Twas the week before Christmas

Deadly Innocent Fraud #3

Deadly Innocent Fraud #3: Government budget deficits take away savings.
Fact: Government budget deficits ADD to savings.

What Makes a Good Mortgage Broker- Part II

By Jack Guttentag

The Mortgage Professor


Last week I brought you some tips on how to know a good mortgage broker when you see one. Here are some more points to consider when you are in the market for a broker.

Good Brokers Will Not Quote Low-Ball Prices

Accurate pricing depends on a number of borrower, property, and transaction characteristics. If these are not known or used, the price cannot be accurate. Loan originators who quote the best prices possible -- and sometimes even better than the best possible -- with the intent of roping in the customer are low-balling.

Avoid any broker who quotes a price without first quizzing you about loan size, down payment, loan purpose, type of property, use of property, state, credit score, and documentation of income and assets.

Don't tempt a broker to low-ball by requesting a price on the telephone.

Good Brokers Try to Find the Best Price Available

You can't take this for granted because it can be tedious work. Brokers get their prices from wholesalers in the form of very complicated price sheets, all of which are formatted differently, making comparisons difficult. Further, while pricing the loan, the broker must also be mindful of getting the loan approved.

There isn't any very good way to monitor this, but you can ask the broker to show you rate sheets from the lenders he checked. This is not so that you can compare prices -- that would require a lot of instruction -- but simply to verify that the information is there.

Good Brokers Are Masters of Detail

Mortgages have many details that must be attended to before a loan can close. Overlooking even one can delay the closing, which could be costly to the borrower.

Good brokers avoid this danger using the same tool that is standard for airplane pilots about to take off, and increasingly in hospital intensive care units: a checklist. This is a low-tech device that has been shown to save lives, and it can also save a mortgage.

Ask the broker to show you her checklist, but don't expect to be able to keep it.

Good Brokers Keep Their Clients Informed

Failure to keep a borrower informed is one of the most frequent criticisms of brokers that I hear from borrowers, especially on purchase transactions where borrowers are faced with a firm closing date. Brokers often fail to let borrowers know that, while there is no news to report, matters are proceeding on schedule.

Negotiate an agreement with the broker on both the type and frequency of communications.

Good Brokers Attend Closings When Needed

Having a broker attend a closing may not always be feasible because the closing is too far away, and sometimes it isn't necessary because the borrower has been through the drill before. But if the borrower is a novice, having the broker available to help explain things is a major source of comfort.

If relevant to you, ask the broker if she will attend the closing.

Good Brokers Get Documents From Lender Prior to Closing

Obtaining all documents from the lender provides the borrower with an opportunity to read them at their leisure and clarify any issues. This may be more useful to the borrower than having the broker at the closing.

Ask the broker if you will have access to the final documents at least two days prior to closing.

Good Brokers Are Experienced

Mortgage transactions are complicated; there is much to learn, and brokers learn most of it by doing it. While more states are moving toward required examinations as a condition for licensing, the rules are spotty and not to be relied on. It is still possible for a borrower to be confronted with a broker who, a week earlier, was flipping burgers.

Ask the broker to summarize his work experience over the past 10 years.

Good Brokers Communicate Effectively With Borrowers

Poor brokers frequently slip into trade jargon, because they are accustomed to it, and insensitive to the client's lack of comprehension. I never fail to be amazed at mail I receive from borrowers asking me to explain something they were told by their broker. A broker who can't communicate well combined with a borrower afraid of looking stupid is a recipe for trouble.

Don't let a broker assume you understand something when you don't. Mortgages are complicated, but they are not beyond the comprehension of the average borrower, provided they are explained properly. If you don't understand what you are being told, it is because of the poor communication skills of the broker. Try another one.

Good Brokers Are Straight With Their Clients

Here are some broker statements that indicate your broker is not being straight. If you hear any of these, head for the door:

"I have a 1.5 percent mortgage for five years."

