Mortgage Mayhem

[MixedPlateBroker]

I just finished watching the Wednesday episode of "Late Night with Andy Bumatai" and I was compelled to comment on some of the advice given by Ms. Tanisha Souza, which bordered on fear-mongering.

I usually don't post on HT regarding work-related issues (mortgage broker) as I usually come here for escape and release. But Ms. Souza's irresponsible and misleading comments about the mortgage market cannot go unanswered.

Lie #1: There is no more subprime.
Fact: There are a surprising number of subprime lenders in business and still funding loans in Hawaii despite a culling of the herd. In fact, there are more subprime lenders available to us than the number of years since Ms. Souza left Goodsill Anderson Quinn & Stifel LLP (http://starbulletin.com/2003/07/20/business/bizbriefs.html) to take the helm of Tardus Financial Services of Honolulu.

Lie #2: People with a credit score < 680 "can't get a home."
Fact: I'm assuming she was referring to securing financing to purchase a home, as she made a broad generalization. But not only can people with credit < 680 secure financing to buy a home, they can qualify for multi-million dollar loans to purchase large commercial and residential projects ... if they have enough verifiable income.

Lie #3: People with a 700 credit score or better can put 10% or 15% down (on a purchase) where before they could put down 5% of 0%. Today it's just not the case that you can get 100% financing.
Fact: There are still many mortgage programs which offer up to 100% financing for purchases and rate-and-term refinances. Short list: Freddie Mac 100, Home Possible 100, Fannie Mae Flex 100, My Community, VA and FHA. These programs were designed primarily for owner-occupants and some have income or occupation restrictions. FHA loans are gaining in popularity and don't even require a credit score.

I have been to a Tardus presentation and I know people who've worked for the company. Tardus' original mission was to provide homeowners a system, utilizing credit cards and a HELOC, to front-load their mortgage -- theoretically paying down the principal more quickly. Ms. Souza now seems to be positioning them as a credit repair shop. They don't broker or lend money. You might find their Hawaii BBB report here (http://www.hawaii.bbb.org/commonreport.html?compid=12000168) interesting. Although their multiple complaints are mostly resolved, it's very odd that the company's principal is an administrative assistant.

Oh, and I apologize for the slightly inflammatory title, but I already spend hours everyday educating and advising my clients about mortgages. I could not stand idly by while Ms. Souza spreads potentially harmful misinformation in order to steer more business to her own company. Hopefully, Andy will attract other sponsors with some ethics and who won't demand seat time. Best of luck to him.

[Pomai]

If I ever need a home equity loan or a new mortgage, I'm coming to see you. I like your optimistic clarification of facts. :)

[1stwahine]

MixedPlateBroker, Mighty impressive! P.K. and I will call you too!!!;)

Auntie Lynn

[MixedPlateBroker]

Mahalo Pomai and Auntie Lynn. I look forward to it!

I'm a big believer in educating my clients so they can make informed decisions. I've even been thinking about starting an informational thread about mortgages to put out some genuinely helpful information for everyone. If anyone would find that interesting, please let me know.

[1stwahine]

Most definitely! We look forward to your information!

Mahalo

Auntie Lynn

[MatildaRose]

Mahalo Pomai and Auntie Lynn. I look forward to it!

I'm a big believer in educating my clients so they can make informed decisions. I've even been thinking about starting an informational thread about mortgages to put out some genuinely helpful information for everyone. If anyone would find that interesting, please let me know.


Yes, please do start the thread. I'm interested, and I know my husband is, too. Thanks for offering.

[tutusue]

Great idea, MPB.

[Leo Lakio]

I've even been thinking about starting an informational thread about mortgages to put out some genuinely helpful information for everyone. If anyone would find that interesting, please let me know.While I can hear Ryan make the standard disclaimer about following advice found on an internet discussion board - it sounds like a fine idea. Not a service I need at present (having become a first-time homeowner about five years ago), but the mortgage world has both constants and variables that it would be great to gain information on, particularly from those in the know. I would think you and timkona would have plenty to share with us.

[ploal5333]

I would think you and timkona would have plenty to share with us.

Yes, I'd like to hear a realtor's point of view. :mad:

[blueyecicle]

We had a credit score of 670 and bought a home with NO money down and at 5.5% no problems.

[Miulang]

When I bought my condo, I had a mortgage broker who was a former teacher, so he really explained the ins and outs of home financing to me. I also had a real estate agent who represented me instead of the seller (she also still teaches adult ed classes on home financing and refinancing and FSBO) so I had a really good education. Got my condo with 20% down, so I avoided the extra PMI that was required at the time on conventional loans.

Miulang

[tutusue]

We had a credit score of 670 and bought a home with NO money down and at 5.5% no problems.
How long ago? There's been a fairly dramatic shift in the market in the past 6 weeks or so. MPB, please correct me if I'm wrong about the timing of the shift. Google will probably turn up lotsa info! I'm too lazy to check it myself! :rolleyes:

[kamuelakea]

Beware! The United States is at the peak of the worst national housing bubble in history. It's only begun. There will be blood in the streets.

To protect yourself;

1) Do not trust Mortgage Brokers
2) Do not trust Real Estate Agents.

They are both motivated by commission only.

From www.prweb.com;

1. If you currently have a "Pay Option Adjustable Rate Mortgage", get out of it if you can afford to. If you can't afford to get out, Americas Watchdog highly recommends that you contact your lender & demand a fixed rate product. If this does not work, the homeowner might want to consult with a bankruptcy attorney.

2. If a homeowner is attempting to sell a home in many major US markets they will either have to lower their asking price, or they might be better off renting the home for at least three years.

3. If you are a buyer, wait if you can.

In the opinion of Americas Watchdog, 2008 will bring more real estate price reductions in the southwest, southeast and northeast. In some markets like California, reductions could be 15% or more.

4. If you are an existing homeowner with adjustable rate mortgage, refinance your mortgage into either a 30 year fixed rate mortgage, or get a five or seven year adjustable rate mortgage and stay put. If an existing homeowner has a good mortgage product---say put.

5. Individuals who are Veterans, homeowners/consumers who have average to even poor credit or first time homeowners, should strongly consider getting a FHA or VA Mortgage. FHA & VA mortgage products might be the absolute best mortgage products available in today's mortgage arena.

6. If a homeowner or consumer is looking for a A+ honest mortgage lender, Americas Watchdog has endorsed American Interbanc as the best priced conventional mortgage lender doing business in the US for individuals with good to excellent credit ("the mortgage lender bankers go to"). American Interbanc's web site is at Http://americaninterbanc.com and their toll free number is 1-800-724-0004.

7. Do not finance or refinance your home without the National Mortgage Complaint Center doing a thorough examination of your mortgage documents. On average the National Mortgage Complaint Center saves consumers $500 to $1000 on their mortgage fees. The cost of this inspection service is $65, or for a full mortgage review to see if a consumer was cheated the cost is $150. The National Mortgage Complaint Centers Web Site is located at Http://NationalMortgageComplaintCenter.Com & their phone number is 1-866-714-6466.

8. Consumers should not fall for too good to be true "no cost" mortgages or Internet solicitations.

9. Consumers & homeowners should demand honest answers from elected officials. Americas Watchdog for years has been advocating that banks and mortgage bankers disclose the same fees that mortgage brokers must disclose. Specifically "yield spread premiums". A "yield spread premium" is a kick back mortgage lenders get for increasing a consumers interest rate/monthly mortgage payment. Mortgage Brokers have to disclose these fees, banks or mortgage bankers do not.

BEWARE: If it is cheaper to rent than to buy with a 20% downpayment and a FIXED 30 year rate, you are being screwed.

[MixedPlateBroker]

How long ago? There's been a fairly dramatic shift in the market in the past 6 weeks or so. MPB, please correct me if I'm wrong about the timing of the shift. Google will probably turn up lotsa info! I'm too lazy to check it myself! :rolleyes:

You could actually still get that ... if you qualify for a VA loan and can secure additional seller credit or gift funds. Otherwise, it's most likely not within the last few months.

[SusieMisajon]

Mahalo Pomai and Auntie Lynn. I look forward to it!

I'm a big believer in educating my clients so they can make informed decisions. I've even been thinking about starting an informational thread about mortgages to put out some genuinely helpful information for everyone. If anyone would find that interesting, please let me know.
Is it true that if your mortgage company goes broke, you stand to lose your house, even if you have kept up with the paymens?

[MixedPlateBroker]

Beware! The United States is at the peak of the worst national housing bubble in history. It's only begun. There will be blood in the streets.
Alarmist (http://dictionary.reference.com/browse/alarmist) –noun 1.a person who tends to raise alarms, esp. without sufficient reason, as by exaggerating dangers or prophesying calamities.

If we were at the peak of a bubble, median sales prices would have been increasing until today. That's not the case. There's already been a slight downturn in values nationally w/some moderate regional downward adjustments.
To protect yourself;

1) Do not trust Mortgage Brokers
2) Do not trust Real Estate Agents.

They are both motivated by commission only.
I appreciate your concern, but it's a bit misguided. I personally know a number of mortgage brokers who get paid a base salary. And I'm sure we've all seen those Help-U-Sell realtor signs -- they work for a flat fee.

Just as in any occupation, there are good and bad apples. Most people wouldn't suggest that we don't trust the Chinese because they're trying to kill us with lead paint and tainted toothpaste. And so we should judge each person as an individual.

1. If you currently have a "Pay Option Adjustable Rate Mortgage", get out of it if you can afford to. If you can't afford to get out, Americas Watchdog highly recommends that you contact your lender & demand a fixed rate product. If this does not work, the homeowner might want to consult with a bankruptcy attorney.

First of all, it's not cool to demand a change to your mortgage terms when you've signed documents stating you understood what you were getting into and that you agree to repay the lender according to the stated terms. At least ask nicely. And bankruptcy should be the last resort for homeowners, especially considering today's tightened guidelines and the potential mortal blow to your credit scores. The FHASecure program is designed to help homeowners avoid foreclosure, if they have some (at least 2.25%) equity. It's better to look into short selling your home if you're upside down. Consult with a financial adviser (not the lender) to see if it's feasible.

2. If a homeowner is attempting to sell a home in many major US markets they will either have to lower their asking price, or they might be better off renting the home for at least three years.

You should consult with your realtor and escrow officer to find out what comparable homes in your neighborhood have recently sold for. The days of getting an offer with two backups in the first week on market are over. You could lose out on thousands of dollars by prematurely cutting your asking price. And not everyone can afford to absorb three years of negative cash flow on a rental property if rents are soft.

3. If you are a buyer, wait if you can.

In the opinion of Americas Watchdog, 2008 will bring more real estate price reductions in the southwest, southeast and northeast. In some markets like California, reductions could be 15% or more.


