MortgagesUndressed

The answers to the question that has been “kept in a hermetically sealed mayonaise jar on Funk and Wagnall’s doorstep.” is Bill Gates, The Google Guys, Steve Jobs, and Senator Harry Reid of Nevada

Click Here For the question.

About Karnak

Picked up by David Porter.

Comment by Larry Cragun: Our Fannie Mae and Freddie Mac entitities are the reason we have low interest rates in this country. If your loan is going to be sold to another investor, the rate will be higher. Fannie & Freddie standards are more difficult, the risk lower, and the rate to you lower.

At this time, we seem to be a nation that loves polarization. Find a scandal and jump on it. It takes place in our lives in so many ways.

I felt this positive report on should be noticed by you, these are important institutions.

..a partial quote.

WASHINGTON, D.C.

€” James B. Lockhart, Director of the Office of Federal Housing Enterprise Oversight (OFHEO), safety and soundness regulator for Fannie Mae and Freddie Mac (the Enterprises), classified Fannie Mae and Freddie Mac as adequately capitalized as of March 31, 2006.

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 requires the OFHEO Director to determine the capital level and classification of the Enterprises not less than quarterly, and to report the results to Congress. OFHEO classifies the Enterprises as adequately capitalized, undercapitalized, significantly undercapitalized or critically undercapitalized. The Enterprises are required by Federal statute to meet both minimum and risk-based capital standards to be classified as adequately capitalized.

Given the ongoing operational weaknesses at both Enterprises, Director Lockhart is re-emphasizing the importance for the Enterprises to maintain capital at least 30% above the statutory minimum capital requirement. As a result, OFHEO is now disclosing the Enterprise’s minimum capital surplus over the OFHEO-directed requirement versus the statutory requirement previously

Click Here to go to David’s full report.
Larry Cragun

BankRate.com is publishing todays average 30 year fixed is a whopping 6.38%. Oh the pain of it all. What will we do, what will we do?

Those of us that financed at the time of Desert Storm paid 10.38%. Yep, we locked the morning Bush Sr. announced Desert Storm. It was in fear the rates were going to skyrocket. Does that make sense? Skyrocketing from 10.38%? It is all a matter of what you are used to. Remember there is no crying in selecting interest rates. So cut it out.

Click here for ridiculous poem on patience:

So the market has soared away from you. You hesitated or weren’t ready, and lost. You have been priced out of your dream of owning a home.

This can be a temporary problem. It is a temporary problem. Here are 10 solutions:

1- Understand you have the power to fix this. (See related article)
2- Understand it may take a year or more.

3- Know what you must do.

4- Believe it will happen.

5- Improve your credit score.

6- Lower your monthly payments.

7- Raise your Income.

8- Build an emergency fund. See related articles.
9- Take a quiet time each day to consider what you have.

10-Take a quiet time each day to consider where you are going.

These will make good topics for future discussion.

Please follow and join in on this topic on RealEstateUndressed.com

Who do you think is gambling with your rate lock?

First of all you are. Of course you are. Did you lock with loan officer Dave at the time of your application? How about when you made the appointment? You could have locked over the phone. But you waited. So there is the proof. You gambled with your own rate lock.

Maybe it is better for you.Maybe not.

If the bank that receives your loan raised prices by an 1/8 percent what would that cost you? On a $300,000 loan only it may only be $24.73 per month. There is no way to know the future on rates. I say, if you guess right you are fortunate. I used to turn CNBC on every morning as the market opened. I always had loans in my pipeline. I cared to be good at this part. It was impossible to always be right. By the way, $24.73 over 30 years is $8,902.37

There is more to the question. Who is, besides you, gambling with your lock? Your loan officer may be. Did he give you a signed lock confirmation? He should have. Even then, did he lock? Maybe not.

His employer may be also. If he the loan officer gave you a signed document (Lock Confirmation) confirming the lock, rate, and fees and chose to play the market for himself, he better deliver what he promised or his employer is on the hook. By the way, if he picked up a quarter in fees by gambling with your rate lock, he makes $700.00 more. That is his car payment for the month.

When the loan officer locks your loan he picks a bank to deliver the loan to. This may be the employer. So do banks gamble with your lock? Probably. Locks cost them money. They make committments to the final investor and the investor commits them the money at a specific rate and fee. This is important for the system. Not all loans make it to closing. So banks generally know about what percent that is, and lock that percent. In a steady market this may work out fine. However, in a market that suffers a fast rise or descent, trouble arises. The worse is a fast rising market. Your mortgage bank may have been used to locking, perhaps 90% of the loan volume they have in their pipleline. But rates went flying up. Guess what? Well to quote one bank manager, we had to deliver 110%. Why more than 100%? Because loan officers cry. There is crying in mortgages. They claim they locked. They say they will pull their business forever. They get the customer on the phone with the bank manager and lie, saying I faxed in the lock form. So now the customer threatens suit. And the poor bank manager closes at a loss.

Gambling like this, or just plain error on locking is a problem that has caused some mortgage banks to close their doors or be sold to a stronger company.

So what can you do? Deal with people you have been referred to as credible. Deal with people that have been around for a good length of time, or work for a company that will stand behind them. I have forgotten to lock loans where it cost me money to close. Any serious, established lender would do the same. A lender you came across as you were rate shopping is the least likely to be honorable.

