My Home Equity Line from Chase was just closed

I just wanted to report on a client of mine that just had their home equity line of credit closed. If you took out a high LTV or loan to value credit line or second mortgage you may be getting a letter shortly telling you that your line has been frozen or taken away. Banks that issued second mortgages are starting to get gun shy about leaving their credit lines open with declining property values and rising foreclosures. Do not assume that your line will always be there. If you are tapping into your equity every month to survive you may want to look for alternatives to get the cash that you need.

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Bush is ready to start Mortgage Aid Plan

The Bush administration is finishing the details of the plan to save thousands of homeowners who are at risk of foreclosure by helping them refi into more affordable mortgage programs. These mortgages will be backed by public funding. The program is aimed at helping homeowners who owe more than their home is worth due to decreasing home prices. The Federal Housing Administration is encouraging lenders to forgive a portion of those loans and issue smaller ones. This plan is similar to the legislation proposed about two weeks ago by Barney Frank who is the chair for the House Financial Services Committee.

Nearly 9 million homeowners currently have negative equity in their property. This is a serious problem. If a homeowner did have equity they could refinance. Current mortgage guidelines are prohibitive to finance a home that has negative equity.

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Debt Negotiation by an Attorney

I would be wary of using a third party debt negotiator to settle your debt for you. I would really advise to seek the services of an attorney to settle your old bills. An attorney is held to a higher standard. You always have the option of going to the state bar to complain about poor service. They are also accountable for monies that are deposited in their trust account. The best reason might be that a third party debt negotiator and an attorney will end up about the same in fees.

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Raise the conforming loan limit to help out the Real Estate market

Ben Bernanke lowering the federal reserve rates every few weeks wont be enough to put life back into the real estate market. The problem as from what I can see it is that the conforming loan limits in most areas are to low for Fannie Mae and Freddie Mac. I live in Maricopa County where the conforming loan limit is $417,000. If you live in Scottsdale your home may sit for awhile on the market due to the fact that housing prices are much higher in these areas. The problem is that once you go over the $417,000 threshold you get into jumbo mortgage rates. Rates on Jumbo Loans can be 2% or more higher than for a comparable non conforming loan. This prices most people out of the market for higher priced homes, not to mention that you will need to bring in a heftier down payment to be able to qualify. We must get these limits down to get the mid level properties moving again.

Mortgage Articles

Tip for doing a Verification of Deposit with Wells Fargo

When doing a VOD with Wells Fargo you may want to consider mailing it in rather than trying to fax it in. I just had a very miserable experience when trying to send a Verification of Deposit to Wells Fargo over their 900 number service vod line. They charge you $20 for every fax you send them. You also get charged $20 even if you get a busy signal. I got a bill for over $430 for what should have been $60. It took hours of frustration to get it sorted out. The third party billing company is Billing Solutions Inc. You will get a bill from them months later without any description of what the service really is. It was a nightmare to get the bill straightened out. Wells Fargo did just about nothing to help get the bill resolved.

My advice mail it in. Dealing with Wells Fargo and Billing Solutions Inc. was a total disaster.

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Wal Mart to offer a pre paid debit card

If you have bounced checks, bad credit or just can't get credit, Wal Mart has good news for you. Wal Mart will be rolling out a pre paid debit card. You can use it just like a credit card, the only difference is that you will need to have cash in your account for the charges to go through. The card will have fees so you will need to pay attention. There is a $4.64 reload fee every time you put money into your account. If you have direct deposit this is waived. If you use an ATM machine you will be charged $1.95 and if you want to cash a check it will run you $3. Requesting a paper statement will cost you $2 and the activation fee is $8.94.

If you don't have any credit, this is a great way to start establishing some. Just make sure in your agreement that they will report to all three credit bureaus which are experian, transunion and equifax.

Get a Debit Card

Bear Stearns may be worth More after all, stocks surge

Bear Stearns stock may be worth more after all. JPMorgan ups its bid for Bear stock to $10 per share. The net effect on the stock market has been a nearly 200 point rally in the stock market. So my question is are we in a recession or an inflationary period or can you have both. The experts say that we are in a recession yet interest rates keeps rising. I don't get it. Can anyone shed some light on this?

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CreditCards.com TV Commercials are pounding the air waves

CreditCards.com TV commercials are hitting the airwaves hard theses days. Credit Cards are not bad only the people that use them irresponsibly are bad. Remember, when you are out using your credit cards, the day will come when you have to repay the credit card companies for all of your purchases. If you can't pay your balances in full, the lie begins. The lie that you can actually afford your purchases. Once you are in debt, they own your ass and your life will become about paying your bills back. All of the money that you are paying in interest to the credit card companies could be going into your savings account or IRA. It does cost you. The lie is that you say to yourself that it doesn't matter. The truth is all of those pennies do add up.

