New Opportunity for Loan Consultants with NMLS Identifier

If you are looking for a home with great technology, great pricing, all the products you desire, brick and mortar for your client meetings in a high end office, fantastic processing, AND leads, AND a draw, AND benefits, then please shoot me an email to michael.foote@caliberfunding.com and I will share the details.

SBA Lending is back

In another sign of improving business climate, SBA Chief Karen Mills talks about the rebirth of SBA Lending. Click Here to Read More.

If you are a small business owner and are interested in finding out more about SBA loans, please give me a call at 949-584-4600 and ask for Michael Foote. We can discuss your business needs and see what programs are best suited for you and your future.

Ethics?... Morals? ...

The definitions of ethics and morals are below for you review, but I believe most of us know what the definitions of those words are, or at least have a vague notion of their connotation.

In my industry many of us have had to take courses specifically focused on teaching us about the ethical moral considerations in the real estate and mortgage businesses. Realtors, specifically, are required to adhere to a specific set of ethical and moral behavior. 

Of course many Realtors don't believe in actually applying these ethical and moral considerations in their business practices. You mean I have to show my seller ALL the offers, for reallies! But I have a buyer too, and I can double-end the deal??? What is a real estate agent to do. Well how about doing the right thing dammit!

It's my belief that, for many, ethics and morals are topics they need to know so they answer questions on their real estate agent examination. By the way the process for obtaining a real estate license is about as easy as it was to get a stated income loan in 2005...Pulse, check, Signature check, Willing lender, Check check! Honestly I think the DMV's written test may be more difficult.

So why am I blowing the whistle on my own peers? I mean its tough out there. People are just trying to get by. Because the disease of greed seems to have gotten a bit worse in some respects, or has it?

It seems the mortgage business is much more legitimate these days, with the elimination of certain products, a redonkulous expansion of disclosure requirements, very tight caps on commissions and the fact the feds will put your cute little butt in federal F-you in the a## prison. Mortgage companies, banks, and brokers seem to get it...Or do they?

Law enforcement and industry reporting indicate that mortgage fraud activity continued to increase in 2009 and 2010. FBI mortgage fraud pending investigations increased 71 percent from 2008 to 2009. HUD-OIG pending investigations increased 31 percent from 2008 to 2009. FBI mortgage fraud-related FinCEN SAR filings increased 5.1 percent from 2008 to 2009.

OK so maybe the mortgage business is still working on itself....

But surely the real estate community has improved itself?

http://www.fbi.gov/boston/press-releases/2011/two-defendants-sentenced-in-real-estate-scam
Google "Real Estate Fraud" and you get 36,600.000 results...Ok that's not fair because I googled "Cupcake Fraud" and still get 7,690,000 results

OK, so maybe the real estate community is still working on things too...

So what have we learned...the mortgage and real estate industries will always have a few bad apples at least - probably more like half the barrel in reality. But what about the rest of them/us. Well short of committing an actual crime, there are ethical and moral boundaries. These apply to ONLY REALTORS® and I'm not going to type the registered sign everytime either, so if I say Realtor I mean REALTOR®. So let's talk a look at a few as they are good rules for all: The complete list can be found here.
Standard of Practice 1-5 : REALTORS® may represent the seller/landlord and buyer/tenant in the same transaction only after full disclosure to and with informed consent of both parties. (Adopted 1/93) 

This one is a classic and I was able to see it broken first hand today. Do you really think a Realtor or real estate agent or broker can truly represent both the buyer and a seller in a transaction? Well maybe, I am sure it can happen...sometimes...maybe.. But this should not be allowed. Does a sports agent represent both the team and player? Does a divorce attorney generally represent both the husband and wife (husband/husband or wife/wife in Massachusetts)?  Does a alleged criminal mind if the prosecuting attorney represents him too? Seriously folks, if you let a broker, agent or Realtor represent both side, be prepared to lose.

Standard of Practice 1-6 : REALTORS® shall submit offers and counter-offers objectively and as quickly as possible. (Adopted 1/93, Amended 1/95)

Another timeless classic. What is better, an offer from a true third party represented by a Realtor not related to the listing agent or an offer from the listing agent? Well that certainly depends on who you ask doesn't it? What is the listing agent brings an offer in from one of his buyers? It happens, not all the time but it goes on...And this counts if the listing agent used the name of his wife, sister, brother, uncle, aunt, college frat brother, or any other moron that will rent his/her license and share his/her side of the commission with the listing agent.

If a Realtor, agent, broker has an offer from a client they represent for a property they have a listing on, that amounts to a potential 100% increase in their commission. The deal I saw today, amounted to an extra $18,000 dollars into the pocket of the listing agent, not to mention the bonus/spiff/pop/desk fee the agent received from the mortgage company he/she referred the loan to, because the rate being offered is well above the rate I saw quoted from another "lender".

