Rate Mortgage

2007-09-06T13:03:00.001-07:00

Adjustable Rate Mortgages and Fixed Rate Mortgages Offer Unique Benefits

Many home owners want to know whether they should choose an adjustable rate mortgage (ARM) or a fixed rate mortgage. Its an important question. The type of loan you choose will determine the amount of interest you pay and extent of your monthly mortgage payment. ARMs offer borrowers low costs initially. And while this initial low cost can be very tempting for smart investors, the offer also comes with a high degree of uncertainty because the mortgage rate is subject to fluctuation. Fixed mortgage rates, on the other hand, carry a high degree of certainty. But they are generally more expensive. The type of mortgage rate you select depends on you particular circumstances.

The Pros of Adjustable Rate Mortgages

An ARM is perfect for homeowners who dont plan to stay in their house very long. If mortgage rates are falling and you dont plan on living in your house long enough to see those rates rise when the market shifts, then an ARM might be in your best interest. Additionally, because ARMs feature lower rates during the opening stages of the mortgage, consumers have the option of buying a larger, more expensive house than they could with the higher price of a fixed rate mortgage. Essentially, ARMs allow homeowners to take advantage of falling mortgage rates. The more the rates fall, the smaller your monthly mortgage payment and the more you save. Smart consumers use these saving to reinvest in a high yielding investments.

The Cons of Adjustable Rate Mortgages

One of the primary negative aspects of an ARM is that mortgage rates can increase dramatically in a short period of time. While ARMs are structured with lifetime caps, these caps can be reached in as few as three years into the life of your mortgage.

The Pros of Fixed Rate Mortgages

Fixed rate mortgages provide homeowners with a sense of security. No matter what happens to the housing market or how high inflation skyrockets during the life of your loan, you will always have the same mortgage payment. This makes it easier for consumers to plan their budgets. Additionally, because fixed rate mortgages are easier to understand than ARMs, first time homeowners get fewer surprises.

The Cons of Fixed Rate Mortgages

In order to take advantage of falling mortgage rates, fixed rate borrowers will need to refinance their homes. This requires paperwork, processing fees, closing fees, and multiple phone calls (if not a few trips to the bank). Additionally, fixed mortgage rates are virtually identical from bank to bank. This means that borrowers interested in a deal are not going to find a tremendous amount of competition for their mortgage rate.

Additional Resources:

Adjustable Rate Mortgage, Adjustable Rate Mortgages, fixed mortgage rates, Fixed Rate Mortgage, fixed rate mortgages, mortgage consumers, Mortgage Payment, Mortgage Payments, Mortgage Planning, Mortgage Rate, Mortgage Rates, mortgages, mortgages fixed rate

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[Source: Mortgage Blog]

Mortgage Housing Bubble

2007-09-06T13:02:00.015-07:00

How Do We Know When a Bubble is Fomenting?

Any economic bubble, whether it involves real estate or stock options, occurs when over-optimistic consumers invest more money in a commodity than the commodity is intrinsically worth. As market hype builds, consumers continue to invest in their over-valued commodity at increasingly inflated prices untilsuddenly, like a bursting bubblebuying plummets. When a real estate bubble bursts, property market values drop dramatically as a reflection of demand until equilibrium is reached at which time market value better reflects actual property worth.

Is the Housing Bubble Fact or Froth?

Shortly before retirement, Federal Reserve Chairman Allan Greenspan acknowledged that the real estate market was optimistic. In a report to Congress he described the then-contemporary real estate market as rather “frothy” but nothing to be terribly concerned about. Some critics argue that by virtue of his office Greenspan refused to acknowledge the existence of an actual housing bubble for fear of spreading panic in the real estate market and insecurity in the general economy.

Housing Bubbles Happen Regionally

Housing bubbles form and burst within a regional context. While it is possible to conceptualize a viable “national” or “American” housing bubble within the context of an emergent globalism, it is easier to verify bubbles at increasingly local levelsneighborhoods, cities, or states. As of August 2007, homeowners in Americas top 40 cities were warned to be on high alert for a housing bubble.

Beginning in 2006, Michael Corkery of the WSJ identified cooling market trends along the Florida coastline, in suburban D.C., and condominiums in the Palm Springs desert between California and Arizona. Investment banker John Talbott cites an average 47.2% decline of equity value in Americas top 40 cities as evidence of a national trend. Property values in Boston have almost fallen by half. Miami and New York City have both seen a 44% decrease in property value and Chicago has averaged a 27.3% decline.

How to Avoid Getting Popped in the Bubble Burst

Consult your local market. Review real estate trends in your neighborhood and city to determine whether a potential equity liquidation merits selling your house while you still can. Economists and investors maintain that the best way to prepare for an imminent real estate bubble is to dump any investments in equity and reinvest net worth in cash. The strongest reinvestment in such a situation is the “nuclear bond option,” where investors place of their total invested assets in each of the following sectors: Short Term Corporate Bond Index; Intermediate Term Bond Fund; Inflation Protected Securities Fund; and Money Markets or US Savings I-Bonds.

Additional Resources:

economic bubble, housing bubble, mortgage housing, mortgage housing bubble, Mortgage Payments, Mortgage Planning, Mortgage Rates, mortgages, real estate market

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[Source: Mortgage Blog]

Guest Post: Why do traditional Realtors despise discounters?

2007-09-06T13:02:00.013-07:00

Our real estate brokerage, BloodhoundRealty.com, is about to list a house for sale in one of the pricier neighborhoods of Phoenix. Our listing strategy is like a military campaign, so we’re always aware of our competition. We knew a similar home two doors away was ready to go on the market, but we were convinced it would be marketed For-Sale-By-Owner so we didn’t feel threatened.

Why not? Because despite what you might have read, a by-owner seller is no match for a skilled listing agent. I’m willing to concede that there are some unskilled listing agents, but that doesn’t matter to us. We compete against professionals, not amateurs.

In fact, the seller went with a limited-service listing instead, which is slightly — but only slightly — more likely to succeed. By now, true FSBOs are thin on the ground. If you are willing to pay the buyer’s agent’s commission, you can get a true MLS listing at a range of discount prices, from $3,000 down to $99. With IggysHouse.com, you can list your home in the MLS for free.

So why is a limited-service listing unlikely to succeed? If you’re in a high-demand market like Seattle, it just might. But in most of America, right now, a home must be marketed perfectly from the first day or it will sell slowly and at a deep discount — if at all.

The one difference between a true FSBO and a limited-service listing is the searchable record in the MLS database. The home will be offered by-owner in all other respects: Priced wrong, prepared wrong and inaccessible to buyers and their agents. This is not a necessary consequence, but it is very, very common. In the case of our newly-listed competition, the home is offered at $200,000 over its market value. Presumably because of the recent re-financing craze, it is encumbered at about $75,000 over market. This home will not be a threat to our listing.

But it wouldn’t be a threat even if it were priced right. There are too many weapons that a professional home marketer will bring into battle for an amateur, no matter how dedicated, to compete. A limited-service listing comes with none of the professionals’ arsenal. So much the worse, it shouts out a warning to skilled buyer’s agents to stay away.

Why would that be so? Because even if it’s competitively priced, even if the buyers love that particular home, it is being marketed by an amateur who will, in all innocence, make egregious errors again and again. Worse, the seller will have no one to turn to for advice, exposing the buyer’s agent to double the legal liability in the transaction, potentially even creating what a judge might regard as an undisclosed dual agency.

The same situation obtains in reverse with discount buyer’s agents like Redfin.com or Buyside.com. Their vaunted cost savings come not from their technology, nor even from picking the low-hanging fruit of well-prepared buyers. The savings they pass on to the buyer come from pushing the costs of buyer representation onto the listing agent.

