MortgagesUndressed

The real estate industry is the single most important segment of our economy. There are different opinions on the size of the effect of the sub prime implosion on the market. The bright side, the fed will have no choice but to reduce rates. So hang in there with hope, a large slide it may not be, but if so, watch for rates to drop.

I don’t drink beer. But the tears are there anyhow. Tears of laughter. From the Seattle Times to Blogsville people are being told to compare lenders. PHHHHOOOEEEY, it doesn’t work folks. Here are 5 reasons why:

1- Rates change, sometimes by the hour, usually each day. So how fast do you do your shopping? Answer: This is not realistic.

2- Trickery. Lenders that know you are shopping will bait and switch, promise you the moon to get you to fill out an application, then of course the rate you were quoted is old. Answer: Calling people cold to get quotes is foolish.

3- Apples and Oranges: Oh you wanted a fixed rate, I quoted a Interest Only fixed rate. Answer same as 1 and 2 above.

4- Trust: They don’t trust you, don’t trust you will give them the business anyway so they are not that careful with the quote or their reputation. Answer: Who is kidding whom anyway?

5- Not referred: If they were referred as being honest and competitive you wouldn’t be shopping them, so you really were not given that big of a vote of confidence. Answer: Get an agent to refer you to the lender, tell the lender you are working with the agent to make sure you get the right kind of lender: one that will be fair in pricing and competent to do what they commit to.

I truly think it is Tom Foolery to follow the advice of those who tell you to go on a shopping spree. You aren’t qualified, you get those who can outsmart you, and you get those who are hungry for a deal. You don’t want to be outsmarted and those that are hungry for a deal should not be your lender. Larry Cragun

I have spent a lot of time pondering the current state of affairs caused by the sub prime implosion. I believe good credit is a matter of maturity. Some of us mature at an earlier age than others. However, the 0 down loans for credit scores as low as 580 helped many immature people purchase a home. As a realtor and owner of a mortgage company I should like the liberal avenues. I don’t, at least I didn’t.

I believe any 580 credit score can climb 100 points in a year with hard work and disclipine. Those two words don’t correspond with maturity do they? I built my pre mortgage company ownership career persuading people with poor credit to take one year and clean their lives up. I don’t know who felt the greater joy, me or them, when I would get calls saying “We did it, we are ready.”

FHA loans were and should be the recovery loan from bad times. They forgive problems one time. If you can clear up your collections and judgements, and have one year of good credit with no bad credit you can get a great rate. That is where it used to be for those who had probllems, and that is going to be the answer in the future.

So if you want a home and don’t own one, and if you have bad credit, you should cheer the sub prime implosion, for it is in your best interest that instead of satisfying your hunger by allowing bad credit, you be forced to grow up. To own a home now, you must. Larry Cragun…. Sorry for the undressing, call it tough love from the ole man.

If I tell them blogging is hard and High Tech, maybe I can have it all to myself.

This is about a different kind of limit, limit on how many times you will go through the application process; usually one time. Actually this was a mortgage division of a large out of state bank.

I was in training, the office would advertise real low rates for Sunday, that meant they had to put the rate in on Wednesday. People would call 5 days after we picked a rate, on Monday. We were instructed to take the application over the phone submit for approval and not talk rates if possible.

By Monday the rates had gone up, so we had to sell the new rate if we did talk rates.
The application questions and length of time on the phone, the thoroughness we went through wore the customer out. Forget the rate, they were ours.

I did this one time and refused to do it again.

The principle here applies to you however, you probably will tire of the process. So don’t go into the application process until you are sure of your lender decision. That is one reason we exist, to help educate you. We want you to pick the right lender, preferably one referred by an agent. We want you to be familiar with all parts of the process through the things we teach and the stories we tell.

Too many companies and loan officers know too many tricks to get you into a higher rate. A higher rate gives them more profit. The lenders we want you to find are those in for the long haul, who value the repeat business from the agent that referred you, that values you as a source of referrals and repeat business. As strange as it may seem, this is not the way some operate.

