Blog with MAE Capital

Boy right now is the hardest time ever to get a home loan done for anyone.  I have been in this business for 28 years and started when interest rates were at 12.5% and we did not have computers. It was tough only in the fact that we were doing refinance transactions for people that had 18%,19%, 20% mortgage interest rates and problem was the sheer volume of business we had.  At that time if you qualified and your income made sense we did the loan.  If you needed a gift from a family member no problem get a letter and prove they had received the money.  If you were self employed we got your tax returns and if they made sense we did the loan.  The appraisals at that time were taking up to 6 months and posed a challenge, but as the clients were waiting for the appraisal to come in the interest rates were dropping so most customers did not mind the wait.  We would just update the file with new pay-stubs and bank statements as they came in.  When we took the application we told the client what their payment would be and what it would cost to get the loan and that is what they could count on, if you didn’t provide what you told your client they could go to another lender.  Sure we broke down the closing cost for the client and it was confusing to them, as most people don’t buy houses every day, but they knew the 2 basic numbers that were and still are the most important to a client are; 1 what will my monthly payment be and 2 how much money do I need to get the house or refinance.  We could teach our clients how to pay off their mortgages early, we could put a move up plan together for clients, we could counsel them on their credit and basically not worry about getting sued for giving people our opinions.

In today’s lending world we have moved into the absurd where our “good faith” estimate of closing costs is 4 pages long and reads like a tax return.  When we give the client this form we cannot change it which means that if we have quoted a rate that is what it is and the same with the fees.  In order for us to change this form we need a documented “change in circumstance” to happen, like an act of God.  Currently , in order for anyone from a mortgage company to talk to a client regarding rates and programs that person has to be licensed und the National Mortgage Licensing System the NMLS.  Under this license there are certain rules and procedures that a licensee must do in order to communicate to a client and are culpable for their actions, so you will not get any extra advice from a licensed Loan Officer for simple fear of retaliation if they were wrong.  As for lenders or the companies that actually give out the money they are regulated by the brand new Consumer Finance Protection Bureau (CFPB) and the rules they are stricken with are far too many to even try to name and the biggest issue is that there has been no precedence set for Lenders to follow.  So if they were to try to just lend money on common sense they could be fined, shut down or imprisoned so they are not about to take any risks for anyone.  I have always known that no one loan is worth your license, so for a lender if there is even a hint of funny business that deal will be shut down faster than a hot knife goes through butter.

When applying for a mortgage in today’s environment you must be prepared to have patience of steel, and don’t blame your Loan Officer for asking for crazy things, if they had their way they would not have to ask for crazy stuff at all.  This again is punishment to everyone for the past actions of a very few number of people.  You can write your elected officials but unless it comes with a campaign contribution it will fall on deaf ears.

Again I love to get comments.

As a current Branch Manager and a former Mortgage Bank owner I have seen sweeping changes in the mortgage industry in the last 2 years. At times it seems too much to keep up with, but as with anything we must. It seems the dissemination of information has slowed even with the internet, I see this as a simple fact that we in the industry have no idea what the government regulators are asking of us. This becomes more and more problematic as the government implements it’s new Consumer Finance Protection Bureau (CFPB concieved by Chis Dodd and Barney Frank). This is a brand new government agency that is costing the taxpayers Billions to regulate the brokerage houses on Wall Street and the mortgage industry as a whole. The problems arise from the “newness” of the agency and with no precedence being established every mortgage company in the country does not want to be the first on their radar as far as an audit as they would have no idea what they are looking for other than the simple fact of, is the client or borrower being protected by the private mortgage company. With no real precedence to go by all the good mortgage bankers in the country are really going overboard on compliance to the point where it becomes difficult for a borrower to obtain a home loan in today’s lending environment. Again the very existence of this new agency designed to protect the consumer is in fact hurting the consumer as lenders are running scared of the big bad government agency who has already touted to get those bad apples in our industry, with no guidance on which companies are the bad apples. As this haunts small private mortgage firms the biggest offenders are excluded from the scrutiny of this agency, the BIG BANKS. Yes amazingly as the Big Banks are the ones who inevitably are purchasing these loans and servicing these loans are excluded from the very agency designed to protect the consumer. This is another billion dollar government blunder, as the agency’s that existed prior in the industry to look after the consumer , the Department of Housing and Urban Development( HUD) and the Treasury Department , still exist and still have their same budgets in place with less responsibilities.