If you were making an offer on that property and weren't being represented by the listing agent, do you really, honestly,ever think your offer has a chance. Maybe...but I would bet $18,000 you would lose out. "Sorry, we went with highest and best"..and the shocker...The listing agent is the ONLY one who knows what the next highest and best offers were and guess what, you just missed it.

I will finish with Articles 4, 5, and 6, wherein my day ended finally and again resulted in a pretty frustrated yours truly left holding the bad and a stakc of paper and wasted toner. I'm not a hater, I don't want to lie cheat and steal. So if someone is willing to do that to beat me out, and the client is too stupid to realize it, then I guess that is what it is.

Article 4 : REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00)

Standard of Practice 4-1 : For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS® prior to the signing of any contract. (Adopted 2/86)


Article 5 : REALTORS® shall not undertake to provide professional services concerning a property or its value where they have a present or contemplated interest unless such interest is specifically disclosed to all affected parties.

Article 6 : REALTORS® shall not accept any commission, rebate, or profit on expenditures made for their client, without the client’s knowledge and consent.

When recommending real estate products or services (e.g., homeowner’s insurance, warranty programs, mortgage financing, title insurance, etc.), REALTORS® shall disclose to the client or customer to whom the recommendation is made any financial benefits or fees, other than real estate referral fees, the REALTOR® or REALTOR®’s firm may receive as a direct result of such recommendation. (Amended 1/99)


Standard of Practice 6-1 : REALTORS® shall not recommend or suggest to a client or a customer the use of services of another organization or business entity in which they have a direct interest without disclosing such interest at the time of the recommendation or suggestion. (Amended 5/88)


When a Realtor, agent or broker receives compensation, a bribe, fake desk rental fee, bogus marketing agreement, or cash in a paper bag, in return for referring clients to these companies WITHOUT full disclosure you have violated your ethics as a Realtor and RESPA. Hell even with full disclosure this is wrong. It's actually wrong even if it's disclosed and the money came in a paper bag. But you get the point.

When a Realtor, agent or broker unjustly disparages a mortgage company or a professionally licensed originator, knowingly, to the detriment of your client, you've violated your ethical code and violated RESPA.

When a Realtor, agent or broker  takes a short sale listing and misrepresents the parties of the transaction to a state or federal bank, they've committed bank fraud and wire fraud. When a Realtor, agent or broker misleads a buyer into taking a more expensive loan from a related company or connected third party to line his/her own pockets, they've committed a federal crime, Truth In Lending, RESPA, Business and Professions Laws, California Real Estate Law....and probably a whole host of other crap an prosecutor can lay on you.

And so I say to the, Future Defendent #1, be prepared to be prosecuted and go to jail.
And when that day comes, please know I will NOT be able to put money on your books. But please say hello to Mr. Madoff. He's kind of butch and maybe you can be his next back door deal. I know you won't like it, because I didn't enjoy it today.

Say hello to Bubba for me.

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Learn it, Live it, Love it!
ethics — n

1. ( functioning as singular ) See also meta-ethics the philosophical study of the moral value of human conduct and of the rules and principles that ought to govern it; moral philosophy

2. ( functioning as plural ) a social, religious, or civil code of behaviour considered correct, esp that of a particular group, profession, or individual

3. ( functioning as plural ) the moral fitness of a decision, course of action, etc: he doubted the ethics of their verdict

moral –adjective

1. of, pertaining to, or concerned with the principles or rules of right conduct or the distinction between right and wrong; ethical: moral attitudes.

2. expressing or conveying truths or counsel as to right conduct, as a speaker or a literary work; moralizing: a moral novel.

3. founded on the fundamental principles of right conduct rather than on legalities, enactment, or custom: moral obligations. capable of conforming to the rules of right conduct: a moral being. 5. conforming to the rules of right conduct ( opposed to immoral): a moral man. 6. virtuous in sexual matters; chaste. 7. of, pertaining to, or acting on the mind, feelings, will, or character: moral support. 8. resting upon convincing grounds of probability; virtual: a moral certainty. COLLAPSE

–noun

9. the moral teaching or practical lesson contained in a fable, tale, experience, etc.

10. the embodiment or type of something.

11. morals, principles or habits with respect to right or wrong conduct.
 
 
 

How long do you have to wait to buy a home after short sale, foreclosure, or BK?

Click on this quick QR code (with your phone) and get detailed description of waiting periods. I get this question all the time, and frankly, many of my peers don't even know the real rules. Now you know!

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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Emotional toll of a short sale

No one really talks about it, but what about the emotional toll of a short sale?




Short sales are all the rage in the real estate industry. And when I mean rage, I mean bad rage. Realtors and property owners alike would agree that the short sale process is cold, unorganized, slow, tedious, and downright depressing.