Here traditional real estate is hoist on its own petard. The actual — commissionable — act of brokerage consists of introducing buyer to seller, with no legally-necessary further involvement on the part of the buyer’s agent. This is an extremely common expectation in new home sales and in tenant representation. In residential real estate sales, both before and especially after the advent of buyer’s agency, listing agents would expect the agent working with the buyer to show the home, negotiate the contract, attend to the disclosures and inspections, etc.

Discount buyer’s agents do few or even none of these things. Like the sellers of a limited-service listing, the effectively unrepresented buyers will turn to the listing agent for showings and advice, doubling the listing agent’s workload and liability and potentially creating an undisclosed dual agency.

The difference is here: A seller pays less for a limited-service listing, expecting and getting lower value for a lower price. But when a home is sold through a discount buyer’s agent, the seller — and the listing agent — get substantially less value with no discount in price. The buyer’s agent’s commission — paid by the seller as a part of the listing contract — is the same whether the buyer’s agent works very hard or not at all. Discount buyer’s agents pass their discounts through to the buyer instead.

I argue stridently that buyers do in fact pay for their own representation - even thought they don’t know it, and, therefore, don’t properly supervise their agents. But the obvious solution to the contradiction created by discount buyer’s agents is to divorce the real estate commissions, with the seller paying only for the listing agent, and the buyer paying only for the buyer’s agent. It will be a knee-slapper for traditional Realtors when a Redfin agent writes a contract on an IggysHouse listing, but that’s what pays the bills at law firms.

You will note that in all the talk about reforming traditional real estate emanating from the new discount real estate start-ups, there is no discussion whatever of divorcing the commissions. This is because it is a true reform, not the sly exploitation of an inane contradiction. When buyers finally knowingly pay for their own representation, they will demand full value for their money. And those willing to go it alone will pay little or nothing in commissions.

But even if we don’t get true reform in real estate, it seems unlikely to me that sellers and listing agents will continue to pay full commissions to limited-service buyer’s agents. Instead, listing brokers will start to offer buyer’s agent’s commission in the form of 3/1 — three percent if the nominal buyer’s agent works with the buyer, one percent if the listing agent has to pick up the slack. This is already happening around the country. The discount buyer’s agents have trickily exploited a contradiction their own trickiness will eliminate.

In any case, discount Realtors are not a threat to traditional Realtors. They are odious because they double the full-service agent’s workload and liability, without a corresponding increase in compensation. But for anyone who values the advice of an experienced professional — and for anyone whose time is more profitably spent at work — discount real estate is a costly proposition. But because full-service Realtors cannot for long bear the operating costs and liability risks of dealing with discounters, investors should expect changes in the marketplace that will reduce the discounters’ already strained prospects for profitability.

—-

Greg Swann is Designated Broker for BloodhoundRealty.com, a boutique real estate brokerage in Phoenix, AZ. He founded and operates BloodhoundBlog, a national real estate industry, marketing and technology weblog.

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[Source: Blown Mortgage]

NovaStar blood-letting continues; slashes retail force

2007-09-06T13:02:00.011-07:00

Market Watch is reporting that NovaStar will slash another 275 jobs in its retail loan division as a proposed securities offering that would have raised at least $100 million for operating and funding capital fell through.

In a cost cutting effort NovaStar will close 12 retail branches and trim 275 jobs.

From Market Watch:

NovaStar also said it will “sharply” reduce retail mortgage activity, closing 12 retail origination offices and cutting the number of employees in that part of its business to roughly 125 from 400.
NovaStar said it will now focus mainly on managing its $15.45 billion portfolio of securitized residential loans, plus mortgage securities.

“We are pulling back to focus on NovaStar’s core strengths and preserve liquidity,” Scott Hartman, chief executive of NovaStar, said in a statement. “Suspending wholesale lending and shrinking the retail operation are painful decisions, but we believe it is best, at this point, to concentrate on serving our current customers and managing our portfolio for the benefit of NovaStar shareholders.”

What an agonizingly slow death for one of the bigger subprime lenders. There has to be a point where the company taps out - we must be close.

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[Source: Blown Mortgage]

How to Get the Best Deal on a Home

2007-09-06T13:02:00.009-07:00

If you have found that dream house, then odds are you will do whatever you can do to get it. Of course you would. But you want to do it smart. How would you go about getting that home without digging yourself into a hole you might not get out of? Here are some tips on how to maximize your funds when it comes to getting that house. Follow these tips and you wont be getting yourself into any holes.

Dont Be Pushed Around By a Seller

Stay up to date

The best thing you can do is know the market. You do not want to overpay for a house. So make sure you pay attention to how much other houses are being sold for. Also you want to know when the best time to buy is, because the market is always changing. The last thing you want to have happen is to buy a house, and then see the market drop a lot the next week. So look for trends.

Manage your offers

When you make your first offer, do not go all out. If there is a lot of competition then you can make a large offer, but in general you should have enough room for a second offer. That way if they counter, then you can have money left. If you max out your offer right away, and they ask for more you are in trouble. So know what you can afford, then go about the bidding the right way.

Watch out for seller mind games

What you see is what you should judge. Do not let anyone try to justify any wrongs there may be with the home. If something needs to be fixed then let them know. You can not be stuck with a problem that arose before you bought the home. Also do not let them try to talk up some beat up old shanty. You are the one who is paying, so it should be all up to you.

Have a backup plan

You may not get the house you want the first time. But make sure this does not cripple you. You need to have a second plan in case the first one falls through. The worst thing that can happen is you are left out on the street. So make sure you have a plan that you can enact, in case the first plan does not turn up as well as you had thought it would.

Your House, Your Rules

If they really want you to pay your money for this house, then they will meet you on your demands. Make sure you are in charge and getting the best deal for you, because you do not want to throw your money around. If you stick to your guns and make sure you follow your list, then everything will work out great. You will be in your home sooner than you think.

Additional Resources:

Buying a Home, buying a house, find the right home for you, General, get a home, get the best deal on a home, Purchasing A Home, purchasing a house, Uncategorized

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[Source: Mortgage Blog]

Guest Post: Predicting the unpredictable: How far will prices fall?

2007-09-06T13:02:00.007-07:00

Lastly, investorguy wrote, “75.3% of all statistics are made up on the spot.”

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[Source: Blown Mortgage]

What House Can You Afford?

2007-09-06T13:02:00.005-07:00

Four questions every home buyer needs to ask

Before house shopping begins, smart consumers in the market for a new home evaluate how much mortgage they can realistically afford. This often involves reconciling personal wants and needs with fiscal reality. In order to determine how much house you can afford, here are four questions to ask yourself.

How much housing expense can I afford? Housing expense is the combined cost of property tax, principal, interest, homeowners insurance and private mortgage insurance. Additionally, how high of a mortgage payment can I afford? To arrive at the answer to this second question, consider other monthly financial obligations your haveobligations like auto loans, credit card debt, and student and other types of personal loans. Thirdly, how much of a down payment do you plan to have saved by the time escrow rolls around? And fourthly, how much money are you comfortable spending on a house?

Be prepared to spend 1/3 of your income on housing expenses

How much money should you be willing to allocate towards housing expenses? The answer to that question tends to vary from personal budget to personal budget. The average American homeowner spends slightly less than a third of his or her paycheck on housing expensesroughly 28% to 33%. While this seems like a significant portion of monthly income, its important to remember that this covers a variety of costs associated with homeownership: homeowners insurance, property taxes, principal and interest.

Mortgage payments and total debt expenditure

Total monthly debt expenditure consists of mortgage and other housing expenses in addition to monthly car loan payments, credit card bills and payments for other kinds of loans you may have accumulated over the years. Most lending institutions recommend that the total monthly expenditure on total debt be no higher than 36% to 38%.