How does this affect me you ask? Well in simple terms of obtaining a mortgage today it has turned to the absurd. As a consumer it has always been buyer beware whether you purchase a pencil, a car, or a house, you had to do your research to figure out what is best for your needs. You have obtained several opinions on what is good and what is bad where you should shop and where not to shop, but when you do go to purchase that pencil or car or house does the merchant tell you how much they made on the sale of those or any products? No, but when you get a home loan today from an independent mortgage banker they have to do just that, tell you what their profit is. Although, it is very confusing to get to that in the myriad of paperwork that the lender has to provide you, but if you ask your loan officer he or she will tell you, the exception is if you go to a Bank to get your loan as the banking lobby is so large they have made themselves exempt from this practice. Furthermore, the CFPB is making the industry so scared to do anything that might help a consumer actually obtain a loan that the average consumer is being asked to provide items that have never been asked for and the lenders are having to make sure every date, signature, disclosure, document is signed and delivered in the proper time frames and nothing was missed thus is taking at least an extra week to get these audits done. The poor consumer has no idea what is going on and often feel that there are actual problems with their loan when the lender is only protecting their own selves not really the consumer at all. This occurs on every loan in today’s environment due to this new CFPB, help or hindrance the answer should be obvious.

I remember reading George Orwell’s book 1984 in 1979 and at the time I thought to myself that we as a society we would never let our Government take over all aspects of our lives and prohibit the will of the people, I guess I was wrong.

Wow  it's a new year you say What is going to be different this year from other years?  I hope I will make more money, I .  hope I will be healthy, I hope I will lose weight.  All things we put on our list for New Years Resolutions, but the big problem with this is the "Hope" part.  We need to actually take action in life to make a difference in our own destiny.  We can't assume someone or something is going to happen different to my current situation we have to do it ourselves.  This change in actions is what makes people successful in their goals and their lives.  Making the change is one thing but sticking to it is another.  We not only have to identify those things in our lives we wish to change but we need to change our habits with regards to the outcome we wish.  So Lets start at looking at your finances as that is where I am an expert, if you wish to lose weight go to an expert there but the change in habits will be the same.

Step 1: Identify that part or parts of your financial situation you wish to change and write it down.

Step 2: The next step is going to be to set a goal and realistic time frames to get you to that goal.

For example; if you wish to purchase a home this year write down the goal and lets say you want to be in your new home by June of this year write that down as well.

Step 3: Next you are going to need to plan how you will get to your goal in detail.  Example; you want to be in a home by June, you are going to have to call a lender to find out how much home you can afford and how much money you need to have saved to get into the home.  You will need to plan how to save for the down payment by June.  You will also need to gather the necessary documents to get approved for a loan.

Step 4: Now the work begins.  You have to do the necessary tasks to get you to your goal in the time you have established to get there in.

Step 5: Stay the course.  Don't give up on your plan no matter how tough it is you will enjoy the benefits of your goal if you follow through.  As for the home example this would be to put your budget together to start or continue to save, or talk to a person who can gift you the down payment.

Step 6: Reaching your goal.  Yes this should not be a surprise, you have taken all the steps in planning and actions so why wouldn't you get to your goal?  So it is time to make sure that everything is in order and complete the goal.  Back to the house example this would be the point where you have the money needed to purchase a home and now with the blessing of your lender you go looking for houses in your price range, make an offer, let the lender appraise the house close on it and move in.

These steps will probably work with most resolutions or goals.  As with anything if you stick to it generally it will work out for you.  I wish you well in the New Year.

The holidays are a time to give back, but in our business we are limited by a little know set of rules and regulations called the Real Estate Settlement and Procedure Act (RESPA).  This little set of rules severely limit what a lender can do for a client before after and during the transaction with respect to gifts and promotion.  It basically says the we as lenders (not banks they have a bigger lobby so their rules are different) can not give gifts of material value to anyone in exchange for any real estate settlement activity.  What this means is that if we want to give any person a gift if they refer business to us we would be in violation of this Act.  Big banks are exempt from this as you can walk into a branch of Bank of America, CitiBank, Wells Fargo, ect. they can hand you a gift for doing business with them.  This time of year you will see the banks giving their customers, bags for groceries, squishy balls, glass, ect.. We as Mortgage Bankers are prohibited from doing such things for our clients (yes the banks would like to see our industry go away so they can rule the world).  However we have been traditionally lower in interest rates than the banks as we carry much less overhead, so we do have a very valid place in the market.  I digress.