"Don't worry about the rate increasing in two years -- I will be there to refinance you into a lower rate before that happens."

"Don't worry about my fee. It's being paid by the lender."

What Makes a Good Mortgage Broker- Part I

By Jack Guttentag

The Mortgage Professor

In the past 10 years, I have written almost 50 articles on different mortgage broker topics, but none of them addressed the most basic topic of all: What makes a good broker?

Perhaps it took 10 years before I was ready to confront this question, along with its obvious corollary: How do you know a good broker when you see one?

Loan officers who are employed by a single lender operate very much like brokers, except they provide the programs of only one lender. Most of what I say below applies as much to them as to brokers.

Good brokers are selected by borrowers, rather than the reverse. Poor brokers must constantly solicit, whereas good brokers enjoy referrals from previous customers, Realtors, and others. It is not the case that good brokers never solicit, but the odds are in the borrower's favor if the borrower does the selection.

One acid test of a good broker is whether the broker will tell a client that a contemplated refinance is not in his interest. The broker who has a constant source of referrals is much more likely to do this than one who purchased your name and address from a leads broker.

A good rule: Do not respond to solicitations.

Good brokers are financial planners: Mortgages should fit properly into a household's overall financial situation and goals, which often involves challenging questions. Here is an abbreviated list of some important ones:

• What is the best type of mortgage for this borrower?

• How much should the borrower put down?

• Should the borrower pay points or receive rebates?

• Should the borrower raising cash take a second mortgage, or do a "cash-out" refinance?

• Should the borrower putting less than 20 percent down buy mortgage insurance, take lender-pay insurance at a higher rate, or take a piggyback second mortgage?

• Will it pay the borrower to refinance?

• Should the borrower consolidate other debts in a refinance? • Should the borrower use available cash to pay down debt, pay points, or make a larger down payment?

There is no single conclusive test of a broker's skills as a financial planner, but there are clues in how the broker responds to your questions regarding one or more of these or similar issues.

• A good sign: The broker indicates what the answer to your questions depends on, e.g., whether you should pay points depends heavily on how long you expect to have the mortgage.

• An even better sign: The broker indicates a specific analytical tool he will use to answer the question, such as a specific calculator or spreadsheet.

• A bad sign: The broker gives you an answer right off the bat.

• Good brokers are good listeners: Every borrower brings a unique package of needs, capacities, and preferences to the table. Unless the broker extracts this information at an early interview, the risk is high that the broker's recommendations will not fit. The shrewd borrower can tell a lot about the broker from that interview.

• A good sign: Before offering any opinions, the broker quizzes you about your financial status and plans.

• A bad sign: The broker pretends to know what mortgage type you need, or the answer to any other issue that may be vexing you, without having first learned anything about you.

Good brokers will act in your interest in dealing with the lender and third parties. They will guarantee the lender fees first presented to you in the Good Faith Estimate, preventing any fee escalation. And they will seek out the best possible prices for third-party charges, such as title insurance. Some brokers have special arrangements to pass on discounts to their clients, while others select providers who give brokers the best Christmas presents.

• Ask if the broker guarantees that lender fees won't be higher at closing.

• Ask if title charges are competitive, and how the broker knows this.

• Ask if the broker guarantees that third-party fees won't be higher at closing.

A good broker operates transparently: The broker who keeps you in the dark is the one most likely to sacrifice your interests for his pay day.

• Ask what the total fee will be, including any payments received by the lender, and if this will be put in writing.

• Ask if you can get a copy of the rate-lock statement as soon as it has been received from the lender.

HighBeam Research

HighBeam Research

From: New Appraisal Rules Backfire in Down Market by Jack Guttentag
Source: The Washington Post, 8/1/2009.
Via: HighBeam™ Research
Copyright 2009 The Washington Post

Send a Christmas card to: A Recovering American Soldier

A BubbleTweet From @mortgageangel

When doing your Christmas cards this year, take one and send it to this address: A Recovering American Soldier c/o Walter Reed Army Medical Center 6900 Georgia Avenue NW; Washington, D.C. 20307. If we pass this on, think of how many cards these wonderful special people would get.

