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)?
www.FirstAmericanMortgage.net
Thursday, May 30, 2013
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
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.
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.
Tuesday, September 25, 2012
Low Rates!
With the announcement of Quatitative Easing 3, interest rates are at their lowest levels of all time.
You can find First American Mortgage on the web at - www.FirstAmericanMortgage.net or give us a call 720-427-8130.
Whether you are an experienced investor or a first time homebuyer, we have the experience and the products to fit your needs and provide the BEST value. Call today!
You can find First American Mortgage on the web at - www.FirstAmericanMortgage.net or give us a call 720-427-8130.
Whether you are an experienced investor or a first time homebuyer, we have the experience and the products to fit your needs and provide the BEST value. Call today!
Tuesday, August 14, 2012
To Privatize or Not?
The newly appointed running mate of Presidential Candidate Mitt Romney, Paul Ryan has proposed the following regarding Fannie Mae and Freddie Mac: "The housing-finance system of the future will allow private-market
secondary lenders to fairly, freely and transparently compete, with the
knowledge that they will ultimately bear appropriate risk for the loans
they guarantee. Their viability and profitability will be determined,
not by political favoritism, but by the soundness of their practices and
the value of their services."
Fannie Mae and Freddie Mac are companies that ensure (or are supposed to ensure) quality in mortgage loan files to be ultimately bundled and sold to investors. One of the biggest issues with Fannie and Freddie over the last ten years is they co-mingled the mortgages sold to investors. Sub-prime, commercial and A-paper loans were all bundled into the same investment and sold. Investors were mislead on the risks involved in the asset. When sub-prime loans started defaulting, it brought down "so called" A-paper securities and unraveled the implied trust in the securities outstanding and for sale. Currently former executives of Fannie are being sued by the SEC over these issues.
The main argument against privatizing (mostly from politicians) is that without a government guarantee, mortgages will become more expensive to the consumer. Well, over the past ten years we have seen interest rates go to ridiculously low levels because our government is purchasing these mortgage securities. It is a false market. So, are mortgages inexpensive now, or are they artificially low to stimulate our housing market. We can all agree the latter is the case. The free market will undoubtedly intervene and the costs will self regulate. Besides, over the last four years we have seen numerous companies receive government assistance that at no time had an implied guarantee.
Ultimately, it is the responsibility of these two companies (GSEs - Government Sponsored Entities) to ensure that the mortgage loans that are bundled into investments represent the implied quality of the investment. This is the strong hold - this is what creates investor confidence - designed to stimulate the purchase of these investments. Well...Fannie and Freddie have failed at this. So, if they failed once with their current structure, why will they not fail again if the same structure is left in place?
In the end, mortgage investments will get purchased because they are a good investment. Having the government behind them didn't prevent the mortgage meltdown and it will not help going forward. Our housing market would be much better served by privatizing mortgage securitization firms (Fannie and Freddie are securitization firms). Common sense lending could be a dream come true, the costs would self-regulate, competition and transparency would help ensure quality, and investors will purchase the securities because of return on investment.
Fannie Mae and Freddie Mac are companies that ensure (or are supposed to ensure) quality in mortgage loan files to be ultimately bundled and sold to investors. One of the biggest issues with Fannie and Freddie over the last ten years is they co-mingled the mortgages sold to investors. Sub-prime, commercial and A-paper loans were all bundled into the same investment and sold. Investors were mislead on the risks involved in the asset. When sub-prime loans started defaulting, it brought down "so called" A-paper securities and unraveled the implied trust in the securities outstanding and for sale. Currently former executives of Fannie are being sued by the SEC over these issues.
The main argument against privatizing (mostly from politicians) is that without a government guarantee, mortgages will become more expensive to the consumer. Well, over the past ten years we have seen interest rates go to ridiculously low levels because our government is purchasing these mortgage securities. It is a false market. So, are mortgages inexpensive now, or are they artificially low to stimulate our housing market. We can all agree the latter is the case. The free market will undoubtedly intervene and the costs will self regulate. Besides, over the last four years we have seen numerous companies receive government assistance that at no time had an implied guarantee.
Ultimately, it is the responsibility of these two companies (GSEs - Government Sponsored Entities) to ensure that the mortgage loans that are bundled into investments represent the implied quality of the investment. This is the strong hold - this is what creates investor confidence - designed to stimulate the purchase of these investments. Well...Fannie and Freddie have failed at this. So, if they failed once with their current structure, why will they not fail again if the same structure is left in place?
In the end, mortgage investments will get purchased because they are a good investment. Having the government behind them didn't prevent the mortgage meltdown and it will not help going forward. Our housing market would be much better served by privatizing mortgage securitization firms (Fannie and Freddie are securitization firms). Common sense lending could be a dream come true, the costs would self-regulate, competition and transparency would help ensure quality, and investors will purchase the securities because of return on investment.
