Mortgage Metamorphosis

Extension Please! Offering Perspective on Why.

2008-04-16T07:44:00.000-07:00

Can we get a 1 week extension please? I continue to hear that escrows are not closing on time.(not my deals of couurse:) I have come here today to offer my opinion on this subject matter. As we all know the times have changed. Many of the sellers in today's market go by the names Countrywide, Washington Mutual, and Aurora Loan Services not Bob aand Suzie Smith. The sellers are motivated to sell but at their pace and on their terms. Not only do they ask the buyer to get pre-approved through their bank to retain more money but they also take their time in opening the escrow.
Why does all of that matter? Changes in the underwriting standards and programs re-emerging are causing the files to get thicker. In the day of low doc, no doc, stated income, and stated life the meat of the file was the appraisal, preliminary title report, purchase contract and the credit/job history. The market was appreciating so rapidly that there was little problem with the appraisal, the credit is a 10 minute skim and the prelim is obvious. The only item of contention was the purchase contract. Fast Forward to now and the file contains all of the same items as well as income documentation, tax returns, bank statements, appraisals in a declining market, DD-214 for VA, Caivrs clearance for FHA, pest inspection reports, non occupant co-borrowers, Title issues because the bank took over etc. The file was an inch thick and is now 5 inches thick. Would you rather read a magazine with photos or a novel in fine print? That is the difference for the underwriters.
All of those pieces are very important for the file. So back to the bank taking their merry time to open escrow. When the bank delays the opening of the escrow a loan officer cannot obtain the prelim. Until the loan officer has the prelim they cannot send the file to underwriting. This can take a week to two weeks on a 30 day close with a five inch file, how could we close? The average business month is twenty business days. If ten are gone we leave ten to have the file underwritten, provide additional documentation, clear pest, get docs out, sign, fund and record each being 48-72 hour process. The math does not work. Standard FHA takes 45 days, add the prelim issue and again how would it ever be done.
I hate extensions as much as the next person but everyone looking to get financing is facing the same dilemna. We have to work as a cooperative unit to get the deal done. The finger pointing just gives the buyer a sour taste in their mouth. Buyers and sellers are indecisive, worried and nervous. It is our job as a team to state that these are the times and offer the information above to put it into perspective.
Does anyone know of a good doctor that does not have a great nursing staff? The Escrow Officer, Loan Officer, Realtor and Appraiser have to be the Doctor/ Nurse team to get things done. Working together to make the patient as comfortable as possible. I will be the nurse if that make others feel better. Effective communication and no finger pointing will lead to faster closings and more decisive decisions in this market. Edify the person that you are working with even if you cannot stand them. We as a country and professionals need the inventory to move. It is our job to ease the fears of the buyer and make it a smooth transaction. So the next time that an extension is needed smile to your seller, buyer, Realtor and Loan Officer, and remember the words above. Assure them that all is well and even workman's compensation gets the paperwork done at some point.
As Always thank you for reading...........Until Next time.
Matt Freeman

