Monday, October 27, 2008

Financial Crisis - Mortgage Failure

We have been in the mortgage and financial industry for a long time. We are asked, everywhere we go, "What really caused this financial crisis?".

We stumbled across this video the other day and thought we should share it with you because it covers the cause very well. Our intent is not to offend, but to help you understand the "how we got here" question.

This video moves very fast but it covers the facts on how we got in this financial mess. You may not like what you will see here, ... but it is all true. You can google it.

So ... watch it twice. Send it to your friends.

There are so many lies out there how can anyone know what is real.

This is real.

Jerry and I are in the mortgage business and we have watched it unfold.

If for some reason this video does not play here, you can watch it at:

Wishing you the best.


Tuesday, October 14, 2008

Non-Purchasing Spouse - FHA

The mortgage guidelines on a FHA loan regarding a non-purchasing spouse are ambiguous and difficult to understand. I get questions on this topic month after month.

There are many reasons why a spouse would/should be left off the mortgage application. One is bad credit. Another reason would be income. The primary borrower is determined by the largest income. If that person has poor credit the only way around it is to leave them off the application.

However, this could be a catch 22 if the other spouse does not have enough income to pay all the debt. Is the non-purchasing spouse's credit examined or used in the DTI calculation? The answer is no and yes.

Does the non-purchasing spouse go on the title? The answer is yes, no, maybe. Confusing??

The answers lie around the state the property is in and if it is a community property state. That helps a little but it is still confusing. Remember, confusing or not, right or wrong, you always follow what the underwriter or closing instructions determine.

You can take a look at the actual guideline wording at FHA Guidelines.

Thursday, October 9, 2008

Hope for Homeowners - H4H - Good? - Bad? - Ugly!

Hope for homeowners! I can't believe they picked that title because it is so deceiving! In fact, I would say it is just the opposite.

The homeowner who goes for this is totally screwed because he gives up all future appreciation. (he may as well rent) I guess what he gets out of it is, ... is, ... well, I guess he doesn't have to move. I would like to say that there is no foreclosure on his credit report but my gut says that this product will show on his report and he will be dinged for it. (Any bets here?)

Let me clarify future appreciation. This program creates artificial equity for the new mortgage lender at the expense of the old mortgage lender which must take a 10% bigger loss and accept the new loan payoff as paid in full.

This new loan essentially "mortgages" the new/created 10% equity and any (?) future equity to the government and to any subordinate lien holder that agreed to release their lien. If he stays in the home for the rest of his life, or at least 7 yrs he will get the benefit of appreciation after that point. Most people move every 4 to 7 years. Do the math.

OK, but look at the math this way. If the homeowner had a 2nd mortgage for $30,000 and gave up their lien for a promise of future equity from the new loan, how long would it take for the home to appreciate $30,000?

Oh, and this lender really only gets a "portion of the equity". What does that mean?? I haven't found the fine details yet. Understandably hidden if they even exist at this stage!

So, ... the original lender takes the major hit here because he not only takes the loss from the equity in the declining market, he also takes an additional 10% loss because he has to give it to the new lender. Remember, the new loan is only 90% LTV. And, he is suppose to smile about this.

The home owner is screwed but doesn't have to move. The old lender gets the royal work over but maybe that is justice although I think the blame is placed in the wrong place here as this lender was only following government direction!

The BIG looser is the American people because all our brilliant elected officials have done is spread the loss into the future to cover their ass and given the government "owner rights" to our equity into the future. The government is now in our nickers!!!

WE LET THIS HAPPEN!! Wow, I am really up set about this stuff.

I have added to our site the underwriting guidelines to the Hope for homeowners program. Please go and review this information and then please comment here and change my mind about the smoke and mirrors the politician are using to destroy our Independence and freedom. Please, tell me that I am wrong.

We have also put up the guidelines for the FHA Secure program. I wasn't a big fan but when I compare it to the H4H it is a great program. Few will qualify for it but at least it doesn't sell our children down the road! Review it here: FHA Secure - Rescue Program

Please come back and comment.


Thursday, October 2, 2008

Emergency Economic Stabilization Act of 2008 - HR 1424

I don't know how you feel about all this economic bail out stuff but it really gets me angry. I'm not going to share my opinion because it doesn't matter. However, I think everyone should read the bill and develop their own opinion based on facts, not media hype.

I did some research and have links below of the pdf files so you can read it for yourself, or download it and read it later. I would like to say that in my opinion all bills going up for vote should be available to the public BEFORE they vote. Unfortunately, that is not the case. Maybe we can change that.

IF you want to just download the files to read later you only have to right click with your mouse and select "save target as", then tell it where you want it saved on your computer. I usually just put the stuff on my desktop.

This link is to the pdf file on HR 3997, the Emergency Economic Stabilization Act of 2008 that was voted on in the house of representative on the 28th. This is the original version. HR 3997

This is HR 1424 which is the revised version of the bill (HR 3997) and was actually passed. HR 1424

This link is a one page summary of the Act. One Page Summary

This link is for the section by section summary. It is much better than the one page summary. section by section summary

This stuff is worth the read. Post your thoughts.

Wednesday, October 1, 2008

Economic crisis - we will survive

What actually created this economic crisis? I guess it depends on who you ask. I will say though that I'm really tired of all the spin everyone is putting on it.

The facts are in our history and you can trace it back or chart it if you would like. Does it matter which political party contributed to this disaster? I don't think it really matters as far as the past is concerned but you need to understand the party platforms so we get the right people in office to fix it.

Here is a short but very fast moving account of how we got here. It moves pretty fast, I actually had to watch it twice.

Before you watch it I want you to understand that I am not pushing politics here. It's a good video because of the facts. I am an independent and don't support either party but that is a different subject.

Incase the video has been taken down, you can watch it here on YouTube.

Or, you should be able to view it here on this blog.

My personal opinion is that we should not have a Bail Out. Let the pieces fall and it will clean out all the bad guys.

I think a lot of "how bad it will be" is hype too. Do I have any facts to base that on? Just my gut because they are not giving us any real information so we can make an intelligent decision. You know about the mushrooms, right?