Foreclosures will get a significant bump in the next few years from market fallout. If you're thinking to pick up an investment property at auction, waiting = losing.

4. If you are an existing homeowner with adjustable rate mortgage, refinance your mortgage into either a 30 year fixed rate mortgage, or get a five or seven year adjustable rate mortgage and stay put. If an existing homeowner has a good mortgage product---say put.


Going from an ARM to an ARM doesn't make any sense in today's market, except in few extreme scenarios. The spread between ARM and fixed-rate mortgage (FRM) rates has never been smaller. Get a FRM if you're refinancing.

5. Individuals who are Veterans, homeowners/consumers who have average to even poor credit or first time homeowners, should strongly consider getting a FHA or VA Mortgage. FHA & VA mortgage products might be the absolute best mortgage products available in today's mortgage arena.

Finally something I can agree with.
6. If a homeowner or consumer is looking for a A+ honest mortgage lender, Americas Watchdog has endorsed American Interbanc as the best priced conventional mortgage lender doing business in the US for individuals with good to excellent credit ("the mortgage lender bankers go to"). American Interbanc's web site is at Http://americaninterbanc.com (http://americaninterbanc.com/) and their toll free number is 1-800-724-0004.

7. Do not finance or refinance your home without the National Mortgage Complaint Center doing a thorough examination of your mortgage documents. On average the National Mortgage Complaint Center saves consumers $500 to $1000 on their mortgage fees. The cost of this inspection service is $65, or for a full mortgage review to see if a consumer was cheated the cost is $150. The National Mortgage Complaint Centers Web Site is located at Http://NationalMortgageComplaintCenter.Com (http://nationalmortgagecomplaintcenter.com/) & their phone number is 1-866-714-6466.
Neither Americas Watchdog nor National Mortgage Complaint Center is listed on the national BBB website. And both the aforementioned companies and American Interbanc all seem to rely heavily on PR pieces (direct and fed to media outlets) to pat themselves on their backs. And for a lender so highly praised by Americas Watchdog, independent praise by satisfied clients is noticeably absent on the Google-scape and here (http://www.labbb.org/BBBWeb/Forms/Business/CompanyReportPage_Expository.aspx?CompanyID=130969 21) on their BBB page.
It doesn't take much imagination to hypothesize that perhaps the three companies are heads sprouting from the same corporate beast. Examination of mortgage documents? They could be passing client and loan info to American Interbanc in an attempt to cherrypick business. Direct lenders have been accused of similar practices in the past.
8. Consumers should not fall for too good to be true "no cost" mortgages or Internet solicitations.
Another pinch of truth here.
9. Consumers & homeowners should demand honest answers from elected officials. Americas Watchdog for years has been advocating that banks and mortgage bankers disclose the same fees that mortgage brokers must disclose. Specifically "yield spread premiums". A "yield spread premium" is a kick back mortgage lenders get for increasing a consumers interest rate/monthly mortgage payment. Mortgage Brokers have to disclose these fees, banks or mortgage bankers do not.
OK. So now they're saying mortgage brokers can be better to deal with than direct lenders or banks? No argument here.:p

BEWARE: If it is cheaper to rent than to buy with a 20% downpayment and a FIXED 30 year rate, you are being screwed.

Most anyone who's been renting the same place for at least five years in an area with increasing population could expect to pay 50%-100% more on a mortgage for a comparable place now -- unless they've been getting hit with regular rent increases. The warning might hold water in some place like Buffalo, NY though.

[SusieMisajon]

http://afp.google.com/article/ALeqM5hvtas4WFDhWyNipjRy9lr1u3nIzw

Britain is right now, at this moment, having a bank run...the lines of people waiting to get their money out reminds me of another time, back in the
late twenties.

[kamuelakea]

If we were at the peak of a bubble, median sales prices would have been increasing until today. That's not the case. There's already been a slight downturn in values nationally w/some moderate regional downward adjustments.

Okay so we are just going over the peak of the roller coaster. So what? Does that mean its a great time to buy?

I appreciate your concern, but it's a bit misguided. I personally know a number of mortgage brokers who get paid a base salary. And I'm sure we've all seen those Help-U-Sell realtor signs -- they work for a flat fee.

Whatchout gang. Dis guy is one soood talkah. "a number of" could be one. and "base salary" doesn't rule out the fact that most are paid on commission or percentage as well.

As far as the "flat fee realtors", they are all flat fee. Whether its 6000.00 or 6%, its still a flat fee. They only way they get that fee is by closing the deal and thats the only thing they work for, closing the deal. That is why one should never trust any agent or broker. NOBODY.

First of all, it's not cool to demand a change to your mortgage terms when you've signed documents stating you understood what you were getting into and that you agree to repay the lender according to the stated terms.

What is not cool is for an entire industry to turn a blind eye to the total abandonment in lending standards over the last few years and for people like you to go whistling along like there is nothing wrong. The govenement is most at fault for letting this happen. The mortage brokers and real estate agents and appraisers are just the slimely implementors.



You should consult with your realtor and escrow officer to find out what comparable homes in your neighborhood have recently sold for.

Never consult with either of these clowns who only have one interest, close the deal. Consult with a financially smart friend or relative who does not have a stake in the deal. Hire a financial advisor to look over you income and ability to pay etc. Never trust a realtor or mortgage broker.

Foreclosures will get a significant bump in the next few years from market fallout. If you're thinking to pick up an investment property at auction, waiting = losing.

I don't know exactly what you are saying here. The only people who are going to lose are those who bought in the last 4 years, who cannot afford their current or future payments and who do not sell NOW. They are going to be forclosed upon and so they will lose.


Neither Americas Watchdog nor National Mortgage Complaint Center is listed on the national BBB website.

BBB is meaningless. They call businesses and try to EXTORT a membership fee so that you can be listed as an "approved business". Has nothing to do with whether the particualar business is reputable or not.


Most anyone who's been renting the same place for at least five years in an area with increasing population could expect to pay 50%-100% more on a mortgage for a comparable place now

Yes, and real estate travels in cycles. That is why anyone considering buying a home now should simply compare their after tax saving cost of buying to the amount they could rent the same home for. Take the cheaper option.

For example, if a 80 year old cottage in Kapahulu would sell for 750,000, then your mortgage and taxes on a 6% 30 year would be about 4500 per month. After tax savings of about 30%, you would still be paying 3000 per month. Plus you are responsible for all repairs and home owners insurance. Now you're back up to 3500 a month. If you can rent the same home for less at a time when we are closer to the peak than the trough, then you are way better off renting.

What this current environment and its mortage brokers and real estate agents will do is tell you they can get you a 4.5% teaser loan so that the initial payments will be closer to the cost of renting. Then in 5 years, your payment doubles and the home is now worth 550,000 and your are screwed. But the mortgage broker and the real estate agent got their commission and are enjoying life.

Forget all the rest of the mumbojumbo big word stuff that they used to convince you and confuse you. Just compare ownership costs and rental postential of the same property and make your decision that way.

There is almost no reason for any average working stiff to get any loan other than a 10 to 20% down, FIXED rate mortgage. None. These were historically loans given only to wealthy investors. Now they are entrapping millions of Americans into debt slavery and or forclosure.

Again, Beware my friends. Be very carefull.

[SusieMisajon]

Is it true that if your mortgage company goes broke, you stand to lose your house, even if you have kept up with the paymens?
hopeful bump

[MixedPlateBroker]

Susie,
Bottom line is that you don't have to worry. Most companies - whether they are banks, lenders, etc - sell the mortgages they fund to the secondary market within a year. In the off chance that a company is holding your mortgage when it files bankruptcy, the bankruptcy trustee will supervise the selling of mortgages to the secondary market. In some cases, entire divisions of a company are sold off, which could include the loan servicing division.

The main thing is to contact whomever was last servicing your mortgage if they happen to file bankruptcy so you can make sure your payment goes to the right place. Another tip to remember is never sign up for the automatic payment service of the company which holds your mortgage. I've spoken to dozens of homeowners who've had their credit histories damaged because automatic payments weren't applied correctly or because of some "glitch" in the system. It's better to pay the tradiitonal way via check as you'll have proof of payment on your account statement.

[SusieMisajon]

Thanks for the reply.

[MixedPlateBroker]

Okay so we are just going over the peak of the roller coaster. So what? Does that mean its a great time to buy?

Yes, it's a great time to buy ... if you're not a speculator simply looking to flip a home for quick profit. Real estate has always and will continue to be a great long-term investment. Look at any chart of median home prices that spans 20, 50, even 100 years and you'll see what I mean.
Whatchout gang. Dis guy is one soood talkah. "a number of" could be one. and "base salary" doesn't rule out the fact that most are paid on commission or percentage as well.

As far as the "flat fee realtors", they are all flat fee. Whether its 6000.00 or 6%, its still a flat fee. They only way they get that fee is by closing the deal and thats the only thing they work for, closing the deal. That is why one should never trust any agent or broker. NOBODY.
By "a number," I mean dozens. And the term "base salary" already inherently implies that someone gets paid something else on top of their base - whether it's hazard pay, a monthly bonus, commission or what have you - otherwise it would just be called a salary.:rolleyes:

Most realtors are actually paid commission. Sorry to bore most of you with the following clarification, but "flat fee" means a person performs a specific service for one set price regardless of the dollar amount of the transaction whereas "commission" means a person performs a service for a fluid price dependent on the dollar amount of the transaction. This (http://starbulletin.com/2002/10/20/business/story1.html) dusty S-B article might help if I'm still not making sense. If someone was selling a million-dollar property, it's quite obvious that $6,000 is not the same as 6%, which would be $60,000.

Most people who want to buy, sell or refinance a home actually want to close their deals as quickly as possible. I have yet to run across a client who would prefer the process to be a long, drawn-out affair. I know I certainly wouldn't trust someone getting paid minimum wage to go the extra mile to get me the best financing to purchase a home or to sell my home for top dollar within 45 days of putting it on the market.

Whatchout gang. Dis guy is one soood talkah.

Thank you for the compliment. "Sood (http://www.reference.com/search?r=13&q=Sood)" is a brave person or victor of enemies, apparently.


What is not cool is for an entire industry to turn a blind eye to the total abandonment in lending standards over the last few years and for people like you to go whistling along like there is nothing wrong. The govenement is most at fault for letting this happen. The mortage brokers and real estate agents and appraisers are just the slimely implementors.


It's amazing how this guy abandons his talking points and jumps to the next one once his position becomes indefensible. I'm surprised he doesn't work for the White House. But seriously, broad negative generalizations are really in poor taste. They're more typical of racists, misogynists and other hate mongers. Like I said before, judge each person as an individual. Lending guidelines aren't to blame, the people who abused or circumvented the guidelines are to blame -- those ... individuals. :mad: I'm sure no one would appreciate it if I went around ranting that Big Island transplants from Oahu shouldn't be trusted because they can't handle the pressures of big city life and ran away to the Big Island. Good thing I'd never make such an ignorant statement.

