Don't call me if you don't want the truth...

Well this is more of a vent than a post.

I am no longer surprised at the consumer who, in an effort to make sure they aren't getting screwed, ends up doing just that to themselves.

You see many in my industry feel that consumers just want to be lied to. Yeah I said it, and you know I am right. In fact, we all want to hear what WE want to hear and unfortunately some out there prey on that fact.

If I can only go 75% on a property there is someone out there who says they will go 80%. Or their valu eis higher that my estimated value...Sure!! Why wouldn't you think some cubicle jockey in Michigan at Quicken with about 5 minutes of experience can comp a property better than me, who lives in California, and is  REal Estate Broker.

And by the time the consumer realizes they are hosed, and gets the offer I presented originally, from the liar, it's too late.

So if you are a prospective client and you DONT want to hear the truth, please call Quicken Loans, they will tell you want you want to hear ALL DAY LONG...becuase they are in Michigan and don't care.

ARGH!

Mortgage Brokers will be your only ally against the big banks

It’s been several years since the real estate and financial crisis began. For my old company it started in the beginning of 2007 and has continued with little relief over three plus years. With the instant evaporation of the subprime product and subsequent elimination of option arms, neg ams, stated income, and others, the real estate market continues to slump.


And while the private money that funded loan volume in the past disappeared the government stepped in with FHA loans and the increase of purchases by Freddie Mac and Fannie Mae. But the government didn’t stop there; they decided there was something wrong with the rules and guidelines that led to the crisis.

No one can argue that there were not significant problems within the mortgage industry. In fact, many of us in the industry started sounding alarm bells in 2005 and 2006 seeing that guidelines and underwriting standards has greatly declined.

So where does that leave us now? Many insiders know that when a financial crisis happens, we all fall back to the big banks. Those big banks have taken a big the opportunity to seize market share and now control effectively all mortgage lending in the nation.

How did they do this you ask? The banks have quietly taken the stance that the mortgage broker was the sole factor that led to the decline of western financial civilization. But there is one problem with that analysis; the brokers had NOTHING to do with underwriting guidelines. That’s right, how can the broker be blamed for creating and spreading a product created in the offices and cubicles of the biggest investment banks.

Were there bad brokers? Oh yes, and bank lenders, appraisers, title companies, escrow companies, funders, reviewers, executives, investment bankers, ratings agencies, and pretty much every position along the mortgage chain.

But now the government has gone too far and it continues to make changes both legally and legislatively that have little to no basis in reality, and worse, do little to help and only seem to force higher costs on consumers.

The bottom line is if the government would have enforced RULES ALREADY IN PLACE, many of the problems we are experiencing today could have been limited. Sure we would have had adjustment in values as has happened on multiple times.

A Little Interest Rate Perspective

I get asked about where rates are going and I usually respond with, "if I knew that, I'd be retired on a beach somewhere". The reality is no one really knows where rates are going. But one thing is for sure, when rates are near zero there is no place for them to go but up. Here is a link showing the history of the prime rate from 1947 to present. The all time high was 21.50%!! Holy Prime Rate Batman! Can you imagine what it was like to qualify for a mortgage then! http://www.wsjprimerate.us/wall_street_journal_prime_rate_history.htm

Let's look at what a mortgage payment would be at 21.5% assuming a $300,000 loan amount....Yeah..that's going to be $5,384.01 per month for 30 years....and of yeah that doesn't include taxes, insurance, HOA, mortgage insurance.

Luckily we are no where near that today that same scenario at today's 4.875% give us a payment of $1,587.62, much more manageable I think you'd agree.

But what if rates started to skyrocket? Rates historically can rise as much as 4% in a year, or more.

Are you still holding on to that adjustable? Don't get caught holding the bag - convert EVERYTHING you have financed to long term fixed debt before it's too late.

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