Oregon Mortgages

Cracking Down?

Well some of you might have heard about ZipRealty or Redfn; who are online discount brokers. We could be seeing the end of that short lived fad…

They were/are offering rebates to buyers and sellers to help connect them with an agent. This was drawing major criticism from many Full Service Real Estate Firms as well as State Lawmakers. It appears that some states have banned rebates citing Kickback Laws and consider it a violation to allow such a thing. Some States have backed off that action a bit amidst pressure from some US Judicial Department who was quoted by saying “A rebate ban hinders Broker Competition.”

It sounds like this is going to be quite the debate for some time. We’ll see how this all plays out. I know us Mortgage Originators in Oregon have to walk a fine line on what we can even do when giving a gift to a client for sending us a referral. It definitely baffles me with what some of these companies are able to do.

Jinxed or just spoke too soon?

Well,

In a blog I posted just the other day I jokingly said that if Countrywide went under we’d be in for some trouble and us mortgage loan officers might be looking for new employment. Kind of a scary thought, as I was joking, I didn’t really take it seriously but I was reading some news today and found this quote quite interesting “After the markets closed on Thursday Countrywide Mortgage, one of the nation’s largest lenders, admitted it might not be in as good a shape as it had claimed earlier in the week.”

Suddenly my stomach hurts….

by the way here is that list of imploded lenders

meanwhile it appears that Freddie Mac and Fannie Mae are trying to get federal regulators to lift restrictions that stop them from buying up more of the mortgages that are out there. They was rumors about it to help ease the ongoing problem we’re seeing with the little mortgage meltdown we’ve witnessed.

On Thursday the European Central Bank (ECB) and Bank of Canada both stepped in to alleviate fears of a credit crunch. The ECB apparently loaned 95 billion euros (the equivalent of $131 billion USD) to 49 banks and the Bank of Canada said it would “support the stability of the Canadian financial system and the continued functioning of financial markets. That officially tops the amount that was tendered during the post 9/11 period. The Feds also pumped billions of dollars into banks in the last 2 days to help prevent any “seizing up”

There is definitely some interesting news out there with over $323 billion being pumped into the market in the last 48 hours. It is quite interesting to see all of this unfold.

Credit Card Companies UP the Ante!

So of course I am at my laptop working away with my email open, bluetooth on my ear, messenger’s open trying to solve some of these loan problems I’ve recently ran into. I get email news updates from all sorts of companies…some worth reading, some only worth adding to my “Block” list…I did just come across an interesting article about credit card rewards and every company trying to constantly up the ante to attract people..

Now it appears that in May American Express is allowing people to use their credit card to make their mortgage payments… Quite interesting, you can get miles out of it and alter due dates so to speak… I can see a lot of people getting into credit card debt (even worse than it already is). Could we ever see the credit card industry buckle somewhat like the Mortgage/Real Estate world has? For some reason I doubt it but it does get interesting when they start offering all sorts of kickers with it all. I guess in American Express’ case they are only allowing it with PRIME mortgages so they can limit themselves from the subprime mess.

I’m not opposed to paying my mortgage with an American Express (Although, I don’t even have one) I am one those people that would rather pay EVERYTHING with a credit card and then make one payment to the credit card to pay it off. I hate seeing tons of transactions in my debit account. I feel like I lose money at times…haha. I guess I should balance it a little better!!

More news

I know I don’t post in my blog nearly as much as I should and I’m going to make that extra effort to post in it more frequently.

This last week has been quite interesting watching the mortgage crisis unfold in front of us. Some ALT-A Lenders have gone out of business and several more are on the chopping block. You can see the total list of lenders who have gone out of business by clicking that link. I think a lot of people were quite surprised to see the subprime mess trickle into the ALT-A world. Guidelines have changed overnight, lenders have cut programs. Things are getting tighter. It’s going to be hard to find a lender who will loan you 100% financing if you can’t verify your income. This gets increasingly difficult for Self Employed borrowers who write off a lot of items to get their income down. Lenders look at the bottom line of your taxes (Gross revenue minus deductions = net income) so if you write that down to a low amount you better be prepared to come up with at least 5% down and 10% down and the conforming lenders.