Never consult with either of these clowns who only have one interest, close the deal. Consult with a financially smart friend or relative who does not have a stake in the deal. Hire a financial advisor to look over you income and ability to pay etc. Never trust a realtor or mortgage broker.

A financially smart friend or relative who has no knowledge of the dollar amount of recent home sales in your neighborhood or what the current listings are is about as helpful as any stranger picked at random shopping at Ala Moana. I love my mom, but I'd never rely on her for legal defense counsel if I somehow found myself on trial.

I don't know exactly what you are saying here. The only people who are going to lose are those who bought in the last 4 years, who cannot afford their current or future payments and who do not sell NOW. They are going to be forclosed upon and so they will lose.

Again moving away from the talking point. My advice was in response to the statement that buyers should wait, if they can. If a buyer found a good deal among foreclosure listings, they should not wait to make an informed bid. Waiting means they simply miss the opportunity to possibly pick up a property at well below market value. Anyone who follows the real estate market knows that foreclosures are up this year and the forecast is for the trend to continue.
BBB is meaningless. They call businesses and try to EXTORT a membership fee so that you can be listed as an "approved business". Has nothing to do with whether the particualar business is reputable or not.
That's funny. According to his highly-touted :rolleyes: Americas Watchdog site:

Top Five Do’s

1. Check out the mortgage lender you are about to do business with. Check with the local Better Business Bureau and check the rip-off report on line for any negative reports or postings about the lender.


Yes, and real estate travels in cycles. That is why anyone considering buying a home now should simply compare their after tax saving cost of buying to the amount they could rent the same home for. Take the cheaper option.

For example, if a 80 year old cottage in Kapahulu would sell for 750,000, then your mortgage and taxes on a 6% 30 year would be about 4500 per month. After tax savings of about 30%, you would still be paying 3000 per month. Plus you are responsible for all repairs and home owners insurance. Now you're back up to 3500 a month. If you can rent the same home for less at a time when we are closer to the peak than the trough, then you are way better off renting.

What this current environment and its mortage brokers and real estate agents will do is tell you they can get you a 4.5% teaser loan so that the initial payments will be closer to the cost of renting. Then in 5 years, your payment doubles and the home is now worth 550,000 and your are screwed. But the mortgage broker and the real estate agent got their commission and are enjoying life.

Forget all the rest of the mumbojumbo big word stuff that they used to convince you and confuse you. Just compare ownership costs and rental postential of the same property and make your decision that way.

There is almost no reason for any average working stiff to get any loan other than a 10 to 20% down, FIXED rate mortgage. None. These were historically loans given only to wealthy investors. Now they are entrapping millions of Americans into debt slavery and or forclosure.

Again, Beware my friends. Be very carefull.

This is simply tackling the issue ass backwards. First of all, prospective homeowners should determine how much house they can afford. I won't go into the boring details since there are countless online calculators which would help determine and explain this for them.

Then a person should decide how long they plan to hold onto the property. Blindly insisting on a 30-year fixed-rate mortgage doesn't make much sense if you're in the military, won't be in Hawaii for longer than six years and don't plan to keep the property. In that case, a lower-cost, lower-rate 7/1 Adjustable Rate Mortgage would provide initial savings and monthly savings with no downside over a 30FIX.

A person also needs to look beyond simple tax deductions and the cash flow difference of renting vs. buying. They also need to take into account that a home purchase means they're acquiring an asset which adds to their net worth as time passes and also grows in value. The $750,000 cottage in Kapahulu may also be selling for $800,000 in two years and interest rates may have increased one or even two percent in the same period.

All that said, common sense tells most people that in certain situations hiring an expert--one with whom you've developed a relationship and whom you trust--is often better than going it alone. Yes, you can always ask your local Home Depot for advice on how to repair the multiple leaks in your home's plumbing. You can do research online and even recruit your neighbor for muscle. But I think most of you would rather hire a plumber who is in good standing with the BBB and perhaps whom your friends and family have had good experiences.

[Mokihana]

DH and I own a real estate appraisal business. One of the traps we've seen happen over the last few years is when people buy large houses, with zero down and interest-only payments. Three years later they're in trouble and end up in foreclosure.

Not saying all the loans like that are bad; but we're starting to see more foreclosures here in Oregon because of loans like that.

Right now it's a buyer's market here. Homes are taking longer to sell, many times sellers are having to give concessions, and house prices may begin coming down soon. So far, so good, however.

It's amazing to me when I see a house sell for say, $795,000 or so... CASH. Once we did an appraisal where the guy bought a multi-million dollar mega house for cash. He was a basketball player.

I think I might be in the wrong business! However, I'm only 5' 4", so basketball is out. :D

[kamuelakea]

Yes, it's a great time to buy ... if you're not a speculator simply looking to flip a home for quick profit. Real estate has always and will continue to be a great long-term investment. Look at any chart of median home prices that spans 20, 50, even 100 years and you'll see what I mean.


I'm am sure you are one of the few honest mortgage borkers oh I mean brokers out their but this statement is either terribly ignorant or dishonest.

I believe people like Robert Schiller, YALE Economist, studies this for a living, has no economic interest in his conclusion (that I can tell). He has studied house prices in the U.S. from 1890.

His conclusion: Home prices have risen at the rate of inflation plus 0.4%. Yep that's whopping 0.4% per year for you having to pay for all improvements, all property taxes and insurance. Not a very good investment when compared to the stock market which has beat inflation over the long run.

Fact is home prices will ultimately return to prices determined by income. Median home price in Hawaii has always been from 3 to 5 times median household income. You do the math.


It's amazing how this guy abandons his talking points and jumps to the next one once his position becomes indefensible. But seriously, broad negative generalizations are really in poor taste.

Once again, you shift from sounding like you are trying to be a reasonable professional to another mortgage borker, i mean broker. If you can look yourself in the mirror and say that you don't recognize that we are at the end of a 3 to 5 year period which defines the most lax lending standards in the history of the country maybe ever but at least since the 1920s leading up to the Great Depression, then you are ignorant because that is a fact.

There has never been a credit housing bubble like this before. If I am wrong, please tell me when??? No doc loans, ARMs, negative amortization. Loans for illegal immigrants. No income? No Problem. Bad credit? No problem. That has been the environment the last few years. If you don't see that, then you are not very knowledgable about your own business.


This is simply tackling the issue ass backwards. First of all, prospective homeowners should determine how much house they can afford.

If you don't know this (I'm sure you are just ignoring it), condo prices in Honolulu droped nearly 50% in value (including inflation) from just 1993 to 1998. How would your military family with the ARM you talked them into in 1993 feel in 1998 about your financial advice???

Like I said. When a realtor or a broker talk, run.

[kamuelakea]

When you buy a home using a mortgage broker, you become a homedebtor, not a home owner. You either rent money from the bank or you rent a home from the landlord.

The best financial decision is to do which ever one is cheaper.

Home ownership purchases stability and does force people who are incapable of saving to save but home buying and home owning is a terrible investment.

[68-eldo]

When you buy a home using a mortgage broker, you become a homedebtor, not a home owner. You either rent money from the bank or you rent a home from the landlord.

The best financial decision is to do which ever one is cheaper.

Home ownership purchases stability and does force people who are incapable of saving to save but home buying and home owning is a terrible investment.

As I approached the time when I would be out on my own my mother made a statement that I remember to this day. She said “When you rent a home all you are doing is paying someone else’s mortgage for them”.

You can rent a home for 30 years and it still belongs to the landlord and you will still pay rent long after the mortgage is paid off. Or you can buy a home and at the end of 30 years you will own the home and stop paying when the mortgage is paid off.

I bought this house in 1980. IIRC my mortgage payment was in the $700 a month range. Today my mortgage is nearing the point where I can pay it off with cash from my bank account. My payments are in the mid $800s. The increase was because of the real estate taxes and insurance premiums the mortgage company pays on my behalf. If I was to rent this house it would most likely cost me somewhere in the $3000+ range.

It sure looks to me like over a 30 year span buying a house was a far better investment then renting.

But if you don’t plan on being around in 30 years and don’t want to pass the equity on to an heir then by all means rent. A lot of people make money on renters.

[GeckoGeek]

He has studied house prices in the U.S. from 1890.

His conclusion: Home prices have risen at the rate of inflation plus 0.4%. Yep that's whopping 0.4% per year for you having to pay for all improvements, all property taxes and insurance. Not a very good investment when compared to the stock market which has beat inflation over the long run.

Fact is home prices will ultimately return to prices determined by income. Median home price in Hawaii has always been from 3 to 5 times median household income. You do the math.

We can talk about the stock market as a whole, we can talk about a specific sector such as tech stocks, and we can talk about individual stocks. Depending on which one we're talking about, we can get different answers.

The same goes for "the housing market". We can talk about the market in the US as a whole, we can talk about one area (like Hawaii), or we can talk about one property.

Hawaii is a unique situation. Unlike the mainland where people are free to move out further to find lower cost housing, in Hawaii there is no place to move to. There is also a rather limited amount of housing. As a result, in Hawaii, supply and demand rules. The prices rise until the number of people who can afford the housing matches the number of units available. The only way prices are going down is some net drop in income or some mass movement away from Hawaii.

[kamuelakea]

As I approached the time when I would be out on my own my mother made a statement that I remember to this day. She said “When you rent a home all you are doing is paying someone else’s mortgage for them”.

It sure looks to me like over a 30 year span buying a house was a far better investment then renting.

Your mother got you to purchase stability. But you may not have made the best financial decision. I agree that your mom is probably giving good advice for most people since most people are incapable of saving. Any extra money at the end of the month is beer money, smoke money or vegas money.

If you were able to pay 1000 less per month for 30 years. That amount is not unreasonable in Hawaii today since renting a single family home is at least 1000 less. Remember, when you rent, no new roof, no plumbing or electric bills, no property taxes etc etc.

If you invested the 1000 in the stock market and added 1000 per month. After 30 years you would have 1,183,677 in the bank. Plenty of equity to pass on and an income of about 50,000 per year if invested in conservative bonds.

Again, I know this is hard for most people, but housing values increase by barely over the rate of inflation. If your home value rises by the rate of inflation, you have earned nothing. You are simply treading water.

But it is better than losing money and that is why home ownership is good for most people. Not because it is a good investment but because it forces weaker people (financially) to at least end up establishing shelter for themselves.