If you are going to use a credit card, use it responsibly. Don't spend what you can't pay back at the end of the month. If you can use a debit card. There will be no bill at the end of the month it is just like spending cash.

Get a Credit Card and be responsible

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GetPrequalified.com presents at Lucky Napkin

GetPrequalified.com was honored to be able to present our unique marketing opportunity to The Lucky Napkin board. Not only does GetPrequalified.com have the best name in the Real Estate and Mortgage industry but we also have developed our own tools for organizing and optimizing large amounts of content for the internet search engines such as Google, yahoo, msn and others. We can create organic search traffic for little or no cost. The best part is that you don't even have to be a programmer to use or technology. So the net effect is we can reach our clients at a low cost.

We look forward to further developments with Lucky Napkin and look forward to posting updates.

Why Federal Reserve Rate Cuts wont help you

The Federal Reserve cut their discount rate to lenders by 75bps this week. Notice that I said to lenders and not consumers. Rates did not drop by .75% for mortgages. They went down about .25%. The only group that really benefits from this type of activity are the financial institutions. The move really allows lending institutions to make more money to try and sure up any liquidity issues.

Don't be lured by sneaky advertising trying to make you think that mortgage interest rates have dropped like a rock. The truth is that they haven't. All that I am saying is Caveat Emptor.

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Fed cuts their rate 75bps on March 18, 2008

The federal reserve did it again lowering their funds rate 75bps. I still think it is going to take more stimulus action than just fed rate cuts to get the credit markets running smoothly again. At this point why not just drop it to zero.

Are Fed Rate Cuts Helping the Economy?

The Federal Reserve rate cut that is expected this afternoon may help stimulate a sluggish economy. However it may do little to break open the troubled credit markets and hands down the mortgage market.

I think with the amount of work that the fed has done already, it should be clear that more measures other than the fed may be needed. It's hard to believe that the fed alone could bail out our economy and sluggish mortgage market. Senator Charles Schumer, chairman of the Economic Policy Subcommittee, told CNBC Tuesday, "Everyone knows we need to do more to stabilize housing." I would concur, I think peoples biggest fears right now are those over home prices and the real estate market. Senator Schumer also called for easing up of capital requirements for Fannie Mae and Freddie Mac and threw out the idea of tax credits for homebuyers.


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Fed Drops the fed funds rate by an quarter of a point

The Federal Reserve Chairman Ben Bernanke announced today on a Sunday meeting that the central bank rate will be lowered a quarter of a point to 3.25% from 3.5%. The action was meant to provide additional liquidity to banks and lending institutions. The JPMorgan merger with Bear Stearns was also announced as well.

Should we just let the market handle the mortgage meltdown or should the government continue to act?

Hold on to your hats, this may not have any impact on mortgage interest rates at the consumer level. If you look at what this years fed cuts have done for mortgage interest rates, you will see that there really hasn't been any significant lowering of rates at all. Don't get lured into any fancy advertising that alot of the banks and lending institutions will be running.

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Bear Stearns bailout causes Stocks to Tank

Bear Stearns which is one of the biggest financial services company has received interim financing from the Federal Reserve Bank of New York to help boost liquidity. The share price of Bear Sterns stock plunged over $23 a share to $33.78.

Bear said it was talking with JPMorgan Chase about permanent financing and other solutions. I think that this should raise an eyebrow as to the liquidity of other banks that were heavily into mortgage back securities. Hopefully we are nearing the end of the subprime loan issues.

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Foreclosure Forgiveness and Deficiency Judgements for primary residences

If you own a primary residence and are facing a foreclosure, you will not be issued a 1099 for a taxable event once the property forecloses. The tax laws were recently changed regarding this matter. This law does not apply for second homes or investment property. If you foreclose on a second home or rental property, you will have a deficiency judgment to contend with as well as a taxable event for your personal income tax.

If you are facing a foreclosure on a primary residence, this is probably the best time to do it. Not that facing a foreclosure is a fun thing to deal with, but in terms of the tax laws it has never been a better time to do it. You can get a clean start and not have to worry about a taxable event to pay for.

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Is the FreeCreditReport.com credit report free?

I have been curious if in fact the FreeCreditReport.com credit report is actually free. I went to their website today to see what would happen when I order a credit report through them. I thought I might have a shot until they asked me for my credit card number on the second screen. It is free but you are automatically enrolled in their credit monitoring program for a free for 7 day trial. If you don't cancel, you will be charged a monthly fee.

Below are the terms for the program taken right off of their website.

When you order your free report here, you will begin your free trial membership in Triple Advantage^SM Credit Monitoring. If you don't cancel your membership within the 7 day trial period, you will be billed $14.95 for each month that you continue your membership. If you are not satisfied, you can cancel at any time to discontinue the membership and stop the monthly billing; however, you will not be eligible for a pro-rated refund of your current month's paid membership fee.

