HARP 2.0: Refinancing Underwater

Everyone knows that the real estate market has taken a massive dive. Homeowners across the country are underwater with loan balances in excess of the current value of their home.

Photo by Guenther Bosch

Not everyone knows about HARP 2.0 (Home Affordable Refinance Program), which was recently revised (December 2011) to eliminate LTV restrictions, among other things and TRY to make for a better solution.

What does this mean?

>>If you have managed to stay in your house and make your payments you may be able to refinance to today's historical low rates, even if you owe more than your home is worth. So, if you want to make your home affordable, you can help by locking in a better rate.

Key Points:
-Loan originated prior to 4/1/09
-Loan is owned by Fannie Mae or Freddie Mac* (see below)
-Loan balance is more than 80% of current home value (there is no ceiling! i.e. Your home could be worth $200k, and your loan balance could be $400k)
-Amount of income is not a consideration, if payments have been made.
-Mortgage payments need to be timely for the last year, if not, start making them; program ends 12/31/2013!
-Can refinance multiple properties under the program (investment, 2nd home, primary)

*Find out if your home loan is owned by Fannie Mae or Freddie Mac. If it is not, there may still be options, but they aren't solved by this legislation:
Fannie Mae Loan Look-Up: http://www.fanniemae.com/loanlookup/
Freddie Mac Loan Look-Up: http://www.freddiemac.com/mymortgage/

Those are the essentials, there are more details, and everyone's situation is individual, if you have more questions, please contact me, I'd be happy to help.

The Time to Buy?

One might argue that now is not a time for anyone to wait to buy. Not with such great rates, low home prices, etc. Certainly having a steady income is important and in a time of economic hardship many people are found working hard to find...work.

But, assuming you have a job, the time is ripe...

However, I ran into a gentleman in the parking lot of Costco recently and he stoutly declared that now was not the time. He proclaimed two years was the time to buy, and that all the experts agreed. No sooner.

I won't question his knowledge, but if all the experts agree, in two years the housing market will absolutely EXPLODE with activity and you'll see bidding wars all over the place.

I know that if I was a buyer, I wouldn't want to enter a bidding war for a home. I wouldn't want to go through that hassle and potential heartache.

So, me thinks (quite humbly) that perhaps the time to buy is actually...NOW.

Sitting by the Phone

My first ad is out today—or at least it should be. You can certainly bet that I'll be scouring the paper as soon as it makes its lofty way onto my driveway.

I'm sitting here by the phone, trying to be composed, trying to be ready. I have no idea what to expect. Will there be a deluge of calls, interested in a Free Home Loan Analysis? Will people be too skeptical of the economy to even consider that what they know about their financial situation and what their financial situation IS can be two different beasts?

We'll see, for now I'm tapping my fingers (on the keyboard) working on the blog, making contacts and looking to the future.

Gearing Up

The Holidays are past, my cold is done (finally!) and the pieces are starting to come together as I look to ramp up the new venture.

For myself and my family it is a time of great change as the new occupation takes off and we try to become better jugglers of those little loud things we fondly call our kids.

Every day they change, and we see something new. Of late, we have been able to enjoy watching the two interact on an increasing basis, with the five month old laughing at anything our four year old does and our daughter has even taken to entertaining the baby. I can’t say that my wife or I mind.

I have my first ad running soon in the local paper, the Castro Valley Forum and am excited to see how things turn out as I build the business. It’s nice to be back in mortgage—and I can put those six prior years back to good use.

Rates are at incredible lows, homes are affordable, yes the economy has its issues, but if you are thinking or even curious about the prospect of buying, now is a great time. There are a surprising amount of people that believe large down payments are needed to get into a home, but with FHA loans you can get by with only 3.5% down and even that can be paid as a gift from relatives, meaning that what you can afford and when you can buy may be surprisingly different than you would expect.

It is also worthy to note that, per an article on www.Realtor.org
“Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of Realtors®.” Certainly a sign of an improvement that is building. Does it mean the worst is behind us? There is no way to know, but it leaves me feeling optimistic.

If you or anyone you know would like to talk to me about your financial situation to see if a home purchase or refinance are in the cards, I would be happy to help. It’s easy to assume that now is not the time, but you may be surprised by what is possible.

In 2003, when I was considering relocating to be closer to my girlfriend (and future wife), I discovered on somewhat of a lark that I could buy a home. In 2004, that’s exactly what I did.