Clusterstock Chart of the Day: Black Friday Weekend Shopping

Yesterday's overwhelming response to the 2 Year T-Note Auction

www.mikenormaneconomics.org posted a link for the CNBC post below.  Reason being because Mike called it exactly like this. Late last year as the Fed began handing the bail-outs to the banks he told us (blog readers) to watch for increased demand for treasuries. He also said it would be the financial institutions at the forefront of these rallies and why -
"The money to by government securities comes from governement spending.  Where else would it come from?" 
One very important thing to note as you watch this:  Rick Santelli thinks that because the banks are buying the securities they will have less money to lend but THIS IS NOT TRUE!  Bail out money was given to the banks in order to meet reserve requirements.









Banks are NEVER lending constrained EVER.  Ask any one whose ever worked in a loan funding department and they'll tell you that a loan creates a new deposit that comes from directly from the Federal Reserve not from the holder of the note.

Labor's Days Past

America's Labor Day may be summer's last hurrah, but labor's days past were no picnic. A few generations ago, American working men and women (and often children, too) struggled just to get weekends off--let alone a long one. A few generations ago, people died when labor struggled. Example: the Pullman railway strike of 1894.

"I Owe My Soul to the Company Store"
Just south of Chicago, the town of Pullman was literally owned by George M. Pullman, manufacturer of the Pullman sleeping car used by railroads. Company brochures painted the town as a workers' paradise, "where all that is ugly and discordant and demoralizing is eliminated, and all that inspires to self-respect is generously provided."
In reality, the company town was just that, run by and for the company as a moneymaking venture. One worker said, "We are born in a Pullman house, fed from the Pullman shop, taught in the Pullman school, catechized in the Pullman church, and when we die we shall be buried in the Pullman cemetery and go to the Pullman hell."

"There Is Nothing to Arbitrate"
When depression struck America in 1893, Pullman slashed wages 25 percent, without reducing rents at company houses or prices at the company store. Some 5,000 workers and their families sank deep into the company's debt.
Finally, in May 1894, the workers went on strike. Pullman closed the plant and rebuffed all requests for arbitration. "There is nothing to arbitrate," he said. Stymied, the union called for a boycott of Pullman cars. Beginning June 26, switchmen refused to attach Pullman cars to trains. When railway officials fired the men, trainmen everywhere walked off the job. Railroad traffic across the country ceased.
Railway officials turned to the federal government for help, and got it in spades. The U.S. attorney general, a former railway lawyer, convinced the federal courts to issue a sweeping injunction against all strike activity, arguing that the strikers had formed an illegal conspiracy in restraint of trade under the Sherman Anti-Trust Act, a law passed, ironically, to combat big business. On July 4, 1894, federal troops descended on Chicago to enforce the injunction.

Out of "Pullman Hell"
In the powder-keg atmosphere that followed, soldiers shot into crowds trying to stop trains, and mobs set hundreds of freight cars alight. The strike collapsed. More ominously for workers, though, companies learned to use injunctions from business-friendly courts as a weapon against labor. One injunction threatened to arrest anyone "inducing or attempting to induce.any person or persons to abandon the employment of...railway companies."
Yet even as the Pullman strike crumbled, the political winds began to shift. In fact, a federal commission called to investigate the incident blamed the government "for not adequately controlling monopoly and corporations, and for failing to reasonably protect the rights of labor." A new, Progressive era was born out of labor's pains.
Eventually, victories would come: the 8-hour workday, the 5-day workweek, improved working conditions, child labor laws, collective bargaining rights--even a national Labor Day, approved by Congress the same year as the Pullman strike.
--By Michael Himick

This article was provided to you through collaboration with Every Learner. To learn more, play quizzes, and read additional articles, visit http://everylearner.com and get a one-month membership at no cost to you.