Down Payment

How much money should a prospective homeowner save before seriously searching for a home? Most lenders prefer that a mortgage applicant put down at least 20% of the cost of the total loan. Depending on your credit history, credit score, salary and house/debt ratio, you may be able to find a lending institution willing to offer you a mortgage with less than a 20% down payment. Otherwise, expect to pay 20%.

Comfort level

Comfort level is a personal value. It varies from individual to individual because there is really no wrong or correct response. To respond to this question, ask yourself, How much is a house worth to me compared to all the other objects and relationships in my life? How much of my disposable income am I willing to invest in real estate equity as opposed to travel, entertainment, charity, personal savings, transportation, health care, retirement funds or higher education?

Additional Resources

auto loans, credit card bills, financial obligations, fiscal reality, insurance property, interest mortgage, Mortgage Planning, mortgages, personal budget, personal loans, principal interest, prospective homeowner

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[Source: Mortgage Blog]

Paying that Mortgage Ahead of Time

2007-09-06T13:02:00.003-07:00

The mortgage payments we all have can be a burden. So why wouldnt you try to get those payments over with as soon as possible? If you can afford to pay early, this may be something you look into doing. It can be a very nice thing to do, but you have to go about it the right way. Here are some things you need to pay attention to when you go to pay that mortgage off ahead of time.

Got Some Extra Money This Month?

What is the catch of early payment?

Early payments sound nice, and you would think that the companies would be appreciative of that. But, actually, some companies do not want you to pay early. They enjoy the interest you have to pay and would like to extend that out as much as possible. So in order to combat that, they will often time issue pre-payment penalties. This could be even worse then that interest you would be paying. If this is the case, then pre payment is something that you will want to stay away from. Make sure you research if there are any penalties.

Know what you can be saving

This is how you make sure that paying early is worth it. Know how much you would like to add onto your payments, and then calculate how much quicker your payments will be done with. In some cases, as little as $25 extra a month can help you knock off 2 full years of payments in the end. You need to know if the extra payments are worth your time, so calculate how it will all work out.

Do all you can yourself

Make sure you make your budget before you enter into a prepayment plan. Know how much you have to pay and how much income you will have coming in. You want to be as prepared as you can be. Do not let any lender tell you what you need to do. They may think they know your situation, but you are the only one who truly does. So be aware of all the factors, and do all the research yourself.

Getting That Load Off of Your Back

Paying off your mortgage as quick as possible is ideal. But it is only ideal if it is done correctly and in your best interest. Make sure everything you do regarding your mortgage is in your best interest. You do not want to be paying as much then you have to, and you do not want to work yourself into any holes. So just use you head, and do your research.

Additional Resources:

best interest, budget, extra money, Mortgage Payments, Mortgage Planning, mortgages, paying off your mortgage, payment penalties, prepayment plan

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[Source: Mortgage Blog]

Refinance Your Parents’ Home Into Your Name

2007-09-06T13:02:00.001-07:00

Refinancing a House

Whether you need extra cash for necessary home improvements or simply want to take advantage of lower interest rates, refinancing your home responsibly can be a useful tool for capitalizing on real estate equity. Many consumers look to the possibility of refinancing their home as a way to improve their financial status. Sometimes, in order to help a family member, individuals wonder if it is possible for them to refinance a family members home in their own name. The most common relationship when this question arises is between parents and their children. But whether you intend to refinance in your own name the property of a parent, sibling, cousin or total stranger, most of the answers remain the same.

Even Co-signing Carries Its Own Credit Issues

Regardless of whom you intend to sign or even co-sign for, your personal credit history, personal income, and debt/credit ratio will determine the amount of money you can refinance in your parents home. Home mortgage lenders are concerned with your reasonable ability to fulfill the terms of any refinanced home loan. Consequently, their willingness to approve your proposal will depend on their evaluation of your creditworthiness.

Lenders also want to make sure you can afford the monthly payments. This will depended largely on your financial lifestyle, current financial obligations and level of income. Current financial obligations that may frustrate your loan approval could include credit card debt, student loans, an auto loan, or (perhaps most relevant) your own home mortgage payments. As a general rule, mortgagers shy away from approving loans where the borrowers total mortgage payments account for more than 36%40% of the borrowers total monthly income. As such, your lenders willingness to approve your refinancing strategy rests greatly on your ability to make the extra monthly mortgage payment within your fiscal means.

Collateral: Its All in the Family

Another issue of concern to potential home mortgage lenders when you consider refinancing a parents home in your name is collateral. Lenders demand a modicum of security. All banks and most lending institutions prefer your monthly cash payment to the possibility of foreclosure and seizure of land.

Banks are in the money business, not real estate. But at the end of the day, your lender will need proof that in the event you default on your loan, the lending institution will be able to salvage the money it lent you. The fact that the home you intend to refinance is in another persons name may be problematic when the bank evaluates its security risk in your home mortgage refinance application. Before make any hard-set plans, talk to your personal lender or a real estate attorney about local or state laws that may complicate your request to refinance your parents home in your name.

Additional Resources:

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[Source: Mortgage Blog]

What the Mortgage Companies Will Look For

2007-09-06T13:01:00.017-07:00

In order to get the best deal on any mortgage, you will want to know how to approach the mortgage companies. There are certain these that they look for in order to get you the best deal you can possibly get. Since we like to have no secrets here, we will inform you on what companies look for in a mortgage. They are not difficult things; it is just in your best interest to know what they are.

Surprise Them With Your Knowledge

First and most important is your credit score. This is an important factor when dealing with anyone who is going to lend you money. This is a 3 digit number that helps to explain how you have managed your finances. The higher the score the better. So the higher your score is, the more likely you will be to get a great rate on that mortgage. But just because you have a poor credit score does not mean you will be completely locked out. There are other ways companies can make up for that score.

A great way to prove to people that you are able to handle your financial status is if you have a good job. This means a job you have held for a few years and one that will continue to give you steady income. A bad thing to have would be a new job every few months, this does not promote responsibility. Mortgage companies really want to see that you are responsible with the things you are given.

So how does that all factor into your income. You will need to show them some proof of how much you make and how much you project to make over the course of the next few years. This is so those companies can judge how you will pay them back. Remember to factor in any bonuses you may receive, because you want to come at those companies with the largest possible amount.

Do you have any important assets? These are also good to have because it shows that you have something to fall back on in case of a missed payment. You do not want to lose these assets, but you want to show that you are confident enough to put them up. If you manage everything correctly, then you will not be at risk of losing anything.

Not Perfect? Dont Worry!

Now the points are not being laid out to tell you that you must be perfect in your quest to find a mortgage. In fact, very few people are even close to perfect. So do not like that get you down. The most important thing is that you get what is best for you in your current situation. So use whatever factors you can in your mortgage search, because you need to look out for yourself.

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Credit Score, financial, mortgage companies, Mortgage Planning, mortgages, poor credit score, what mortgage companies look for

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[Source: Mortgage Blog]

Vacation Time - Guest Posters to the Rescue

2007-09-06T13:01:00.015-07:00

They, while excited to see me, are more thrilled at spending time with their first grandson.

Look for the first one later today and every day thereafter. I will continue to post news items as they come up, so keep the emails coming. I won’t be far from the computer, but not chained to it.

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[Source: Blown Mortgage]

A brief history of your Blown Mortgage Scribe - Part One

2007-09-06T13:01:00.013-07:00

I have recieved now more than a few requests to share a bit more about my background with respect to how I ended up where I am now than i reveal on my About page. It is a task that I have not been too excited about as it feels self-indulgent and overly revealing at the same time. I am sure that many of you will skip these posts (and yes there is more than one) and feel free to do so, those of you interested in where this is all coming from - enjoy.

