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SoCalMtgGuy

SoCal, would you please call or email me? I want to put together a show/DVD series called Real Estate Reality, primarily for the public benefit, as you stated at the other blog where this FB stuff started. Seeing you are an AE, but like you said it would piss some people off to recommend against bad loans, would you help me?

Here’s the thing: Once something becomes common knowledge, there is less pressure not to talk about it. But I need to put this together SOON, to help more people Before they are FBs. My volume of work is down 65% or so, no surprise if you are not deep in denial. Of course Forensic Appraisals can be done to replace cashflow, through I guess Loss Mgmt depts. If you can send me any contact info for those types of clients, that’s awesome, truly. My goal is to be kind of Suze Ormond of homeownership.

One of the big problems in South FL, where I live/work, is that the Insurance is doubling and Tripling, causing bigtime payment shock, Just at the time when ARMageddon kicks in, for the TFB combined effect… Add our large number of foreign borrowers, who have NO clue how to find this blog, or what the terms LIBOR, Fed, MBS or anything Else mean, and it’s truly a mess. All those who cut the grass, wash restaurant dishes or take out the trash, are finding it hard to live here and suddenly, for us. CA has been way high for decades, and your incomes to a large degree compensate for that. I wonder how they’ve kept a lid on it and kept the public believing that more still move In than Out, of FL and CA?

I talked to a data vendor the other day, trying to get foreclosure listings (they have someone go to the courthouse and get Lis Pendens and key them in, daily) In Broward county alone (Ft Laud area) there were 53 keyed in One Day last week. However, when I went to the official county recorder site, I see only 3 filed in 3 weeks from Dec 5 to Dec 26??

OK, lag time, but let’s face it, was November not pretty much Way enormously busier than that anyway?? Assuming it took them a month to get it where the public could see it…. Now, does that mean we’re sandbagging records, and if so, why? To avoid wholesale panic, or to let the sharks get a headstart on foreclosures? Doesn’t add up to me. Can you help me here?

Another thing we have here, that is Doubtless replicated nationwide, is the “Investment Club” or Foreclosure Group, which is typically owned by some cats that skim the cream and flip houses to the general membership. I’ve offered to speak FREE at their meetings and it’s declined. Why? They pay (or have the members pay) Big like $100 each, to see national “make a million without trying” so called experts, and these people hawk books, DVD’s mentoring services, hard money lending, data services and more to their captive members through email, direct mail and meetings.

There are so many ways the public is fleeced in real estate, and I can’t pay attention, much less to produce a show. Speaking of which, see Oprah and Nate singlehandedly solving the oversupply? I love it when a plan comes together. And two shows named almost exactly alike, to create cashflow for someone other than the viewer, “Flip This House” and “Flip That House”. People Believe what they see on tv, is the scary part.

It seems like “equal time” is in order. I remember when they advertised cigarettes on tv. And there was this anti-smoking ad, a man and his adorable baby boy go walk in the woods, skip stones, and each time they do something cool, the voice goes, “Like father, like son”. Then he sits down and lights up a cancer stick, “Like Father, Like Son…. Think about it”

I say we take a Fraction of the Windfall property tax revenues and fund a series of anti-stupid loan ads, and anti-thinking you’re qualified as an investor, “don’t try this at home” ads. But what do I know? Maybe a big lender or Real Estate franchise would help fund it, or NAR.

Who am I kidding? Appraisers make too much sense. Kind of like the old days when someone was smart, they made him a priest or killed him, if he didn’t go along. The same figuratively happens to us, as we’re paid 20 to 50 times Less than LO’s & realtors but then we’re a “necessary evil”. Well, 90% of us are now officially corrupt or ignorant, having come into a market so far removed from the present one, and so quickly, that our poor little heads are spinning, for the most part.

OK, so now go up a couple of paragraphs to how uninformed bwrs are, and now apply that to 90% of presently active realtors, mtg brokers, and appraisers. Nobody saw the problem because we’re too close to it and it’s changed (on the face, though lots of us saw it coming) so fast. When these people were shown how to do their jobs, that was almost a different job. You had only to type a listing into MLS and stand back while the offer stampede took place. Same goes for the rest of the industry, and greed is very strong. Now that they, too, have big bills, are FBs &/or have 4 investment properties, they need to keep the lies flowing to pay for it all - hostage to the lifestyle the boom created.

FNMA changed the forms to include a section where we analyze the contract. But then Nobody created a single course to teach appraisers how to DO that. That’s just one small issue with the whole system. And states do it their own way, and maybe they record stuff their way too.