Friday, July 13, 2012
Running in the Mud for MS!
I have committed to run five miles in the mud up at Winter Park on August 4th to raise funding to end Multiple Sclerosis. The event is titled "MuckRuckus" and will consist of a five mile run through mud and many obstacle courses. Take a look at the website listed below. There are some pretty interesting pictures and descriptions of the event.
This is the link to my page. http://main.nationalmssociety.org/site/TR/MuckRuckus/COCMUCKEvents?px=11306591&pg=personal&fr_id=18837
I am asking you to join me in the movement to create a world free of MS by making a contribution (or join our running team) in support of my efforts. Contributions can be made on the web link above and any size contribution is much appreciated.
Thank you very much!
This is the link to my page. http://main.nationalmssociety.org/site/TR/MuckRuckus/COCMUCKEvents?px=11306591&pg=personal&fr_id=18837
I am asking you to join me in the movement to create a world free of MS by making a contribution (or join our running team) in support of my efforts. Contributions can be made on the web link above and any size contribution is much appreciated.
Thank you very much!
Monday, June 11, 2012
Dimon to Testify
This week the stage is set for James Dimon to testify before the senate banking committee regarding the $2 billion loss JP Morgan sustained from hedge trading losses in early 2012. Will the fall out from this reckless trading be the end of JP Morgan Chase (the losses are expected to far exceed $2 billion)? Some believe the majority of the top 5 banks in our country are on a predetermined path to extinction. I disagree with this notion.
The top 5 banks will prosper for some time ahead due to sheer size and scope. To date, the FDIC has shut down 28 banks thus far in 2012 compared to 45 banks at this time in 2011. Even though we are at nearly a 50% reduction, this is still far too many banks being forcibly closed. Once this number starts to level out to the pre-2008 figures (http://www.fdic.gov/bank/individual/failed/banklist.html), consumers will feel more secure and turn to smaller, more local financial institutions to handle their banking needs. This will put pressure on the top 5 banks, but will not force them out of business.
Regulation from legislation is the question to the existence of the top 5 banks. The political lobbies of the top 5 banks are too strong and too impor$ant to the politicians to propose legislature that will lead to their demise.
For now and for later, trust First American Mortgage with your real estate financing needs. We work with both large and small banks to ensure that you are getting the Best Value available.
Thank you!
The top 5 banks will prosper for some time ahead due to sheer size and scope. To date, the FDIC has shut down 28 banks thus far in 2012 compared to 45 banks at this time in 2011. Even though we are at nearly a 50% reduction, this is still far too many banks being forcibly closed. Once this number starts to level out to the pre-2008 figures (http://www.fdic.gov/bank/individual/failed/banklist.html), consumers will feel more secure and turn to smaller, more local financial institutions to handle their banking needs. This will put pressure on the top 5 banks, but will not force them out of business.
Regulation from legislation is the question to the existence of the top 5 banks. The political lobbies of the top 5 banks are too strong and too impor$ant to the politicians to propose legislature that will lead to their demise.
For now and for later, trust First American Mortgage with your real estate financing needs. We work with both large and small banks to ensure that you are getting the Best Value available.
Thank you!
Wednesday, May 30, 2012
If This Then That!
Posting here...makes it's way around the social media circuit. FB and Twitter are now victims of simultaneous posts! Mahalo.
Tuesday, May 22, 2012
Paul Volcker and Securitization
Earlier this month, Paul Volcker (American Economist and Chairman of the Fed under President Carter and President Reagan) stated that modern securitization causes banks to engage in speculative trading putting their customers and shareholders at too large a risk.
Gramm-Leach-Bliley tore down Glass-Steagall in 1999 under President Clinton. Glass-Steagall was a law that was in place to prevent diversion of funds into speculative operations and prevent the affiliation of banks, insurance, and securities companies. Political lobbying and economic pressure caused congress to overturn a law that had held our financial system together for over 66 years! Now we have banks, insurance and investments all under the same corporation - too big to fail.
The new financial reform bill (Frank-Dodd) has some provisions to abate speculation within financial institutions (ironically called "The Volcker Rule"). Will it be enough? JP Morgan Chase is under investigation currently for violating this rule and loosing over $2 billion due to speculative trading. Let's see what happens here.
Yes, Fannie and Freddie need to be overhauled with a serious dose of common sense (the ghost of Thomas Paine!) While modern securitization aids in allowing speculation by banks, it is not the reason the US banking sector almost collapsed in 2008. This was a direct result of the greed caused by enticement of lobbyists from banks, insurance companies, and securities firms to repeal Glass-Stegall and the fortune they stood to make (and have made).