There are four parts to this thing and I’ll be rolling them out over the next week or so. It is definitely an unfinished piece. Particularly the parts about my indoctrination in to the industry and any in-depth conversation of where I learned what I share here; but its a modest start and one that I hope puts some perspective me - the person who writes Blown Mortgage every day.

– Morgan

Part 1

The Early Years 1976 - 1998

We’ll breeze through the formative years as it can get a bit cumbersome and is primarily rooted in good-old suburban America. I was born on January 25, 1976 to Paul and Diane Brown. The first born, I am the older of two sons for my mom and dad. My brother, Graeme Brown was born a mere 23 months later in December; and to this day laments that as a December baby his birthday is always neglected. I grew up in Avon, Connecticut. Avon is a small, typical East-coast town nestled away in idyllic Connecticut suburbia. Ideal, anyway, for a relatively stress-free upbringing. Avon, and the surrounding towns Farmington, Simsbury and others are towns insulated from the difficulties of “real life.” A peaceful bubble where neighbors leave their doors unlocked at night, kids play in the street, and the most exciting thing happening in town was the occasional volunteer fire drill.

I spent the majority of my days playing baseball or whatever sport was in season with my younger (more athletically gifted) brother in between being a very serious over-achiever in the classroom. During high-school I was on our conference-winning varsity baseball team. I managed to earn an All-Conference Academic Team nod for my baseball/academic feats; though I imagine it was more for the grades than the baseball. I was also on about a million after-school clubs including Model United Nations, Tutoring in the City, Young Republicans, Computer Club you name it, I was probably on it. I spent too much time growing up stressed out about things I couldnt control; politics and my parents divorce are two that consumed the majority of my time.

Growing up in Avon in retrospect was a true blessing. Living presently in California, and meeting so many California kids who were born and raised in the OC, I am so thankful to have the peaceful, bucolic setting of Avon for my youth. The dangers of drugs, alcohol, violence were all absent from my childhood and for each day I live I am thankful for not having to deal with any of that growing up.

When it was time to go to college my high-school mentors and advisors thought Id do what every other sensible east coast graduating senior does by attending one of the myriad well-regarded liberal arts colleges in the North East. I would have none of it. I wanted out. The catty in-fighting, the cliques, being around the same 500 people for the last 18 years was just the fuel I needed to blast-off for greener pastures. I didnt make my parents too happy with my college requirements which are repeated here in total. They were 1. Some place warm, 2. some place far away, 3. Some place big. That was it I wanted a fresh start somewhere warm and potentially prosperous.

After looking at schools such as University of Miami, Florida, University of California San Diego and Santa Barbara, University of South Carolina and Pepperdine; I settled on the University of California at Santa Barbara. I was the only one from my school attending (duh) and I couldnt have been happier. I chose Santa Barbara because of the idyllic setting. I dont know if any of you have been to the campus; but it is one of the most beautiful settings in the world (based on my limited travels). The day that I went to visit the campus was a beautiful Santa Barbara fall day. I remember it exactly today 10 years later as the day I was there. It was late-afternoon; a light, cool ocean breeze swept over the campus and kissed my face. I stood, with my Dad, in one of our painfully few bonding moments, looking out over the cobalt blue of the Pacific, soaking in the salted air and feeling the warmth of the sun and possibility on my skin. It was perfection defined for a sheltered kid from Connecticut; and I still equate it with the feeling of endless possibility to this very day.

My Dad and I walked around the campus on a group tour that (minus any other visitors) ended up being a private escort around the grounds. I was hooked immediately; and I believe my dad knew before I even told him that this was my spot.

The College Years

College in Santa Barbara is a delicate balance of enjoyment and responsibility; and I handled the juggling acts better at times than others. Ironically, the further I progressed in my education the more clumsily I managed that tension. I was a Marine Biology major; intent on fulfilling a childhood dream of swimming with Shamu at Sea World as a world-renowned expert in the field of marine mammals. It wasnt until my junior year of college that I was told the cold facts of marine biology; mainly being that 99% of ocean life is plankton - hence requiring 99% of the study and research and that there isnt much money to be made studying the microscopic shrimp. Disillusioned is a good word, bored of the subject is probably more accurate, and I chose the fastest path out of the major which was a quick jump over to Zoology. Literally one class separates the majors at UCSB.

Through my first year and a half I mastered the balance of fun and class with the same skill and gusto that got me through high-school as a stressed-out, ultra-conservative, type-A personality headed for a heart attack at 22. I was Deans List with a 4.0 average my freshman year (spring quarter no less) and enrolled by selection in to the Honors Program. I began struggling with the balance between social and academic pursuits upon my acceptance in to the Beta Theta Pi fraternity during my sophomore year.

Joining a fraternity, while a definite impediment to ones academic drive (I quickly lost my honors status and was never to see the Deans List again), has been one of my most personally satisfying and successful decisions Ive made to date (with the notable exceptions of my marriage and birth of my son). It was in my fraternity that I first got the idea that it was OK to slow down a bit. That the race was rather a myth; and that there wasnt anywhere to get in any particular hurry. Right or wrong, I unwound, distressed and started to come in to my own as a person with a point of view (not a very impassioned one, mind you). My mom continues to say to this day that Santa Barbara made me who I am now.

But back to why it got me where I am today. In Santa Barbara and in the fraternity specifically I became very involved in organizing events. It was something that I loved to do. The promotion, the marketing, the outreach these were all things that lit my fire. I loved marketing an upcoming fraternity event; the kegger, the beach clean up, the softball tournament, whatever it was I loved promoting it and seeing the success as people streamed through the proverbial gates. It was my first taste of marketing, and while I was propping my eyelids open reading marine biology texts, I was enthralled with marketing. It was the first taste of the path I would eventually choose.

My senior year I was able, with the help of a very good friend, to put together the fraternitys single largest charitable event in the history of the chapter. I organized and promoted a softball tournament that involved more than 3,000 Greek-affiliated students from 6 different universities over a weekend long sequence of events, games and the requisite parties. It was a massive 3-month undertaking which involved recruiting sponsors such as Red Bull and other name-brands, as well as encouraging teams to road trip it to Santa Barbara from as far away as Phoenix. It was a huge success on all levels, and sparked an annual tradition for Beta at Santa Barbara which is planning its 10th Annual Greek Softball Tournament. It was a great achievement that was even sweeter after my failed attempt junior year to rally the same event with a disastrous outcome (no one showed, literally).

For my efforts with the softball tournament I was awarded the University Award of Distinction; one of 50 of a graduating class of 4,500 to receive the honor, which is awarded for improving the quality of life on campus and in the community. It was a great moment. At that point I should have known that my passion was organizing, promoting and marketing. But I didnt.

Stay tuned for part 2.

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[Source: Blown Mortgage]

A brief history of your Blown Mortgage Scribe, Part 2

2007-09-06T13:01:00.011-07:00

Part 1

Here’s part 2:

After College

After college I took a year off and enjoyed the last of my halcyon Santa Barbara days. Enjoying the life of a nominally employed; I slept, swam, imbibed and for a gainful wage worked as a front door sentinel for a popular nightclub and waiter at the mildly famous (and tasty) California Pizza Kitchen. I still fought with myself about career direction and ended up making a poorly reasoned foray in to the dreary world of clinical research. It must be the worst career choice possible for someone who tires quickly of details, menial office work and loathes superiors who refuse to nurture and cultivate ambitious employees. I quickly realized that my time in Santa Barbara was coming to a much-needed close and began to look in earnest for a position that actually matched my passion of marketing with some of my relative skills (computers) outside of a field I now thoroughly rejected as a possibility for my livelihood (biotechnology, any science really).