Check out China’s national debt as a percentage of GDP: 24% as opposed to Our 64% and Europe’s 67%. That bothers me, but of course there’s not a damn thing I can do. I already voted, which our complacent citizens have by & large stopped doing.

Chavez and Ortega won, spelling some short-term possible relief for south FL, and the boomers retire to sunbelt, not cold places. However, FL no longer enjoys affordability. The state has $8.7 Billion in windfall property tax revenues, and we will have to appeal One By One to get it changed. They increase taxes blanket, yearly, whether they need it or not.

Man, I feel like running for office - oh yeah, I’m broke. You need money to get to help make bad decisions, unlike the people who have to actually Live with the bad decisions the rich politicos make…. That seems wrong somehow, doesn’t it?
Doreen

Where fico scores do matter the most are in the subprime, alt-a, and second mortgage area. For example, let’s say someone wants a second mortgage and a 620 fico is needed for approval. If your borrower has a 619 fico, they aren’t getting the loan, period. FICO scores for those programs are very strict. There is no gray area like there is with Fannie/Freddie products. Usually 580 is needed to get 100% financing via subprime if you fully document your income. I see 640 needed to get 100% financing with a stated income product, it was 620 but guidelines are starting to tighten. Usually subprime and alt-a’s provide better rates in 20 point increments, and usually give the best rates at either 680 or 700+. With your C + D and below credit, you need at least 500 or you don’t get approved. This doesn’t matter much on purchases but it does on refinances. If a borrower is below 500, there is pretty much nothing other than private funding that can be done for a borrower. LTV’s, occupancy type, loan purpose, property type, documentation type all work in conjunction with respective credit scores in determining what someone qualifies for.

I agree with you that the no-doc loan can be used. But when you are dealing with people in the 500’s and low-mid 600’s, they usually aren’t eligible for those loans…not to mention, they ‘need’ 100% financing. Even putting 25k down on a 500k ’starter home’ is hard to come by for most of the people I saw.

But yes, the lenders will keep competing and lowering the bar to ‘drive volume’ and help people ‘own a piece of the american dream’.

SoCalMtgGuy

Of course, when the norm is 5% down, it won’t be long before someone else comes along and lowers the bar. Here is a recent e-mail I received from an account executive:

680 MID SCORE!!!

Prepays are available for even better pricing!!!

I wonder if the end investor knows what their money is going towards.

When doing a loan where 2 people (or more) are on the loan, then the person who makes the most money (or states the most) is the ‘primary borrower’. Even if they ’state’ the most, it still has to be somewhat believable.

I believe the type of loan they are looking for is one where they will take the co-borrowers score and go to 100%.

There are some cases when this doesn’t make sense…here is a typical situation: husband works full time, wife doesn’t work, or works a part time job, but has a credit score much higher than the husband. Sorry, can’t use her credit score to ‘qualify’ for the loan because she isn’t the primary borrower. And you can’t ’state’ her income to be x-amount if she is a housewife, because she doesn’t have a job that can be verified.

I also remember a case when it would have helped me out had we been able to do that. It was a full-doc loan and both husband and wife made pretty much the ’same’ money. But when it came down to it, the wife actually made about $150 more than the husband…but his score was higher. So even though they were almost ‘equal’, had to price the loan off the lower fico score.

Sometimes it doesn’t even have to be a big difference to make a big deal in the rate of the loan. There are breakpoints that are usually about 20 fico points apart until you get to a 700 fico. There is a decent difference in rate between somebody with a 599 fico, and somebody with a 602 fico. That is when getting your credit up can save you .25-.5 or more on rate depending on the breakpoint. That is also why people will try to use the co-borrowers score…and obviously some lenders are catering to that…I just can’t believe they are doing it to 100% now.

I hope that helps.

SoCalMtgGuy

Yep. So, in the cases we describe, the borrower increases their base loan amount by many thousands over where they were initially. The funny thing is the payment difference is arguably minute, but they just increased their debt load and the LO is laughing all the way to the bank. I cannot believe how lucrative the sub-prime market is.

Your thoughts about broker expenses.. utilizing PPP’s into the fold is interesting.

I can’t count how many times borrowers signing loan docs comment about how they paid off all their (or much of it) CC’ds, Car Loans etc and their payment is now manageable. I’m thinking in my mind, ‘wrong. You just shifted the debt to your house and it cost you $10K to do it.’

We are not an escrow company anymore. Feels more like we are a credit bill paying service.