Archive for November, 2008

Black Friday Super Sale!

November 28, 2008

The turkey feast is over, the holiday-season has officially begun.

To many, the day after Thanksgiving is a day to recover from a long day of cooking, over-eating, family and football.  To others, it is not a recovery day, but a day of action, a day to get started on holiday shopping!!  With retailers opening as early as 4 AM (and some opening as early as midnight last night), the onslaught of “Black Friday” sales listed in the newspaper and by email and on the television and on the radio are everywhere.  (But, just as an aside, if you live in Georgia like I do, the advertisements from retailers have been a welcome relief from the back-to-back-to-back-to-back political commercials for the upcoming Congressional runoff . . . “Well, he’s a liar.  No, he’s a liar.  Well, he’s a liar” . . . seriously the commercials say the exact opposite — someone MUST be lying.  Maybe they are both lying??).

Anyways.

One “Black Friday” super sale that you need to know about (even more so than the door-buster sale at [insert retailer name here] is the sale in mortgage financing.  Mortgage rates are close to a year low — meaning if you have an adjustable rate mortgage (and I know millions of us do), or if you have a mortgage rate that is higher than 6.25% — you need to get ready.  The Fed’s decision to inject billions of dollars in to mortgage-backed securities caused mortgage rates to go down earlier in the week.  AND, because the market has been able to sustain that movement down in rates — meaning the move was more than a temporary knee-jerk reaction — these historically low rates may stick around for more than just a few hours.  The last time mortgage rates dipped down to this level was January 15th of this year.  Mortgage rates dipped down to 5.25% only to stay there a few hours and jumped up to 5.875% by the end of the day!

When rates dropped 0.5% on Tuesday (after the Fed’s announcement), thanks to myRateTrack.comand the target refi rate notification system, a lot of my clients were notified that their target rate was available.  If you have not yet set up your own personal account, please take 5 minutes to set it up now.  It’s free for you to use and could save you hundreds of dollars per month and thousands of dollars over the life of the loan.  To access the myRateTrack.comsystem for free, use the promo code “the mortgage blog”.  With this code, you will entered in to my database of clients, and we can start monitoring your mortgage together.

Let’s see . . . you could have set the alarm for 4 AM this morning to make it to the department stores to be the first person in line and get the $20 gift card, or you can take a few minutes (at your leisure), set yourself up in the myRateTrack.com system (with a target rate set, you’ll be one of the first people that gets a phone call from me when it’s time to take action) and you could soon be getting a “gift” of a big-$$$ savings every month in your mortgage payment.  Talk about the gift that keeps on giving!!

 

Jeffrey Pinkerton is a Mortgage Consultant and President of Hillside Lending, LLC and writer for “the Mortgage Blog.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit www.hillsidelending.com.

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They’re . . . . . baaaaaaack (low mortgage rates).

November 26, 2008

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They’re . . . . . baaaaaack (low mortgage rates).

With all of the scary things going on with the economy and markets, the market took in some good news this week with the announcement from the Feds that they would purchase $600 billion dollars in mortgage related assets.  This promise of an influx of dollars in to the mortgage market, caused mortgage rates to dip a 0.5% from Monday to Tuesday alone.

If you are a client of mine and we have not discussed your optimum target refi rate and entered it in to the myRateTrack.com system, then we need to talk as soon as possible.  To start tracking your mortgage refinance options and to set a target refi rate so that you will be alerted when it’s time to take action, use the PROMO code “the mortgage blog” to enter the myRateTrack.com system for free. 

 

Jeffrey Pinkerton is a Mortgage Consultant and President of Hillside Lending, LLC and writer for “the Mortgage Blog.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit www.hillsidelending.com.

Happy Election Day!

November 4, 2008

This was too cute . . . had to share.

Friday was “dress up like a vocabulary word” day at elementary school.  The vocabulary word chosen by my daughter:  ELECTION.  Don’t forget to get out and vote!!  Especially if you are planning on voting for my candidate of choice.  : )

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Only a couple of hours left here on the east-coast.  Well, a couple of hours to get in line, at least.

 

Jeffrey Pinkerton is a Mortgage Consultant and President of Hillside Lending, LLC and writer for “the Mortgage Blog.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit www.hillsidelending.com.

For the record, it’s not predatory lending.

November 4, 2008

It’s not predatory lending. 

Predatory lending, the taking advantage of and exploiting individuals for profit is terrible and criminal, but it is not the cause of the housing and lending crisis.  Predatory lending has to do with lying, cheating or intentionally misleading a borrower for profit.  Certainly this did happen in the past and could happen in the future – and we would all agree, criminals deserve to be punished.  If you are a consumer who was lied to, cheated or taken advantage of this post does not apply to you. 