Real Estate and Parenting

2008-03-11T23:12:00.001-07:00

For all of you that are parents and in the Real Estate business(mortgage or sales) you should understand what I am about to say. I will also ask for feedback on techniques that you use to keep the two very separate. A Real Estate career can be very demanding and it should be. However, without the appropriate barriers it can easily seep into another part of life called parenting. The facts are that we are commissioned sales professionals and we have to be accomodating to our clients. Most of the time our clients jobs are in the normal hours of a business day (8-5) and that requires us as Real Estate professionals to meet our clients off work hours. These times Monday through Friday 6-9pm and Saturdays and Sundays can be very hard on our own families. The solution is to have very strict barriers.
First, I will admit that early in my career I was terrible at this and I do not think that I am the only one. I worked as a Mortgage Professional from 7:30 am on the phone until 9-930pm. Yes, the money was good but I did not get to know my Two children at the time intimately. They knew that I was there Daddy and that Daddy had to make the money. I can honestly say that I did not see their first step and all the other firsts. Weekends were for my family right? Wrong again. I constantly was on the phone pre-qualifying my clients to buy or sending out the new Pre-approval letter, holding an Open House or striking up conversation at the park to gain a new prospect. The off switch was stuck.
As the market changed and business slowed a little I began to have more time on the off hours. The money was still good and we began to get to know each other. Partially because we moved and all we had was each other and my wife needed help. The other reason is that I was not slammed like a newly opened In and Out Burger. This is when I realized that to have barriers was not only good for my family but my business. I never said no before and my clients began to call out absurd hours. Establishing barriers also said in a nice way that I value your business greatly and will provide you all my expertise but I also have a family and they mean the world to me. With that I went from smooth talking salesman to a business professional. Respect my time away and I will give you the best when I am on the job. No distractions because I have separated the two.
Business then made another change and for a moment I worked all day and night again because I thought I had too. Boy was I wrong. I always have known that relationships are the key to this business. What I did not know was that before I can establish lasting relationships in the industry I had to be able to establish lasting loving relationships in my home. Now I have three kids and the third child Daddy was her first word. I saw the first step and stayed awake with her all night while the first tooth broke through.
Real Estate allows us the flexibility to be at the play middle of the day or participate when your daughters school goes to the Pumpkin patch. In my opinion, with strong barriers between work and family known to all strong realtionships are built throughout. Lasting Relationships that will help us all last through this cycle.
In conclusion, remember that being a parent is just a season. It goes by so fast and we do not get that time back. This downturn is just a season also and we dont get this time back either. Embrace both with strong barriers and both will flourish. Thank you for listening.

Job Market Catastrophe

2008-03-07T12:15:00.000-08:00

http://money.cnn.com/2008/03/07/news/economy/jobs_february/index.htm?postversion=2008030713

This article by CNN provides a great overview of the job market. I think that this validates Paul Zane Pilzer's view of where the next Millionaires are going to make their money.

New FHA Limit Increases in California

2008-03-06T23:35:00.000-08:00

Here are the New loan limits for California:) The source of this information was:

See http://www.ofheo.gov/media/pdf/ConformingLoanLimitLtrstoEnterprises112607.pdf.

Numbers are 1-Unit, 2-Unit, 3-Unit, 4-Unit
CA Bishop (Micropolitan Area)
Component County: Inyo
$ 437,500 $ 560,050 $ 677,000 $ 841,350
CA Los Angeles-Long Beach-Santa Ana (Metropolitan Area)
Component Counties: Los Angeles, Orange
$ 729,750 $ 934,200 $ 1,129,250 $ 1,403,400
CA Madera (Metropolitan Area)
Component County: Madera
$ 425,000 $ 544,050 $ 657,650 $ 817,300
CA Merced (Metropolitan Area)
Component County: Merced
$ 472,500 $ 604,900 $ 731,150 $ 908,650
CA Modesto (Metropolitan Area)
Component County: Stanislaus
$ 423,750 $ 542,450 $ 655,700 $ 814,900
CA Napa (Metropolitan Area)
Component County: Napa
$ 729,750 $ 934,200 $ 1,129,250 $ 1,403,400
CA Oxnard-Thousand Oaks-Ventura (Metropolitan Area)
Component County: Ventura
$ 729,750 $ 934,200 $ 1,129,250 $ 1,403,400
CA Phoenix Lake-Cedar Ridge (Micropolitan Area)
Component County: Tuolumne
$ 437,500 $ 560,050 $ 677,000 $ 841,350
CA Redding (Metropolitan Area)
Component County: Shasta
$ 423,750 $ 542,450 $ 655,700 $ 814,900
CA Riverside-San Bernardino-Ontario (Metropolitan Area)
Component Counties: Riverside, San Bernardino
$ 500,000 $ 640,100 $ 773,700 $ 961,550
CA Sacramento--Arden-Arcade--Roseville (Metropolitan Area)
Component Counties: El Dorado, Placer, Sacramento, Yolo
$ 580,000 $ 742,500 $ 897,500 $ 1,115,400