All this talk is great for the occupy folks, but we are keeping it positive for the season.  What we can provide is education and information regarding the process, and whatever we see fit to offer.  We have added a little twist by offering a weekly recipe, yes food can always put a smile on your face.  We figure that other than loan information, of which our site is loaded with, we would give you a continuing reason to visit our site and hopefully you refer people to our site not only for this but as our service is second to none in the loan business.  give it a try at www.maecapital.com/recipe . Have happy holidays and a great new year.

The holidays are a time to relax and think of family and good cheer.  We also have created this tradition of exchanging gifts.  This can get people in trouble with credit this time of year.  People also will tend to dip into the savings they have built for the year, that could be used to better your financial situation by purchasing a home or investments that will, in the long run, be better than an Xbox.  Did you know that most wealthy people have vast real estate holdings as it is a hedge against inflation as well as a growth asset. 

So when you are trying to keep up with the Jones or make your kid happy for an hour out of the year think of the long term happiness you will have with financial security.  If you over spend on credit your credit score can go down as well the possibility of getting yourself overextended where you can't pay your bills.  This time of year you should make a plan for spending and paying off debt.  With any good plan you need to know what you have and what you will have in order to plan for holiday spending.  What you need to do is write down your income, your savings, and how much your currently monthly outgo is.  This is where you start, if your income is currently not enough to pay for your current obligations then you may want to seek relief now in the form of Bankruptcy or credit counseling.  If you have income that is left over after you pay your normal bills consider that as savings, look at the savings you have build up from the prior months and determine an amount you are comfortable spending without breaking the bank.  Once you have your number write it down and then figure who you are buying for and then put dollar amounts next to the names making sure not to go over your spending amount.  This will allow you to enter the New Year under control of your finances.

I hope this helps with planning your shopping for the holidays.  If you can master that then you just have learned the are of budgeting and you can use this technique each month to plan for your expenses and your savings.

Budgeting your income and expenses is an important process and should be done once a month as income and expenses changes.  Some basics to budgeting are knowing exactly what you net income or take home pay is monthly, as well as knowing what you are spending your money on. 

This first part of know how much money you are making a month may or should be the easy part of this task.  The trick is to use your net pay or after tax pay.  If you are on commission or self employed you should have a grasp of what your income will look like in the coming 30 days.  Write this number down, be conservative, meaning if you think your take home pay is going to be $3,000 after taxes but are not sure go lower try $2,000 as not to over extend yourself.

The next part is going to be much more difficult and will require you plan your month expenses out. You want to prioritize your expenses starting with the roof over your head and the vehicle that gets you to work every day.  So the expenses you should list are as follows;

1. Rent or House payment

2. Vehicle payments

3. Electricity and utilities

4. Food

5. Credit card Debt

6. Insurance

7. Taxes

8. Leisure activities

All of these expense items are important to take into consideration when looking at your budget.  These expenses reflect your life style at the present time.  At this point you have to look at your income and your expense and check to make sure that your income or "Net income" covers all of your expenses if it does not then you are deficit spending and you need to cut back on expenses as your credit card debt is probably rising every month. 

This technique of budgeting is as old as money itself however, this is not really ever taught to you in school, it is usually left up to the parents to do so.  The problem is sometimes the parents have never been taught this either and there is a vicious cycle developing of bad credit and poverty.  In order to "get a head" of the cycle you need to be diligent with your income as well as your expenses. 

How do you "get a head" you ask?  Well it is not easy and most of the time require sacrifice of life style.  Let's assume that your net income is more than your rent or house payment, utilities, phone, your car payment, your food, and credit card minimum payments.  The part the is sending you into deficit spending might be your need to have a $4.00 Starbucks coffee everyday, or you have to see the latest movie that comes out every week.  Remember I wanted you to write down all expenses down to the coffee every day as they all add up.  For example that $4 coffee every day is $28 a week and $1,456 a year, the movie just for you is $20 a week or $86 a month and $1,040 a year.  These are just items that average people do and treat themselves to regularly.  Dig deep into what you spend as that is what you can control, generally you can't control your income.  

Now that you can see where your money is going try and cut a little here and there and you will be surprised how quickly things turn around.  If you are one of the lucky ones where your net income exceeds your expenses that difference will be savings.  This is ideally where you want to be as savings is your fall back position or even your retirement.  If you can control this you will find yourself in position to invest and let your savings work for you by making good sound investments.  The ideal savings model has you with 6 months of reserve in savings at all time, meaning 6 months of all your expenses in savings. 

I hope this helps you remember wealth is earned by smart people who budget. 