So, have unscrupulous mortgage people really caused Americans to get in to mortgages they couldn’t afford, sending the world economy in to a tail-spin?  Has anyone read reports where a borrower was forced to sign papers at closing or else face physical harm?  Or an instance where a borrower is now being held liable for a mortgage to which they didn’t sign and agree to pay back under certain terms?  Of course not.  Everyone gets closing papers at the closing table to sign – not everyone reads them.  Even fewer people, apparently, understand what they are signing. 

The housing crisis is a result of lenders agreeing to give consumers terrible mortgages (and consumers agreeing to take those terrible mortgages) and Wall Street agreeing to buy these terrible mortgages. 

Why did consumers agree to these loans?  Because they were cheated, lied to or manipulated?  No.  That’s political rhetoric.  Overwhelmingly, people who got these terrible mortgages were people who’s financing options were 1. get no mortgage and no house, or 2. get a kind-of-terrible mortgage (also called a sub-prime mortgage or an ALT-A mortgage) and a house (terrible-ness is in proportion to the terrible-ness of said person’s credit and ability to document income, assets, etc.).  Most people chose option two.  

And why did lenders agree to give people these mortgages?  Because Wall Street was willing to buy them.  And then, quite simply, Wall Street investors had mortgage-eyes that were bigger than their portfolio-stomachs could handle.  If a little-bit-terrible mortgage with a little-bit bigger than normal profit margin can make us a little bit more return, maybe a little-bit-more-terrible mortgage with a little-bit more than normal profit margin can make us an even bigger return, and if an even little-bit-more-terrible mortgage . . . [ad nauseum]. 

It reminds me of the not-so-wise words of the not-so-little Violet from the movie Charlie and Chocolate Factory, “so long as it’s gum, then that’s for me” – This same idea applied to the mortgage secondary market — “so long as it’s a loan, then that’s for me.  Hey, second course is coming up . . . oh, desert.  Here it comes . . . blueberry pie!”  

If there were no market for terrible mortgages to be bought on Wall Street, then there would be no terrible mortgages.  But, if investors were willing to take the risk on these types of loans, and consumers were will to accept them in exchange for owning a home (option 2 from above), then lenders and mortgage brokers were willing to do them.  You could almost argue, that the mortgage broker was bound to offer these products as options to his or her clients.  If the mortgage broker knew the loan products were available to borrowers and mentioned those products to some consumers and didn’t mention them to others, wouldn’t that create an Equal Credit Opportunity problem?  What if the broker only offered certain loans to those people he or she deemed intelligent enough, or responsible enought or educated enough, or savvy enough to understand, for example, how an option ARM works?  These scenarios are a lawsuit nightmare waiting to happen. 

So, what do I mean by a terrible mortgage?

Here are just a few examples of the types of loans available a year or two ago:

— stated income loan – the borrower was only required to state their income.  As long as the income was “reasonable” for their line of work, that dollar amount would be used for qualifying; Originally the borrower had to be self-employed with a high credit score to use this type of financing (just a little-bit-terrible with a little-bit terrible rate to match)

— stated income loan for a W2 employee — that’s right.  A borrower who had a W2 job (and easily documented income) was allowed to state their income to qualify (more-terrible credit risk, more-terrible rate and terms to match)

— no ratio loan – the borrower’s income was verified, but there was little to no guideline to determine a maximum allowable payment 

— no income, no asset verification – translation, we don’t need to know how much money you make, where or if your work or where your downpayment money is coming from

— no doc loan – translation, we need a copy of your credit report and pretty much nothing else

— 55% debt to income ratio – the borrower could spend up to 55% of his or her gross monthly income on their housing payment.  So, for someone making $50,000 per year, this type of loan would allow them to spend $2,200 per month on their house payment (this for a person who probably brings home close to $3,000 per month total)

— disregard for credit history – now, this wasn’t the name of the loan, but listen to this scenario.  If a borrower had a low credit score of 580 and had at least 4 credit trade-lines on their credit report (even if all 4 trade-lines were collections and even if the collections all had outstanding balances) they could get a mortgage with $0 down

Where did this get the mortgage business (and the U.S. housing market)?  You got it.  Being rolled down to the squeezing room . . . and it’s gonna hurt a little bit, for everyone.

 

Jeffrey Pinkerton is a Mortgage Consultant and President of Hillside Lending, LLC and writer for “the Mortgage Blog.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit www.hillsidelending.com.