I'm not saying that it is right or wrong to to market a product this way, you just need to be informed about what is so with FreeCreditReport.com. Credit Monitoring is a useful product. So if you are looking to get credit monitoring, you might as well get a credit report as well to see if there is anything on there that is not supposed to be on there. So the answer is yes it is free with conditions.

For articles on credit scores and credit scoring go to GetPrequalified.com

Can a pre payment penalty on a mortgage be good?

Pre payment penalties have been getting a bad rap lately in the media. I often hear or read stories about home owners that said they were unaware that their home loans had prepayment penalties until it was too late. Their loan officer slipped it in the closing documents or they were at the closing table and had to sign because their stuff was on a moving truck and they couldn’t delay any longer. Depending on who the lender is, a pre payment penalty can range from 6 months of interest to up to 5% of the unpaid loan balance. Typically they have been associated with sub prime and hard money loans. Now many A paper loans are offering prepayment penalties. If you choose a prepayment penalty on an A paper loan you can receive a lower rate of interest. Typically it will range from a .125%-.25% interest rate reduction. A lender will give you this perk because when they sell their mortgages on the secondary market, they can get more for them and they are able to pass this on to the consumer. The secondary market likes longer term notes. Pre Payment penalties don’t have to be trouble if you know how to leverage them. Either you have your loan or your loan has you. If you understand how they work and can effect you, a pre payment penalty can be leveraged for a financial benefit.

There should never be an instance that a borrower winds up with a prepayment penatly unknowingly. It is something that should be fully exposed by you loan officer or lender. There is a separate disclosure that you will need to sign in your closing papers to disclose that a pre payment penalty is part of your mortgage agreement. If you are not sure ask the title agent. It is there job to explain everything that you are signing. They will be able to point it out to you if in fact there is one.

Remember that until a mortgage is recorded you can back out. If you are unsure or uncomfortable with the terms of you loan don’t do it. Never make any financial decision that you are uncomfortable with.

Go to GetPrequalified.com. for additional articles on mortgages, real estate and finance.

Does pulling your credit report hurt your credit score?

I have been in the mortgage business for nearly 7 years. One of the biggest misconceptions that I run into is that pulling your credit report numerous times will hurt a credit score. I find that sometimes new borrowers are reluctant to have their scores pulled because of this belief. They believe that their scores will drop considerably if everyone is pulling it. The reality is that you can pull your mortgage credit report unlimited times in a 14 day period from the first pull and it will count as one pull.

It is a known fact that borrowers will talk to a couple of different lenders prior to selecting a company to go with. It is just part of the research and fact finding process. It is a ploy by some lenders to tell their clients not to have other brokers pull their report. To a broker that has already pulled credit, this improves their chance of securing the loan instead of another broker. They scare the potential borrower into believing that their credit will be ruined if they have other people obtain reports, thus potentially risking the homebuyer’s ability to obtain a loan that serves the consumer versus one that serves the mortgage originator.

The problem with this is that a borrower may miss out on better loan terms and lower closing costs. If a lender tells you not to have anyone else pull your credit for these reasons, you may want to talk to someone else. They are not being honest with you. The end result is that it could cost you thousands of dollars over the term of your loan. An honest lender will give you this information. They are confident in their services and don’t have to rely of sleezy scare tactics to earn your business.

If you want to know what your score is, you can pull it yourself. If you pull it on your own it does not count as a pull. Be sure that you pull a mortgage credit report. This will be more accurate for assessing your ability to get a loan and the types of rates that you will be able to get. Most of the free credit reports online are consumer credit reports. They are similar but are not accepted as a valid report in the mortgage industry. You can go to Getprequalified.com to order a free credit report. You will also find other useful services to get started on the home buying process.

Dave Mason
Mortgage Broker

Countrywide to be bailed out by Bank of America

The rumors still continue to swirl about Countrywide heading towards filing bankruptcy. Bank of America stepped in with a 4 billion dollar bail out plan. The last thing this country needs is a big bank failure. This would only fuel more financial uncertainty in the current credit crisis in this country. The merger wouldn’t seem to have much that that the regulators could bark about. Well, there is one thing. The total deposits held by BofA is about 9.88% of all US deposits. The limit is 10%. If Bank of America takes Countrywide on, that would probably put them over the top. I think they may have to overlook it in this instance. To much in the credit markets is at stake.

What do you think Countrywide should do?

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The tide will come back in for the Real Estate Market

If you are worried that the Real Estate market is over, I think you need to draw on a simple metaphor. The tide goes out and the tide comes in. You need to trust that the tide will come back in. Nothing ever stays the same and something in the universe is always at work. The Real Estate market will come back. It has gone down before and come back, it will do it again. The savvy investor will be out buying, the rest will wait and see what happens. What will happen is that values will go up and the ones who were waiting to see what happened will wish they didn't.

Don't wait to buy real estate, buy real estate then wait.