This is another attempt by the Federal Government to help home owners who are "underwater" on their mortgage.  Meaning that you owe more than your home is worth.  The big "catch" or the condition of qualifying for such relief is that your current mortgage be held (the underlying security) be held by  Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC).  The way you find this out is to go to this page for FNMA:

 http://www.fanniemae.com/loanlookup/

Or this page for FHLMC:

https://ww3.freddiemac.com/corporate/

These look up pages will tell you if either of the agencies hold the security on your loan.  Your loan might be serviced (this means where you send your mortgage payment) by a bank or mortgage company.  In other words so it is clear you may make your mortgage payment to Wells Fargo Bank or Bank of America or any number of different lenders, the loan may still be securitized or owned by FNMA or FHLMC.  The only way you are going to know is to use the above look ups.

If your loan is not held by either FNMA or FHLMC you are out of luck on the HARP program.  However, if you have an FHA loan there has always been a provision for refinancing your loan if you are underwater and that is called a FHA Streamline Refinance where no appraisal is required.  You have to be current on your mortgage payment and have had only 1 late in the last 12 months (No lates are better  but 1 is the max in the last 12 months). 

If you have what in the industry we call a non-conforming loan or a loan that does not conform to FNMA and FHMLC guidelines such as a Jumbo loan these refinance options don't apply to you.  In order to get relief with these types of loans you should call the lender who you are making your payments to and see if they can do anything for you.  Don't forget with all these loans you signed a Promissory Note which is a legal document that says you promise to pay this loan back under the terms of which you took the loan out originally.  The lender does not have to do anything for you, so be nice to them and you might get something done.

In closing the author of this has been in the mortgage business for 28 years and understands the issues faced by Americans with their mortgages and the values of their homes.  This new program will not be in effect until December of 2011 and we will not know the full scope of the final rule until sometime in the middle of November so stay tuned for more updates.

Contact us for more information and help with qualifying for this program we can get your application now so when it come to fruition we will be first on the list to get it done.

I have been exploring the internet for things to make my job easier.  I have found a few Apps (little programs that you can download) that have made life a little more connected.  I know we all have cell phones, home computers, officer computers, ipads, itouch, android ect.  Well I am sure I am not the only one who wants them all to communicate, my schedules, email, tasks, and notes.  You can take it further if you so wish, but I still am simple and just want to see what I am supposed to be doing when I am supposed to be doing it.  I have found several applications that are free and very useful in day to day life.  The following are just a few;

1. Evernote:  www.evernote.com this application allows you to organize your tasks, to do lists, pictures and thoughts.  It is web based so it shares to all your devices. You can store and share pictures instantly from your phone. It is easy to install and learn on any device you might have.  But you do have to download it to all your devices.  Once it is there it is easy to use.

2. Xobni:  This is a cool app www.xobni which is inbox spelled backwards.  This app works with all your devices and it brings up profiles of the person emailing you or texting you, so you can see who they are are and pictures.  It links you to facebook, likedin, and twitter so it can find the individual who is communicating with you and their profile.  This also works with all the devices.

I hope this helps you in your day to day life and I will be posting other sites as I come upon them to help out our followers.  As always leave your thoughts or sties that are cool.

Well this question is not a yes or no answer as it depends on the purpose of the refinance.  YOu can get away without an appraisal if you;

1. Have an existing FHA loan and wish to lower your payment from a 30 year fixed rate to another 30 year fixed rate and you are saving more than $50 a month on your payment.

2.  If you have a conventional loan owned by FNMA or FHLMC and you have made all you payment on time and have good credit and qualify in the automated system (that we run).  The system will give us an appraisal waiver, but we need to run the system based on your information you provide us.

If you are taking any cash out of the property there will be an appraisal required.  If you are refinancing an investment property you will need an appraisal. 

However, if you are "under water" on your mortgage to the value of your home any of the two above circumstances might allow you to lower your payment even if you are "under water".

You know being in the Mortgage business is not an easy thing these with all the regulation and figure pointing.  Sometimes I guess I bitter when I find out that bank loan officers don't have to take the same NMLS tests that I had to take to do this business.  All they need to do was to get finger printed, I guess the bank lobby in Washington is far great than whoever is lobbing for my best interests. 

Should I be bitter that my secretary makes more money than me?  This is my choice , of course, to run my own business and provide for my people.  But why in the heck would Warren Buffet say his secretary pay more in taxes than he does.  Obviously he does not do his own books, if you added up as a percentage of his income all the property taxes, personal property taxes, payroll taxes, excise taxes, capital gains taxes, income taxes, royalties, DMV fees he is paying enough taxes to employ anther 10,000 people.  Where is that logic?