I landed in Los Angeles after taking a job in 1999 with a dot-com company called SalesMountain.com. I was hired on as an operations manager managing a team of 30 part-time data entry personnel who didnt care what I knew or what I was doing there as long as they got paid suddenly immersed in the fading light of dot-com greatness. While it wasnt a marketing job it certainly was an interesting change of pace, and the idea of working for a start-up was inspiring. It invoked the kind of feeling I had as a kid when Id wake up to a crisp New England winters day with virgin snow glistening in my front yard, nary a footprint to spoil it. I had again the feeling of endless possibility that I captured on the bluffs of Santa Barbara, this time in a company with no blue print, with rules and ideas only to be written by us the self-proclaimed pioneers of a new economy. We all know how this story ends with a bust. But before we get to the ending of another failed dot-com company I must acknowledge another defining event in my life.

After a few months of over-achieving at the dot-com startup I was asked to go to Frankfurt, Germany to relieve a counterpart who had been attempting (with little success) to get the German and London-based operations of the company up and running. I readily agreed, willing to take the prospects of a year abroad and an apartment over another baking summer on my buddys couch in a non-air conditioned, somewhat-converted Sherman Oaks garage. So off I went to Frankfurt to experience the world (at last!) and to learn what it truly means to start a business from the ground up. Between weekend getaways to Milan, Paris, Amsterdam, Munich and Hamburg I logged obscenely long hours doing everything from network administration, data entry, venture capital status meetings and schmooze fests, cleaning toilets, building web pages and web-based advertisements, hiring employees, learning German and managing two London-based remote employees. It was the immersive experience in every sense of the word; and I loved (and still love) every minute of it.

After a year (and one Christmas) in Germany the unfortunate realities of the dot-com bust resulted in our venture capitalists shutting us down to reclaim the only remaining capital left from 16 failed ventures (ours was the only one with most of the initial $5 million given) and my prompt return to Los Angeles. While the unpleasantness of the return was somewhat upsetting I had no clearly defined in my head what I was good at and what I wanted to do. I wanted to market. I wanted to do more with the web and help promote and develop business concepts and marketing programs specifically related to the web. I had finally found it.

Housing, Finally

If you were beginning to wonder when my career would converge to the industry I am now dutifully entrenched in, wonder no longer. Here we begin Morgans immersion in to the world of housing and mortgage. After collecting a months worth of unemployment during a fruitless search of Los Angeles-based opportunities I took a random weekend sojourn to visit my friend in San Diego. After a weekend of carousing I flipped through a San Diego Union Tribune while nursing a rather stubborn hangover and found a small one inch by one inch job opening for an interactive marketing firm as an assistant account executive. With a leap of faith I secured a job interview and the job; shoveled my belongings out of my LA garage and headed to San Diego finally on a path with continuity and promise.

The company I worked for was known for its home building clients; including all the largest Southern California builders. As this was 2001-2004 the home building and mortgage industries were both going gang busters; and I was able to quickly learn about the industry and the particular quirks that are involved with marketing a home. It was here where my desire formed to combine marketing with pleasing customers. I have always been in search of the genuine article the fulfilled promise. I loathe the constant sting of over-promise, under-deliver that is so prevalent in our society today. The constant battle between sales and production. The sales person promises the world in order to win the business, and production simply delivers a product that (at best) dutifully fulfills its purpose (but, alas, does not deliver the world) and at worst is a poor hack and worthless.

I have always felt that the importance of marketing lay not in the ads on TV, nor the brochures, nor the website, but rather an orchestration of a much larger organism-the business itself. If I could I would spend 90% of my marketing budget on improving the internal operations of a business and 10% on the outside because I firmly believe that a company that can actually live up to the hype ascribed to it by their sales people, the media or overzealous fans are the ones that truly rise to dominance in their industry. And not only do they dominate; they are ascribed with a benevolence and good will from their customers. Simply look at Google to get a sense of the magic. This has always been the quest for me.

While working on marketing these homes (primarily building web sites and integrating back-end loan origination platforms in to lead-generating online platforms) I was really drawn to the experience side of home buying. As some one who hadnt yet bought my first home I was amazed at the range of emotions that run through a prospects mind: from pure euphoria to sheer terror and back more than once before taking ownership. I was fascinated by the attention to detail that these home builders put in to marketing a home; from pumping in the scent of baking cookies to playing piped in sounds of children playing in the bedrooms all in an effort to sell homes (homes that were selling themselves by the way in 2001-2004).

Going through this experience of learning about the emotional connections people have with homes made me acutely aware of the stresses that one faces when dealing with homeownership and the uncertainties that it raises in a buyers mind. I also learned what worked what calmed the soul enough to sign on the dotted line the triggers and cues that were needed in order to reassure the buyer that the purchase was a safe and smart one (though clearly those buying in 05-06 are cursing their poor luck). This understanding was in stark contrast to the story being told to me by my soon-to-be wife and future brother-in-law.

Both worked for different mortgage companies in Orange County. Their stories were of fast-talking con artists bilking home owners for tens of thousands of dollars for simple refinance transactions. Of desks made out of broken doors and saw horses; offices in garages and antics that would make the most loyal fraternity clown blush. Disbelief and shock were my most common reactions. It was in complete defiance of the goodwill being built up on the purchase side. It felt like pure evil. Not picking up phones on signing day, adding additional points and fees to loans, signing documents and creating new ones; these were all stories I heard at one time or another from the various cretins that boasted about their atrocities over beers at happy hour. I usually left feeling nauseous.

Thankfully so did my wife and brother-in-law. They got fed up with the malfeasance and fraud rampant in their previous organizations. More than that, I believe they got fed up with the depravity and lack of respect and basic decency towards fellow man flaunted by their colleagues. When they got fed up, they called me.

At first I was not sure about the mortgage industry, and certainly wasnt sure about leaving a company where I had rocketed to the top of the heap and experienced 100% salary increases in each of the first 3 years of employment. I felt like I was on a good path; yet the idea of building the ideal business (you know the one where we meet the promise) was appealing. Entrepreneurship is embedded in my genetic code. My mother and grandparents were both small business owners, and the idea of being my own boss was of course intoxicating as well. So, after assurances that we would be different; that we would be the answer to the unconscionable actions of others, I roped my best friend from college in to the enterprise with us and New Day Trust Mortgage was formed.

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[Source: Blown Mortgage]

Saving For a Down Payment on a Home

2007-09-06T13:01:00.009-07:00

Getting a home can be a very exciting thing. Once the buzz is finished, you will realize you need to fund the house! That obviously starts with a down payment. Saving for a down payment can give you a great advantage. So how would you go about it? How can it be done the most effective way? Here are some tips for you that will hopefully help you start to save for that down payment.

Money Saving Tips

Be familiar with how much you can afford

This is very big. You do not want to go blindly into the down payment process without truly knowing what you can and cannot afford to get. Become familiar with your finances, so you know how much is right for you. The last thing you want to do is spend money you do not have on a down payment. Then things can start to get ugly.

Stay Within Your Range

We all want the biggest house possible. But that is probably something you should work your way up to. Maybe start with a smaller house, build some equity and credit. Then as you get more equipped to move up, start to look for the house you would like. Its sounds boring and tedious. But trust me; you will save yourself a good amount of troubles. It will be much more rewarding, knowing that you have a house you can afford, and it is your dream home.

Assess Where You Will Be

This kind of goes with staying in your range. Note where you plan to be in 5 or 10 years. That will help with decision regarding houses. It also puts a time table on your goal of getting a bigger house. Then it becomes more manageable, because you have a set plan and you can chart your progress. You will not need to blindly charge into a house that does not fit with your plan.

