A Simple Visual on the Current Mortgage Landscape

January 18, 2008 by 2 Comments

Fellow Certified Mortgage Planning Specialist, Dan Green, has created a very easy to understand explanation of what has happened in the mortgage industry.   I highly encourage you to watch this short video presentation showing a history from 2000 to our present condition and how this situation impacts all of us, including "prime" borrowers.

The Mortgage Reports, is written in a very easy to understand style and packed with great informative content.   This is one of my must reads that I’m subscribed to…if you want to understand more about mortgages, perhaps you should too (and don’t forget to subscribe The Mortgage Porter in the upper right corner of this site)!

Friday’s rates will follow later this afternoon.

Filed Under: Mortgage, Refinance, Subprime Lending

Be-Be-Be-Benny and the Fed

January 17, 2008 by Leave a Comment

This morning, Ben Bernanke testified before the House Budget Committee.  You can read his entire testimony here.   During the question and answer session that followed afterwards, there were a few comments that I found interesting:

"Subprime done properly is a positive thing".  I agree completely with Ben Bernanke here.  He gave stats that there are approximately 5 million mortgages classisfied as subprime ARMs with a total principal value of about 1 trillion dollars.   He estimates that currently 20% of the subprime ARMs are delinquent and that not all of the delinquent borrowers will go into foreclosure.   80% of subprime ARMS (the most troublesome sector in the mortgage industry) are performing.

One member of the House, Representative Marcy Kaptur from Ohio-D, didn’t even know who she was addressing!  In an akward moment, she had confused Bernanke with Paulson implying Bernanke was once the CEO of Goldman Sachs and that he may somehow have responsibility with the mortgage meltdown.   From the Baltimore Sun:

"No, no, no, you’re confusing me with the Treasury Secretary, said a smiling Bernanke."

"No, I got the wrong firm?"

Someone whispered to her the Treasury Secretary’s name Henry Paulson which she then uttered.

Then she said "Where were you, sir?"

"I was the CEO of the Princeton economic department," Bernanke said, referring to Princeton University where as economics chair he got to manage other professors and graduate students, not investment bankers and financial traders.

That got a huge laugh in the hearing room, proving yet again it pays for a central banker to have a sense of humor when he has to deal with Congress.

"Sorry, I got you confused with the other one. I’m sorry. Well, I’m glad you clarified that for the record."

Ben’s views on the economy facing slower growth combined with a dismal Philedelphia Fed Manufacturing Index helped to send the Dow tumbling 307 points to a 10 month low.   Mortgage interest rates are currently staying low during this turbulent market.   A rule of thumb to follow is the worse the stock market does, the better rates do as investors are pulling their money from stocks and investing them into bonds.   

All eyes and ears will be on the Fed waiting to see how much they move rates on their meeting on January 30, 2008…or if they take action sooner.   Remember, when the Fed lowers rates, this typically has a reverse action on long term mortgage rates (they go up).   Don’t wait for the Fed meeting to lock in your interest rate.

Filed Under: The Fed - FOMC

Local Mortgage Wholesale Office Closes Today

January 16, 2008 by Leave a Comment

Update January 17, 2008.  I just called Bellevue’s office of MortgageIt where the receptionist told me "we’re not closed YET".  I asked if they were closing and why would their rep send this email out and she replied that other offices are closing and she has no idea why the rep sent the email.   These are odd times for sure.  I’ll try to get to the bottom of this.

Update January 17, 2008 5:30 pm.  I understand that MortgageIt will be closing their Bellevue office at the end of this month.  I guess our rep was a wee bit premature with her announcement.

I just received this email from our Wholesale Rep of MortgageIt in Bellevue:

Hello!
I just wanted to let all of you know that the Bellevue Branch of MortgageIT has closed today.  I wanted to wish all of you well and the best of luck in the New Year.  I will truly miss the relationships I have made in this industry….Please keep in touch.  Thanks again!
Sincerely,
Stephanie Price
MortgageIt is a subsidiary of Deutsche Bank.   From another Bellevue MortgageIt Account Executive Krisel Anderson’s site on Active Rain:
MortgageIT is a growing Top 25 lender that originated approximately $29 billion in wholesale, retail and correspondent loans in 2005 and continues to build a network of established offices in the US.
I have no idea if other branches have been closed as well.  I’ll provide more information when I receive it. 
Update – January 16, 2008 1:15 pm:  I just received a generated rate sheet from MortgageIt stating that prices have worsened (many lenders are sending new rate sheets due to the changes in rate today).   So perhaps it’s just the Bellevue Branch that is closed.   I was expecting it to be a formal announcement from MortgageIt.   What have you heard?
Filed Under: Mortgage

Dab-nab-it the Hawks LOST

January 13, 2008 by 2 Comments

Well…the first 4 minutes were great.

Down comes the Seahawk flag in our living room and the Christmas tree (we were leaving it up as long as the Hawks were winning).

Filed Under: Seattle

YOU Magazine and MMG Weekly Now Available

January 12, 2008 by Leave a Comment

January’s issue of YOU Magazine is now available featuring 7 ways to make the New Year great including:

As if this wasn’t enough, this week’s Mortgage Market Guide Weekly is an absolute must read covering what’s going on in the mortgage industry and why if the Fed cuts rates, mortgage rates likely increase.    This issue of MMG Weekly also addresses how to freeze your credit in the event of ID theft and what’s coming up on the economic calendar.   

Mortgage Market Guide and YOU Magazine are just a few examples of the tools I invest in for my mortgage practice as my commitment to you.   It’s very important to me that my clients fully understand mortgages: the largest financial obligation on the most significant investment they may have in their lifetime.