Gramm-Leach-Bliley tore down Glass-Steagall in 1999 under President Clinton. Glass-Steagall was a law that was in place to prevent diversion of funds into speculative operations and prevent the affiliation of banks, insurance, and securities companies. Political lobbying and economic pressure caused congress to overturn a law that had held our financial system together for over 66 years! Now we have banks, insurance and investments all under the same corporation - too big to fail.
The new financial reform bill (Frank-Dodd) has some provisions to abate speculation within financial institutions (ironically called "The Volcker Rule"). Will it be enough? JP Morgan Chase is under investigation currently for violating this rule and loosing over $2 billion due to speculative trading. Let's see what happens here.
Yes, Fannie and Freddie need to be overhauled with a serious dose of common sense (the ghost of Thomas Paine!) While modern securitization aids in allowing speculation by banks, it is not the reason the US banking sector almost collapsed in 2008. This was a direct result of the greed caused by enticement of lobbyists from banks, insurance companies, and securities firms to repeal Glass-Stegall and the fortune they stood to make (and have made).
Friday, April 20, 2012
Friday, March 23, 2012
FHA Changes MIP Premiums
On 4/9/12, President Obama's Temporary Payroll Tax Cut Continuation Act of 2011 is requiring FHA to increase the mortgage insurance premiums for newly originated loans. Currently, 30 Year Fixed FHA Mortgages require 1% of the loan amount paid upfront as mortgage insurance. This figure can be financed into the loan amount and is rarely seen on the borrower's bottom line. In addition to this, there is a 1.15% annual mortgage insurance premium that is paid monthly.
These fees have been going up at various intervals over the last few years. The demise of "sub-prime" lending has allowed FHA insured loans to flourish with their low down payment requirement of 3.5%.
The changes that are going to occur on 4/9/12 will make a big impact on the affordability of FHA loans. The upfront mortgage insurance premium is going to 1.75%. A whopping 75% increase. The annual mortgage insurance paid monthly will increase to 1.25%. .10% on $100,000 equals an $8.33 increase in monthly payment. This is quite low compared to the last increase of .25% in April of 2011.
What does this mean to you? - With the ample availability of 5% down payment conforming loans, not too much at the moment. FHA loans drive a very important sector of our housing economy right now. This sector is allowing the nation's banks, GSEs (Fannie and Freddie) and other holding companies to get out from under the massive amount of properties they own as a result of foreclosure and default. For these institutions, increasing the difficulty for borrowers to obtain FHA financing, is not good and results in a longer term holding non-performing assets. Fortunately, we are starting to see REITs coming alive again and buying up these non-performing assets due to the strengthening rental market. As investors step up to make up for the shortfall of FHA buyers, look for prices and interest rates to head north.
These fees have been going up at various intervals over the last few years. The demise of "sub-prime" lending has allowed FHA insured loans to flourish with their low down payment requirement of 3.5%.
The changes that are going to occur on 4/9/12 will make a big impact on the affordability of FHA loans. The upfront mortgage insurance premium is going to 1.75%. A whopping 75% increase. The annual mortgage insurance paid monthly will increase to 1.25%. .10% on $100,000 equals an $8.33 increase in monthly payment. This is quite low compared to the last increase of .25% in April of 2011.
What does this mean to you? - With the ample availability of 5% down payment conforming loans, not too much at the moment. FHA loans drive a very important sector of our housing economy right now. This sector is allowing the nation's banks, GSEs (Fannie and Freddie) and other holding companies to get out from under the massive amount of properties they own as a result of foreclosure and default. For these institutions, increasing the difficulty for borrowers to obtain FHA financing, is not good and results in a longer term holding non-performing assets. Fortunately, we are starting to see REITs coming alive again and buying up these non-performing assets due to the strengthening rental market. As investors step up to make up for the shortfall of FHA buyers, look for prices and interest rates to head north.
Monday, February 20, 2012
Jimmy Buffett's Long Lost, Clean Cut, Relative.
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| Hi Kaleah! |
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| Hi Uncle Brad! |
Thursday, February 16, 2012
Three's Company
Tuesday, February 7, 2012
Bank of America said to put off Refinancing Clients
Bloomberg.com reported today that Bank of America has started a reservation system allowing their customers to receive a call back in 60-90 days due to incoming call volume. So yes, incredibly they are saying "we are too busy for your money right now" during these historically low interest rates. Guess what? - First American Mortgage, LLC is open for business and we are not only originating refinances currently, we are providing great service too! Did Bank of America tell you to wait 60 days before they could help you? Well, don't think twice - go to www.FirstAmericanMortgage.com, fill out our secure online application and get a call from me, the owner, that very same day. I am never too busy for your referrals either. Thank you!
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