Oregon Mortgages

Self Directed IRA’s

Well, I guess it isn’t NEW so to speak…

But it would appear that there are some people rooting for foreclosures; people who make mortgage loans with their self directed IRA. There are companies that promote using the strategy of directing these funds into providing mortgage loans and are grouping several thousands of people together to produce these. I’m not the biggest fan of this tactic, there are a lot of variables involved. There are companies that handle this sort of thing for the IRA holders so if someone was to do it, I would recommend that they get set up with a company that has a track record of success.

• They don’t typically look to back a 30 year conventional loan
• They look for terms of 3 months to a few years
• Even Fixer uppers, small-scale developers, or bridge loans for relocating families
• Typical interest rates charged are around 10%
• If a default occurs the IRA can own the property
• No more than 70% Loan to Value that way if a default does occur then you are owning the home at a considerable discount.
• if you DO NOT have at least $100k in an IRA then this sort of thing wouldn’t exactly be the best thing for you to attempt.

I know investors that basically do that sort of thing and charge anywhere from 10-15% interest rates plus 3-5% of the loan amount as an originating fee involved. They, surprisingly, favor defaults due to the equity position involved and the ability to yield even higher returns. Obviously there is a lot more to it and also a lot of legal and tax guidelines that go along with an IRA so its not all fun and games.

I’ve also known people who have gotten tied up in court battles trying to foreclose on someone who they had lent the money to. So it all sounds great on paper but it can be a real pain in the behind You have to think about your legal fees, court costs, repairs, real estate fees to sell the property…..etc. You could wind up upside down in your investment.

More Countrywide News

I know people must be getting tired of hearing about them but they are an important lender in our world so they should be important to all Real estate Agents, appraisal companies, Inspection companies, Title & Escrow…etc.

Countrywide is cutting 12,000 jobs out of their line up. That is roughly 20% of their entire workforce. They have scheduled it to take place over a 3 month period. We’ll see most of the job cuts come from areas that are lower in origination. Countrywide expects to see a 25% decrease in their loan originations for 2008.

“Each employee at Countrywide is considered an important member of the Countrywide family,” said David Sambol, President and Chief Operating Officer. “While workforce reductions are therefore always very difficult, these decisions are being made with the utmost attention and sensitivity to the impact they will have on our Company and our people.”

Their stock fell 6% upon release of the news about the job cuts. That is definitely a significant amount of jobs for Countrywide to cut. I’m assuming we’ll see a lot of their retail loan officers be let go. Quite the interesting news…

The Schumer Bill

This is a bill that is being introduced by Senator Bill Schumer who is a Democrat from NY. The bill would lift the caps on Frannie and Freddie by 10% to allow them to help buy more loans during the “credit crunch.” If accepted then it would allow Freddie and Fannie to pump another $145 Billion into purchasing mortgages. It would also allow them to purchase “Jumbo” loans which are loans over $417,000, this would allow them to help people in areas with more expensive housing. The bill itself would also push $72.5 Billion for to help refinance borrowers who’s loans are currently adjusting to higher rates or about to adjust.

The Bush Admin as well as the OFHEO (the governing bodies of Freddie and Fannie) have rejected proposals previously so I’d assume we’ll see some negotiations go on.. This could definitely help ease some tension on the market as well as borrowers so we’ll see what happens!

States Get Involved in the Subprime

Well amidst all of the Subprime and even Alt-A problems it appears that states are trying to help solve the problem in their own communities. 30 states have introduced some sort of legislation that would help protect the consumers from Subprime Mortgages.

New Jersey introduced a legislation that would limit the ability of Mortgage Professionals to charge above market rates as well as prepayment penalties. “If Washington isn’t going to act, the states are.” Gov. Michael F. Easley of North Carolina.

Maryland, Massachusetts, New Jersey, New York, Ohio and Pennsylvania have all rolled out programs that help refinance home owners currently at risk with their current mortgage. They are using proceeds from state bonds as well as federal lending agencies which are accounting for roughly $500 million. That sounds like a great deal of money (and of course it is) but that will only help a small amount of people.