CA Salinas (Metropolitan Area)
Component County: Monterey
$ 729,750 $ 934,200 $ 1,129,250 $ 1,403,400
CA San Diego-Carlsbad-San Marcos (Metropolitan Area)
Component County: San Diego
$ 697,500 $ 892,950 $ 1,079,350 $ 1,341,350
CA San Francisco-Oakland-Fremont (Metropolitan Area)
Component Counties: Alameda, Contra Costa, Marin, San Francisco, San Mateo
$ 729,750 $ 934,200 $ 1,129,250 $ 1,403,400
CA San Jose-Sunnyvale-Santa Clara (Metropolitan Area)
Component Counties: San Benito, Santa Clara
$ 729,750 $ 934,200 $ 1,129,250 $ 1,403,400
CA San Luis Obispo-Paso Robles (Metropolitan Area)
Component County: San Luis Obispo
$ 687,500 $ 880,100 $ 1,063,850 $ 1,322,150
CA Santa Barbara-Santa Maria-Goleta (Metropolitan Area)
Component Couny: Santa Barbara
$ 729,750 $ 934,200 $ 1,129,250 $ 1,403,400
CA Santa Cruz-Watsonville (Metropolitan Area)
Component County: Santa Cruz
$ 729,750 $ 934,200 $ 1,129,250 $ 1,403,400
CA Santa Rosa-Petaluma (Metropolitan Area)
Component County: Sonoma
$ 662,500 $ 848,100 $ 1,025,200 $ 1,274,050
CA Stockton (Metropolitan Area)
Component County: San Joaquin
$ 488,750 $ 625,700 $ 756,300 $ 939,900
CA Truckee-Grass Valley (Micropolitan Area)
Component County: Nevada
$ 562,500 $ 720,100 $ 870,450 $ 1,081,750
CA Ukiah (Micropolitan Area)
Component County: Mendocino
$ 512,500 $ 656,100 $ 793,050 $ 985,600
CA Vallejo-Fairfield (Metropolitan Area)
Component County: Solano
$ 557,500 $ 713,700 $ 862,700 $ 1,072,150
CA Yuba City (Metropolitan Area)
Component Counties: Sutter, Yuba
$ 425,000 $ 544,050 $ 657,650 $ 817,300
CA Alpine County $ 547,500 $ 700,900 $ 847,200 $ 1,052,900
CA Amador County $ 443,750 $ 568,050 $ 686,650 $ 853,350
CA Calaveras County $ 462,500 $ 592,050 $ 715,700 $ 889,450
CA Mono County $ 462,500 $ 592,050 $ 715,700 $ 889,450

What is going on?

2008-03-06T15:15:00.000-08:00

This week has been one of the most extreme weeks in a while. I do not know about you but everybody I know has siad to me " the strangest things have happened to me this week." The week seems to be all out of order. The dollar is dropping fast, oil is sky-rocketing, bonds rally, stocks tank, mortgage rates go up and the sky seems to be falling. What is the cause of all this craziness? PANIC! None of the normal indicators are giving the message that they normally deliver. Generally, when the 10yr treasury bond yield drops like it did today mortgage rates come down with it. Why then was there two price changes for the worse? Unemployment cannot be that good and we will find out soon the REPORTED numbers on that front. What does all of this mean to the consumer? My thoughts would be to do what you do best, enjoy life as it is and do not spend excessively. Buy the necessities only and make smart decisions. In this time, I would think that a smart decision is a decision with an exit strategy or one that you can afford to invest long term. The other option is to do nothing and sometimes that is the best plan.

A Dose of Optimism

2008-03-04T15:05:00.000-08:00

In the recent bouts of change in the industry we alll begin to look at what is the positive side of things. The one that jumps out at me the most is what a great time to buy. Homes that were 785K around me in June of 2006 are going for 515K and less. What you can get for the devalued dollar these days is amazing. The next best thing is that the lenders are requiring that you have money into the investment so even if the investment goes down a little bit more you are still in the green. Also, you are less likely to walk away from an investment that you put something into. It would require what all great investor's have which is patience. Real Estate over the last 100 years nearly doubles the home value every 10 years. That statistic came right from the National Association of Realtors. Think about this for a moment. If you buy a 515K dollar house and you put 100K down in ten years you will have a a million dollar home. The equity position at that time will be in the 600K plus range depending on the loan choice. Thank you again for tuning in.

