Archives for September 2007

Sparky, Mollydooker CEO, has not lost his head!

Although from this photo, it looks like I whacked a piece of his head off!   What can you expect from a cell phone/camera?   Friday night we attended the Wine Maker’s dinner featuring Sparky Marquis of one of my favorite wines, Mollydooker   The event took place at Andaluca located at the Mayflower Park Hotel in Seattle.   

Sparky1 Sparky is quite entertaining and we sampled the entire 2006 releases:

  • 2007 The Violinist – Verdelho ($20)
  • 2006 The Scooter – Merlot ($20)
  • 2006 The Maitre D – Cabernet ($20)
  • 2006 Two Left Feet – Shiraz, Merlot and Cab blend ($20)
  • 2006 The Boxer – Shiraz ($20)
  • 2006 Goosebumps – Sparkling Shiraz ($50)
  • 2006 Gigglepot – Cabernet ($50)
  • 2006 Blue Eyed Boy – Shiraz ($50)
  • 2006 Enchanged Path – Shiraz/Cab blend ($80)
  • 2006 Carnival of Love – Shiraz ($80).  My favorite WOTN.
  • 2006 Velvet Glove – Shiraz ($175)

If you’ve been reading Mortgage Porter for a while, then you know that I’m a big fan of Mollydooker and to meet Sparky was a thrill.   It was a very fun evening. 

For more information on Mollydooker wines, visit their website.

Confessions of a former Predatory Lender


I recently received an email from a Loan Originator who wanted some advice on how to develop a "referral based business".   Having a referral based business means that you have provided such a high level of service to your clients that they feel compelled or at least comfortable in recommending you to the people they care about.   My business is dependent upon referrals from my clients and professional relationships.

I have mixed emotions reading this gentleman’s email.   I’m angry that consumers could be prey to someone who is not properly trained and suffer by possibly losing their home or at the very least thousands of dollars.   I almost feel bad for this person who really seems to have had no idea (he seemed almost brainwashed) at what he was doing to consumers with his former employer.   

""I have been in the mortgage industry for nearly 2 years. So I guess in the scheme of things I am relatively new …or maybe not the way that things are currently going. Anyway, I started at a mortgage company that I will not mention here for fear of being sued. It was an extreme predatory lender. I didn’t realize then how much so; I was given 2 weeks classroom training and thrown on the floor to sell. They taught me enough to sell the mortgage but not to properly qualify borrowers, so the rates, fees, etc. always changed.

I really knew nothing of the mortgage industry at the time. That particular company really keep the LO’s separate from the process. You sell the file, pass it off to the processor, and sell another one. Also act as a liaison between the borrower and the company. I was required to call them up every day to let them know that everything was fine then take the fall when the mortgage program completely changed.

The company that I am speaking of really had me sold on them for a while. I really had company pride and truly believed that my rates, programs, and ease of use were superior to any other mortgage company out there. I slowly began to realize that none of this was true. I studied relentlessly for several months on my own time. The more I learned about the industry the more I realized that the company that I was working for was horrible. I began to lose sleep over the fact that all of the “wonderful” mortgage loan products that I had been providing my clients were really the worst deals they could’ve gotten.

Needless to say I left that company when I realized what was really going on…."

When you are considering a mortgage or mortgage advice, please do select your Mortgage Professional carefully.   Don’t let them select you by "cold calls" or deceiving junk mail.   

Hat tip to Tim at Rain City Guide for the photo.  We’re not sure if he’s either a victim of a bad mortgage or if he’s an unemployed subprime Loan Originator.   What do you think?

Update:  Don’t miss America’s Mortgage Broker, Brian Brady’s response to this post:  The Difference Between Right and Wrong.

Friday Funny

Regardless of our opinion of Ben Bernanke, I’m sure you’ll find this spoof of "Every breath you take" comical.   

Ben, we’ll be watching you Tuesday, September 18.

Hat tip to Calculated Risk.  (I’m not sure if this was an ad (for CBS) at the bottom of their page or if they posted this video there.   Regardless, it made me chuckle).

Zipping the Scales

Obesityzipcode0912finalx_3I found this article by the Seattle PI very interesting.   Before moving to West Seattle (10-14% obesity zip code), I lived on North Lake in the West Hill neigh- borhood of Auburn (a more than 25% obesity zip code).   

Living at North Lake meant that I planned my groceries because it was a bit of a trek to make it to QFC (which is now gone).  The produce and meats were pretty good quality.   The neighborhood also had other low cost grocery stores.  I felt that QFC, at the time, offered the highest quality.   There was (is?) a Trader Joes, for some reason, I didn’t shop there.