Filed Under: Credit Scores and Reporting, Financial Planning, Just for Fun, Recipes

My First Post at Rain City Guide

January 10, 2008 by 4 Comments

 

Today is a very special one for me as it marks the anniversary of my first post at Rain City Guide.  I will always feel like I magoo’d* when Dustin Luther invited me to be a contributor on his Seattle blog.  I was just learning the blogging ropes (Mortgage Porter was just a few months old) and really had no idea the significance of Rain City Guide.

My heartfelt thanks go to Dustin, ARDELL, my fellow contributors and our readers.

*”Magoo” is a term my husband and I use meaning “super lucky”.  Like how Mr. Magoo would walk off a plank, drive off a cliff and still manage to land on his feet.

Filed Under: Weblogs Tagged With: ,

More from the Misleading Mortgage Junk Mail Bag

January 9, 2008 by 4 Comments

Yesterday’s prize piece of junk mail has to be one of the worst mortgage mailers I’ve seen in a while.   It states:

Dear M/M Porter,

Congratulations!  We have great news regarding your account originally funded with Mortgage Master Svc. Corp. …

Note:  Who ever shows as the lender on your Deed of Trust is public record.  It’s not magic that someone has this information.   This information is available for purchase from the credit bureaus, title companies or many other data resources.

We are happy to inform you that you have been preapproved for a new mortgage loan that can substantially lower your monthly payment…we can "freeze" your current interest rate and lock you into on of our "fixed" product lines.

We do not qualify for the Bush/Paulson "freeze" plan.   Nice play on trendy mortgage words.

The Federal Government has issued new incentives on 30 Year Fixed Rate Mortgage Loans through FHA & Fannie Mae!  These incentives have considerably lowered fixed rates and made refinancing attractive again!

We’re still waiting on Congress to work out mortgage plans.  Fannie & Freddie now have risk based (credit score sensitive) pricing for a-paper.   Rates are attractive right now due to investors seeking safety in mortgage backed securities (bonds) instead of stocks.

This promotion will expire January 28th 2008!  However, as an added incentive for you to call us right away, there is an immediate opportunity for you to "skip your next two mortgage payments"!!

Ya gotta love the two exclamation points.  The letter goes on how we must call right away and is signed "Have a blessed day!"

Under the signature, it states rates low as blah blah blah, which is an obvious option ARM and does not include any APR.   This is pure trash.   In the fine print below that the letter does state the letter "is not a direct solicitation endorsed or sponsored by Mortgage Master Srvc Corp".   Duh!

What now?  No where on this letter can I see who the lender is or if they are licensed do provide mortgages in Washington state.   Letters that are a solicitation for mortgage loans that are misleading such as this should be forwarded to DFI to investigate.

Here’s the address:

Enforcement Unit, Division of Consumer Service

DFI, P.O. Box 41200, Olympia, WA 98504.

Please don’t select your Mortgage Professional by a mailer such as this one or a phone call from a total stranger.   Get referrals from your friends, family, co-workers or professionals you trust and respect.   If you had a good experience with your previous Mortgage Professional, contact him or her if they are still in the biz.  If it looks too good to be true, it probably is!

Filed Under: Predatory Lending

Home Equity Loans Offer Protection from Financial Uncertainty

January 8, 2008 by 3 Comments

While on vacation last week, I took advantage of being "unplugged" and read the Seattle Times.   On the last Sunday of 2007, they featured an article on How You Can Ride Out a Recession by Teresa Dixon Murray.   Teresa offers 17 easy suggestions on how to protect yourself during uncertain economic times with her top tip being:

1. If you own a house, get a home-equity line today.

It won’t cost you money unless you use the credit line. But this way, you will have access to money if you lose your job or hit an emergency. If you wait until you’ve been laid off to apply for the credit line, "good luck trying to get a loan if you’re unemployed," said Les Szarka, president of Szarka Financial Management in North Olmsted, Ohio.

I’m sometimes hesitant to broadly recommend HELOCs to clients.  Actually, I feel this way about all mortgage programs, selecting a mortgage properly requires evaluating your current needs and future financial goals.   HELOCs can be trouble when used improperly and a valuable tool when used with the right strategy (this is true for any mortgage). 

One of the best reasons to have a home equity line of credit is for protection in the event of unexpected circumstances such as loss of employment or health.  And as the article mentions, to provide a safety net during uncertain times with our economy.  A HELOC is best used when you’re not using them (was that a Yogi-ism?) but you must obtain one while you’re employed, with good credit and home equity.   If you lose your job or are temporarily off work due to health issues and/or your miss a payment due to being off work or ill, you will find it difficult to qualify for a home equity loan when you need it the most.   Imagine being in need of cash, having decent equity in your home and having a lender tell you, "sorry you don’t qualify" or having to opt for a hard money loan. 

There are a couple other reasons to consider a home equity loan today instead of tomorrow or next week:

Guidelines are tightening.   Most home equity loans are limiting the loan to value they will lend on and are raising credit score requirements.    Combine this with possibility of properties losing value and the amount of your possible credit line may be limited.

For example, if you home is valued at $400,000 today and you have a $300,000 mortgage currently against the property, your credit line may be limited to $60,000.  If your home depreciates 5% to $380,000; your available credit line may be limited to $42,000.   During these historic times, it’s also possible for the lender to reduce your credit line on the HELOC or to close it due to inactivity.

Review your options with your trusted Mortgage Professional (who will hopefully refer you to a bank or credit union if their rates are not competitive with this product…some are…some are not).

Filed Under: Home Equity Loans & Second Mortgages
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