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Property Nut a great way to sell or find a home online

I recently put my home on the market for rent. I have it listed in MLS as well as Craigs List. I was spending about 30 minutes a day reposting my ad to keep it fresh in the system on Craigs List. The longer it is on Craigs List, the lower it goes down the list and the less likely it will be seen. One of the benefits of using PropertyNut.com is that they do it for your everyday. In addition to Craigs List, your listed property will be distributed on backpage.com, oodle.com, hotpads.com, vast.com and google. Listing my one rental unit was $9.95 per month. They also have unlimited plans if you have multiple properties you want to sell.

It's a no brainer.

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Stopping Junk Mail from Bank of America

I have tried everything to get BofA to stop sending me their junk mail. I have literally been on the phone for hours. They are like a dumb animal. Seriously if you have any tips on getting Bank of America to stop sending me their crap I would appreciate it.

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Late Payments on mortgages reach an all time high

Since the measure started being kept in the mid 80's, the number of mortgages that are currently late are over 7% of all existing mortgages. This is the highest number ever recorded. If you back out the home currently in foreclosure, the number is still over 5%. Since the news of this hit the market, the stock market has dumped over 1%.

For additional articles on housing, visit GetPrequalified.com

What Interest rates have to do with the current housing market

Over the last few weeks the Subprime mortgage market has been devastated if not killed off. We have seen multiple companies go out of business. Large players such as Novastar, New Century and even First Magnus have gone into bankruptcy. Even Countrywide the nation’s largest mortgage lender is teetering on financial disaster. We are now seeing the impact of these high risk loans play out in the real estate market as well as on Wall Street. The panic over the liquidity in the mortgage markets has definitely spilled over into the real estate market in a big way. If you look at the run the real estate market had in 2004 & 2005, the market force in the market was the availability of multiple loan programs and low interest rates. Low interest rates made it cheaper to buy a home than to rent. In this time many people were buying homes on first lien home equity lines. If you look at the prevailing rates for these home equity lines, they were around 4.25%. If you compare the same rate for that mortgage today you would be at 8.25%. Not only was money cheap but you could even buy a home with no money down and no proof of income, employment or assets. No documentation loans made it easy for anyone with high credit scores to obtain a mortgage. Many of these buyers had no business buying a home. They could buy because they could. The rules for lending have changed. That type of borrower will no longer be able to obtain this type of financing. You must now demonstrate your ability to repay your mortgage.

What does all of this mean to the current real estate market? Since the Subprime meltdown, mortgage companies have pulled back on the types and loan to values of mortgages they are offering. It is no longer enough just to show up at the closing table with your good credit score. You must demonstrate your ability to repay the loan. The no documentation or liars loans, as they are often referred to have disappeared. The 100% financing loans have also begun their recession. Borrowers will now have to have some skin in the game. Many of these high risk loans had borrowers bring no money down to the transaction. If things get bad, there is nothing to loose. Walking away from the situation is easy. It is true that you will end up with a foerclosure on your credit report, but the impact is still less than a bankruptcy. If you have put a down payment down on a property, a borrower would be more inclined to try to work it out and try to keep the property rather than to just walk away.

If I am selling my home what does this mean to me? What it means is that the pool of buyers has shrunk considerably. The tighter the lending guidelines get, the fewer buyers there will be to potentially buy your home. You might expect to see the value of your home drop as well. It is just simple economics. As demand goes down and the supply goes up, your home becomes worth less. If you don’t need to move don’t. If you do, you may want to consider renting. Real Estate cycles don’t last forever and it is likely market conditions will change in a few years.

If I am a buyer what does this mean to me? If you are in a position to buy, you may not have a better time to purchase a new home. With low interest rates, lower property values and anxious sellers abound, you may not find a better time to buy for years to come. There are still many programs that will allow you to buy with no money down. You may want to talk to your real estate agent about negotiating a seller to pay for your closing costs. Many Fannie Mae loan programs will allow a seller to pay for up to 6% of your closing costs. This would be enough to pay all of your costs and even buy your interest rate down to a more attractive rate. Sometimes the best time to buy is when nobody else is. The deals of a lifetime could possibly be right under your nose. At some point you need to give up the fact that this in not 10 years ago, it is now and these are the market conditions. You may kick yourself in another 10 years and say why didn’t I act then. Following the flock may not get you want and it may not be prudent. Trust you gut and make your move. Life is risky, but owning property over the long term is usually a winning proposition.

For more information on Fannie Mae 100% financing please visit GetPrequalified.com. While you are there you can check your credit and find other valuable financial services to assist you in the home buying process.

