Tuesday, December 10, 2013

Snowed In or Snowden

With the arctic temperatures we have been feeling lately, I can't help but wonder - how is freedom's best friend doing, Edward Snowden? The 2013 Sam Adams Award Winner, army veteran, card carrying republican and self-proclaimed "American" is entrapped in asylum within "mother" Russia and probably feeling the frigid temperatures about now. I can't help but think, what would I have done if I was in his shoes.

Snowden is currently a fugitive for releasing documentation that verified the National Security Agency spied illegally on millions of people, including foreign countries violating both our constitutional rights and the Vienna Convention. His claims that the United States Department of Justice is unwilling to prosecute NSA officials for illegal surveillance have fallen on deaf ears state side. As a result of Snowden's leaks, we have learned about PRISM and the Foreign Intelligence Surveillance Act.

The Foreign Intelligence Surveillance Act came about by President Bush's passing of the Protect America Act in 2007. From FISA, PRISM was born. PRISM is a surveillance program that allows the NSA to spy on you through computer software and hardware. The NSA can see your Google searches, Skype conversations, Microsoft documents, Facebook pages, etc all through PRISM. The NSA was also caught monitoring the cell phones and documentation of international leaders using FISA and PRISM - including Germany's Chancellor.

I can understand that the FISA and PRISM are designed to protect our country from terrorist attacks, but at what expense? Our freedoms and personal privacy? At what point do we become minions of the all and mighty powerful - US Federal Government? These questions are difficult to answer and our constitution was written to set the framework to answer these questions.

So what would I have done - frankly, the only thing I would have done differently than what Edward Snowden did is to include more people on the distribution list of the evidence showing the illegal activities of the NSA. The more people that are aware of what is trying to be hidden, the less likely it will be to continue. The more the NSA breaks the laws and violates our constitutional rights, the more the citizens of our country will spy on them and shed light on their misbehavior. Our federal system was established to include "checks and balances" and if these are not internally withheld, Americans must take action.

What would you have done had you known what Edward Snowden did in early 2013?

I am always open to discuss current events and am available at www.FirstAmericanMortgage.net

Wednesday, November 6, 2013

Fannie is Eliminating 3% Down

It has been announced that Fannie Mae is eliminating the 3% down program for home purchases. So, does this mean FHA loans will be competitive again? Since FHA announced in the middle of this year that in addition to hiking the mortgage insurance premium to almost double what it was two years ago, FHA will not allow the cancellation of mortgage insurance for the entire life of the loan on new originations. This meant that if you wanted to put 3% or 3.5% down on a home purchase in most of 2013 and you used an FHA loan - you would be paying approximately double than if you took a regular Fannie Mae Conventional Loan. FHA, with its financial troubles, needed to increase their revenues. They chose to add costs to their loans. Well, they added so many costs that they priced themselves right out of the market two fold!

So now, it appears that Fannie Mae has heard FHA's message:

FHA: "Hey Fannie, you are pricing me out of the business"
Fannie: "Well, FHA, you priced yourself out with those ridiculous increases in mortgage insurance premiums. Then you really shot yourself in the foot stating that new loans will not be allowed to cancel mortgage insurance ever"
FHA: "Yes, but we are broke"
Fannie: "The reason you are broke is because you fail to use common sense and make wide sweeping changes to your policy that render you obsolete"
FHA: "But we are more powerful than you - and the Federal Government needs us to survive"
Fannie: "Ok, we will get rid of 3% down loans"

If you are a buyer and cannot put down at least 5%, you will require FHA financing going forward. Did FHA become competitive or is this a forced manipulation of our economy? 

I am always available to discuss these issues or any other pertinent market topics and can be reached at www.FirstAmericanMortgage.net .

Thank you very much!

Monday, October 7, 2013

The Scottrade Baby Asks: "Are You Managing Your Finances Wisely?"

Are You Managing Your Finances Wisely?

Are you paying too much for your mortgage? Is your money being invested wisely?
If you’re curious about how you could save money every month, why not see if I can help you?
Just give my office a call for a no-fuss, professional consultation. I won't try to push you into making any quick decisions and I won’t waste your time. I work with a team of financial professionals that can help make your life easier, profitable and more secure.
I'll just give you the facts, and maybe save you a few dollars along the way! Just give my office a call at 720-427-8130 or contact us at www.FirstAmericanMortgage.net

Thursday, August 29, 2013

Did the "Great Recession" affect you or anyone you know?