Another thing you can do is be sure to put ALL of your money through your bank account. Deposit all cash, checks…etc. into your business account before you pay any bills. You can still get your Bank Statements loans that use your bank statements to verify income as well. This goes for W2′d borrowers as well who might have a side job. If you are paid in cash be sure to deposit that money into your personal account before spending any of it. This will greatly help you down the line.

Mortgage Rates Rise

Well over the last 5 weeks or so we’ve seen a pretty substantial increase in 30 year fixed rates. The 30-year Fixed Rate Mortgage has increased 38 basis points to reach the highest level since it averaged 6.55 percent during the week ended August 10th 2006. Also, the 5 year treasury note saw it’s highest level, last week, since the week of August 3rd 2006. We were so pampered when rates remained pretty consistent for the last 5 months.

Frank Nothaft, Freddie Mac vice president and chief economist commented about the report, “Mortgage Rates climbed this week owing to market concerns of a tight labor force and wage growth. May’s unemployment rate remained at the second lowest level since May 2001 while average hourly earnings rose. Additionally, unit labor costs increased 1.8 percent over the first three months of the year, tripling the original estimate, and fueling inflation fears.”

With hourly earnings rising, unemployment being at a 6 year low and inflation fears on the rise refect directly into the increase in mortgage rates. We’ll see how the summer plays out and with reports to be expected that will affect Mortgage Rates we’ll all be watching very closely.

Rent Vs. Own

This has to be my favorite topic to debate on. A lot of people think that it will just “cost too much to own” so they’d rather rent. I’ll argue my points with people and explain tax advantages…etc. I mean, when I first bought my home in Springfield, Oregon I was a single male with 2 roomies. With what I charged them I effectively paid less than what I was paying when I was renting a room from my own brother! IN FACT, I actually made money off of my home. With the tax savings I was able to get from being a home owner I not only paid less on a per month basis, the money I got back from taxes covered that and then some. I worked it out with my accountant and I had actually made something like $1400 which I thought was pretty sweet.

So this post wasn’t to gloat that I had made money off of my friends (although it was pretty nice to do) but to ask people when faced with the ancient fight between renting and owning (when the payments can be pretty similar and after the tax savings they could be exactly the same.) Of course I am not a tax adviser so I direct my clients to an accountant but I speak from experience.

I’m always trying to help people enjoy the benefits of being a home owner. I think sometimes when I’m talking to people about the benefits they think I am being biased because I am a Loan Officer and I get paid for convincing them. Yes I do get paid for providing Mortgages in Lane County Oregon but At the same time, I wouldn’t put ANY of my clients into a situation that I felt would be bad for them. It is my job to look at their financial situation as a whole and to help them determine what is an affordable mortgage payment.

If anyone is curious and just wants to play around with interest rates and payment options feel free to check out our Mortgage Calculator.

NAR Strikes Back

Well as many of you know CBS aired a segment that really attacked Real Estate Agents. CBS interviewed a “discount brokerage” CEO which I won’t even do the justice of naming. he attacked the Real Estate Industry as a whole. In short they attacked the NAR and Agents while the NAR on 2 occasions offered to have a representative there to at least give a statement for their side. They were not given that opportunity. The CEO said “by far the most screwed up industry in America.” He was referring to the home prices going up over the years and the real estate commissions staying the same.

Yes they do charge a % of the sale which is fair in most peoples opinions. Will all people be happy with it? No. Can we satisfy everyone in this world? no. This is how the real estate market has been for years so why all of a sudden change it? Yes some agents make a good deal of money. But they also get their clients top dollar when selling their home and those people REFER their friends and family to them. Obviously they weren’t to broken up about paying 5 or 6% in commissions if they are referring other people to them.

I’m a Mortgage Consultant and 95% of my business is from referrals. I charge less of a fee than an agent (Mine range from 1-2% of the sales price) If we are receiving most of our business from referrals our clients seem to be pretty happy with the transaction.