DebtFreeDave
Mortgage Broker

When is the best time to buy a new car

The best time to buy a new vehicle is in the last quarter of the year. You will find car dealers more eager to deal in order to make room for next years new car inventory. My recommendation is to go during the week and in the morning or afternoon. You will gain the upper hand then. Do not be in a hurry or be to anxious. If the dealer you are speaking to isn’t getting your the deal you want, you will have time to go to another dealer and see what they can offer you. You may also want to check some of the online services to see what the car you are looking at is going for. If you are going in with a trade in, you may want to go to kbb.com to get an idea of what your trade is worth. In most cases you can get more if you sell it on your own. If you do not want the hassle I would trade then. This will save you a lot of haggling time.

For additional Auto Buying articles visit GetPrequalified.com

Mortgage Brokers underfire, realtors are in jeopardy too - Congress is voting to limit your ability to buy a home

In a knee jerk response to the mortgage crisis, some really “smart” folks in Congress think they are doing the right thing by preventing home buyers from using the Yield Spread Premium to pay for closing costs, including origination fees that all mortgage folks use to get paid. Some members of Congress have proposed and now have the House of Representatives voting on HR 3915. This bill is also known as the “Mortgage Reform and Anti-Predatory Lending Act of 2007”. Enacting this bill will essentially force all mortgage brokers to charge you points to arrange a mortgage for you. This means that if you are going to use a mortgage broker to buy a home, or refinance, you’ll have to take more money out of your pocket to do so.

For more information on this topic go to: GetPreQualified.com

Debt FreeDave

Lending Tree three ring circus

LendingTree, When Lenders Compete You Win!!

When you fill out an internet form for LendingTree.com, you will have lenders competing but it may drive you crazy in the process. What you don’t hear about in the advertising is that you will be bombarded by aggressive sales people all trying to earn your business. Unless you like to talk to sales people in your spare time, the process will drive you nuts. In theory it makes great sense. Competition is great; you just want it to be the right kind of competition. In reality playing the multiple lender game can become a sales pitch nightmare.

What LendingTree doesn’t want you to know is that you can accomplish the same thing by dealing with just one reputable mortgage broker. A mortgage broker has dozens of mortgage wholesalers to get mortgage quotes from. An individual mortgage broker can get mortgage quotes from a variety of sources such as Bank of America, First Horizon, Ohio Savings, Washington Mutual, Wells Fargo, Countrywide, Citibank, Flagstar, World Savings, Chase and National City to name a few. A single mortgage broker can deliver you dozens of mortgage quotes from multiple lenders that they deal with. As long as you are comfortable and confident with the person that you are dealing with, they can save you hours of aggravation and pesky sales calls. The mortgage brokers for GetPrequalified.com can accomplish getting multiple lending quotes for you.

A bank on the other hand can only give you a rate quote on only the loan products that they have to offer. This can be limiting. This is probably why banks have been trying to get mortgage brokers wiped off of the lending landscape. A mortgage broker is not locked into any particular lender or money source. Interest rates change daily. A good mortgage broker can change with the fluctuations to deliver you the best interest rates offered by the different lending institutions. They will get you to the lowest interest rates because they get paid the same regardless of what lender they use. Get the picture?

The other piece of the lending puzzle most people don’t think about is using a local lender in the home buying process. When you use an internet lender, you may be speaking with someone thousands of miles away. If you have a problem with your loan, I’m sure you would want the option of getting in the car and going to visit with your mortgage broker in person so you can speak with them face to face. Problems do occour in a real estate transaction. Wouldn’t you feel more comfortable with someone you can sit across the table from? I am consistently shocked at how many potential borrowers know nothing about the person that is originating their mortgage. A mortgage may be one of the most important financial instruments that you will sign in your lifetime. You probably wouldn’t pick a stock broker in this manner, why would you pick your loan officer like this? Using an internet lender that you have never seen or met is gambling. There is no reason to do this. Work with someone that you know and trust.

Look for a lender that has been in the mortgage business for a minimum of 5 years. Ask them if they could have the phone numbers of the people that have closed loans with them in the last 30 days. There are a lot of people that drift into the industry looking to make a quick buck. The reality is that completing a mortgage takes expertise. You want someone that has spent the time to educate themselves in learning what it takes to fulfill the duties of completing the task. Someone who is professional has a great interest in making sure that you have a positive experience. They want referrals and their reputation is important to them. It should be easy to spot a slick salesperson from someone who is a consultant.

The internet is a powerful tool in the financial markets. Do your research. When it comes to business, personal relationships still rule. Talk to your friends that own property. Ask them if they would recommend the person that did their mortgage to you.

DebtFreeDave
Mortgage Broker

Additional Home Buying Articles

Hey don't pull my credit

I have been in the mortgage business for nearly 7 years. One of the biggest misconceptions that I run into is that pulling your credit report numerous times will hurt a credit score. I find that sometimes new borrowers are reluctant to have their scores pulled because of this belief. They believe that their scores will drop considerably if everyone is pulling it. The reality is that you can pull your mortgage credit report unlimited times in a 14 day period from the first pull and it will count as one pull.