Should I be bitter that I worked hard and paid off my house during the worst economic time since the Great Depression and people are being incented to walk away from their homes after living in the home sometimes rent free for over a year?  Our Government looks at those people as victims and have several funded programs to help these folks.  What about me that did the right thing????

There are more things to be bitter about let me know what yours are or even better let everyone know how NOT BITTER you are.

Here is an interesting question, how can we create demand to purchase and own a home?  In this economy it seems that people are just trying to make ends meet and purchasing a  home might be lower on the list of things needed to get done.  I know I get frustrated with the cost of living having to pay for such things as DMV registration on all my vehicles, having to smog them (even my diesel truck), property taxes, medical insurance, gas prices, personal property taxes, insurances, taxes on goods and services I have to buy, taxes I have have to pay for my employees, medical insurance for my employees.  Maybe all of these incidental taxes on everything are the same for everyone and with income being lower than it has been in decades these little items prohibit people from having the extra money to save to purchase a home.  With housing being one of the only things America has not had to out-source to other countries maybe we need to pay attention to this segment of our economy other than the stock market to stimulate demand.  The stock market is invested in companies that have out-sourced their labor to other countries, it is not regulated like housing for the simple fact that our politicians are all invested in the stock market.  Maybe we cut taxes, cut the minimum wage, get rid of unions that force companies to out-source their labor and give incentives to own your own home. 

I don't know it is just a thought what do you think???

The California Housing Market has leveled off with more bank owned homes to hit the market this fall.  What this means to anyone looking  purchase a home either for personal use or investment is that the market for fixed up homes for first time buyers will be the hottest of all.  Demand remain low due uncertainty in the jobs market.  People have to live somewhere so the single family rental market will also remain strong as most families would prefer to live in a home other than an apartment.  The strongest segment of the market will be those homes priced in 100k-to 200k range as that is the "sweet spot" for income that people can qualify for a home (Central Valley).  Those that have the income and not the credit will look to rent these homes as well, paying $800-$1,500 a month.  Weakness in the Stock Market and Global fears of another recession dip will force investors to look closer to home to make their investments and real estate is the most logical of those investments.  We are not seeing any further dips in Real Estate prices due to these phenomenon.

Please chime in and let me know your opinion.

Well fall is the time of year where start to think of the winter time and how you will survive.  Animals in the wild gather their food supplies for winter during this time as the nuts and berries are ripe.  They also put on weight to prepare for winter as they may go quite a while without food.  What do we do in preparation for winter?  Not much for the most part, some of us cut wood so we have heat some will can the fruit and vegetables from your yard, but most just simply let winter come with the expectation that their home will be heated and they will have food at the store.

What about financially?  Most people don't even think about their finances during the winter other than paying for Holiday expenses.  Did you know that winter is generally a slow time for Real Estate as most folks don't like to go out and look at homes in the winter due to the weather.  This winter is stacking up to be very interesting with the lowest interest rates in recorded history.  I say that in preparation for Winter you should look at the interest rate on your home and see if it is time to refinance or even buy a home or purchase an investment home.  The Federal Reserve has all but said we have entered a second recession.  It is time to do some evaluating of your finances this time of year and look at your biggest investment and see if you can save money on it.  Or buy an investment property with money you have in the stock market as with a slowing economy the DOW will certainly slump, but with proper you can put a renter in your investment and get money each month.  Food for Thought

Let me know what you think write comments on this post or any post.

Loan Application are a financial snapshot of your finances as of this moment in time.  We take into consideration what you are doing now and what you have done in the past.  A loan application gathers your Address history for the last 2 years. It gathers your income and job history for the last two years.  It gather your banking information for the last 3 months as well as you investments and retirement.  It gathers your rental property information if you have them.  It also gathers your debt information, what the balances are and the minimum payments on that debt.

Once we have this information as a lender we determine if the loan meets the lending criteria set forth by the secondary markets, and if it does we the approve the loan.  If it does not meet the criteria we either pose alternate programs or have to issue a denial letter.  As a lender we have 30 days to issue what is called a "Notice of Action Taken Letter".

So when applying for a loan be sure to have the following items ready to be given to your lender;

1. Pay Statements for the last 2 months.

2. YOur last 3 months Bank, investment, retirement statements available.

3. Your last 2 years of Tax returns as well your W2s and or 1099s.

4. Your address history for the last 2 years.

5. Your Job history for the last 2 years.

6. Your Landlord name and address.

7. A list of your bills and balances is helpful but we will obtain that from the   credit report as well.