Lending Update

2008-03-02T14:50:00.000-08:00

Here is the scoop on lending in California:100% can be obtained through VA or CalHfa primarily at this point. Anything else that states there is 100% financing is simply not aware of the upcoming changes. There are pockets like lake county that have stayed out of the declining market that is effecting 100% financing. The day of the 80/20 combo is over so each of these options require mortgage insurance. Mortgage Insurance has another set of guidelines. They do not want to issue MI if the borrower does not have a minimum 620 Fico score with three scores and they use the lower of two with only two scores for LTV's above 90%. Under 90% The parameters for fico are still the same. MGIC requires a 45% DTI and most other MI companies are the same. So even if a borrower qualifies for a loan up to 95% in some cases or 97% in the case of FHA they will not qualify for MI. If they do get approved for MI the rates are so high they no longer qualify for the loan. It is a serious catch 22. Second home nearly the same lower LTV's and second home requirements. On Investment the guidelines for lending are very strict currently. You are unlikely to get cash out on an investment property over 60 LTV and if it is stated may even be hard to get that. You have to have 680 Fico unless you go Hard Money. There are some subprime lenders coming back to play. They require some form of income documentation but they are flexible on the types. They use bank statements, 75% of 1099's, mixtures of income etc. For MI on purchase and rate and term refinance you have to go Full documentation. FHA always require MI even if you are more than 20% down, CalHfa and Va require a DU approval which is the Fannie Mae underwriting engine. Fannie Mae is extremely credit driven. Essentially you have to have very clean credit.

Picking a Side!

2008-03-02T12:31:00.000-08:00

Not to get political or anything but have you been watching the Presidential candidates working their prospective crowds? Every issue is a political debate. One where you have to choose a side and argue why that side is better than the other and how you are going to help. Are you pro or con? This is the very question that faces each candidate. As a member of society, that is going to vote and choose the candidate that best stands for all the same beliefs and the candidate that has the best plans for reconstructing our society, I say that sometimes the side that needs to be chosen is neither.
Did you ever think that the best side to be on is not one of the sides that is being argued for? Do you ever think that each side has valid points that are reasonable and backed by great facts? I may not be liked but consider abortion for a minute. Both sides have a legitimate argument concerning this very topic. Those that are for abortion understand that growing up in a home that parents neglect you, resent you, or choose to drop you in a garbage can only to be found dead is not healthy. They understand that as a child this is like being on life support without the choice to pull your own plug. Many might suggest to pull the plug in light of knowing what lies ahead. Why put them through a life of misery knowingly?
Others believe that everyone deserves a chance to live and murdering someone that does not have any say in the matter is wrong. There are many willing parents that would love to adopt the child and provide an environment that would be conducive to the growth of the next potential President. The child deserves the chance and just because the parents did not think before they acted this does not condone taking the life of the child.
(Before I go on, I am going to state that I know that I am not covering everything for this topic but abortion was an example only for the point I want to make.)
We are so quick to take a side in arguments that we forget the very nature of the problem and we begin trying to win a debate. This in many cases draws us away from our own beliefs. Like an attorney the job is to win. Even when you know your client may be in the wrong.
It becomes a job and the original problem gets brushed under the rug.
I choose neither side because neither offers a SOLUTION to the argument. Either way there are unhappy individuals. Back to the case of abortion: I know that those that are in favor of abortion are not in favor of murder. They simply want the child to have a fair chance at life. When this is not an option they are PRO choice for a parent that is not capable of giving a child the chance. Yes, there is safe surrender at the fire station or hospital but from there where does the child go the foster care and adoption system. This is what is broke. If we had a solution to the child care system and more financing for our children to find homes this would be one solution that both sides would support.
Consider the other side of the argument: They are not PRO making a child grow up in an unstable environment generally leading to bad things. They are PRO giving the child a chance to grow up. Again the SOLUTION is a fixed child care system that fosters great homes and a chance for the child. Both sides truly want the same thing.
ALL TOO OFTEN we get caught up in picking a side, winning the battle when most of the time the true winner sits right in the middle. A solution that would work for both sides. It is time for America to begin to start finding the solution in the debate not focusing on winning the debate.
Again, what does this have to do with Mortgage and the market? Just read CNN and the opinions, all of the opinions are based on the presenters position and how it effects them immediately. I call it the Pessimist, the Realist and the Optimist. The three positions that can be taken. Really they represent the worst case, Neutral, and the best case. Each of which can be from two different arenas ie. the bond strategist and the stock market strategists. Again, if the debate and the position was one for SOLUTION rather than position we would have a much better America.