Do What Is Best for Your Current Situation

This is the main theme. You can have a plan, and that is great. But what you really need to is manage your plan with what works best for you at your current state. Because, if you stay inside a zone you know you can handle, you will have less bumps along the way. The less bumps you have, the more feasible it becomes to obtain that dream house.

Like it was stated earlier, your dream house becomes a lot more fulfilling if you know you can handle it. Do not get stuck in a situation to early, before you are ready for it. If that happens, your chances of owning a dream home become less and less. So just sit tight for a few years, chart out a plan, and then go get that house when you are ready. Stay calm, and everything will work out!

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down payment, money saving tips, mortgage help, Mortgage Payment, Mortgage Payments, Mortgage Planning, mortgages, payment money

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[Source: Mortgage Blog]

Ameriquest to Close - execs wonder whyd we spend all that money on Super Bowl ads?

2007-09-06T13:01:00.007-07:00

Ameriquest, long the poster-child of successful (and suspect) subprime lending announced that the unit will close upon the finalization of their sale to parent company Citi. Citi will pick up their servicing portfolio, along with their wholesale arm Argent Mortgage in the deal. Thanks to commenter BB for pointing out the news story to us.

From the release:

Along with shuttering Ameriquest, Orange-based ACC Capital Holdings also said it was selling its wholesale mortgage origination operation and a mortgage servicing business to Citigroup for an undisclosed sum.
Under the agreement with ACC, Citigroup acquires servicing rights for $45 billion worth of loans. Terms of the deal, expected to close Sept. 1, were not disclosed.
Citigroup is the nation’s largest financial institution.
The sale includes operational centers in Orange and Rancho Cucamonga, along with Rolling Meadows and Schaumburg, Ill., as well as a broker network extending across 48 states.

More from the OC Register on Citi’s plans for employees here in town:

Danielle Romero-Apsilos, a spokeswoman for Citigroup, said Argent is still making a small amount of loans.
We will restart the origination business slowly and it will be under new management and we will have a new brand, she said.
Citigroup plans to keep the Orange office as well as three other operation centers that will report to New York, she said.
The company is picking up about 2,000 employees nationwide from ACC and plans to keep most of them, she said.

More blog reaction from Housing Wire.

Hey, at least we’ll always have their commercials:

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[Source: Blown Mortgage]

The Mortgage Broker vs. Mortgage Banker Argument

2007-09-06T13:01:00.005-07:00

Several people have asked me to comment on the differences between mortgage brokers and mortgage bankers and levy an opinion on which I believe to be the better business model. I am, of course, weighing in on what I believe the best model to deliver service and a solid loan to a consumer, and will ignore owner-related issues such as profit margins as they do not relate to the overall customer experience. This is not meant to be a deep introspection of the two models; rather, consider it a survey of some of the important differences between the two and their implications on customers interacting with each.
If youre wondering why I may be able to speak to this argument with any rigor it is due to the fact that the company I own has operated under both the mortgage broker and mortgage banker business models. As the champion of our switch from brokering to banking, and the change agent involved in the transition, I have a first hand knowledge of all aspects of the differences between the two models. With this understanding I believe I can candidly discuss the pros and cons of both models; and what the implications of each are for the customer.

For those of you with limited time or attention, Ill share my conclusion with you here. With anything complicated the answer is it depends, and here is the distillation of the below: if you are unconcerned about loan-product selection and you are a very vanilla-type borrower then I would suggest choosing the mortgage banker. If you are concerned about a wide selection or you have a difficult financial or credit history I would suggest choosing the mortgage broker. With one caveat, I would always suggest the mortgage broker over the small mortgage bank.

The Broker Argument
The broker argument is often surmised as follows. The broker has a wide range of bank partners and loan options, making it easy for brokers to find and place the best loan for a customer in terms of price, rate and terms of the loan. The argument continues, not incidentally, that people with difficult-to-document situations can be served by this wide network of lending partners. Brokers will also excitedly share with you the discount you receive by receiving wholesale rates that are below the market that banks offer. The reasoning is that because the broker is responsible for overhead they receive a reduced rate from the bank which they are graciously passing on to you, the customer.

An Argument against Brokers
Often, youll hear someone who works for a bank or a mortgage banker tell you that working with a mortgage broker is bad news with the following pitch. A broker is an independent third party, with zero decision-making ability; they dont approve your loan and have to wait in line with all other mortgage brokers while they wait for a decision from the underwriting department. Further, when you have a middleman you pay for that extra party involved. They have expenses that they need to cover by fees charged up front on a loan; which means higher upfront charges to you.

The Banker Argument
The banker argument sounds a bit like this. By working with a direct lender you have eliminated and expensive middleman who has zero decision-making ability. You have decided to come straight to the source; and because we lend our own money we are able to make underwriting decisions, gain special exceptions, and process your loan much faster at a much lower cost to you. Everything is done in-house, there is no waiting inline, no false promises I can give you a fully underwritten approval from right down the hall. A mortgage broker cant really tell you what youre approved for until they hear back from the bank, which can be weeks. Why put yourself through that when I can tell you right now whether youre approved or not? And remember, we are a financial institution, a direct lender, not just a fly-by-night broker who you are not sure is going to be there tomorrow.

An Argument against Bankers
Often, when a broker is competing against a banker theyll use some derivative of the following argument. Mortgage bankers are exceptionally limited in the products that they are able to offer. They make their money by producing volume in limited product categories; in addition they dont have the opportunity to shop for the true best deal for you. You only get to choose from what they offer, and depending on their specialty, those rates and programs could be far from the market value. You also dont see how much money they truly make on your loan. They could be making thousands of dollars in additional hidden profit by giving you a higher interest rate than you deserve. Further, many small mortgage banks are nothing more than brokers on steroids. Since they sell your loan immediately they dont always have ultimate control like they say they do. Finally, your loan will be sold immediately. This means that you may be confused about whom to make your payment to, and will have to deal with the headaches of your lender changing almost as soon as the ink dries on your loan documents.

Common Misconceptions about Brokers
With anything confusing people attempt to simplify the story to make it easier to understand. We are far better at remembering and making sense out of stories than we are at remembering and processing lists of facts and figures. Thats why people tell stories and dont rattle off bulleted lists. The problem with the way we process information and remember stories however; is that we tend to over-simplify to make the story cleaner and easier to tell and remember. For most things the result is negligible, and the simplification suits us well; for others this tendency can be damaging. Such is the case in a complex comparison between brokers and bankers. By distilling to simple comparisons we fall victims to the lack of focus on key distinctions and facts.

Here are some common misconceptions about brokers, and a humble rebuttal.

Brokers dont have to be licensed
This is patently wrong (mostly, depending on the state). Brokers are governed by state licensing institutions and therefore require licenses to operate. Federally chartered banks are not subject to state licensing requirements and therefore do not need to have their employees licensed under the state regulations in the jurisdictions where they operate. The efficacy of licensing is a debate for another time; but suffice to say, according to (most) state laws brokers of residential home loans need a license.

Brokers have no decision making power
This is wrong as well. While this myth is most likely perpetuated from the past, brokers have many of the same tools as the mortgage banks in terms of underwriting and qualifying a borrower for a home loan, on the spot. Brokers have access to the same Automated Underwriting Systems (AUS) that most mortgage bankers do. This allows brokers to obtain instant approvals in-house with out needing to ship the file off to the bank for approval. Once an AUS approve is obtained, the bank simply verifies the documentation supports the information uploaded in to the AUS; they do not re-underwrite the loan, and they do not review the decision (except as noted).