Reproduced with permission. Copyright c 2002-2009 Every Learner, Inc. All rights reserved.

545 People

Hope For Homeowners and Mini Skirts - Part One

Hope For Homeowners and Mini Skirts - Part One

Shared via AddThis

From MMG Weekly
Last Week in Review
"The fact that an opinion has been widely held doesn't mean that it's not utterly absurd." Bertrand Russell True words - and last week was one that was full of opinions that moved the financial markets - here are some highlights.
The week began with bank analyst Mike Mayo spewing out a negative forecast, which included his thoughts that loan losses by financial institutions would ultimately exceed levels from the Great Depression. This was followed by word from hedge fund giant George Soros that the US banking system is insolvent and that the economy won't recover in 2009.
However, as mentioned in many previous newsletters, the recent changes to mark-to-market should prove to have a positive impact on the economics and overall operations of financial institutions. Why? Because the recent ruling to look at mark-to-market accounting in a more relaxed light will free up the banks' capital ratios and allow them to do more lending, which will help their profitability, as well as ultimately help the economy unlock as businesses and consumers are once again able to borrow and use credit in a more normal fashion.
Lo and behold...as earnings season began last week, there was already evidence of this playing out as true, when Wells Fargo said Thursday that it expects record 1st quarter earnings and that their Wachovia acquisition was exceeding their expectations. In addition, the New York Times said Thursday that the US banking system overall may be in better shape than most people think.
As you can see in the chart below, Stocks hit an all time high in October 2007...until mark-to-market accounting practices were instituted. And notice also that Stocks reversed course, and have been on a strong rise since early March of this year, buoyed simply by the speculation that there would be a change in mark-to-market, which was finally announced on April 2nd by the Financial Accounting Standards Board.
Chart: Dow Jones

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. And this is exactly what happened in the early part of the week when Stocks were plagued by the negative opinions mentioned above. However, Stocks rallied on the good news that ended the week, causing Bonds and home loan rates to give back some of the gains they had made, ending the week unchanged to slightly worse from where they began. The Bond market closed early Thursday and both the Stock and Bond markets were closed Friday in observance of the holiday weekend.

Bills.com’s top eight tax topics that filers should know

1. Maximize deductions: Consult with a tax advisor to receive all qualified tax deductions. Remember that donations to nonprofit organizations of money, vehicles, clothing and household items, or stocks or other investments should be included as well as contributions to retirement accounts, medical savings accounts, health savings accounts and 529 college savings plans.
In addition, medical and dental expenses that exceed 7.5% of adjusted gross income as well as flexible spending account contributions for expenses such as child care and medical care should not be overlooked. Some health insurance premiums, such as those for self-employed individuals or people who cannot choose to purchase health insurance at work are also included, as well as student loan interest and some education expenses.

2. Take credit for economic impacts: Ask a tax advisor how you are affected by any losses in investments, or how a job loss affects current or future tax.

3. Deduct an investment in America: Taxpayers who bought a first home in 2008 can claim a maximum $7,500 income tax credit on their 2008 tax return. That credit must be repaid in $500 increments on future annual tax returns. Americans who purchase a first home between Jan. 1, 2009, and Dec. 1, 2009, may be eligible for a tax credit of up to $8,000, which does not need to be repaid. Home buyers can claim this credit on their 2008 tax return (either filed on time or with a six-month extension) or on the 2009 tax return.

4. Get paid back for green improvements: 2008 investments in home energy efficiency - such as solar systems, geothermal heat pumps or small home wind turbines - qualify for a credit for 30% of the equipment cost, up to $2,000. (That limit no longer applies in 2009). Energy-saving home improvements, such as windows, exterior doors and high-efficiency heating or air conditioning equipment, bring a 10% credit for 2008, with a maximum credit of $200 per category. In 2009 and 2010, the credit will be 30%, up to a maximum $1,500 total, with no category cap.