100% Financing Fading Away

2008-02-27T08:05:00.000-08:00

In order to get a 100% financing in this day and age you have to either be a Veteran or a First time home buyer. First time home buyer is defined as someone that has not owned a home in the last three years. The reason is the declining market. To lend a 100% of the value of a home that is still declining is like giving away free money. It is nearly an immediate loss to the investor. To make sure that their investment is safe investors are decreasing your borrowing power by 5% but still calculating your rate based on 100% financing risk. Bottom line is if you do not make the money and have the money or qualify for VA or CalHfa financing consider 100% financing a thing of the past.

The Two Headed Monster

2008-02-21T09:04:00.000-08:00

Inflation and a struggling economy is the world's two headed monster. Generally when the economy is sluggish the Fed can cut the rates as he has done and this will lead to cheaper money. Individuals and coporations access this money and pour it back into the economy. This helps to stimulate businesses and growth. However, when inflation is present the Fed cannot cut rates to excessively. Generally, the Fed would stand pat or raise rates to fight off inflation. So the dollar buys less and there is less dollar to go around. This is a two headed monster. Add in the spiked tail that is the mortgage meltdown and we have a situation. Without values in the market place even the rate cuts do not lead to tthe same amount of money flushed into the economy because on the ground level this is where the consumer generally accesses the money. Those who do have value run into the problem of available programs and whether or not it is advantageous to borrow. The fallout of Mortgage Backed securities poses a problem for everybody. Now in California there have been talks of no more stated income. Are you kidding me? Without looking up the actual statistic I will go out on a limb and say that California is full of entrepreneurs who generally run great businesses. Either sole proprietor or corporation these companies cannot afford to pay extensive taxes and so their individual tax return generally does not show enough income to qualify. Much of the market would be out of luck. So with all that being said it is a great time to buy and a great time for VA and Calhfa and reverse mortgages. We are going to have to fight the two headed monster and hopefully while doing so stay out of a recession.(too late in my opinion) Why are life coaches thriving in this economy? WE ARE ALL LOOKING FOR HOPE!

President's Day

2008-02-18T16:44:00.000-08:00

A three day weekend and I get the luxury of laying on the coach being fed Theraflu and every other medicine known to man. Drugged up the same way the market is drugged. At one point I think that you become immune to the cure. It no longer has the desired effects. I find myself saying "honey, I need some more of that cough syrup!" My wife informs me that it has only been ten minutes and that I should wait for it to work.
I find this to be the same as the reduction in the rates. By the time that we begin to cut the discount rate we are so sick that no regular dosage does the trick. Then when we catch up to the cold virus we find that it is not a miracle cure and we begin to beg for more even when the indicators say we should hold. Even if the rates continue to be cut and the mortgage rates fell we are hurting in the programs department. I continue to hear we would do that if only the borrower would just have 20 % down. Thanks but I rather continue to take the cold medicine against what the label says because I think it would deliver me into a deep dream state that said I have the 20 % down. I would not ask to borrow more if I had the money. You might as well smack me in the face, after all I probably would not feel it by now.
After months of blaming subprime and arms on the news and in the papers I read an article that says Jumbo's are very costly so you should consider a jumbo arm to keep the cost down or a higher rate second mortgage that is essentially obsolete, or the last suggestion was to borrow from your parents.
The silver lining is that the stimulus package just made Jumbos cheaper. This should take 1-3 months to implement and then watch the mortgage frenzy that ensues to get your cheap jumbo rate within the year before they revert back. The Government I think is going to see the demand and have to extend that deadline.
The market used to be much more predictable. You could advise a client of the risks and the benefits and give them a range that would not change the reality of their refinance but now you have to say hurry up and take the medicine without making them feel that you are excersing your agenda. I know that I was really sick and complaining a lot but the high dosage of medicine I think was to accomplish my wife's agenda, "for me to go to sleep, relax and let the medicine do it's job." Honestly, three days later I can say that the medicine does work if you let it.
In summary, the market is drugged with all the ideas , plans and possibilities, The glass half full people and the glass half empty. In this market we even have the shattered glass and the bubbling over. The reality is this is the market now and we can waste time analyzing it and by the time we figure it out it will be gone. Recession by definition can only be determined in hindsight. some beleive we are in one and some don't. By the time that we can prove either one of these groups right it will be to late. Live in the future by living in the now. Believe me if you buy the home and we were in a recession then you bought at a good time. If we are not in a recession you bought at a good time. If you refinance and the rates plummet the risk cost you a no cost refinance to a lower rate. If you don't and the rates go up then it cost you more. If there is nothing that you can do now then stop worrying about it. No medicine in the world has been very effective against anxiety over things we cannot control.