This means that an approval from a broker is as solid as the one from the bank. In fact, the mortgage bank is going to do the exact same thing. Where this myth holds is in the offices of the old school brokers who refuse to run files through AUS prior to submitting files to the bank. By avoiding this recent technological advance the broker is putting you in line with others; and then truly has no decision making ability. Some times, if you are a subprime borrower or have a unique lending circumstance, brokers may not be able to issue an AUS approval, and then your file will need a complete underwrite at the bank your loan is destined.

Brokers are financially unstable
Bankers love to portray all mortgage brokers as fly-by-night operations that dont have the capitalization or the stability to be a direct lender. This is certainly true in some cases. Some people who obtain a brokers license choose to practice their craft on a part-time basis, others are truly the fly-by-night variety, in the industry for a quick buck and then gone the moment things get tough; however, there are some brokers that are well established, have a longer track record of success than a mortgage banker, are better capitalized and have made a choice to stay a broker.

Brokers are a rip-off
There seems to be an American quality that drives us to eliminate the middle man, perhaps its been the successful marketing over the years of direct-to-consumer efforts of other industries. We love Costco, we love discount wholesalers we loathe paying markups and dealing with middlemen. In the case of mortgage brokers some are certainly rip-offs. The fact remains however that anyone issuing credit to you in the form of a home loan can rip you off. Bankers can certainly charge excessive fees with the best of under-handed brokers. Loan officers at banks and loan officers in a brokerage all have varying moral compasses and the institution they work for has little to do with their current direction.

Here are some common misconceptions about mortgage bankers; again with a rebuttal:

Bankers charge more on loans you just dont know it
Some brokers argue that because mortgage bankers are not required by law (like brokers are) to disclose the compensation paid to them for selling premium interest rates, bankers are able to dupe the customer in to a higher interest rate to reap additional hidden profit. While it is true that bankers do not need to disclose that hidden profit (known as yield spread premium, see link for in-depth explanation) most are unable to maximize that hidden profit because to do so would price them out of the competitive interest rate market. Hidden profit cannot be made unless there are higher interest rates charged to the customer. Unless the customer is blindly accepting the rate on good faith, they should be able to quickly surmise that the rate offered is way out of line with even a superficial comparison shopping effort.

This competitive environment often limits this ability to hide profit from customers from turning in to a rip off.

Bankers are limited to only one of two programs
Ive heard the silly argument that bankers are bad for consumers because they only offer say, product A or B, and if product A or B isnt ideal for the customer the mortgage banker still steers them in to one regardless better options out there. While bankers do customarily have fewer bank relationships than brokers, this does not necessarily mean they are more limited in the mortgage products they can offer. Take for instance a mortgage banker that sells to Countrywide. This banker may have in excess of 150 different loan products running the full spectrum of financing options.

Additionally, mortgage bankers may be allowed (based on the business rules established in the institution) to take loans that dont fit their banking guidelines through the broker channel and act in a limited broker capacity; that is they can farm your loan out if it doesnt fit internal guidelines. As I said, their ability to do that is really dependent upon the institution they work for.

Bankers have better rates
Some people mistakenly believe that bankers have lower rates than brokers. It probably stems from the eliminate the middleman pitch that we discussed above. This myth is just that, a myth. Rates are based upon the rate available to the bank for the particular loan program PLUS the markup charged by the banker to cover their expenses and add to the bottom line. This markup is hidden from you, the borrower, and often from the employees definitely the sales team. Brokers must disclose all rate markups. This doesnt imply that banker rates are higher than broker rates, but it does suggest that regardless of business model their will be fluctuations based on decisions made at each individual business.

Some pros and cons of working with a broker

Pros

Low overhead can lead to lower rates
Wide range of products from diverse lending sources
Can source many different financing options
Must disclose all compensation associated with loan

Cons

Necessary middleman
Sometimes limited decision making ability
Can be ephemeral, lower barrier to entry for business owners

Some pros and cons of working with a mortgage banker

Pros

On-site decision making ability, more control over the process
Better rates for larger banks (volume discounting)

Cons

Dont disclose yield spread premium profit
May charge additional fees to support overhead (underwriting, etc.)
May not have true decision making ability

Why I dont like small mortgage banks
I said earlier that if you had to choose between a broker and a small mortgage banker to always go with the broker. Heres why I believe that.

Decision Making Ability
To make a decision on a loan you need an underwriter to sign off on the loan and a funder to coordinate the funding by ensuring the final documents are in place that make the loan sellable. When those two positions are properly performing their job functions you have in-house decision making ability on loan approval and funding. The problem with small mortgage banks is that they may not have underwriting and funding in-house. This takes the decision making ability right back out of the hands of the small mortgage bank; making them no better than a mortgage broker on steroids.

Small mortgage banks may not have underwriting and funding in-house due to the high expense associated with the positions. Underwriters are not cheap, and while funders are relatively inexpensive it is a fixed cost that some smaller operations choose to not incur. So if you are working with a small mortgage bank they may have a contract underwriter or a part-time underwriter or use an underwriting service to approve the loans they plan on writing. This invalidates their argument of having centrally-based decision making ability because they are sending their loan files off to another source outside of their organization for someone else to underwrite and make the decision. This is exactly what brokers do.

To exacerbate that problem, smaller mortgage banks often require prior approval from either their warehouse line or end investor (the bank ultimately buying the loan) or both. This means that not only does the small mortgage bank have to underwrite the loan (by sending it out?) but they also need to receive approval from their warehouse credit facility to lend the money and they may even need the investors prior approval to buy the loan before they are willing or able to fund the loan.

So hopefully you can see the added complexity that can bog down your loan when you use a small mortgage bank. Instead of one approval, they may need up to 3 approvals before your loan is truly approved and ready to go. Most of these problems are alleviated when you use a larger mortgage banker who has in-house, delegated underwriting authority. The question to ask when someone tells you they are a direct lender is Do you have in-house underwriting? and Do you have delegated approval authority from your investor? If the answers are yes to both of these questions then you are in pretty good shape; if not the service provider is going through extra hoops to approve your loan for funding.

Costs
As I mentioned above underwriters and funders are not cheap, and they are fixed costs for a mortgage bank; costs that arent there for mortgage brokers. There are other costs for mortgage bankers that are not associated with brokers warehouse interest fees, document preparation fees, fees associated with the loan sale and transfer, and of course the added salaries of the people involved in the process.

These costs need to be recouped by small mortgage banks, and they often do it either by adding hidden profit in to the loans in the form of inflated interest rates, or by charging additional fees on the closing statement to recoup the costs of mortgage banking business. For a smaller mortgage bank that doesnt do a lot of volume the need to recoup costs may be much higher on a per loan basis than a larger mortgage bank. Again these costs are non-existent for a mortgage broker.

You can see that a large mortgage banker, who operates on volume and therefore only needs to recoup a small portion of expenses on each funded loan; and a mortgage broker who doesnt have the associated costs with their business model, may be less expensive than the smaller mortgage bank.

Higher Interest Rates
Continuing with the above, the need to recoup costs while profiting in a higher-overhead environment can often times manifest itself in interest rate mark ups. That is, the mortgage banker is not required to disclose yield spread premium profit on each loan. They therefore are able to mark up the rates offered to them by investors in secret, before delivering them to the sales staff so that there is a fixed profit margin on each interest rate quoted. This is often profit for the house and not known by the sales staff. In order to achieve this profit though there needs to be a spread between the interest rate offered by the investor and the interest rate charged to the customer by the mortgage banker. This can be anywhere from a few percentage points to a quarter or half-again higher interest rate.

This is exacerbated in smaller institutions because of the pressure to increase margins on each unit funded because of the overhead expense associated with banking. Larger institutions can make smaller profit on each individual unit; relying on volume to make up the difference.