These CAN be good things for consumers. Someone does need to help limit was people can do. I think that there will have to be some very in dept conversations & literature on how these programs should work. I personally have no problem with this because if there is a way that I can put even my subprime borrowers into a 30 year fixed with no prepayment penalty I do so. I always explain to them that this at least gives them the option to refinance their home IF and WHEN they want to. Even if the rate is a little bit higher than say a 3 year arm. I’m not so much against the prepayment penalties if the loan IS a 30 year fixed mortgage. That one can help lower their rate a bit and might not be a bad idea. At least they still have the comfort of being in a 30 year fixed rate program and don’t have to worry about their payment skyrocketing. It gives them the luxury of being able to sleep at night knowing that their mortgage is safe!

More Countrywide News

Well there is some more good news for Countrywide today. It appears that Bank of America Corp. invested $2 Billion into the largest lender in America to help them live to fight another day. They purchased non-voting preferred stock that can be converted into Countrywide common stock at a price of $18.00 per share which is roughly 17.5% below what the stock was trading for at close Wednesday. If they do convert the stock it would get them roughly a 16% stake in Countrywide Financial. At this point it is hard to say whether Warren Buffett is trying to purchase them as a report previously stated. I guess we’ll have to wait and see.

Bank of America’s CEO Kenneth Lewis said, “We hope this investment will be a step toward a return to a more normal liquidity in the mortgage markets. In the current turmoil the stock market has been underestimating the value in Countrywide’s operations and assets.”

There was definitely some scary times for Countrywide who was fairly close to being downgraded to “junk bond” that would have most likely doomed them. I’m not a financial guru when it comes to the stocks but I was never THAT worried about Countrywide going under and now it appears they will be able to rebound.

100% financing’s future in the real estate world

I know many people don’t have the best credit, life happens and you have to make a sacrifice so you miss a credit card payment and that kills your credit score that you worked so hard to obtain. Well times are getting tougher, guidelines are getting stricter and yet another blow has been dealt to the real estate community and mortgage community. Now, more than ever, people need to pay attention to their credit report, what their scores are, what negative information is on there and how to clean it up a little bit to prepare them to buy a home.

Currently, people with less than stellar credit are able to get 100% financing through Fannie Mae insured loans. There are 4 levels of an approval that consumers can get.

1. Approve/eligible
2. Approve/level I
3. Approve/level II
4. Approve/ level III

Depending on which category you fall into there will be RATE adjustments as well as MORTGAGE INSURANCE adjustments. Obviously the higher the level the higher the rate and the mortgage insurance you will pay on a monthly basis. Depending on your income you might be able to afford the payment or you might not. That of course is a personal decision, us loan officers can only tell you how much our lenders will QUALIFY you for.

Now Fannie Mae is introducing some adjustments to their programs beginning October 20th, 2007. As of that day if you receive a Level II adjustment you will only be eligible for 97% financing, you would be required to contribute 3% of the purchase price towards transaction. That would be $3,000 per $100,000 dollars of real estate. If you receive a level III adjustment you will be capped at 95% meaning you would be required to bring in $5,000 per $100,000 of real estate.

If you fall into one of these categories and you are looking to purchase a property soon you’d better consult your Loan Officer and either find that property very quickly or start doing some damage control to rebound your credit scores. You are more then welcome to check out my Credit Report Blog by clicking the link or by checking out my blog below. I am always up for helping people improve their scores and assisting in anyway that I can. Feel free to contact me and we can discuss how to improve your scores.

What? Warren Buffet’s a superhero?

He’s no superhero but definitely perceived as a buinsess/financial guru (I know I’ve read his books) and now it appears that Warren Buffet could be BUYING Countrywide Wholesale. Quite interesting, I believe Mr. Buffet already has a good number of stock in the company. I guess it only makes sense for him to purchase more and become the Majority shareholder. I mean, I wouldn’t have a problem with Mr. Buffet running any company I owned. If anyone could pull your business out of a financial downfall it is him.