Happy Valentine's Day!

2008-02-15T09:07:00.000-08:00

I hope that everybody had a great Valentines day. I had the opportunity to curl up on the couch sick as can be and fill up on different cold medicines. The market is just the same. It is filled up on different cold medicines hoping that one will put it out of it's misery. My thoughts sit back and watch for a moment while the market chooses it's direction. Tuesday will be a fresh start for all.

How do you standout?

2008-02-13T18:49:00.000-08:00

In the world of Mortgage Brokers and Bankers how do you set your self apart? That is a great question. The normal answer is to provide impecable service, provide a value add, give a raving fan guarantee, sell a product that noone else has and everything else that you have heard over the years. As I sit in a cafe that sits on the church grounds I see several high school students pondering the same question. How do I standout? How can I set myself apart from the "competition." The noise begins to become a little bit louder as one of the teenagers shouts to gain the attention of her friend and the boy holds out his brand new I-phone to attract others who want to see the technology. So many young professionals fighting to capture the attention of someone who could potentially become a great friend. Struggling to establish relationships that are built on solid ground with honesty, integrity, betterment of each other rather than oneself and I begin to remember what sets us apart. Relationships. We either create a lasting relationship with our client and if we provide great service, value add, a raving fan guarantee and everything else we stand out. The relationship is first. How many times have you went to a professional and they started to rattle off numbers and tell you what you should do without asking your goals and plans for the future? How many times do you feel you were sold the plan they wanted for you? I have been asked many times if I think that there is a difference between business relationships and personal. I will go out on a limb and tell you I think they are one in the same. If we do not get to know our clients how can we ensure that we are providing the options for them to make the right choice? How do I set myself apart? I establish as deep a relationship as the consumer will allow and then I provide a customized mortgage for them. I also provide the reality, statistics and math. After all, it is financial and the math does not lie. I choose to make certain that I understand the needs and the wants of my clients. The clients that I do not do this for are the ones that I no longer have as clients. Remember, the first meeting is an interview and in that interview we both are finding out whether it is the right fit. I now choose the clients that I want to work with based on the relationship they want to have. If they do not want to let me do my job by providing sound advice regarding their mortgage I choose not to work with them. So as the kids leave the cafe they leave not in the big group they came in but in small groups of two or three. I imagine the two or three that have chosen to have a true partnership that offers open communication, honesty and integrity. The same honesty and integrity that forms solid relationships in High School allows for me to plan the appropriate mortgage for my clients. Without this I am just a mortgage broker selling a product which is not why I chose to be in the industry.

Advice: Choose a mortgage broker that you can open up to and let know what your true plans are within reason. Do not be shy of the current situation, be proud of the situation that you are creating together. Stick with that broker forever even if your "friend" gets in the industry. It is like you hairstylist or dentist or mechanic, once the rust is established run with it, grow with it together and watch the financial picture blossom together as friends that are business partners.

Break out the Band-Aids!

2008-02-12T18:07:00.000-08:00

Recently, I was reading an article that spoke of three effective mortgage crisis bailout plans. The first FHAsecure has already helped 30000 plus homeowners. The FHAsecure allows borrowers that have resetting interest rates to capitalize on a reasonable fixed rate with no volatility. As far as I see it the program is solid as long as the borrower can qualify. The second is the five year rate freeze known as Hope Now. There are two camps as you would imagine on this one. One camp that says this is a good start and a second that says why should we bail out risk takers. To the second camp I say the following: "people hire professionals to help them mitigate risk and make the right choices regarding such a large decision such as buying a home. As a mortgage broker, I think that we did not do a sufficient job in educating the consumer, secondly that job was made harder by the media that stated you could not lose, third the investors that were willing to create such loans for the 'hired sales force' (mortgage brokers) to sell, and every other party involved that didn't beleive that utopia would crash. Greed started the problem and everyone is to blame. We needed to humble ourselves but in an age of "gimme now" it was hard. I too fell prey. We are not bailing out risk takers because the way it was presented stated there was no risk! We all now pay the consequence and HOPE NOW helps to reduce catasrophe that would further eliminate the middle class." The third is the stimulus package which would raise the conforming loan limits temporarily. This is a great solution for some states but my fear is that they will shoot low trying not to create the same wave as before and have to adjust midway instead of aiming high and stopping at the proposed sunset clause date. Complain all you want to about each of the solutions but the Mortgage meltdown is here and at least we are searching for solutions. As for now we have to make do with the band aids that we are able to put on some gaping bullet wounds. As I have said before this is simply my opinion and is not intended as legal advice. If you are searching for solutions take the appropriate step and contact someone that can help you.