The Federal Housing Administration (or FHA) has announced in one of their recent letters that borrowers who have suffered hardship and had to go through Foreclosure, Short Sale or Bankruptcy are now able to obtain financing within one year of these events. So, if you have lost your job or had some event that has caused you to receive less income, and you went through one of the aforementioned events, you will only need to wait one year before being eligible for FHA financing. This is big! They have reduced this time by more than half. Granted, it is an FHA loan and the mortgage insurance premiums they are requesting are inflated and tough to swallow since their recent increases, nevertheless- this is allowing people to get back into home ownership. Here would be a perfect example of how to use this financing:

- Your home was foreclosed upon last year because you lost your job due to layoffs at your former company.
- You are now gainfully employed and have been for at least 3 months.
- Your current income allows you to qualify for a renovation loan to buy a "fixer upper" property.
- You buy the home for $200,000, put $80,000 of renovation into it, and it appraises for $350,000 a year later.
-You complete a refinance a year after the purchase, when your credit is rebuilt and you qualify for conventional financing.
-This enabled you to buy a home, remodel, and refinance with no mortgage insurance in about a 20 month window.

Of course there are many variables involved in this example, but it remains doable and a very profitable venture.

As always, we are available at www.FirstAmericanMortgage.net to discuss this blog or any other finacing questions you may have.

Thank you very much!

Monday, July 29, 2013

So...why must you provide so much detailed documentation for your mortgage loan file?

The creation of your mortgage is just the first in a series of processes it goes through over its lifetime. Understanding the long-term nature of your mortgage will shed some light on the reasons why lenders are so scrupulous during the underwriting process.

Mortgages are created to be sold. Be aware that most mortgages are created with the intention of reselling them. Mortgages are bundled together after closing into what are called mortgage-backed securities, and these securities are then sold to investors.

Fannie Mae and Freddie Mac are the intermediaries between lenders and investors; effectively, investors forward money to lenders through Fannie and Freddie. In turn, lenders send back mortgages to Fannie and Freddie, who bundle them together (often thousands at a time) and send them to investors, who then send more money.

Fannie sets the guidelines under which the mortgages are underwritten, and the purchase of securities from Fannie/Freddie by investors is based on specific guidelines.

This process explains why lenders are careful. Before these securities are sent to them, however, sample files go through what is called a re-underwriting.

In this process, loans that (for many reasons) are outside the guidelines may need to be repurchased from Fannie/Freddie by the lender. Fannie and Freddie charge up to an 11% penalty to the lender ($22,000 on your $200,000 mortgage) for repurchasing. So in the event of a repurchase, the lender will face: receipt of a long term (in many cases 30 year) asset that they can't sell, reduced ability to lend further as lenders are restricted on loans receivable, and be required to pay a whopping fine to Fannie or Freddie.

This goes a long way to explaining why lenders check files scrupulously and may make what seems like unreasonable requests for additional documentation. 

As always, we are available for your questions or comments at www.FirstAmericanMortgage.net

Thank you very much!

Tuesday, July 2, 2013

Don’t Forget Your Mortgage in Future Plans

Here are some things to consider...as always, you can find us at www.FirstAmericanMortgage.net

Beyond the immediate benefits of home ownership (such as tax advantages), if you're considering entering the housing market, you will also want to look at the longer-term benefits of owning your own property.

These include:

Rental potential

If, at some point in the future, you decide that you need more space and are able to afford a larger home, you may decide that renting out your existing one makes sense.

The monthly rental income will help offset some - if not all - of the expenses of maintaining the property and may actually put money in your pocket each month.

If there comes a point when the property is completely paid off, then the rent could be a great source of retirement income.

Source of equity

Over time, as the value of the property increases and your mortgage balance decreases, you'll be able to tap some of the equity in your home with either a fixed-rate second mortgage, or some type of line of credit.

The equity may come in handy in the future for things such as home repairs and college tuition.

If you expect to be able to pay off your home at some time in the future, you may be considering downsizing to a smaller, less expensive home.

Your home equity may allow you use the proceeds of the sale of your older home to pay cash for a new, less expensive property, and you can deposit the remainder of the proceeds of the sale to provide retirement income, to purchase a vacation property, or for a host of other reasons.

For many decades, real estate has been one of the best places to invest your money, and despite the recent mortgage meltdown, it will continue to be so.

In many cases, it can even outperform the stock market.