[Nords]

I'm am sure you are one of the few honest mortgage borkers oh I mean brokers out their but this statement is either terribly ignorant or dishonest.
This is interesting. Usually it's the consumer whose seemingly straightforward questions make the sales guy defensive and insulting. (I'm recalling all the times I've seen this in threads started by financial advisors & annuity salesmen.) This time it's a customer who's using terms like "borkers" and the mortgage broker is actually coming off as a pretty reasonable human being.

Maybe we could keep the insulting terms out of this thread so that I can learn more about the mortgage business from someone who seems to have a balanced view of it.

Home prices have risen at the rate of inflation plus 0.4%. Yep that's whopping 0.4% per year for you having to pay for all improvements, all property taxes and insurance. Not a very good investment when compared to the stock market which has beat inflation over the long run.
Your numbers are correct but you're not addressing the leverage issue.

If I walk into a brokerage and show the stockbroker a few pay stubs & tax returns, and then propose buying $500K of Alexander & Baldwin stock for nothing down with a promise to pay for it over the next 30 years, I don't think they're going to go for it (even though they're on a commission). Yet somehow I can persuade a mortgage broker to give me a "nothing down!" loan for a depreciating pile of construction materials on land whose value rises at about the rate of inflation.

I think a good reason to own land/homes is that little investors like us can acquire ownership at a very low down payment (admittedly with high leverage) and wait for the price to rise. If we can handle the carrying costs then the sale can bring profits far in excess of the actual investment. It's difficult to achieve the same leverage with stocks, especially since their value is so much more volatile than most land/homes.

Hang out a sign saying "Cheap stocks on margin!" and everyone runs away fast. Hang out a sign saying "Cheap homes with cheap loans!" and customers will line up. Each investment has advantages & disadvantages, and having either one go bad can put its owner in bankruptcy court. I'm a homeowner, landlord, and stock investor and I wouldn't put all of my investments only into one of these assets.

Median home price in Hawaii has always been from 3 to 5 times median household income. You do the math.
One number has averaged a range of multiples of another type of average.

Yet individual home values have gone far outside those averages, and in both directions. Some homes have been tremendous investments and others have been horrible mistakes. And depending on what time periods you're looking at, they've been both.

We bought a Waipio Gentry home in 1989 and its value was killed a few years later when, among other reasons, Waikele's new homes came on the market. Its value subsequently soared when Central Oahu Regional Park was built. Median home prices were 3-5x median household income the entire time, but if I'd had to sell during the first few years then I'd've been one unhappy camper-- and even more miserable when I saw how values recovered.

The math can be a lot more complicated than it looks. Schiller does make it look easy, though.

How would your military family with the ARM you talked them into in 1993 feel in 1998 about your financial advice???

Hey, we were one of those families.

Most military families rent when their tours are so short but an ARM can make buying a lot cheaper than renting. (Admittedly at the risk of having the home value drop and wipe out your equity.) We bought because we expected to stay beyond a three-year tour and expected to build some equity (boy were we wrong-- for the first 10 years anyway). The ARM saved us a lot of money and when mortgage rates moved in our favor, we refinanced to a fixed rate.

When we were unexpectedly relocated to San Diego it wasn't much fun making payments on that fixed-rate mortgage, despite having decent tenants. But now that home values have skyrocketed to the other end of that range of median values it's a lot more fun being a homeowner.

During those periods I never cursed my mortgage broker. I may have blamed myself for making bad decisions (or for making decent decisions at bad times) but I'm the guy who signed all those papers claiming to understand that I knew what I was getting into. And at 18 years since we bought the house we've been happy with the results.

Like I said. When a realtor or a broker talk, run.
I think the information can be good or bad, as well as the credibility of the person giving it. Telling us to run away from all of them, good or bad, doesn't do much for the credibility of the person giving that advice...

[kamuelakea]

Hawaii is a unique situation. Unlike the mainland where people are free to move out further to find lower cost housing, in Hawaii there is no place to move to. There is also a rather limited amount of housing. As a result, in Hawaii, supply and demand rules.

Hawaii is not terribly unique. Economic fundmentals rule everywhere. However, you are absolutely correct, it's always supply and demand.

The only thing unique about Hawaii is that there are ethnic groups that believe only Hawaii can provide them with the ethnic environment they want to live in. There are no other Plantation Asian or Native Hawaiian communities in the United States. Therefore, these groups are willing to pay more for their homes. They do it by working 2 jobs, living with multiple families etc. We all know this.

In the US as whole, median home prices have always been around 3 times median income. In Hawaii and other "desirable" or high demand locations, a median home value has always been 3 to 5 times median income. THIS IS HE ONLY DIFFERENCE between Hawaii and anywhere else. Homes are more expensive in Hawaii and always have been and always will be.

However, current median home price is 665,000. That is closer to 10 times median income.

That is a bubble. That bubble will pop. When it does, anyone who bought in the last few years will be hurtin.

Remember supply and demand is more complicated with homes because people don't pay cash. Most people use monopoly money provided by the government. The government has been dumping money into the system like never before allowing people to overpay for homes all over the country including Hawaii.

[kamuelakea]

We bought a Waipio Gentry home in 1989 and its value was killed a few years later when, among other reasons, Waikele's new homes came on the market. Median home prices were 3-5x median household income the entire time, but if I'd had to sell during the first few years then I'd've been one unhappy camper-- and even more miserable when I saw how values recovered.

Hey, we were one of those families.

When we were unexpectedly relocated to San Diego it wasn't much fun making payments on that fixed-rate mortgage, despite having decent tenants.

I may have blamed myself for making bad decisions (or for making decent decisions at bad times) but I'm the guy who signed all those papers claiming to understand that I knew what I was getting into.

And at 18 years since we bought the house we've been happy with the results.


Nords,

First, you make my point by illustrating that buying a home is not a slam dunk good investment, even in Hawaii. If you had some bad luck (divorce, bad invesment, job loss) in 1994, you might have lost it all.

Second, it is obvious from your post that you are more financially savvy than the average guy. You were able to navigate your way through the ups and downs of the market. Most people wouldn't.

Third, it took 18 years for you to say you are happy with the results. And you are saying that as we sit upon the top of the greatest national housing bubble of all times. Sounds like the Midas effect.

Fourth, I wonder how happy you will be in 5 years if home prices in Hawaii drop by nearly 50% AGAIN just like they did in the mid-1990s and just as they should if median home prices return to 3 to 5 times median income????

[GeckoGeek]

buying a home is not a slam dunk good investment, even in Hawaii. If you had some bad luck (divorce, bad invesment, job loss) in 1994, you might have lost it all.

We can say the same for stocks too.

home prices in Hawaii drop by nearly 50% AGAIN just like they did in the mid-1990s and just as they should if median home prices return to 3 to 5 times median income????

What median are you looking at? The value or sale? Sale median can move all over the place depending on who's buying and selling, but the value of any given home can stay relatively stable. Yeah, I remember a slump, but I sure as heck don't remember anyone saying their home was only worth half of what they paid. 10% loss I can believe, but not 50%.

And why should home prices be fixed according to median income? Isn't it the mortgage the median income can qualify for? It's the low interest rates that have caused prices to get higher relative to income. But what are "normal" interest rates? Is our current rate low or were our past rates high? Dig out the crystal ball, because the answer is going to depend on what happens to America's economy as a whole which includes things like NAFTA, China and a bunch of other trends.

And quite frankly stocks can get sucked into a bubble themselves. Right now the stock market is pumped up with retirement investments. What happens a few decades down the line when those 401Ks investments get cashed in? What is that saying "Past performance is no guarantee of future results"? That needs to be applied to the stock market as a whole too.

Also, are we talking about buying real estate as a pure investment, or are a place to live? Housing is an unavoidable expense. It's better to build equity so you have something when you move out then to pay rent and have nothing but a security deposit to show for it. You can live in a real estate investment. You can't do that with stock certificates. As for stability, yes, unstable investments always promise a higher rate of return. They have to to attract any money.

Lastly, what do you do for a living Kamuelakea? You haven't disclosed your personal interests in your advice. Normal people don't argue that passionately about investment.

[kamuelakea]

Lastly, what do you do for a living Kamuelakea? You haven't disclosed your personal interests in your advice. Normal people don't argue that passionately about investment.

GeckoGeek,

If you havn't figured it out yet, I am not normal.

But sides that, what interest would I have in telling people to be careful about making the largest purchase of their life at the top of a housing bubble. How could I benefit.

I have no bone in this. See GeckoGeek, I am passionate about plenty. I went public school so I am SUPASMAT as Bulaia would say. I will tell you that I do not do anything that involves the real estate industry or banking industry.

What I am passionate about is B S uz. The mortgage broker who started this thread began with attacking someone on Bumatai's show for giving an alternative view of home financing. I just found it ironic since there has been more mortgage fraud, appraiser fraud, realtor fraud over the last few years than for decades prior and here is a mortgage broker attacking someone else and continuing to sell the ideas of the idiot loans that end up leading the lambs to slaughter.

I care about the lambs.

[kamuelakea]

We can say the same for stocks too.
What median are you looking at? The value or sale? Sale median can move all over the place depending on who's buying and selling, but the value of any given home can stay relatively stable. Yeah, I remember a slump, but I sure as heck don't remember anyone saying their home was only worth half of what they paid. 10% loss I can believe, but not 50%.


Let me and the official stats from the Board of Realtors refresh your memory.
Wot GeckoGeek, lemme guess, you went Iolani or Punahou. Sheeshs, tank god my parents saved da 200 grand for private school tuition.

Honolulu Board of Realtors:

1992 Median Sales Price Condos: $193,000.
2000 Median Sales Price Condos: $125,000.

That is a nominal drop of 35%.
Inflation over those years was about 3% per year. 8 x 3 = 24%.

35% nominal loss plus 24% inflation loss = 59% loss.

That is the MEDIAN which means certain condos (less desirable or whatever) droped by even greater percentages.

YEP, real estate never goes down.

Hahahahhahahahahahahahahahhaahahah.

Buy now everybody, you might get priced out.

Suhkaaaaazzzzzzz.

[GeckoGeek]

Wot GeckoGeek, lemme guess, you went Iolani or Punahou.

Nope.

Sheeshs, tank god my parents saved da 200 grand for private school tuition.

Same here. And they invested in [drum roll] Real Estate! :p



Honolulu Board of Realtors:

1992 Median Sales Price Condos: $193,000.
2000 Median Sales Price Condos: $125,000.

And what exactly does that tell us? Median means that half the condos sold for less and half sold for more. The median could be influenced by factors like more condos selling in outlying areas, or more smaller condos or even fewer rich man's condos. But is tells us NOTHING about what a unit bought for $193,000 in 1992 sold for in 2000.



35% nominal loss plus 24% inflation loss = 59% loss.

Oh, nice. Now you're factoring in inflation. Is this tied to Hawaii's inflation rate or CONSUS? That 3%/year seems rather simplistic.

Buy now everybody, you might get priced out.