5. When a refund is not great: Some people are disappointed if they do not get a refund. But a refund means the taxpayer gave the IRS an interest-free loan. For most people, that cash would serve them better in their wallets every week. Those who have a sizable refund coming should talk with a tax advisor about completing a new W-4 with their employer and choosing a number of exemptions that will provide for the most appropriate withholding of taxes.

6. File on time: Filing late incurs penalties and interest for those who owe money to the IRS. If a return is filed more than three years late, the filer forfeits any refund on that return. The penalties for not paying tax owed with a filed return are much less than the penalties for not filing a return with an unpaid balance. Filers who are considering not filing a return because they cannot pay the bill are probably better off filing and avoiding the substantial late-filing penalties. When individuals or couples cannot pay because of a death in the family, serious illness, financial records lost in a natural disaster, or a reason the IRS deems “reasonable cause,” the IRS might waive penalties for those who contact the agency to negotiate solutions.

7. Get an extension: If for some reason a taxpayer cannot complete his or her return, he or she can file for an extension (IRS Form 4868). Keep in mind that this is an extension to file, not an extension to pay taxes owed. Penalties might still apply, but they will be less than if the person simply does not file.

8. Get help: Specialists, often found at or through reputable debt settlement firms, can negotiate directly with the IRS on behalf of consumers who owe $10,000 or more. Tax relief specialists usually are attorneys, enrolled agents or certified public accountants with special training and experience. They can navigate the intricacies of IRS forms and calculations, help consumers understand the criteria the IRS imposes, and then help them get back into good standing with the IRS.

“Tax filing season is a necessary evil,” Ewing said. “With appropriate preparation, you can make sure you are paying only what you owe and no more.”

For more information, visit www.bills.com.

It has been 5 days since my last post

When I began this blog 6 weeks ago I set up a reminder for myself to post every 3 days. Until this week I've been able to keep up with that commitment. Yesterday I spent an hour or so reading various news pieces relative to mortgage and real estate in an effort to come up with a topic of my own. Now here it is Saturday morning and 5 days since my last post and 5 days before the deadline for filing 2008 income taxes. In between all of this I've got an increasing number of really terrific customers and I am so grateful and having so much fun helping them navigate the market and make sense of the opportunities this market presents.

Thinking about all of this a children's nursery rhyme song keeps running around my brain
'I like my job, I like it fine. Nobody has a better job than mine.'
and I'm smiling because it's so simple yet so true for me.

Also, twitter message to my phone this morning prompted me upon a quote by American Physicist, Richard Feynman
'If you have any talent, or any occupation that delights you, do it and do it to the hilt. Don't ask why, or what difficulties you may get into.'

I realized, rather than struggling with 'blogger's block' I'd just sort of do a quick brain dump. Most people respond well to this. Others become suspicious of what my motives might be or percieve it as a lack of experience. But it's okay. I'm not the type of person that will nod in agreement as someone slops up or sells garbage believing or acting like it's vanilla ice cream. Nor am I intimidated by rank. In people and in practice, I respect authenticity most. Status quos are not reality. I don't think being popular for being unpopular is necessarily a bad thing.

I'm doing this to the hilt!

A while back I had a need and then along came a solution, something new that I 'could really use' , I bought it, employed it and as I'd anticipated, life's load was a little lighter because of this "thing".
1am; 26 days later, plastered over front pages and news wires around the globe: It's that same "thing" but now it's new and improved, it's ULTRA-thing. That lighter load suddenly is a real drag.
Introducing loan modifications without all that messy payment default stuff.
Housing Affordablity Plan Fact Sheet From the Treasury Dept. Mar 4, 2009

Cramdown

Jill Korenaga

Housing Shortage?

Jill Korenaga

MortgageAngel Blog Project

MortgageAngel Blog
day of creation: Saturday February 28, 2009 1:51:09 PM
Prepare me to appropriately provide content that is necessary for today's real estate and mortgage market. Guide and inspire me to deliver information in a meaningful way. ~Laus Deo~