Consider your mortgage as part of your long-term retirement plan.

Thursday, May 30, 2013

Posted Today at CNN Money Regarding Ariticle: "Foreclosure sales fall to lowest level since 2008"

Bottom line - the Government runs Fannie and Freddie and has since their inception. The SEC should have had oversight of these giants and admonished them immediately for packaging commercial, subprime and conforming debt in to one securitized asset - i.e. the cause of the credit crisis. Now here we are in 2013, the banks are holding foreclosed homes on their books (in part because the Govn't mandated it in order to avoid a glut of supply on the market and now because their balance sheets are rising with home prices going up) and the Fed is artificially keeping interest rates low. We have an oversupply of home buyers and lack of supply of homes for sale = prices are being driven up. Has nothing to do with job creation or the overall health of our economy.
Whether you are 'left' or 'right', we have a situation where the Govn't didn't have the ability to regulate and enforce the correct policy to stop the credit crisis in the first place and is now POURING more regulation and manipulation in hopes to help our economy and avert crisis. Does anyone believe that the Govn't should stay out of these matters and allow our economy to 'self-regulate' a little more - as did the Geniuses who developed the CONCEPT of our economy (Adam Smith)?


Friday, April 26, 2013

Protest Your Property Taxes!

With depressed property values still evident in some areas, buyers are scooping up properties at a fraction of what they cost a few years ago.

Interestingly, property taxes seemed to have held their own (or in some instances increased) even as these property values flattened or dropped.

This shouldn't come as a surprise, as the tax revenue base in many communities has decreased because foreclosed properties are no longer contributing to the tax revenues. This gap needs to be made up somewhere, and mostly it's being offset by increasing the tax burden on those who are able to pay.

There is little a prospective buyer can do about this tax burden before going to closing; their debt-to-income ratios will be based on current assessments. However, there is plenty buyers can do afterward.

The first step is to contact the taxing body to find out what process to follow to protest property taxes. It may take time and effort, but it can be done.

In many areas, there are companies that assist homeowners by providing the taxing body with supporting data to show that properties are worth less than the taxing body believes. These companies will either charge a flat fee or work for a percentage of the savings realized by the homeowner.

If you have refinanced in the past few years and the appraisal value is lower than the tax assessed value, you can use the appraisal as grounds for your argument to lower your assessed value - and lower your tax burden.

Please feel free to contact Brad@FirstAmericanMortgage.net if you have questions about this process.

Thank you!

Friday, February 22, 2013

Kaleah's Cousin

This little guy has been so much fun over the past two months. We have been going everywhere together and he never leaves our sides. He loves to hang out and is very much looking forward to meeting you. His favorite things are warm milk and clean diapers. Thanks Oscar for being such a great son.

Friday, January 25, 2013

Ability to Repay and the Qualified Mortgage

This month the Consumer Financial Protection Bureau issued its ruling on Ability to Repay and established criteria for the Qualified Mortgage. Something the CFPB has been waiting to issue since the inception of the Dodd-Frank Wall Street Refrom Act. The essence of the ruling is that lenders will need to verify a borrower's ability to repay the mortgage. Also, mortgages that meet certain criteria will be Qualified Mortgages resulting in the lender having reduced litigation risk. In recent history, borrowers have sued banks stating that they were given a loan they could never reasonably pay back (yes, I understand how crazy this sounds - but it has happened to the tune of millions). These law suits prompted the banking lobbyists to ask for a "safe harbor", enter the QM and Ability to Repay.

The second class of loans created by this ruling are high cost mortgages - 1.5% above the prime offered rate. Loans with interest rates above 1.5% over the prime offered rate (and meeting the QM criteria) are offered a lesser degree of legal protection (called rebuttable presumption).

What all this means to you:

1. Mortgage loans will require more documentation Two years tax returns will be required for self-employed. In the past, there were instances where only one year would be required.
2. Mortgage loans that fit the QM criteria may become less expensive and more available. The reduced litigation risk will provide incentive for banks to lend more in this market.
3. Alternative products will become more expensive. The 1.5% cap above the prime offered rate will be in play as the interest rate environment changes. 1.5% above the standard conforming offered rate is not much and many Jumbo and alternative products use an increased rate to offset the risks associated with these loans.

Personally, my business plan has always had a cornerstone of quality loans. These regulations should make things less expensive for my customers. The increased documentation requirements will hurt the self-employed individual's ability to borrow and this is not the right thing to do for our country.