Suhkaaaaazzzzzzz.

The main thing is understand what the hell a ARM is and make sure you can afford it. That's what's caused the problem. You can't always say "I can sell if I get behind" because the market may slump right then and you haven't had enough years in the home to build equity. (New car buyers have similar problems. They owe more on the loan then they can sell for.) Real Estate is not a good short term investment unless you can time the market. The buyer's costs and selling costs will eat away at most short term investments.

[kamuelakea]

GeckoGeek,

Seems like you got everything feegaahd out.

To you, the median droping 35% doesn't matter and inflation is irrelevant.

Good luck on your investing career.

[tutusue]

[...]And what exactly does that tell us? Median means that half the condos sold for less and half sold for more. The median could be influenced by factors like more condos selling in outlying areas, or more smaller condos or even fewer rich man's condos. But is tells us NOTHING about what a unit bought for $193,000 in 1992 sold for in 2000.[...]
I can speak for one, low-end condo building with small units in an outlying area...Makaha!!!

As many of you know, my unit is very small...400 sq. ft. I purchased it in '86 or '87 for $30K, fee simple, oceanfront. I had/have no intention of selling it so really didn't care what the market might do but I did follow the values in that building out of curiosity.

At the height of the 90s market a unit like mine was selling for $150K. We owners were flabbergasted esp. since that wasn't too long after Hurricane Iniki and we were the hardest hit building on Oahu! At the depth of the market in the late 90s, my neighbor 2 doors away bought that unit identical to mine, one that had been fixed up, for the high $20Ks...$28K, iirc.

Fast forward to 2006 and units like mine were selling for $225K! I could never have imagined those prices but mainland investors saw the oceanfront, fee simple part and they went crazy buying up units. My property taxes now reflect that.

It's now 2007 and those same units are listed in the $190K range. I don't know what they're selling for as I haven't checked. One thing's for sure...it's been a wild roller coaster ride when it comes to prices in that complex and I'm certainly happy that I didn't have to buy a ticket!

[MixedPlateBroker]

Great job, kamuelakea, in your attempts to wheedle “lambs” to find solace in your protective shepherding. Your 10 posts in less than two days have included backpedaling on a number of your talking points, whining, cherry-picking of stats (see the entire statistical report from Honolulu Board of Realtors here (http://www.hicentral.com/pdfs/annsales.pdf) to see what I mean) and name-calling when everyone has used respectful language in addressing you.

My approach is to empower my clients with useful information tailored to their individual situation so that they can make the best decision for themselves and their families. I doubt that anyone who’s ever come to me about their loan sees him or herself as a mindless lamb, with fear nipping like a dog at their heels while they unquestioningly follow my commands. I know kamuelakea loves blanket statements, so here’s one just for him: You’ve never disproved anything I’ve said in my posts including my thread starter. Why? Because the information I’ve shared is factual, not an “alternative view.”

I again invite any HTers who have any questions about mortgages to ask, as I remain happy to answer to the best of my abilities and knowledge. I’ll also be posting about relevant topics on the subject of home financing. I agree with Leo Lakio regarding the standard disclaimer about advice given on discussion boards and I encourage you to consult a reputable mortgage broker (and it doesn’t have to be me). In fact, it would be great if others in the biz—other brokers, realtors, appraisers, escrow officers—would chime in with their insights. Or, if anyone would like to share their home buying/refinancing experiences, good or bad, please don’t hesitate! No one should undertake such a large financial investment as buying a home without first educating oneself. We’ll just ignore the troll as we carry on.

[kamuelakea]

Great job, kamuelakea!

You’ve never disproved anything I’ve said in my posts including my thread starter. Why? Because the information I’ve shared is factual, not an “alternative view.”

Actually I totally disagree with the suggestion of your thread starter in so far as it suggests and even encourages the continued use of 1) Subprime 2) Bad Credit and 3) No Down loans.

Those loans might make sense in a balanced, well priced market or in a down market where investors are taking a gamble. They are not appropriate IMHO at the peak of the worst housing bubble in US history when interest rates are still at historic lows.

Think about that last statement hard gangey. Prices are at historic nose bleed highs and interest rates are at historic lows. That means that the statistical odds are that prices will drop more than rise and that interest rates will rise more likely than they will drop.

EITHER of those happening will destroy the people who take out the 3 loans Mixedplatebroker is selling in the first post.

Again, if you are going to buy at the peak of the bubble and you realize that the same thing that happened in the 1990s in Hawaii could happen again, at least put 20% down and get a fixed 30 year. All the other loans are liars loans that will come back to bite you in da elemu.

No charge for my advice. I wonder if I saved anyone on hawaiithreads from financial disaster??? Only time will tell. Probably not, cuz most people don't listen to my kind of advice. They like da smood talkah who "gets" them a bigger house that they can't really afford.

[ploal5333]

I have advice that will help. If you follow real estate, when you're looking to buy a home, do not obtain a realtor unless it's new construction willing to offer 3% to buyer's agent. I really believe in today's market a buyer's agent is a liability.

Have you ever noticed when you visit open houses that if you look like an interested buyer the first thing the seller's agent asks is 'are you working with someone?' If you respond 'no' they put a great smile on their face and more pep in their voice. 'Call me after my open house hours!'

They're more willing to negotiate if there's more $ in their or their company's pocket.

[68-eldo]

kamuelakea
When your statements are examined the holes become apparent. There are so many inaccurate statements I have a hard time finding a place to start.

I’ll start here:

Famous quote (http://en.wikipedia.org/wiki/Lies,_damned_lies,_and_statistics)

There are three kinds of lies: lies, damned lies, and statistics

Someone once told me you can put a barefoot man with one foot on a block of ice and the other on a hot stove and any decent statistician can prove he is comfortable.

Those are a couple of humors ways to make the point that statistics don’t always tell the whole truth. Most of your statements are backed up by statistics. I’ve provided my real life experience. Can you back up your statements with real life experience?

You either rent money from the bank or you rent a home from the landlord.
The problem with this statement is it totally ignores the fact that with the exception of a few loans all mortgage payments pay down a portion of the principal. Each payment lowers the amount you owe so the next payment pays less in interest and more toward the principal. As the loan nears the end most of the monthly payments go to the principal. That’s how you eventually end up owning the home.



….but home buying and home owning is a terrible investment.

OK, if you get out your microscope and look at only the value of the home there maybe some truth in this statement. However this statement ignores the value of not paying rent if you live in the home yourself. As GeckoGeek says “Housing is an unavoidable expense.” If you have to pay X dollars anyway why not put some of that money toward owning the home rather than lining the pockets of the landlord? It’s a very foolish landlord that rents out a home for less than his expenses. If you bought that home at the same time and rate as the landlord you would be paying less than what you are renting it for.

If you think that by renting you’re not going to pay for that new roof, think again. The landlord collects a little extra from you every month, puts it in an interest bearing account until the roof needs to be replaced.

If there was no profit in renting out homes there would not be any landlords or homes for rent. As GeckoGeek said his education was paid for by renters.


If you invested the 1000 in the stock market and added 1000 per month. After 30 years you would have 1,183,677 in the bank. Plenty of equity to pass on and an income of about 50,000 per year if invested in conservative bonds.

Interesting math. There are 12 months in a year, so in 30 years that would be 360 months. If you paid $1000 per month that would be 360,000. Where did the extra $823,677 come from? You said to put the money in the stock market. Well I tried that too. My portfolio is running at about 75% of what I put into it. I don’t know anybody that is doing well in the stock market since the dot com bubble burst. What is your magic advice for investing in the stock market?


I will tell you that I do not do anything that involves the real estate industry or banking industry.
So you are a stock broker?

You have made a few comments that I agree with. To put it in a nut shell; interest only and ARM mortgages are dangerous and should be used with great caution. But a savvy buyer can use them to their advantage. The key is in fully understanding the different types of mortgages. And that is what MixedPlateBroker was trying to accomplish at the beginning of this thread. But MixedPlateBroker has not been able to get a word in edgewise lately.

Howbout we let him say his piece?

[Nords]

First, you make my point by illustrating that buying a home is not a slam dunk good investment, even in Hawaii. If you had some bad luck (divorce, bad invesment, job loss) in 1994, you might have lost it all.
Well, I'm glad to help you, but what I'm really trying to do is to provide a little balance to your "mortgage brokers and real estate bubbles are all bad" diatribes. I agree that RE is not a slam dunk investment but it offers advantages that the stock market just won't do.

Second, it is obvious from your post that you are more financially savvy than the average guy. You were able to navigate your way through the ups and downs of the market. Most people wouldn't.

Thank you. People either have to educate themselves or find someone to help them navigate the mortgage markets. We've learned a lot from the mortgage people we've worked with (some good, some bad) and most of the info on Bankrate.com & other websites is written by people in the mortgage business. They can't all be as bad as you seem to feel.

Third, it took 18 years for you to say you are happy with the results. And you are saying that as we sit upon the top of the greatest national housing bubble of all times. Sounds like the Midas effect.
Sorry to give the wrong impression. It didn't take us 18 years to be happy, but rather I meant that over the 18-year period we've owned the house we've been happy with the experience.

We bought a fixer-upper and even in your 1994 (personally I thought 1996 was worse) our sale price would have been more than the purchase price. Of course we dumped a ton of sweat equity into it, we learned all about real estate & home improvement, and we started to raise our family there. Spouse's parents lived there for nearly six years, too. We learned a lot from that place.

Ownership gave us opportunities that we wouldn't have had by renting. We would have ended up with a lot less money by renting, and we wouldn't have had anywhere near your $1000/month left over for the stock market. If we'd sold our home then we wouldn't have been able to stay in the Hawaii real estate market when we got back from the Mainland, and indeed today I doubt we could afford the market rent on our rental property or our home.

Fourth, I wonder how happy you will be in 5 years if home prices in Hawaii drop by nearly 50% AGAIN just like they did in the mid-1990s and just as they should if median home prices return to 3 to 5 times median income????
Well, I'm not looking forward to being a landlord any longer than necessary, but we'll sell when it makes sense and we'll keep renting it out until then. I doubt that Waipio will revert to the mean as much as you claim, but it's a financial decision. If we can make more money elsewhere then it doesn't matter what the house's actual value is... only the opportunity cost.

I'm not going to go point-to-point on all your statements, but I disagree with your claim that mortgage brokers are bad and that real estate is bad too. I don't necessarily disagree with everything you say but the value of your debating points is weakened by your use of invective, glittering generalities, and strawman examples. I think you take a bit too much pleasure out of raising a ruckus, too, so I'm done with you.