Here are some basic statistics about the housing market today. They fluctuate based on who you ask, but in general they are true:



• 25%-30% of all mortgaged homes are worth less than the balance of their mortgage(s)



• More than 1 in 10 mortgagors are behind on the mortgage



• Some say over 5 million foreclosed homes could hit the market throughout 2011



These are some sobering statistics, but it leads us to our point. A homeowner, you, or someone you know, that is in default and pursuing a short sale is not alone. Sure it feels like they are alone. Many people don’t feel able to freely discuss financial difficulties because of the fear of being ridiculed, ostracized, worrying the kids, and a whole plethora of personal reasons. The fact is it’s hard to deal with these issues and many people feel similarly.



The plain truth is a short sale owner will be leaving their home and that in itself is filled with unknowns, fear, and emotional angst. No one likes not knowing where you are going to live. How much it will cost? Where it will be? Will the kids like the new school or neighborhood? Moving is particularly hard for families when kids have roots and have grown comfortable. For those of you that moved as kids most certainly understand.



Many people relocate and kids can be taught that moving can be a good thing, exciting, a new adventure. And the same is true for the homeowner. You are going on a journey and you’ll be leaving where you’ve been. You’ll meet new people, see new areas, and enjoy new local restaurants. And most importantly you’ll be with your family, together, and ready for the new challenges that life consistently presents.



You see a house is just a bunch of wood, cement, tile carpet and other stuff.



A home does not make a family;

A family makes a home.



Financial strains can be the cause of arguments between husband and wives, or worse with children. The stress can and will most likely make emotions run high and patience run thin. It’s important during the stressful short sale process to take a step back when things get loud or stressful and focus in on what the problem really is. Would you normally be fighting or arguing about this? Are your daily issues being exacerbated by the financial situation? Stop and take a deep breath. It is remarkable how just stopping and relaxing for a moment can clear some of the stress and allow you to focus on the important items.



It is important to avoid procrastination. Let’s suppose you are notified an offer of your property has been accepted. Now you need to plan and execute. But first you have to get out of your own way. Some are better than others, but many of us procrastinate and it’s important to not let your emotions take control. You should always have been looking for a rental property. Most likely you will not be able to buy a home for awhile. And that is OK.



Take this freedom to enjoy being a renter and letting the property owner handle being a real estate owner. There advantages to being both a renter and owner. Focus on the good of renting. Lower costs, less maintenance, no landscaping, no HOA fees, more or less room depending…There are many advantages – just look and you’ll see. More importantly, you’ll feel better.



Remember, you are not alone. A home does not make a family, a family makes a home. Obtain the services of a Real Estate Broker/Realtor. Consult your tax expert and whenever possible consult an attorney with expertise in short sales and their legal ramifications. Your Realtor/Broker should be able to offer significant advice and direction if you are contemplating a short sale transaction.

Top Five Things to do when preparing for a short sale real estate transaction?

Preparation is the key to a smooth and successful short sale transaction. As with many things in life, proper planning is always the preferred method when approaching a financial transaction. And that is just what a short sale transaction is, a financial transaction involving multiple parties all with different goals or objectives.

So to make sure you are fully prepared to even start the short sale process here are the essential items any real estate broker will need to begin the analysis.

#1. Two years of personal financial documents. I’m talking everything you would need to apply for a mortgage loan. Essentially that is just what you are doing. The lender that has to approve your short sale needs to know if you really can’t afford the current mortgage. They will always look to see if there is a easier way to save their investment before a short sale, mainly loan modification.

#2. Previous loan documentation. Gather everything you have on the previous loan(s) you’ve had on the property from the time you purchased it until now. This will give the broker a clearer understanding of you current loan terms and future adjustments. An old appraisal can also aid in the short sale process as the current lender is able to see previous values as compared to NPV or net present value.

#3. Get the property on the market. There is no short sale without a buyer, and now more than ever, buyers are a selective breed. Gone are those days of standing in line the night before to buy a new property the next day. Buyers are scarce. For many reasons it’s harder to get financing. So buyers can be picky. The earlier your broker can get marketing your property the better.

#4 Negotiate for a release of all future liability. One of the keys to any successful short sale is making sure the seller does not owe anything more after the short sale is closed. When at all possible make sure to consult your CPA, Real Estate attorney, and Real Estate broker when considering a short sale.

#5. Stay patient and resolved. If this short sale is for your primary residence, this is much more emotional than if this is an investment property. So it’s important to maintain an analytical approach whenever possible. There will be people coming into your home and it makes the prospects of moving out that much more heart wrenching. So know that you are not alone and although this will be a blemish on your credit, in time, it will become less and less of a concern for creditors seeking to lend to you later.