Living in West Seattle, we currently have several grocery stores, including Metropolitan Market and PCC.   Whole Foods is coming soon (it’s rumored that Trader Joes will follow).    With so many stores, I find myself shopping for groceries every day for that nights meal.   The grocery store is an almost retreat like a pleasant break in my day.   Metropolitan Market has great samples of cheeses and the kiosk is always cooking up something great.   The produce and meats are very fresh.   (When I lived in Des Moines, I loved going to the local butcher, B&E Meats over the grocery store). 

Where my home was located in West Hill Auburn, we had a lot of Weyerhauser walkers (North Lake is next to Weyerhauser’s corporate headquarters)…admittedly, I was not one of them.   I do get out and walk more living in West Seattle.  In fact, this is a much more "active" neighborhood than my former.   You have to be mindful opening your car door or you just might nail a bicyclist.   Joggers, walkers and people with strollers cover the sidewalk.   

The study, which followed 9000 King County residents boils down to:

  • Access to fresh healthy foods.
  • Cost of fresh healthy foods and organics compared to canned and other processed foods.
  • Education about different types of food and reading labels.   One example in the article which surprised me, is that raisin bran was less healthy than frosted mini-wheats.
  • Walkable neighborhoods (sidewalks, safety, etc.)

To read the entire article, click here.

UPDATE:  Hat tip to Lisa Wallace-Baker who just told me about Walk Score which "grades" how walkable your neighborhood is.   My West Seattle neighorhood scored 32 out of 100 and my former Auburn scored a 15.

Family Opportunity Mortgage…now at Mortgage Master Service Corporation

EDITORS NOTE: Mortgage programs change often. Family Opportunity Mortgage is sadly no longer available… who knows…maybe lenders will bring this back and I’ll be having to update this post again! There are updated guidelines that may work for your situation. If you are interested in this product for a home located in Washington state, please contact me and we’ll see if it’s available or if another mortgage program will work for your scenario.

The Family Opportunity Mortgage helps families who are buying or refinancing homes for college students, elderly parents and disabled adult children.   Without this program, these transactions would often have to be considered as “investment properties” with higher interest rates and closing costs.   Now, it can be treated as a vacation or second-home mortgage.

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Lady Liberty returns to Alki on 9/11

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Should I refi my VA loan?

A gentleman from Bremerton called me wondering if he should refinance out of his VA adjustable rate mortgage.   The start rate is 5.125%, however it’s scheduled to adjust in a few months.   VA ARMs (and FHA) have the best caps available at 1%.  The most his ARM could adjust worse case scenario would be to 6.125%.   And his VA loan does not have any mortgage insurance (unlike an FHA loan, which could possibly justify refinancing).

He’s also considering possibly selling in a year or so. 

The adjusted rate is very close to what I could currently offer him with a new conventional loan (a new VA loan would provide a higher rate).   If he was considering living in this home "forever" and the thought of having an adjustable rate mortgage was causing him emotional grief (low risk tolerance); then I might recommend a different strategy.

His estimated mortgage balance is $224,000.   I did not ask if the existing ARM is a 3 or 5 year fixed (I was driving during our conversation).    Here’s some figures to consider:

  • Worse case adjusted principal and interest payment for 5/1 VA ARM @ 6.125% = $1460.40 (amortized for 25 years). 
  • Worse case adjusted principal and interest payment for 3/1 VA ARM @ 6.125% = $1378.97 (amortized for 27 years).
  • Conventional mortgage refinance (assuming 80% loan to value; which offers a better rate than a VA 30 year fixed) principal and interest payment @ 6.000% based on a loan amount with closing costs financed: $1378.40. 

If the VA borrower has the 5/1 ARM scenario, it would take him just over 4 years to break even on the closing costs of the new refinance.   If the VA borrower has the 3/1 ARM scenario, it would take over 9 years to break even using the conventional refinance.   

What would you recommend?

A Near Perfect Storm: The US Housing Market

Perfect_storm_1796069_2Washington Mutual’s Chairman and CEO, Kerry Killinger, referred to the U.S. housing market as "a near perfect storm".

Killinger said at a a Lehman Brothers financial services conference:

"the combination of rising delinquencies, higher foreclosures, more housing inventory, increasing interest rates on many mortgages and greatly reduced availability of mortgages due to limited liquidity is creating what we call a near perfect storm".

On a side note, both Washington Mutual and Countrywide have been aggressive "dealers" in the Option ARM markets.   Washington Mutual’s flyer explaining Option ARMs states "It’s both easy and smart".   If you’re a reader of Mortgage Porter, you know I disagree.   Option ARMs are not easy and not smart for a majority of home owners.   

"Roughly 28% of Washington Mutual’s loans held are in these riskier option-ARM mortgage products, according to Plesser. By contrast, pay-option loans comprise more than 40% of Countrywide’s interest-earning assets".  According to this article in Business Week.

What should you do to weather out the storm?  Be prepared.  Have a plan.   Contact your Mortgage Professional today