Interesting math. There are 12 months in a year, so in 30 years that would be 360 months. If you paid $1000 per month that would be 360,000. Where did the extra $823,677 come from? You said to put the money in the stock market. Well I tried that too. My portfolio is running at about 75% of what I put into it. I don’t know anybody that is doing well in the stock market since the dot com bubble burst. What is your magic advice for investing in the stock market?
The math isn't intuitive but the extra money comes from compounding. My TI-55 calculator handbook (published 1977!) says that the future value (FV) of a series of payments (PMT) at % interest rate over n months is:
FV = PMT x {(1+%)^^n-1}/%. ("^^" is an exponent, best I can do with this keyboard.)

The interest rate being used by that example is about 9% per year (.75% per month in the formula) which is about right over most 30-year periods. Of course if the 30 years happened to include 1930-41 or 1966-82 or 2000-2003 the result is significantly less wealthy than that. But large-cap stocks since 1926 have been reasonably close to that number.

I don't know about you guys, but I had to use that $1000/month (or more) to live somewhere during that 30 years. Even at my best paychecks I couldn't afford to own or rent a house AND put $1000/month in the stock market. So while the math is correct, very few people have the resources to achieve that number.

I don’t know anybody that is doing well in the stock market since the dot com bubble burst. What is your magic advice for investing in the stock market?
Buy value stocks.

We lost our share during the bubble burst (one heckuva tuition at the School of Experience), but by mid-2002 there were bargains everywhere (even in Hawaii). We added to our international stock mutual fund, we bought a lot of Berkshire Hathaway, and we bought a lot of a small-cap value stock index fund. Heck, by 2003 we'd even made money in the NASDAQ QQQs. Since then we've shifted some of it into dividend stock funds but there are still dollar bills out there selling for 75 cents.

Investing in a diversified value-stock portfolio is a lot easier to achieve today. Beating the market averages takes a lot more effort but the work is eventually rewarded. If you're living below your means and investing at least 10% of your gross pay then there will always be bargains somewhere-- real estate, stocks, even commodities/natural resources. The market has become global and the expenses are a lot cheaper than they were even in the 1980s. So while there may be as many bad stocks as there may be bad mortgage brokers, there are far more good ones of both.

[68-eldo]

The math isn't intuitive but the extra money comes from compounding. My TI-55 calculator handbook (published 1977!) says that the future value (FV) of a series of payments (PMT) at % interest rate over n months is:
FV = PMT x {(1+%)^^n-1}/%. ("^^" is an exponent, best I can do with this keyboard.)

The interest rate being used by that example is about 9% per year (.75% per month in the formula) which is about right over most 30-year periods. Of course if the 30 years happened to include 1930-41 or 1966-82 or 2000-2003 the result is significantly less wealthy than that. But large-cap stocks since 1926 have been reasonably close to that number.



Thanks for providing those numbers. I do understand the extra money would come from compound interest and gains in the stock market. But that was not made clear in the original statement.

The only reason I am engaging the troll is, like you, to provide balance to the statements made. There are likely others reading this thread that are just starting in the housing market that could be scared away from buying a home. I hope you continue to balance out this thread.

Kamuelakea dismisses the advantages of home ownership as just buying stability. But stability is very important to the average family.

I have nephews and a niece that are beginning to look to buy a home and this thread helps me find talking points to help them in this endeavor.

[kamuelakea]

I am glad that you are comfortable with the current mortgage environment. Good luck to all of you in your investment endeavors. You seem to know what you want and what you are doing.

You will remember me in 3 to 10 years when things get really really bad in housing.

Just make that mental note and get back to business.

[808shooter]

Real estate is a great investment. Far better than the stock market. Why?

1. Stocks can go to zero. Companies go out of business all the time. Even big ones like Enron or Worldcom. Houses never go to zero. If they get destroyed, that is what insurance is for.

2. Time is on your side. Yeh housing prices may go down 35% from here but so what? If you have your rental paying the mortgage - who cares what the value is today. Unless you need to sell in the near future then it's proabably not a good idea to be in real estate. It's not a short term endeavor. Real estate prices never stay down forever. Everyone needs a place to live and we live in the most beautiful place on earth.

3. You leverage your money in real estate. With $25,000 you could purchase a $250,000 rental. If your property doubles in 20 years, your original $25,000 investment has now turned into $300,000 or a return of over 1200%.

4. Investing in real estate works. I know lots of old people that are rich because of real estate. They own their own home and own lots of rentals. In contrast, I never meet folks that say, whew. I made a lot of money in the stock market. Yeah!!!

[kamuelakea]

Real estate is a great investment. Far better than the stock market. Yeah!!!

Thats right 808shooter. Buy now. Real estate always goes up. If you don't buy now you will be priced out forever, they're not building any more land, it's Hawaii, everybody wants to live here, this is paradise, its Timkona's Baby boomers, they wouldn't give me this no doc- interest only- negative amortization - ARM - bad credit - loan if they didn't think that I could pay for it.

Hurry, buy buy buy buy. You'll be building equity and getting rich!!!

[GeckoGeek]

You will remember me in 3 to 10 years when things get really really bad in housing.

You're not the first to have this doom an gloom over housing. I've seen this before. It was in the paper about 10 years ago. Guy was so convinced that there would be a big crash that he sold his house and rented it back.

I'll most likely remember you the same way I remember him. :rolleyes:

[GeckoGeek]

Houses never go to zero. If they get destroyed,

The land never goes to zero. :) And the value of the land is usually much higher then the building on it.

Another advantage of home ownership is locking in your expenses. Look at 'eldos post. $700/month for a house is an incredible deal. Think of how much money he's saved - tax free. That may not have been a spectacular deal in 1980, but he's still paying 1980 prices in 2007.

It's been a long time since I ran the calculations, but I figured I had to earn $1.56 to take home an additional $1.00. So saving money counts for a lot. And once the home is payed off, one is really set for retirement when one has no wages.

Yes, you can go broke in real estate if you go about it wrong. If you're going for a ARM because that's all you can qualify for - danger! danger! An ARM is either for short term loans or if you expect interest rates to go down. Today it's more likely interest rates will go UP. And since in the early years the payment is almost all interest, the monthly payments will climb like crazy.

[tikiyaki]

Real estate is a great investment. Far better than the stock market. Why?

1. Stocks can go to zero. Companies go out of business all the time. Even big ones like Enron or Worldcom. Houses never go to zero. If they get destroyed, that is what insurance is for.


4. Investing in real estate works. I know lots of old people that are rich because of real estate. They own their own home and own lots of rentals. In contrast, I never meet folks that say, whew. I made a lot of money in the stock market. Yeah!!!


These are the 2 things that I thought about when I bought my Hilo Condo a few months ago. I know people are making a killing right now in the stock market, but it unless you REALLY know about how the stock market works, it seems like playing craps in Vegas to me. I figure people are always going to need a place to live, but that promising new startup company can go under really easy.

And yea, the old people who bought their properties 10 and 20 years ago who still have them are doiong alright right now.

The trick is to hold onto it long enough, and keep it rented the whole time.

Also, I watched some prices in Hilo triple since 2004, and they're still way less expensive compared to anywhere else in hawaii and where I live in SoCal :eek:

I just need to keep it rented. :o

[SusieMisajon]

That British bankrun is still going strong.

[oceanpacific]

The land never goes to zero. :) And the value of the land is usually much higher then the building on it.Unless, the land is in the "volcano zone" in Puna .................

[kamuelakea]

Real estate is a great investment. Far better than the stock market. Why?

1. Stocks can go to zero.

Very easy way to elliminate this possibility.

2. Time is on your side.

I tried to explain this already but apparently you went private school. Time is on yourside by about 3 or 4% only if you own stocks. That difference is massive but I know its too hard for you.

3. You leverage your money in real estate.

While there is some truth to the benefits of leverage, over time, it becomes less relavent. See in your example, the 25,000 did not turn into 250000. It turned into 250000, adjusted for inflation might take it down to 150,000, minus all the interest you paid on the loan so we are now at 25,000, then minus the new roof, painting, termite, property taxes, etc etc etc etc and guess what? You negative. Great job investing genius. Facinating how people completely forget the "costs" of ownership.


4. In contrast, I never meet folks that say, whew. I made a lot of money in the stock market. Yeah!!!


If you gave Warren Buffet 1000.00 in 1957, guess what you would have today?


Answer: Scroll Down but make up a guess before you do. At least guess.



a




a





a




a




a




a



a




a




a



a





a


a


a

ANSWER: 27 MILLION.

That is not a typo. And no costs of ownership like a house.

No charge for the advice gangey.

You welcome.

[CranBeree]

kamuelakea,

why do you sound so bitter?

[Pua'i Mana'o]

I have been to a Tardus presentation and I know people who've worked for the company. Tardus' original mission was to provide homeowners a system, utilizing credit cards and a HELOC, to front-load their mortgage -- theoretically paying down the principal more quickly. Ms. Souza now seems to be positioning them as a credit repair shop. They don't broker or lend money. You might find their Hawaii BBB report here (http://www.hawaii.bbb.org/commonreport.html?compid=12000168) interesting. Although their multiple complaints are mostly resolved, it's very odd that the company's principal is an administrative assistant.

Oh, and I apologize for the slightly inflammatory title, but I already spend hours everyday educating and advising my clients about mortgages. I could not stand idly by while Ms. Souza spreads potentially harmful misinformation in order to steer more business to her own company. Hopefully, Andy will attract other sponsors with some ethics and who won't demand seat time. Best of luck to him.

As a mortgage broker, do you lose money if people like me pay off our 30yr mortgages in 10 yrs?

[808shooter]

Thats right 808shooter. Buy now. Real estate always goes up. If you don't buy now you will be priced out forever, they're not building any more land, it's Hawaii, everybody wants to live here, this is paradise, its Timkona's Baby boomers, they wouldn't give me this no doc- interest only- negative amortization - ARM - bad credit - loan if they didn't think that I could pay for it.

Hurry, buy buy buy buy. You'll be building equity and getting rich!!!

Haha you right Big K, no worry about me. I doing jes fine.

The secret is buying real estate that you can maintain a positive cash flow on with a decent down like 10%-20% with a fixed 30 year.

Find that and you're good to go. Too bad finding good deals like that in Hawaii is getting pretty tough. Lucky for me, I investing in a market with positive cash flow with 20% down. We talking cap rates of 8-9% and real potential for short to medium term appreciation.

I'm not going say anymore. Too many haters and skeptics anyway. And... I want my friends to get in and catch this wave while we sit out the Hawaii market for a few years.

If you right, we'll have lots of cash to throw back in the market in a few years at dirt cheap prices. If not then we'll have good returns for a few years then start investing back into Hawaii - just won't be able to buy as much.

[MixedPlateBroker]

Pua'i,
If a client decides they want to prepay their mortgage, there are no negative consequences for me. I actually advise my clients that they can reap significant interest savings by making extra payments toward principal, especially in the early stages of their mortgages. Although prepaying a mortgage reduces the interest one can deduct from their income taxes, many find the prospect of paying off their mortgage sooner the more attractive option.