It is a known fact that borrowers will talk to a couple of different lenders prior to selecting a company to go with. It is just part of the research and fact finding process. It is a ploy by some lenders to tell their clients not to have other brokers pull their report. To a broker that has already pulled credit, this improves their chance of securing the loan instead of another broker. They scare the potential borrower into believing that their credit will be ruined if they have other people obtain reports, thus potentially risking the homebuyer’s ability to obtain a loan that serves the consumer versus one that serves the mortgage originator.

The problem with this is that a borrower may miss out on better loan terms and lower closing costs. If a lender tells you not to have anyone else pull your credit for these reasons, you may want to talk to someone else. They are not being honest with you. The end result is that it could cost you thousands of dollars over the term of your loan. An honest lender will give you this information. They are confident in their services and don’t have to rely of sleezy scare tactics to earn your business.

If you want to know what your score is, you can pull it yourself. If you pull it on your own it does not count as a pull. Be sure that you pull a mortgage credit report. This will be more accurate for assessing your ability to get a loan and the types of rates that you will be able to get. Most of the free credit reports online are consumer credit reports. They are similar but are not accepted as a valid report in the mortgage industry. You can go to GetPrequalified.com to order a free credit report. You will also find other useful services to get started on the home buying process.

Dave Mason
Mortgage Broker

Mortgage Bankers vs. Mortgage Brokers

Dear Ms Reagor:

Thanks for the article on Sunday in the Arizona Republic, Feb 2007, regarding Eagle First Mortgage company’s closure. I’m glad to see bad apples weeded out. Although, I’m sure there are folks that worked there that we’re doing anything wrong who now have to look for new jobs. My company is called GetPrequalified.com LLC and I am the “Responsible Individual” for our mortgage broker license. Our company is committed to first time home buyers and helping folks prepare their financial house in advance of buying a home. I have been in the mortgage business for 11 years and have served on several local and state mortgage boards in Pennsylvania over the years prior to my moving here to AZ in early 2004. I am passionate about our industry being accountable for how consumers are treated during the home buying and refinancing processes.

In your article from this past weekend you state: “Legislation recently was introduced in Arizona to license all loan officers and originators to help crack down on bad loan and mortgage fraud.” You probably know this already, but the bill is HB2320. This bill, HB2320, doesn’t quite get the job done that it is intending to accomplish. Simply put, this bill only requires the loan officers and originators of mortgage brokers to get licensed; it does not call for the licensing of loan officers and originators of mortgage banks and other lending institutions.

Mortgage bankers are glorified mortgage brokers. Essentially the only difference between mortgage bankers and brokers is that mortgage bankers are required to have a higher financial net worth; but the educational and experience licensing requirements (3 years mortgage experience, 24 hours of class and take the AZ State test) are the same for either license type. Other than that, we operate and conduct business similarly. In fact the current President of the Arizona Association of Mortgage Brokers is the owner of a mortgage bank.

MANY of the most egregious violations that HB2320 is trying to fix are committed by employees of companies that are licensed as Mortgage Bankers or aren’t licensed in Arizona at all. I have heard from talks given by Department of Financial Institutions Superintendent Felecia Rotellini that complaints to her office about Mortgage Bankers outnumber the complaints against Mortgage Brokers 2 to 1. Mortgage Brokers account for about 60% of all the loans done in this country. This statistic has been the case for as long as I have been writing mortgages.

Every study ever done shows Mortgage Brokers as the lowest cost of all mortgage originators. My company, as with other mortgage brokers in the area, often compete head to head with the big mortgage bankers and federally chartered banks and very often we beat these companies not only in rate, but in “lender” fees. This is in spite that under the current federal laws, mortgage brokers have to disclose every fee they make, which includes what is called the Yield Spread Premium which is associated with the interest rate that a borrower pays for their mortgage. Mortgage banks and other banks don’t have to disclose this ever during the mortgage loan process.

Every mortgage loan originator no matter where they work is focused on the interest rate that they sell and/or a combination of origination fees in the form of points to make their salary and/or commission. Mortgage bankers and loan officers working at banks don’t have to disclose this fee to the buying public. Yet, mortgage brokers are disclosing all of their fees and still providing in general lower fees and the majority of the loans written for homeowners. These are good things for the home buying public. Mortgage Brokers have lead this country to its highest level of home ownership in history.

Other than making it harder and more expensive for Brokers to do business, this bill would accomplish very little. It gives those bad apples who are originating loans an opportunity to hide under the licensing of a Mortgage Banker. You speak about this directly in your article when you wrote: “Those employees are not licensed and could get jobs at other mortgage firms. So could Sanchez, as long as he does not apply to be a broker again.” This current legislation proposal will encourage the bad apples to migrate to mortgage bankers where they can hide.