Is your lender product agile? To me, this is mandatory as you pick out a lender!

My first lending job, after years as a real estate agent, was with a large bank. This one was not product agile, at least in our office. Some loan officer’s aren’t product agile, they work in a tunnel.

Product agile is having the ability to do a wide variety of loans. My first bank, was trying to only take the cream of the crop loans, they tried to persuade us to pass on the difficult, or non standard loans. That was nice in theory, but was one of the reasons I left them. They were not product agile.

A real life example: I will call him Brick. Brick had a very high credit score, near 800. Brick had a good job. Brick was getting married. This was to be an easy loan. It needed to be easy, brick was marrying a lady from out of the area. The sellers were excited to sell to these soon to be newlyweds. They let the future Mrs Brick rent the home prior to closing. The weddding reception was to be at the new house. This loan had to close. This could be a pressure situation I was in, but Bricks loan was a slam dunk.

What could go wrong here I ask you? Why did I need to be product agile?

I couldn’t think of a reason, but I did.

Brick was in the Army Reserves. Desert Storm was happening. Just before the loan was to close, Brick was called to active duty. His activation date, a week after the marriage.

So what did I have to do? First I had to disclose these material facts, as did Brick. Fraud issue. Next I had to listen to Mrs. Brick vent: what a way to start a marriage - and you better close this dang loan buddy, I am living in this house come heck or high water.

So, being product agile, and thanks to Bricks high credit score, the loan closed.

Brick had income from the reserves. It had been for more than 2 years. He was an officer. I found a nitch mortgage bank, that liked Bricks file. They used a NIQ; No Income Qualifier loan and gave Brick a pretty good rate. WHEW.

Product Agile, Great credit score, two year plus history in the reserves, and a sorta happy Brick and soon to be Mrs. Brick.

By the way, I was invited and did attend the wedding reception. It was a nice event for me, for obvious reasons.

Larry Cragun

Announced by David Porter of Pacesetter Mortgage who is attending the National Mortgage Brokers Convention:

David Announces

Breaking News! Mortgage Blog News - Freddie Mac announced today at the National Association of Mortgage Brokers (NAMB) Annual Convention that with their “Home Possible Mortgages” they will be offering a true 100% LTV mortgage.

They will no longer be requiring that borrowers:

• Have $500 of their own money. Loans are now available to consumers with no cash investment required by the borrower. As before the seller may pay all of the closing costs, but again, no $500 required investment from the borrower.
• Home Ownership Education requirements are now waived. Although Freddie Mac strongly encourages this education it is no longer required.

I have never had the opportunity to break news before. This is good news for the consumers of America. Freddie Mac plans to further announce this information in a press release on Monday.

Larry Says: Now what we really need is for a 0 down FHA program. That is what will make a difference Click Here for article from Boston Herald on this point.

1- Golf Courses

2- Bus stops

3- Schools
4- Libraries
For those of you that want to learn more about Karnak: Click Here

The question will be posted on Tuesday.

To: Ann’s Story - Scene 1

To: Ann’s story - Scene 2 - Why did I say the loan was easy?

How Could Ann Have Been Overcharged?

First one could ask what is overcharging? using a $300,000 loan as an example, what would you say? What do you think you paid in fees to your lender - loan officer? Some think 1 point or per cent, some think two. Paying two points on $300,000 is $6,000.00. Is that competitive? I think I will leave this up to you to comment on for a while.

I can make my point now though.

When you are like Ann: obviously new at the mortgage process, unfamiliar with loans that don’t require employment documentation, in a needy situation, in a hurry, and sorry to say - a single woman you are in a position to be charged more.

There are other situations than Ann’s that play into overcharging. For example: those that have difficulty speaking the English language often pay very high fees by their circumstances. Having credit issues is another.

When you are willing to accept a higher rate, you are usually causing or increasing a rebate situation for the lender.(see article on reabates. Were Ann willing to pay an extra 1% in interest, she would have possibly allowed the lender to make a 2% rebate. This might not be disclosed. Overcharging for sure is when a lender charges a two per cent origination fee and takes a two per cent rebate. That is four points. Four points on $300,000 is $12,000.00. As my granddaughter Savannah might say, YUK. I guarantee that is overcharging. I guarantee this happens to unsuspecting or unaware borrowers. I guarantee this is wrong. I guarantee that there are loan officers that do this, I guarantee they will boycott our site.

I don’t care about them. I care to expose and undress them. I care to make things more transparent. I care to educate you.

I spoke yesterday with attorney John Long. He is an industry expert. He is excited about what we are doing on this site. We will be meeting next month to see how we can support each others efforts to help the consumer and clean up the industry. John has some exciting initiatives underway.

After retiring our mortgage company I audited over 2,000 files. I decided as it was time to shred them, I would take 6 or 7 files a day; shred and look at each file closely. I already had a process to audit a high per cent. Here is my conclusion: 93% of the loan officers are straight shooters. They care about integrity. I believe one reason we grew fast in our company was that I made it clear, no hanky panky. We attracted the good ones.

These 93%, the good ones, I believe will welcome this site and what we undress. These are the ones we plan to endorse and bring to you here eventually. These are the ones you should be doing business with.

Larry Cragun