So todays lesson: don’t go into an application unless you are certain this is the lender. Larry Cragun

I send you out to buy a book on Icky Bug.

Have a nice weekend. Lar

Loan Officers and Real Estate Agents are finding it tough sailing. The larger portion of the lending force have few qualifications. They feasted on refinances. A signifcant portion of the agent force did well when so many buyers and sellers were to be found.

Last year many tried to make it part time. It is getting discouraging and many are bailing out. That is good. Those who survive do so because they love the business, have proven themselves, or are so danged determined they are the type of agent you want to work with.

Just be careful that when picking an agent or lender you don’t find one half way down and not yet landed in their new career.

Can’t you just hear the guy jumping above as he yells Bonzaiiiiiiiii. Yes, that is a good one. From real estate to landscaping. I love it. lar

Am I really doing too much loan officer bashing? No. I do offer a solution, a consumer protection solution. Be careful who you put in charge of your loan. We now invite loan officers that have real estate agents that will recommend them to participate in our national initiative soon to be in beta testing.

We will be directing consumers to the agent loan officer teams that have experience with each other. Now is the time to contact us if you have that capacity. Larry@mortgagesundressed.com Cragun.

I have been challenged on a few old posts with, “what right do you have to mess with what people are charged”? “It is the market that determines that isn’t it?” “Let the market decide what loan officers should charge.”

That is all fairy tale talk. At least with the loan officers I would like to see out of the business. With rebates given for raising rates, including a pre-payment penalty clause, selling a sub-prime loan, or selling an ARM with terms favorable to the bank when the loan adjusts up it is very difficult to let the market decide the money the lender will earn.

Add to that - almost no one will go through a second application. If a liar can get you to fill out the application, you are nearly dead meat.

Add to that - if the liar or greedy loan officer can get you close to closing before you see the numbers he has got you. Too few people are willing to walk, even when getting ripped off.

Add to that - all too many borrowers are in a hurry at closing, just sign without reading.

So the bad ones, they charge as much as possible on each and every loan.

Then there are the stellar ones. The stellar ones are loan officers that are truly professional. The loan officer that can garner the trust of real estate agents. How do they charge?

First of all - they are having enough activity to know what is competitve.

Next - they believe in their hearts that the HUD 1 closing statement is an indication of their integrity. First of all it will match the Good Fatith Estimate for costs. It will match the lock sheet for rate and fees. These loan officers assume that the real estate agent for both sides of the sale, the borrower and everyone the borrower knows will some day see the HUD 1. They know that if there are thousands of dollars in rebates, someone will see them and judge them. They know their reputation is on the line, and more importantly their ability to get referrals and repeat business.

So in summary, how do good loan officers decide what to charge you? They charge what is competitive to the marketplace. The difference in a good loan officers methods, there are no tricks and there is full disclosure.

MAJOR MARKET CHANGE ALERT !!!
Effective immediately the prime market is experiencing HUGE changes to high CLTV,
reduced doc, and NOO products!  The second lien market is evaporating at record
speed and is virtually becoming nonexistent!  These changes are happening across the
market, with all lenders ... remember the industry saying "subject to change without
notice".

What does this mean to you?

*        My community 100% which allows for EAI and EAII, low M.I.
*        Flex 80/20 loans still available Full Doc with score of 700 using our C30 and
Elite Full Doc seconds
*        Flex100 loans can be used instead of 80/20's and 75/25's
*        FHA 97% loans w/gift will be used instead of 80/20's
*        VA 100% loans will be used instead of 80/20's
*        OO Full doc Alt A loans will be capped at 95% cltv
*        OO SIVA, No Ratio, SISA, and No Doc 1st and 2nds will be capped at 90% cltv
*        NOO Full doc Alt A loans will be capped at 90% cltv
*        Discontinued ... NOO No Ratio, SISA and No Doc seconds

What else may be on the horizon?

*        SIVA, No ratio, SISA, and No doc will only be available for self employed?