Times are different, but the lesson is still the same. If you’ve got a few minutes, I’d love to talk—even if it is just to ask a question or say hi.

Today’s Best National Rates from Mortgage News Daily:
                                  Today   52 Week: Low  High
30 Yr FRM                     3.83%               3.83%  5.14%
15 Yr FRM                     3.28%               3.25%  4.33%
FHA 30 Year Fixed        3.75%               3.75%  4.99%
Jumbo 30 Year Fixed    4.05%               4.05%  5.86%
5/1 Yr ARM                    3.03%               2.98%  3.95%
Updated: 1/9/12 2:55 PM

Happy New Year!

And what a great year it will be! May your 2012 be a time of wealth, health and happiness.

Photo by SJ Photography

The Chosen Broker

I chose a broker to partner with, on my Loan Officer journey. It was with great trepidation that I made that final decision. There is risk, there is reward, and we will ultimately see how it all pans out.

I am slowly spreading the word about my availability as a loan officer as the last bits of licensing and approvals are finalized.

In the meantime, I'm working on a marketing platform. Choosing an approach and style is not something I take lightly. I'm practically biting my knuckles, hoping it is not disastrous. One person, whom I respect highly, thinks my marketing idea will be a flop. As tempted as I am to take their advice and ditch the idea, I find myself drawn inexorably towards it. One thing to remember when presenting yourself and your business to others: is that passion is everything. If I go up to someone with a downtrodden expression, uninterested in my work, and fully convinced they will find no value in what I have to offer, then I have already lost the day. Anything that helps up your passion in your field/craft/business is a good thing and can only be a boon to your pursuits. So, with that in mind, I am pushing forward with something that only time will tell if it is a success or a failure.

Even though all of my tools are not yet in place to help show myself as a loan officer that primarily you can trust to be honest and hardworking, I am able to help you with loans now.

I look forward to helping people achieve their dreams and make for a better tomorrow for themselves and their families.

NMLS in the bag and DRE licensed. Now what?

I passed my state and national NMLS exams this week and learned that my DRE license was approved. I’m happy to have that done, and excited about what is next. But wait. What is next?

I have to choose a brokerage.

For several reasons, that is quite daunting.

1. I like the idea of running things (more or less) myself, BUT it also means I am entirely accountable for leads, keeping clients happy, etc.

2. I like being in control of my income, BUT it also means I have to MAKE that income. There will be no corporate cushion that will help me through a time of sickness, lack of work, or unmotivated clients.

3. I like a flexible schedule that is in my control, BUT (are you seeing a theme here?) it also means that I’ll lose out on some weekends, nights, etc. AND it won’t always be a schedule that flexes to my desires; many times I will have to adjust to it. So, in a way, my schedule will become a living and breathing thing that makes demands upon me. Weird to think of, but something important to remember.

So, all of this makes me cautious in my effort to find the right broker—who will be my partner in this endeavor of risk and reward. Even though part of me just wants to dive in, discover as I go, and change gears later if necessary. This will be a start to my sales career, and I want it to get off on the right foot. So, I’m doing a little more calling and then I’m making a decision. Before the end of this year I’ll be back in the mortgage industry.

Exciting and a little overwhelming.

Secondary Mortgage Market. Quality Control & Confidence?

As I'm going through the NMLS training for my MLO endorsement, I had to stop and laugh (darkly) at the curriculum's comment on the purpose and value of the Secondary Mortgage Market.

First, for any non-mortgage industry visitors, the Secondary Mortgage Market is where residential loans are packaged up in neat little packages and sold off to investors like stocks. That is a gross simplification, but it works.

I have read before that the purpose of Fannie Mae and Freddie Mac was to provide a secondary market for loans to be sold and keep money infused in the system; this would mitigate risk for lenders and make loans easier. THAT certainly happened. The laughable part of the curriculum is that it offered a level of quality control and consumer confidence.

Why is this funny?

Because Freddie Mac and Fannie Mae did not (sadly) have sufficient quality controls in place to make sure that loans bought and sold on were for the best interest of the consumer (and quite apparently, the country and world at large). I'm not putting entire blame on them, the economic problems of today are the result of greed, short-sightedness and corruption all around. From the little consumer, to their mortgage broker, the big lender and all the way up to the highest levels of government.