Countrywide’s stock apparently rose 12% with just the rumors of Warren Buffet being involved. You really have to appreciate the way one person can impact the stock market. I guess I should have bought some shares, no? It is unsure if he is going to buy part or all of the company. I would definitely say this would help them out and get them back in the right direction. The fact that if he did buy the company that alone would get people interested and we’d see their stock prices recover. I was kind of hoping they’d lose a few more dollars and then I would pick some up….way to go Warren! Definitely some good news in the mortgage world. Hopefully we’ll hear some more news over the next couple of days.

Oh and on a side note 4 more lenders have gone out of business since yesterday. Most notably BNC Mortgage and First National Bank of Arizona.

Foreclosure’s Still on the rise.

Well RealtyTrac who sells foreclosed homes released a mid-year report showing California and Ohio cities are accounting for 10 of the top 20 metro area foreclosure rates. Some areas where foreclosures skyrocketed have been slowing “but the overall trend is toward escalating foreclosure rates, with 82 of the top 100 metro areas reporting year-over-year increases in the number of homes affected by foreclosure,” says James J. Saccacio, CEO of RealtyTrac.

Here is the top 20 list you DON’T want to see your city on!

Stockton, Calif.
Detroit/Livonia/Dearborn, Mi
Las Vegas/Paradise, Nev.
Riverside/San Bernardino, Calif.
Sacramento, Calif.
Denver/Aurora, Colo.
Miami
Bakersfield, Calif.
Memphis, Tenn.
Cleveland/Lorain/Elyria/Mentor, Ohio
Fort Lauderdale, Fla.
Atlanta/Sandy Springs/Marietta, Ga.
Fort Worth/Arlington, Texas
Fresno, Calif.
Indianapolis
Dayton, Ohio
Dallas
Akron, Ohio
Oakland, Calif.
Columbus, Ohio

I found the information interesting for the most part. I found the article via the NAR website. I believe I also read somewhere that Fannie and Freddie were denied the ability to purchase more loans. They were seeking approval to help solve part of the mortgage problems for lenders but apparently the government didn’t see it as a benefit so they were denied that ability.

Who Can You Trust?

It seems like every corporate enitity gets a little greedy… Who pays for it? The consumers do. You, Me, Our neighbors even the community that we live in. I’m not just referring to the current Mortgage Crisis going on. I’m talking about Enron, Tycoon, and even the insurance companies…

I was reading a news article this morning about home owners who, for lack of a better term, got shafted, by their insurance company. The article particularly states State Farm (Who I’ve always encourage clients to leave due to their prices) and AllState. We all know that natural disasters happen; a hurricanes, a tornado, a wildfire or an earthquake. Homes can be partially damaged or even completely destroyed. For example there were home owners in California who’s homes were destroyed by a wildfire and when they contacted their insurance companies most of them tried to settle for less than what their policy was for. Between 30-60% of the actually policy. That is just sad; their home was destroyed and they aren’t even getting enough money to rebuild a similar home.

PBS interviewed homeowners who said that their coverage had been switched by their company from “full replacement” to “extended replacement” coverage before the fire. Naturally they questioned their agents and were told that the extended replacement was much better for them but when it came time to pay up they were left in the dark.

Along with that, insurers reported $73 Billion in profits last year (49% higher than 2005) in the wake of Hurricane Katrina. Record PROFITS after one of the biggest natural disasters in history? That just strikes me as odd.

Annual Credit Reports

I know a lot of us have had a good amount of discussion about clients checking on their credit for incorrect information, identity theft, unpaid collections…etc. I encourage all of my clients to contact each bureau to access their report (they get 1 free one annually) to monitor their report.

In case anyone wanted to pass this information to their clients to help them monitor their credit I thought I’d post a couple links. You can get a free annual credit report with that link or if your clients want to monitor their credit report on a monthly basis (it does not show up as an inquiry to use this company) you can do so at True Credit. It does cost $14.95 a month (no contracts) to use that feature but it is well worth it. I use it for my own credit and I get updates as soon as a inquiry has been made, new accounts have been established, any change to current accounts (if they report me late) etc…Its a pretty good site to use.

I thought I’d share some of this information for everyone. I hope its beneficial for you and/or your clients. If anyone knows of any other sites and/or tools that help out please let me know. I always like to add useful tools to my arsenal!