The waiter delivering cold food

I just got an email from a client. It's tough to be a salesmen for a mortgage company these days and the latest example is from a client who is asking for a transaction to be approved a certain way. In the old days, I think this deal would be declined anyway (the issue is whether the client plans on occupying a home).

Do I believe the client? Yes, but those are my PERSONAL feelings, not my professional feelings. As a salesperson, we have to take what we are given by operations and spin or use it the best we can. I can see operations point on this transaction, but when do we have to say, an underwriters feelings or the mass opinion on a conference call does not contain personal feelings. Operations personnel make decisions based on facts, but do their personal animosities and personal agendas creep into decisions? You'd have to say yes, sometimes they probably do. For what one persons goals may sounds totally unrealistic and ridiculous to another. And if your underwriter doesn't think what YOU are doing jives with what THEY would do, the potential for conflict arises.

I've long heard inthe news about financial institutions making decision based on race, creed, national origin etc. But I have NEVER personally seen it. I'm a salesperson, I believe and sell what the client tells me. Have I ever looked at the government monitoring and said, wow this guy is black, we better not give him too much money, not even close. I don't care if the client is purple. There is a loan to fund and I want to get paid. So then if any discrimination is being perpetrated, it's being done by the people who generally hold themselves out to be the righteous protectors of credit standards. But they are just people too.

But when operations effectively calls a borrower a liar, what course do you take. There is no other course but the truth. When there is no data or facts to discpute the borrower and no reason exists not to trust the borrower, shouldn't we then believe them?

It's a sad indictment on our profession, but these are precarious times and loans are being funded and repurchased and bought back and repacked again...and then someone finds something wrong and the loan is a buyback? It's almost dizzying. Why would anyone even grant credit- well money of course, but there isn't even enough of that these days. At least not in my pockets.

Sometimes, more often than before, it makes me wonder why on earth I have choosen this profession.

Your rate is floating?!?!??!? Now what do you do?

Rates have really risen quickly catching many of us, including me, left holding a wet bag of floating loan applications. When the loan officer told you to hurry up and get those items to him so he could lock your loan now sounds not so much like a sales pitch, but a true call for urgency on your part.

But don't freak out. Rates are expected to fall back a bit soon. But we may have left the lowest of mortgage rates in the history books. However, no one really knows, including yours dearly.

Here is my recommedation if your loan is floating.

If your loan is for a purchase, you are most likely going to need to lock something -so take the new higher no points rate, and know that historically speaking its a really good rate. If you qualify for a higher rate or adjustable mortgage take it and run.

If you are tight on your debt to income ratio get used to a term called discount points. You'll need to pay some of these to buy your rate down, in other words, get it lower to qualify.

If you are a refinance loan. Hang back, you most likely haven't ordered an appraisal yet and hopefully didn't pay a nonrefundable application fee - so you can wait. Check in daily with your loan consultant and check to see what your rate is for that day. Have a number in mind and when it hits, take it.

Don't be greedy. Yeah I said it. You know who you are. If your rate gets back to 4.5% don't try to hold out for that extra .125% in rate. Take the benefit and feel good. No one times the bottom of a market.

OK, that's all kids.

Ouch 10 yr hits 3.51% @ 92.64 For those of you regular folks..that's bad

We experienced our first 4 rate change day today. Rate are over 300 bps higher than a month or two ago. Refinances are slowing and the pace of decline in values is picking.

What's the bright side you say? Well prices will continue to fall and those with resources and good credit can pick up property with what appears to be a new low in values since the implosion of the Real Estate bubble.

$9 Trillion in home equity lost since 2006

It's a huge number. We all lost about $1.7 trillion in home equity this year alone. This could be good or bad depending on how you look at it. Massive drops in values create investment opportunities. Properties can now be acquired and debt service with average market rents. So you can buy an asset that will eventually increase in value again and the investment will pay for itself while appreciation takes place.

Now if you are a homeowner one way to limit your exposure to your currently underwater or zero equity properties is to buy at today's prices. If you are fortunate enough to be able to afford the qualification buy another home as a rental and use that valuation to offset some of your loses on your current properties. When home values increase you will have achieved appreciation on two properties at an overall low.er cost basis.

Go Rental, Go Investment!, 2011 will be a great year to acquire real estate.

Rate Check Check Check Microphone Check

Wow, what a rate roller coaster these days. Rate are mostly stable this week although higher that the previous 30 days on average. The general concesus it rates will chop around these levels for the near term with a tendncy to rise over the first two quarters next year...which is RIGHT around the corner.

Prudent lending advice is to apply with your lender or broker of choice and float the rate while processing and underwriting take place. All the while you should be working with your lending professional to lock on a dip.

Of course, you can just lock today too...I mena 4.5% at no points for 30 year fixed base rates is still pretty darn good.