What's on Tap

2008-02-10T21:27:00.000-08:00

There are a few big readings this week that may sway the Bonds one way or the other. Stay tuned for the Redbook, Retail Sales, Business Inventories, Jobless Claims and Consumer Sentiment to name just a few. Remember that this week also has on tap Valentines Day. This is the day that you do something for your significant other that is completely expected and counted on. If what you do is not what they thought they expected it is relegated to another disappointing day of not understanding the other side. Uncertainty in a relationship is not a good thing. The market hates uncertainty and this is one of the reasons of the turbulence. Suprise or something nice when it is unexpected usually results in something good. The unexpected tax rebates that may or may not show up at your house would be an unexpected good thing. Do something good for yourself and your significant other this week and see if you can capitalize on today's low mortgage rates. Happy Valentine's Day!

Recession?

2008-02-06T10:45:00.000-08:00

There are many opinions on whether or not the economy is in a recession. While reading an article on cnnfn.com this morning I realized that it is all perspective and opinion. Are you an optimist, pessimist or realist? Are you currently low on funds and struggling or are you very comfortable? Are you a mix of the few? Depending on your standpoint and reasoning you may feel that we are in a recession and do not know it. You may feel that we are not in a recession and that the global economy will help to stimulate the US economy because the dollar has less value making it attractive for international investors and exports. The article titled "Look Who's Buying Now" was about 13 fund managers and there opinion on what to invest in. Each had a very different stance and approach to investment. Were any of them wrong? I don't think so because it goes back to perspective and what they are trying to accomplish. For the lay person this could get very confusing. As I stated yesterday, I feel that if we knew that we were in a recession then we would be on our way to recovery. We tend to hold on as long as possible before acknowledging the truth. I think they call it denial. Denial is a common symptom for a situation that requires change. This is generally large scale change and the individual or the group have to tackle it one step at a time. The most elusive step is the very first step. I think that we have acknowledged the problem but we are uncertain which direction is appropriate to move towards. Change will only begin when we have direction and begin to march forward one step at a time. Until then I think that we will be stuck in a state of uncertainty. The level of uncertainty that I felt after reading the opinion of 13 brilliant fund managers. We are looking for Leadership at the highest level. Your votes count so get out there and help choose the leader that you think will show us the first step.

Bonds Rally!

2008-02-05T09:11:00.000-08:00

The bonds have rallied while the stocks have tumbled. The sharp selloff comes on news of a weak service sector reading. Additionally, the ISM services index a survey of services sector executives, showed business activity falling in the month of January for the first time in five years. The question remains are we heading into a recession or are we already in one. If we think that we may be headed into a recession we are already there. Many situations present a challenge where it behooves us to optimistic about the current state of the relationship or market. In the case of the market, positive outlook is what helps get some people to work in the morning. Knowing and accepting the truth leads to a new game plan. When you are steering a ship as large as the United States economy it is easier to believe that staying the course with subtle adjustments is all that is needed. This only allows matters to get worse and the end result is messy. I don't claim to have all the answers but I do beleive that the recession is here and we need to acknowledge it.
On a positive note rates are phenomenal and for those that can reach the apple on the tree now is a great time to do so. That is it for now. Have a great week.

There is no Perfect Season!