In Conclusion
The banker/broker argument is a bit overblown. It is often used as a sales tool and the benefits of each are usually espoused the strongest based on the companys current business model. Bankers push banking and brokers push brokering. As both a banker and a broker (a small banker, btw) I think that both models are efficient and have pros and cons that offset one another and are often overblown. I think that consumers, real estate professionals and other interacting with the lending community should not base their decisions on the business model chosen by the financing source (broker or banker) but rather on the individual merits of the people and institution. Regardless of model, I would look for people that tell the full story and look out for the best interests of the borrower as tantamount to any of the concerns above. Bankers and brokers both can be excellent sources of financing and lousy sources of financing. Its up to the borrower to and business partner to choose their financing source based on service, honesty, integrity and follow through; more so than rate, cost or business model.

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[Source: Blown Mortgage]

Avoiding Foreclosure

2007-09-06T13:01:00.003-07:00

Foreclosure is an evil word that many of us do not want to hear. So what can you do in order to make sure you avoid that foreclosure at all costs? Well here are some tips on doing just that. You need to make sure that you are always paying attention to what is happening in regards to your mortgage, and payments. So lets figure out some way to help keep you on the right track.

Figuring Out How to Beat Foreclosure

In order to make sure foreclose does not become a problem for you, you need to make sure you remain current on all of your payments. Now obviously this is something you should always look to do. This is the number one step is fighting that foreclosure. Make a list of when all your payments are due, then note when you make that payment. This will help you keep track of everything better. You always want to make the process as easy on yourself as possible.

Cant Make Those Payments?

Well if you cannot make payments on time, then you do not want to panic. One thing that can result from that panic is more payments in other areas. For example, if you borrow from your credit cards to pay the mortgage, then you will have to pay those credit cards off. You are not really subtracting any payments at all. You are just shifting them. If you have a zero interest credit card, however, that is something to look into. That is a way you will be saving yourself trouble.

Maybe Refinancing is Right for You

The key to keep track of is making sure you continue to maintain that credit score. If you have kept it high, then you should look into refinancing. This is something that can help you with those payments, and help you to make sure you are always getting the best rate possible. Contact the lender and figure how the refinancing process and what it involves. It may not help you at all, but that is what you need to find out. In a situation where you are falling behind on payments, you need to do whatever you can to see if there is a better option.

Do Not Worry Yourself in Making Bad Decisions

Missing mortgage payments is not something that anyone enjoys. Fighting of foreclosure is a hard thing to do when you have missed payments. But you want to remain strong. The last thing you want to do is rush a decision and end of hurting other areas of your finances. So just fight through this troubled time, things will get better.

Additional Resources:

credit card, credit cards, Credit Score, foreclose, Foreclosure, interest credit card, Mortgage, mortgages, Refinancing

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[Source: Mortgage Blog]

PSA: Go FHA!

2007-09-06T13:01:00.001-07:00

Hey everyone, a friendly mortgage tip. Let me know if this sounds like you:

Your credit scores are 620 or below
You haven’t had any late mortgage payments in the last 12 months
You have a loan amount under $362,760
That loan balance is less than 97.15% of your home value
You have an adjustable rate mortgage set to adjust

If that sounds like you, and you are looking for a way out, how does this sound?

30-year fixed loan
No prepayment penalty
In the mid-upper 6% range
1% origination fee
No junk fee charges

Subprime adjustable rate mortgages are ticking time bombs, if you are in one and are near the end of the fixed period inquire about FHA refinancing.

If the above sounds good to you, and you’d like to talk with an FHA approved lender, why, you can call me. Morgan 866-363-9329 (the rest of my contact info is in the sidebar).

**Please note the bullet points above do not represent the entire qualifying guidelines or benefits of the FHA program. To learn more please contact me directly.

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[Source: Blown Mortgage]

How we got in to this mess - a video

2007-09-06T13:00:00.001-07:00

So, we’ve been hooked on the screen cast thing around here lately. First it was the podcasts, then the 30-second news clips (starring yours truly as a talking head) and now we’re on to the screen casts. In this video I cover some of the rudimentary top-level actions that got us in to this mortgage and credit mess. Not deep economic theory, not really anything deep - just a cursory look at the problems articulated by yours truly.

View the video here.

While this clip is geared for the Realtors out there, consumers will surely find the overview of the problem valuable.

One note of disclosure. This presentation is not mine, not the words, not the slides. You see, lots of mortgage people pay for prepackaged information that comes to them at different intervals. There are many services that provide this type of information. We get to use it as our own as part of advisor-based marketing. Lots of people use it, most don’t say that they didn’t come up with it. Personally, I find most of it disingenuous and therefore don’t use it. It’s usually too salesy. However; I thought this piece was worthy of passing on, but not worthy of passing off as my own.

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[Source: Blown Mortgage]

Lehman to fire another 850 workers in mortgages (Reuters via Yahoo! News)

2007-09-06T12:54:00.001-07:00

Lehman Brothers Holdings Inc said on Thursday it will fire another 850 workers, or about 3 percent of its work force, as it scales back its mortgage lending efforts globally.

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[Source: Yahoo! News Search Results for mortgages - Posted by FreeAutoBlogger]

Beige Book: The Demand For Residential Mortgages Continued A Downward Trend In Most Districts. (Nasdaq)

2007-09-06T02:38:00.009-07:00

(RTTNews) - Beige Book: The demand for residential mortgages continued a downward trend in most Districts..

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[Source: Yahoo! News Search Results for mortgages]

Gov't official: Hit to economy not over (AP via Yahoo! News)

2007-09-06T02:38:00.007-07:00

Congressional Democrats promoting legislative solutions to the mortgage-market crisis said Wednesday that a Bush administration plan doesn't go far enough to protect homeowners who face huge increases in their monthly payments when rates on their adjustable mortgages jump in the months ahead.

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[Source: Yahoo! News Search Results for mortgages]

Credit crunch moves beyond mortgages (The Charlotte Observer)

2007-09-06T02:38:00.005-07:00

The stream of credit offers that has filled consumers' mailboxes in recent years may be slowing. Although credit card issuers and other companies that lend to consumers have escaped the barrage of defaults that mortgage lenders have suffered, they're nonetheless being more careful about who they lend to, and under what terms. Some card issuers are raising interest rates, while others are cutting ...

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[Source: Yahoo! News Search Results for mortgages]

Where Was FICO? (Forbes)

2007-09-06T02:38:00.003-07:00

The widespread use of no-money-down mortgages flummoxed the best-known scorer of creditworthiness.

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[Source: Yahoo! News Search Results for mortgages]

Edward Gramlich, 68, Dies; Ex-Governor of Fed (New York Times)

2007-09-06T02:38:00.001-07:00

Mr. Gramlich had warned of a looming crisis in home mortgages and had run a federal board created to aid airlines after the September 2001 attacks.

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[Source: Yahoo! News Search Results for mortgages]

Vacation Time - Guest Posters to the Rescue

2007-09-05T02:57:00.009-07:00

They, while excited to see me, are more thrilled at spending time with their first grandson.

Look for the first one later today and every day thereafter. I will continue to post news items as they come up, so keep the emails coming. I won’t be far from the computer, but not chained to it.

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[Source: Blown Mortgage]

Lenders to assist borrowers from defaulting mortgages (New York Daily News)

2007-09-05T02:57:00.007-07:00

The Federal Reserve and other banking regulators issued special guidance yesterday urging loan companies to work with borrowers in danger of defaulting on their home mortgages.

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[Source: Yahoo! News Search Results for mortgages]

A call to rescue at-risk mortgages (Rochester Democrat and Chronicle)

2007-09-05T02:57:00.005-07:00

WASHINGTON Federal and state banking regulators Tuesday called on mortgage companies to reach out to financially strapped homeowners to help them hang on to their houses.

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[Source: Yahoo! News Search Results for mortgages]