Point is: the incredible appreciation that was going on across the country was beyond the point of reason. I live in the San Francisco Bay Area. In the East Bay in 2004 a small 900 SF bungalows was selling for about $300k (in ok condition). That incredible price, for something so small, would have been in excess of a million dollars by 2010 at that rate of appreciation. A million dollars for a little bunglaow? Unless you're in top notch condition, located in the heart of an EXTREMELY valuable neighborhood, we all know that is just insane.

I was in the mortgage industry from 2003-2007 as a processor and underwriter. I was in no high level position, but I still feel like I should have realized something was amiss. Certainly, those in positions of authority should have been more than just aware of the peril, they should have been doing something about it.


But not enough was done and instead of instilling confidence and quality control the secondary market allowed lenders to continue to give money away on homes with little consequence for later default, until everything reached a saturation point and the market collapsed under its own bloated weight.

That's why it is funny. The part that isn't funny is that the money is still out there, but it isn't in the hands of the average person. Yep. All because the Secondary Mortgage Market instilled quality control and confidence.

Perhaps that is a bit snarky to state, but if the secondary market didn't exist, then lenders would have given out money slower and would have had to be more responsible if the loans they made defaulted. Whether they can sell the property and recoup their losses is pointless, because the process is long and can be expensive.

Now that changes have to be made, I have yet to see any that are actual solutions. Instead, there appear to be a series of hastily prepared bandages put in place to make the market "safe". Some may have a little effect, but most just look like needless extra layers of government.

NMLS: An Injection of Confusion

I've been calling around, talking to Mortgage Companies, looking for someone with a good fit for me as a MLO, problem is... They're all DOC licensed & I took the DRE exam! The hiring manager for a mortgage banker even told me that a DRE license is no longer any good for someone to become a Loan Officer. What?

Certainly not what I had read or been told, but it had me worried: Did I just waste my money and time on an exam for a license that is pointless? Certainly, I've kicked around the idea of becoming a Real Estate Agent, but my experience in mortgage leads me toward the lending side of things. It's where my experience is and I feel I'll have a better shot in this atrophied and very competitive economy.

I can't very well go throw more money at a DOC license. So, I called the DRE and looked up some job listings. Apparently the hiring manager for the mortgage banker was wrong. I'm right. Odd.

I'm boggled because I would expect someone that high up, and in the position of a "hiring manager", to know about their industry enough to know what works for their competitors. I guess not.

Is this an indication of how polarized DOC and DRE licensees are? How very separate and different? Or does it illustrate how much confusion the changes in the industry have made? I found a little clarification on the NMLS website in a .pdf of the MLO SAFE Requirements Compliance Chart. Looks like it was mandatory for the MLO endorsement for DOC licensees to continue business as of 8/1/2011. DRE licensees needed the endorsement effective 1/1/2011. So it says pretty clearly right there that a DRE licensee can still be an MLO.

If you're in mortgage, you're probably tapping your computer, asking me what about the NMLS license. Yes, well, I apparently need to work on that, too. From what I had read in the exceedingly clear (not exactly) instructions on getting licensed, I misunderstood that the NMLS licensing occurs after an employing company is found. It does, but it doesn't. You need the endorsement of a licensed company, but the required education needs to come first—at least that's what I've heard.

It's a matter of preference, and an expensive one at that. Looks like doing the mandated hours of training and all the rest will cost me a few hundred dollars, above and beyond what anyone had to do just a couple years ago. I'm not sure how this will help fix the industry. The biggest issue was greed and corruption; classes don't fix that, ethics do. Seems like government just enabled a whole new set of classes that colleges and training schools can offer.

For now, I've got a new list of phone calls to make. I'm looking for a DRE licensed Mortgage Company in the Bay Area. And then I've got more courses to take. Wish me luck.

State Exam: The Results...

Nailed it.

California Real Estate State Exam passed on the first try yesterday. Which is a good thing, let me tell you—they take the exam seriously.

Image: Michal Marcol / FreeDigitalPhotos.net

3 hours, 15 minutes and no phones, no food, no books to read, no diversions of any kind during your breaks and no...(wait for it)...COFFEE. None. Nada. Zip. No java to be had. Denied.

I don't usually have coffee first thing, but an hour or so in I'd like to have (perhaps need) some caffeination. So without having downed my own brew before, I was left high and dry till all 150 questions were behind me.

Next time I'm drinking something on the way. Because, yes, there are license renewals to think of.

Now I must get the actual license, find me a brokerage, deal with the NMLS and try my hand as a Loan Officer.

So today was—in reality—probably quite easy.