A little history on this bill…the head of the House Rules Committee district includes the Countrywide (a nationwide mortgage banker) call center in Chandler that reportedly employs 4000 originators (they are looking to expand to 10000 in the near future). He is listening to their needs and desires pretty closely. They didn’t like this bill when it was first introduced as it called for all originators to get licensed and their originators work in all 50 states from that location. If every state had an L.O. license they would need 200,000 licenses for that one facility! They support a national registry or licensing of originators which isn’t a bad option, but will likely take a long time to implement. The bill has been changed from its original form to exclude Mortgage Bankers. Additionally, the AMLA, the Arizona Mortgage Lenders Association didn’t like this bill when it was originally introduced because it required their constituents to be licensed as well. Mortgage brokers of all the lending institutions and have continually suffered a barrage of discriminatory attacks on their existence such as this amended bill that’s being sent through the house at this time. Yet, we provide most of the loans and get less complaints than those who attack us.

The few people who amended this bill to its current condition apparently were influenced by a similar bill in Nevada that started with Mortgage Brokers being the only folks to have individual licenses for their originators and was amended to include Mortgage Bankers two years later.

Reportedly, the NV mortgage bankers got in trouble for employment ads that basically said, “come to work for us, you won’t have to put up with all that education and licensing crap.” Ultimately, the ads got the bankers in trouble with their regulator and they were forced into being covered by the regulation.

But, how many Nevada brokers went out of business in the 2 years because they couldn’t hire a good originator? Also, how many consumers were under served during those two years while their bill was altered to include everyone who originates residential mortgages?

Why would the AZ State Legislature wait to include everyone who originates residential loans for its constituency? Seems like politics to me versus serving the people that the Legislature represents. Let’s get everyone licensed now.

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Buying a home with a Bankruptcy

Consumers Beware: If you have collection accounts that are over a year old and you are told by a mortgage loan officer to pay them off in order to get yourself ready for a mortgage hang up on them. For more information call Dale Stouffer at 480-226-3020 to get the scoop.

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Debt Settlement, Debt Negotiation an alternative to Bankruptcy

I think this is going to be the year that America is going to have to face its unhealthy debt problem head on. There has been a big party going on in the real estate industry for a few years and now it is time to deal with the hangover. If you have turned on the TV we are beginning to be bombarded by commericals for debt reduction, debt consolidation, credit counseling, CCCS and debt negotiation services. I do not remember seeing that many of these ads when the real estate market was doing well a few years ago. Debt gurus such as Suze Orman, Dave Ramsey, Larry Winget and Kevin Trudeau have been flooding the airwaves pitching debt salvation with their programs and products.

The fact is that millions of people are just getting to far behind on their bills to even try to bail themselves out. They would love to do a debt consolidation or debt restructure program but they just cannot afford it. Many people will look at the bankruptcy option. Getting a chapter 7 or chapter 13 bankruptcy is not as easy as it used to be. I think if you are considering a bankruptcy you may want to consider the debt negotiation option. Debt Settlement and Debt Negotiation will allow you to settle your debt without the long-term negative impact on your credit like a bankruptcy would have. You can also be out of debt in 36 months or less. Usually you can settle your debts for 40-60 cents on the dollar. In a chapter 13 you will still be making payments. The majority of credit card companies such as Discover, Master Card, Visa, American Express, MBNA, Citibank, Washington Mutual, Providian, HSBC, Chase, Bank of America, Wells Fargo and others will negotiate with you. If you file bankruptcy, they stand the chance of collecting nothing. It is very expensive for them to go to court and try to collect from you. Getting judgements is the easy part, collecting on them is the difficult part.

If you are considering bankruptcy, it is worth your time to investigate the debt negotiation option.

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House not selling, ask your mortgage broker about the Interest Abatement Program

If your home is not selling, you may want to consider offering to pay up to 6 months of a home buyers mortgage payments. There is a new program out by First Horizon that allows a seller to cover six months of mortgage payments for a borrower. The money is held in escrow and is paid monthly until the escrow account is depleted. The minimum amount that has to be paid is 3 months of payments.

If you are a buyer it could be the time to ask your agent to negotiate these terms for you in your purchase contract. The market is soft. Any loan officer should be able to discuss how the program works and what you can get out of it.

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Compact Fluorescent Bulbs save Money

I replaced 16 light bulbs in my home with the new energy saving fluorescent bulbs. My November bills are usually in the low $60’s range. My bill this month in November 2007 was $42. This is with an increase in energy prices over the previous year. I’m a believer that they do save energy. I bought the bulbs at the dollar store for $1 a piece. They paid for themselves in the first month.

For more information on being green go to GetPrequalified.com.

Special Warranty Deed vs. Quit Claim Deed

I just learned that if you transfer title to a new owner by way of a quit claim deed or special warranty deed that you may loose your title policy. If you are taking title by any of these means, you may want to consider purchasing a new policy from a title company. Just because a title search is clear today doesn’t mean that something can’t pop up in the future. One title issue could wipe you out.