I know some of you have heard the hype surrounding today's Federal Reserve Board meeting regarding the federal funds rate. The majority of economic prognosticators have predicted a moderate rate cut of 0.5%. Although that sounds good on paper, a cut wouldn't be felt immediately by most Americans. Fixed mortgage rates are based on the bond market. ARM and credit card rates would show some downward movement on a rate cut, however. Historically, certain sectors (http://www.chron.com/disp/story.mpl/ap/fn/5141834.html) of the stock market get a boost from a rate cut.

If the Fed serves up a small cut or does not deliver one at all, it's widely expected the Dow will slump on the news and mortgage rates would feel some upward pressure. Some believe the Fed will stand pat on the funds rate over fears of overheating the economy.

Whichever direction the Fed goes, their announcement is expected at 8:15 a.m. HST today. You can check here (http://www.bloomberg.com/news/regions/us.html) for the latest updates.

808,
Good call on the change of scenery. Hard to squeeze decent cash flow out of Hawaii properties, even on the Big Island. I'm guessing your alt market doesn't get much snow, either.;)

[kamuelakea]

As a mortgage broker, do you lose money if people like me pay off our 30yr mortgages in 10 yrs?

PUa'i,

Nobody in the initial purchase process is hurt by paying off a loan early.

Very few, if any, banks nowadays loan their money to you and wait to be paid back by you. Banks give you money and then immediately sell them off to Wall Street or the government versions, ie Fannie and Freddie. The bank, mortgage broker, realtor and appraisor don't care what happens after that. They work only to close the deal. Hence my warnings.

What has happened in the last 10 years is that mortgage loans are sold to Wall Street, Fannie and Freddie, who bundle them into investment vehicles that people can purchase as an investment. The investor gambles that they will get guaranteed interest based upon people needing to pay their mortgages. The Chinese, Japanese, Austrians and other countries have been buying these mortgages like crazy over the past 10 years. That is what has kept fixed interest rates so low.

But heres the scam. Why would these country be buying all of these loans, many of which have no chance of being paid off? Are the Chinese stupid? No, they are smart. It is because they are giving the U.S. the opium necessary to get them addicted to consumption. Guess who makes all the crap that the U.S. homeowner will consume over the next 20 years? Yep, China, Japan, Austria etc etc.

You guyz are going to think I'm becoming Waioli Kai but dis ain't no conspiracy theory. Its economic fact.

These countries have gambled that it will be better in the long run for their developing industrial engines to lose money on the mortgages when many go unpaid but to create a long term consumption addicts that will continue to service their needs by buying their crap for years to come.

The U.S. homedebtor, I mean homeowner, has becomes China's bitch.

See?

[kamuelakea]

kamuelakea,

why do you sound so bitter?

I am sorry if you think i sound bitter.

I shouldn't sound bitter.

I AM BITTER!

Aloha

[kamuelakea]

Pua'i,
Although prepaying a mortgage reduces the interest one can deduct from their income taxes, many find the prospect of paying off their mortgage sooner the more attractive option.

There is rarely a benefit to paying the a bank 1 dollar in interest so that you can save 30 cents in taxes paid to the government. In most cases, I would rather pay the government the 30 cents. For all you guys who went private school, let me give you the equation: Spend 1 dollar and save 30 cents means YOU LOSE 70 cents. Genius!

The only exception I can think of is the possible effect the deduction has in terms of shifting one to a lower tax bracket or allowing certain special tax deductions by decreasing income below some maximum threshold.

These don't apply to most people so most people happily celebrate every April 15th that they have spent 1 dollar in bank fees to save 30 cents in taxes. Again, not to akamai but whatevah?

[kamuelakea]

okay time foah moi.

preddy soon, i going chage you guyz for dis edumakation.

[Pua'i Mana'o]

Pua'i,
If a client decides they want to prepay their mortgage, there are no negative consequences for me. I actually advise my clients that they can reap significant interest savings by making extra payments toward principal, especially in the early stages of their mortgages. Although prepaying a mortgage reduces the interest one can deduct from their income taxes, many find the prospect of paying off their mortgage sooner the more attractive option.

then why the disparaging comments about tardus? Using the very same mathematical principles and available LOC that the geniuses of the banking industries came up with against those very same industries is a very noble, heck quite American thing to do--yay for the little guy! Your original rant against whatsherface was about minutiae; who cares what she did for a living? But the math, the sweet Jesus math of suppressing principal is brilliant, and one doesn't need to pay for the services of companies like tardus to do it.

Yet here we are, several pages into this, and not a peep.

(on the larger scale, as a woman who lived through negative equity horrors of the real estate bust of the late 80s/early 90s, I am so averse to debt that my own attitudes fall squarely in line with Kamuelakea).

If a person is disciplined and numerate, mortgage acceleration programs are very powerful tools. For those who aren't disciplined and won't sit still long enough to grasp the mathematical concepts, it wouldn't work, but let's be honest--those types wouldn't be the ones to run a MAP anyway.

[MixedPlateBroker]

then why the disparaging comments about tardus? Using the very same mathematical principles and available LOC that the geniuses of the banking industries came up with against those very same industries is a very noble, heck quite American thing to do--yay for the little guy! Your original rant against whatsherface was about minutiae; who cares what she did for a living? But the math, the sweet Jesus math of suppressing principal is brilliant, and one doesn't need to pay for the services of companies like tardus to do it.

Yet here we are, several pages into this, and not a peep.

(on the larger scale, as a woman who lived through negative equity horrors of the real estate bust of the late 80s/early 90s, I am so averse to debt that my own attitudes fall squarely in line with Kamuelakea).

If a person is disciplined and numerate, mortgage acceleration programs are very powerful tools. For those who aren't disciplined and won't sit still long enough to grasp the mathematical concepts, it wouldn't work, but let's be honest--those types wouldn't be the ones to run a MAP anyway.

Pua'i,
My thread starter wasn't an indictment of Tardus, it was simply a rebuttal of three statements Ms. Souza made which were wholly untrue (refer to my original post to see which statements these were and my response as to why they were wrong).

If Ms. Souza sat with Andy and made her pitch according to the original Tardus principles (she only addressed prospective homebuyers with bad credit; Tardus' system is only useful for existing homeowners), then I wouldn't have posted at all. Unfortunately, she made broad, misleading generalizations about the mortgage market. I was surprised, given her background as an attorney, that she would even consider making the statements she did, which I evinced were outside the scope of her business and expertise.

[Pua'i Mana'o]

Pua'i,
My thread starter wasn't an indictment of Tardus, it was simply a rebuttal of three statements Ms. Souza made which were wholly untrue (refer to my original post to see which statements these were and my response as to why they were wrong).

If Ms. Souza sat with Andy and made her pitch according to the original Tardus principles (she only addressed prospective homebuyers with bad credit; Tardus' system is only useful for existing homeowners), then I wouldn't have posted at all. Unfortunately, she made broad, misleading generalizations about the mortgage market. I was surprised, given her background as an attorney, that she would even consider making the statements she did, which I evinced were outside the scope of her business and expertise.

Having never seen that interview, I'll take your word on it. I thought you made your three points quite clearly. But let's look again at the paragraphs I quoted above from you:

I have been to a Tardus presentation and I know people who've worked for the company. Tardus' original mission was to provide homeowners a system, utilizing credit cards and a HELOC, to front-load their mortgage -- theoretically paying down the principal more quickly. Ms. Souza now seems to be positioning them as a credit repair shop. They don't broker or lend money. You might find their Hawaii BBB report here interesting. Although their multiple complaints are mostly resolved, it's very odd that the company's principal is an administrative assistant.

Oh, and I apologize for the slightly inflammatory title, but I already spend hours everyday educating and advising my clients about mortgages. I could not stand idly by while Ms. Souza spreads potentially harmful misinformation in order to steer more business to her own company. Hopefully, Andy will attract other sponsors with some ethics and who won't demand seat time. Best of luck to him.

You moved your sights off of Ms Souza and onto the company in these last two paragraphs. The language you employ very much intends to make Tardus' work suspect, when it is a sound, reputable, and proven method of accelerated mortgage reduction.

[MixedPlateBroker]

PM,
If, by the language of my initial post, I made Tardus "seem suspect," let me point out no Tardus executive or employee -- Tanisha Souza included -- can deny with veracity anything I've said.

You've already agreed with me that three things Souza said regarding the mortgage market -- in her capacity as a representative of Tardus, and while appearing on "Late Night with Andy Bumatai" to give advice -- were not factual. Therefore Tardus -- with Souza as its representative in a public forum -- was giving out bad advice.

I stand by the facts I've stated, whether in my initial or subsequent posts, as they remain facts.

[Pua'i Mana'o]

If, by the language of my initial post, I made Tardus "seem suspect," let me point out no Tardus executive or employee -- Tanisha Souza included -- can deny with veracity anything I've said.

You appear to co-mingle your points and evade mine. Let's review:

I have been to a Tardus presentation and I know people who've worked for the company. Tardus' original mission was to provide homeowners a system, utilizing credit cards and a HELOC, to front-load their mortgage -- theoretically paying down the principal more quickly. Ms. Souza now seems to be positioning them as a credit repair shop. They don't broker or lend money. You might find their Hawaii BBB report here interesting. Although their multiple complaints are mostly resolved, it's very odd that the company's principal is an administrative assistant.


You use the term theoretical when it is based upon sound mathematical principles.

You disparage the corporation by making their product look suspicious (without bothering to describe it) and offer a link to the BBB with a warning of its oddity, when the link shows that the corporation is in good standing.


You've already agreed with me that three things Souza said regarding the mortgage market -- in her capacity as a representative of Tardus, and while appearing on "Late Night with Andy Bumatai" to give advice -- were not factual. Therefore Tardus -- with Souza as its representative in a public forum -- was giving out bad advice.

I never agreed; I took your word for it and believed you were quite clear in making your points. In the now three times I have commented on this thread, that in fact was never my point.

I stand by the facts I've stated, whether in my initial or subsequent posts, as they remain facts.

I do appreciate your interest in rebutting Souza's comments, but find you to be avoiding an actual discussion on what is really the most fascinating aspect of this conversation, that is how out-of-the-box MAPs are, what Tardus actually is, and why their product is actually weak (my quick pov: it is hard to make a buck on quadratic equations that are in the public domain, especially when folks like my just figured it out and set it up for ourselves)--even though the premise is quite sound, provided people understand the math.