Back to the real estate portion. I don’t think I would want to use some internet company (we saw what happen to the dot com boom) that provides the service at a discount and handles as many as 8 (the CEO stated this) transactions or more PER WEEK. That sounds pretty busy for an agent to actually help me negotiate the best price. I think I’m going to do some research on this company and give my run down on it.

Perception of Loan Officers

So now I am about to vent a little bit. As I read Blogs or overhear some Agents talking about Loan Officers I can’t help but get somewhat upset. I mean, it doesn’t make me mad, its almost funny to me.

It just seems that the perception of loan officers rival that of a car salesman (which I am labeling right now and they don’t deserve that but you get the idea). I get the feeling that a lot of agents think we’re out to take advantage of the borrower. Now I can’t deny that their are some loan officers who will and DO take advantage of the trust they place in us. Some of us on the other hand put our clients best interest above our paychecks. No amount of commission is worth having my client upset in the end. I am a Mortgage Professional in Eugene Oregon and I service all of Oregon and now we are servicing Loans in California. I strongly believe that you must put your clients best interest above your own. If you take care of your clients they will take care of you.

I think a few bad apples spoil the rest, well the perception at least. I think sometimes us LO’s get an unjust label place upon us that does seem a little unfair. Yes, I’m sure you’ve had a bad experience with a loan officer that does skew that perception but I’ve had my fair share of bad experiences with agents, title companies, appraisal companies, insurance agents…etc.

Lawsuits!

So I was reviewing an article that I found very interesting. I thought I’d share the basics of the article with everyone here to get some input.

Two associations that represent owns of multi-family properties have recently sued the Housing and Urban Development (HUD) over new regulations that have been put in place. They are now being required to provide all written documents, materials and services to tenants and applicants who do not speak English as their primary language.

The National Housing Council and the National Apartment Association have filed their lawsuits in federal court against HUD. They are asking them to to stop the law (Limited English Proficiency Guidance or LEP) that went into effect in March. The new guidelines require all federally funded apartment owners to translate various documents into multiple languages and to provide verbal translation for those who cannot read the documents after being translated.

Jim Arbury who is the Senior Vice President of Government Affairs for both associations believes that HUD should use their own resources to translate the documents. He feels that it is unfair to require the individual apartment owners nationwide to do this and to have translators on hand at a moments notice but would rather they have a hotline in place. He was also quoted in saying “Every dollar spent on this misguided policy is a dollar that could be spent serving needy families and maintaining their properties,” said Arbury. “We are calling on HUD to withdraw its Guidance, to act proactively to translate important rental documents and to create a hotline to handle inquiries from LEP persons.

Closing Costs Vs. PrePaids

You’ll routinely hear both of these terms throughout the mortgage and real estate world. If you are a home buyer you will here your Agent and your Loan Officer talk about these. This blog post is a continuation of my last one titled “Bait & Switch”

It is quite easy for a consumer who isn’t the most educated with the loan process to get fooled here. If you ask a loan officer to put together some numbers for you (after he has a completed loan application, he should never quote you interest rates without having a full analysis) and you ask the simple question “well, what are my closing costs?”

Simple question right? wrong! If the loan officer knows he is competing for your business and you ask for the closing costs he will disclose JUST the closing costs. Which could make the loan sound like a GREAT deal. You have prepaid items as well which I will define directly below.

Closing costs = 3rd party costs involved. ALL Title fees, broker fee for your Loan Officer and any other fees their company charges, the lender charges you an “underwriting fee” to process the loan on their end, appraisal…

Prepaids = Items that you would have to pay regardless so they are not considered closings cost. That is all Prepaid Interest, Insurance and Taxes reserve accounts.

If you are going to have the lender pay your insurance and taxes on your behalf they add it to your payment and pull a portion out every month to add to a reserve account so when your taxes are due they pay them for you. These are known as prepaid items. If you are shopping your loan and comparing loan officers be sure to ask them “what are all my closing costs and prepaid items or What would be my total settlement charges to close this loan” You can at least then compare Good Faith Estimates and make an educated decision.