For more information on Real Estate go to GetPrequalified.com .

First Right of Refusal vs. First Right to Purchase

The clause, First Right of Refusal is probably one of the most misused terms that I see in the residential real estate industry. Most agents use the clause to try to lock up a buyers position on a real estate purchase contract when a buyer still might have a contingency to work out. Usually it is a property that is in escrow that needs to be sold in order to buy a new one.

The first right of refusal gives a buyer the right to match or beat a subsequent offer that comes in later on the property by another buyer. This clause is usually requested by the seller so they can continue to market the property. I can’t say that I blame a seller. Why take your home off the market for someone that can’t fully perform yet. They can accept a contract and still continue to market the property for buyers that may offer better terms and can close now. The problem with this is that to the buyer they have no real price protection. Someone can come in and offer a lot more than the original buyer was willing or able to pay. The original buyer may have just spent a lot of time and money trying to work out a deal that can be swept right out from under them. From a buyers point of view I would recommend using a “First Right to Purchase” clause. This gives the buyer a certain amount of time to remove their contingency without having to renegotiate the purchase price. A new buyer can come in with a significantly higher price, but the buyer in 1st position will get the property as long as they remove their contingency and continue with the purchase of the property. The purchase price will remain the same even if a higher price is offered by another buyer.

If you are a buyer just realize that most agents don’t know the difference. Be sure to have your agent use the First Right to Purchase clause in your contract if you are going to write a purchase contract with a contingency in it. The last thing that you want to do is to have to go back and negotiate on price again.

For more helpful real estate articles go to GetPrequalified.com .

Universal Default Rate on Credit Cards, Suze Orman

I got a good tip from watching Suze Orman the other night. Consumers don’t realize that when you default on one debt it can affect other credit use. There are a lot of people that are losing their homes due to foreclosure. They feel that the mortgage is hopeless yet they want to keep their credit cards for emergency use. While this is understandable, consumers fail to realize what the impact to their credit is across the board. Your creditors are checking your credit all the time. If they see that you are having trouble on one of your credit accounts, they have the right to raise your credit card interest rate to the universal default rate. It is in your contract. If you don’t believe me, then believe Suze Orman. I’ve seen her tout this fact a few times on her show. Your rates can go as high as 29% just because you are late on your mortgage. The reality is that you need to keep up on everything. If you are having financial difficulty you need to be aware that your credit cards may not be your safety net.

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Ing Direct to the rescure on Jumbo Loans, the orange mortgage

When the subprime meltdown got going, Jumbo mortgage rates got hammered. Rates shot up from the high 6’s to the low 8’s. We can now do a stated income loan up to 1.5 million for the low 6’s again. I know that the high end market has been sitting a bit. Hopefully this will come as a shot in the arm to help stimulate the higher end of the real estate market.

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Don't put your home on the market if you think you may want to Refinance

If you have just taken your home off the market and are trying to refinance, you will probably find out that you can’t. Most lenders have changed their lending guidelines since the subprime meltdown. Most wont refinance you for at least 3 months from when the house had been removed from the MLS. This is a new change and something to be aware of.

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The Fair Debt Collection Practices Act

If you are falling behind on your bills or are already in collections you do have rights. Creditors cannot harass you. To view a summary of the Fair Debt Collections Practices Act go to GetPrequalified.com.

The Subprime mess and Mortgage Meltdown

As a mortgage professional I am still scratching my head over all the the foreclosures going on in this country. I can proudly say that I have not had one loan that I have written ever foreclose. A good loan officer knows if there is a problem. It’s not that hard to figure out if someone is going to be able to keep up with payments over the long haul. What do you think we need to do to keep the bad loan officers out of the business? Do you think that we need to have a national licensing program? I can tell you that I have had enough of being lumped into the same pool as these other less than reputable loan officers.

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The VA loan limit is not going to be raised in 2008

For months there has been speculation that the loan limit for VA financing which currently is at $417,000 would be raised in 08. The projection was that it would be over $500,000. The news now is that it is not going to happen. From a real estate market standpoint, I think the market would benefit from an increase. With increasing home prices, the low end luxury market is really suffering. I think that it would be a good boost to the overall health of the real estate market. Do you think this is a good or bad idea to leave them where they are at.

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Citi Mortgage anounces mortgage cutbacks on 2nd mortgages

Citi Mortgage, a division of Citibank, is cutting their loan to value limits on second mortgages to 85% ltv in areas of the country that are deemed to have declining markets. This is just another symptom of the the mortgage meltdown this country is experiencing. Chase has cut their lending limits to 75% ltv on second mortgages. Six months ago both of these lenders would lend up to 100% of the value of your home.

Lenders are cautious now. You need to do your homework now if you are trying to get mortgage financing on a home. Just because you want to do something, does not mean that the banks will be willing to work with you.

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