2008-02-03T20:21:00.000-08:00

The Patriots lose the Super Bowl. So much for the perfect season and the perfect storm. After all these years in Football a perfect season was only possible twice. We are one and one with the result. The word perfect is such a frustrating word. Perfect does not exist. In Real Estate I hear all the time I want the perfect rate, the perfect house, I want to buy at the perfect time. I think that the market is still going down so I want to wait. There is nothing wrong with that aside from the fact that the perfect financing may no longer be available. You see when we are going to buy a home it is an exciting time, selling may be exciting, or maybe we are simply refinancing. The problem occurs when we consult an army of individuals and begin the opinion Brigade. This onslaught of opinions from non-professionals creates concern, confusion and hesitation for the actual consumer. Each opinion offers suggestion based on their situation and not yours. They may have 20% down and you are 100% financing. What I am trying to say is this; The only perfect time to buy, refinance or sell your home is when you are ready to go. You have to make the payment, you have to live in the property and you have to live with the decisions. All others who offer an opinion say nothing if you were right, rub it in when you are wrong and disappear if you need their help. Remember, you cannot time the bottom of the market, or the lowest rate, or the perfect combination of both. You move when you are ready. It is the decision of you and any other parties that are contributing to make it happen. I am sorry if I sound harsh I am not trying to be. I am simply being a realist. Do what is in your heart. Be strong in your decisions, consult your professionals and be happy with your choice. As we found out tonight no matter how much the odds are in our favor it is very hard to acheive PERFECTION! Congratulations to Eli Manning and the Giants. Have a Blessed week everyone.

Who will win the Super Bowl?

2008-02-01T16:47:00.000-08:00

The question of the weekend is who will win the Super Bowl? I actually love to root for the underdog but in this case I really would like to see 19-0. Just another wonderful phenomenon that I was able to live through. For all of you who cannot stand the Patriots supremacy just know that this too shall pass. How does this relate to Mortgage? Just like all great dynasties in the NFL there are cycles in Real Estate. They come and go approximatley every 10 years. What we are experiencing is part of a cycle. It too shall pass and we will all live to see values on the way up versus the way down. It wasn't long ago that we thought they would never go down. Now we find ourselves thinking, will they ever go up again? The simple answer is YES! Be patient and soon the Raiders will again be a dynasty. At least that is what I tell myself.

He does it Again.

2008-01-30T15:32:00.003-08:00

The fed cuts the rate 0.5%. Bonds respond negatively to the news driving rates up today. More details later.

Today is the day?

2008-01-30T08:54:00.000-08:00

Today the Fed will release it's latest in the rate cut frenzy. There is a lot on the table. The economic stimulus package which includes the raising of the conforming loan limit, inflationary pressures coupled with GDP growth of 0.6%. This is the slowest in five years and half of what was expected. The economy is more than sluggish and everyone understands that. I understand that too many rate cuts may devalue the dollar and poses a whole other problem. We are in a rock and a hard place and we must understand that there is not a perfect answer. We may only begin to do something and then make other adjustments down the road. Many argue that a short term fix will lead to major problems down the road and I agree it may. However, if we spend all the time planning for the perfect tomorrow than today will pass right by us. We cannot hide from the problems. Stay tuned for what the Fed does today and hopefully that will shed some light on tomorrow.

Next Fed Meeting

2008-01-27T20:14:00.000-08:00

The next Federal Open Market Committee meeting is scheduled for January 29.30. Many are eager to see if the Fed still cuts the Fed Funds rate by the half that was widely anticipated prior to the 0.75% emergency rate cut on the 21st. We will have to all wait and see.

What can I do?

2008-01-27T12:25:00.000-08:00

With all the media hype for the mortgage industry it must be difficult for consumers to know what is real. What should I believe? How much of this is true and what does it mean for me? I couldn't agree more. As a senior mortgage analyst I understand your pain. The news is coming faster and more furious than the recent storms that hit the Sacramento area. I think that there is confusion all the way up and down the ladder. This is a situation that requires careful manipulation. One wrong move could give the result of a failed science experiment. Right now if you are a consumer in the market place get the opinion of a professional. Interview several before making a decision or use the same professional that did a good job for you last time. Remember that life changes and plans change. When this happens we have to make adjustments. In some cases this is to our mortgage. Rates have not been better since 2004. If you have the ability to better your financial situation then take a look. If the numbers do not work for you then stay put. Time always cures all problems and this is especially true in Real Estate. If you can wait out the storm you will be in good shape again. It is also a great time to invest. When the Fed is easing there is always great opportunity. Make sure that when you are looking at an investment you have both an entrance and an exit strategy. Many young investors fail to set up an exit plan. This is a very important piece. Remember this, there is a lot of opportunity right now and there are several options for you as the consumer. If worse case scenario happens to you understand that you will live to battle again. Each day is a snapshot in time and tomorrow is the first day of your future. Thank you for listening to my thoughts. I will continue to update consumers as to market changes and opinions as the days go on.