[MixedPlateBroker]

PM,
My intent was not to evade your questions, I was simply trying to point out that my thread-starter is factually sound and that my focus was on what Ms. Souza said. Everything mentioned in that post about Tardus was meant to show that Ms. Souza was neither qualified nor credible in making those specific three statements. I will further clarify my position since there seems to be a bit of a misunderstanding.
You use the term theoretical when it is based upon sound mathematical principles.
I say "theoretical" because I've spoken to many people who failed in the practical application of the Tardus system, which is no fault of Tardus. As far as I'm concerned, there's nothing wrong with the math. I assumed we were on the same wavelength when you said, "If a person is disciplined and numerate, mortgage acceleration programs are very powerful tools." If being the operative word.
You disparage the corporation by making their product look suspicious (without bothering to describe it) and offer a link to the BBB with a warning of its oddity, when the link shows that the corporation is in good standing.
OK. Now that we've established that I did not disparage Tardus or its product, please refer to the section of my post that reads "it's very odd that the company's principal is an administrative assistant." I never questioned the company's good standing on BBB, I simply noted what was out of the ordinary on their report. How many companies have you seen that list an administrative assistant as their principal? Again, this is simply a commentary on Souza's credibility and not a swipe at the company, especially considering it's a franchise.
I never agreed; I took your word for it and believed you were quite clear in making your points. In the now three times I have commented on this thread, that in fact was never my point.
So here's where I misunderstood you. I thought you literally took my word for it, not figuratively. You're entitled to your own opinion. Although you do contradict what you said previously in your second post, "Your original rant against whatsherface was about minutiae ..."

I do appreciate your interest in rebutting Souza's comments, but find you to be avoiding an actual discussion on what is really the most fascinating aspect of this conversation, that is how out-of-the-box MAPs are, what Tardus actually is, and why their product is actually weak (my quick pov: it is hard to make a buck on quadratic equations that are in the public domain, especially when folks like my just figured it out and set it up for ourselves)--even though the premise is quite sound, provided people understand the math.
Actually, you've only been asking me why I've been disparaging Tardus (which I've shown I haven't) up til this point. I think you've already answered most of your own questions, although I don't think it's their product that's weak -- it's that most people would balk at paying $3,500 for the product. But I agree with you on your other points. As far as going into detail about what the Tardus system is, I'd be hesitant to put it all down in an open forum considering Souza is an attorney and I'm sure Tardus would like to protect their financial interests.:cool:

[808shooter]

The language you employ very much intends to make Tardus' work suspect, when it is a sound, reputable, and proven method of accelerated mortgage reduction.

To make it real simple. The idea of using a Heloc to finance your mortgage is a great idea with two BIG assumptions.

1. Low, Stable Short term interest rate environment. Totally at the mercy of the Fed who controls short term rates.

2. Clients need to have lots and lots of discipline. It is not easy to live 100% on credit with all funds going to pay off your huge loan financed on volatile short term rates.

There is lots of opportunity for abuse and if the client's profile isn't suitable, they could get themselves into a lot of trouble. I feel like I'm pretty smart, know exactly what the deal is but when I thought about doing what Tardus is proposing a few years ago, I decided it wasn't worth the risk? Why, it takes too much energy and discipline to watch your finances that closely. I like the guaranz 30 year fixed. Low stress, sleep at night kind of security.

(and btw Braddah K, long term rates are all based on the value of the 30 year treasury note. That is the debt that is issued by the Federal Govt. Backed in full by the US Govt - the safest investment in the world. The safest. That is the debt Japan & China have been been aggressively purchasing for the last 8 years. And the reason isn't a sinister tinfoil hat type plot. It is to maintain a favorable currency valuation for the yen and the yuan. If the yen and yuan appreciate too much vs the dollar, bad for Chinese and Japanese exports to the US. The yuan was unpegged from the dollar in 2005 so the Chinese are forced to use their dollar surplus to buy yet more dollars in the form of US treasurys on the open market. When the long bond price goes up, yield (long term rates) go down. The US Treasury market drives long terms rates, not the secondary mortgage market. And braddah, that is why we have enjoyed low long term rates for a while. )

No charge foa da privete skoo edumakashen. heha jes joking.

[Pua'i Mana'o]

It works if the person understands the math and lives within her means. If she is responsible and disciplined enough that the total sum of monthly expenses are equal to or less than her net wages, then it works, regardless of what the interest rates are.

She must get into a lifestyle of Habits:
•put her checks consistently on the mortgage, which suppresses the principal
•keep as minimal amount of cash as possible, paying as many bills as possible with her credit card--this offers a month of interest-free float
•pay off that CC the following month by drawing on the heloc.

Habits are these:
-the entire sum charged on the CCs must be equal to/less than her net monthly income minus whatever cash was kept on hand (some bills do not allow for CC payment).
-the CC must get paid on time.
-the paychecks must get put towards the mortgage on payday

for many this is so far out there and intimidating to wrap one's mind around. But it can be done, and one doesn't need to pay someone else to set it up.

[kamuelakea]

(and btw Braddah K, long term rates are all based on the value of the 30 year treasury note. That is the debt that is issued by the Federal Govt. Backed in full by the US Govt - the safest investment in the world. The safest. That is the debt Japan & China have been been aggressively purchasing for the last 8 years. No charge foa da privete skoo edumakashen. heha jes joking.

808shooter,

You might want to google around a little more. Fannie Mae and Freddie Mac are backed by the U.S. Government. Those are only for loans with very specific and stringent requirements. Those mortages are sold to investors as Ginnie Maes, according to their own website www.ginniemae.gov "The ONLY mortgage backed security back by the full faith and credit of the U.S. Government". By the way, both FMs are in trouble right now for cooking their own books so even the U.S. Government "Mortgage CDO" organizations are crooked.

But the subprime liar loans etc being purchased by investors such as the Chinese are NOT backed by the U.S. government. They are essentially like a stock and if they go to zero, nobody's bailing them out. That is why the U.S. government didn't have to care about the funding of the housing bubble. Its the Chinese etc who will appear to the average numbskull to "lose".

Of course as I explained, the Chinese etc don't care if they lose on the mortgages because they will have won by creating millions of 30 year indentured servants who will pay their "rent" to the Chinese every month and buy Chinese made crap to fill their homes with.

Americans will be laughing at the "dumb Chinese" for funding our home buying but it is the Chinese who will be laughing at the "dumb Americans" for getting themselves into a lifetime of debt.

Whose dumber?

Check it out 808SHooter.

[808shooter]

808shooter,

You might want to google around a little more. Fannie Mae and Freddie Mac are backed by the U.S. Government. Those are only for loans with very specific and stringent requirements. Those mortages are sold to investors as Ginnie Maes, according to their own website www.ginniemae.gov "The ONLY mortgage backed security back by the full faith and credit of the U.S. Government". By the way, both FMs are in trouble right now for cooking their own books so even the U.S. Government "Mortgage CDO" organizations are crooked.

But the subprime liar loans etc being purchased by investors such as the Chinese are NOT backed by the U.S. government. They are essentially like a stock and if they go to zero, nobody's bailing them out. That is why the U.S. government didn't have to care about the funding of the housing bubble. Its the Chinese etc who will appear to the average numbskull to "lose".

Of course as I explained, the Chinese etc don't care if they lose on the mortgages because they will have won by creating millions of 30 year indentured servants who will pay their "rent" to the Chinese every month and buy Chinese made crap to fill their homes with.

Americans will be laughing at the "dumb Chinese" for funding our home buying but it is the Chinese who will be laughing at the "dumb Americans" for getting themselves into a lifetime of debt.

Whose dumber?

Check it out 808SHooter.

I don't doubt that the subprime mortgage securities are more risky. Kinda surprising that the Chinese were buying them aggressively. I did google that for info. Bank of China owns about 11 bil in subprime mortgages. A lot of money but immaterial in the big scheme of things.

http://www.mutual-funds.biz/2007/08/24/news/international/china_stocks.reut/index.htm?postversion=2007082417

THe US treasury market is the 1/2 of the total national debt. That is over 4trillion in treasurys. Of the treasuries on the market, about 1 trillion are owned by the Japanese and the Chinese.

So you might be right about the Chinese buying our bad mortgages but they probably could care less. What has really fueled the housing boom was the low long term rates which have been a result of the aggressive accumulation of US Treasuries by China and Japan. The subprime paper is probably just "diversification"

Anyways, you did edumacate me on something I didn't know about before. We just don't agree on what it means. Take it easy boo.

[GeckoGeek]

The Chinese have to do something with all those dollars they get from the trade imbalance. If they buy tangible things like companies we tend to get upset.

Still, perhaps we should be concerned with the long term plan.

[MixedPlateBroker]

Caveat emptor. If there's a simple lesson we can take from the subprime mortgage mess, it's that critical thinking and healthy skepticism are classic looks that should always have a place in our mental wardrobes.

Even as children many of us were told that if something sounds too good to be true (http://www.npr.org/templates/story/story.php?storyId=14379609), it probably is. I wondered aloud how certain corporate executives could sleep at night the other week as I paused a random Ditech.com TV commercial and read the fine print to discover their advertised rate was based on pricing only five years old.:eek: Small wonder they surrendered their mortgage license in the state of Virginia (page three) (http://www.scc.virginia.gov/division/banking/news/cc_win07.pdf).

So how does one avoid the mistake of getting into a mortgage they'll regret later? I've put together a few tips that might come in handy.

Don't buy more house than you can comfortably afford. If your annual gross household income < $60k, you shouldn't be shopping for homes in the $400k+ range. As simple as this sounds, I've gotten calls from dozens of people who've found themselves prisoners of their own homes. Laboring at multiple jobs just to pay the mortgage and bills and not having any disposable income gets old in a heartbeat.

Be cautious who you do business with. When it comes to choosing a realtor or mortgage loan officer to work with, it's easy enough to check to make sure their credentials are in order (http://www.hawaii.gov/dcca/areas/pvl/programs/mortgage/). You should also be checking out their company on the BBB (http://www.hawaii.bbb.org/WWWRoot/SitePage.aspx?site=55&id=3e4dbc19-d84c-442e-94fe-58b3ed9e7ab6), here (http://www.complaints.com/) and even here (http://www.ripoffreport.com/). Then there are the qualified recommendations from family and friends. I avoid using the word "advice" as I have seen too many people get waylaid by bum advice from mostly well-meaning friends or family who have no experience either purchasing or refinancing a home.

Lastly, don't be afraid to ask questions. If someone pulls your credit report, ask to see all the accounts listed therein to verify the report's accuracy. If they price a loan for you using your credit report, ask for a copy of your Good Faith Estimate. When they lock in your interest rate, ask for an updated copy of your Good Faith Estimate reflecting your locked pricing. When you sign your final loan documents, ask for a complete duplicate package for your own records and an original color appraisal report.

And in case anyone was wondering, "dunce cap" is not a classic look.:p

[kamuelakea]

Don't buy more house than you can comfortably afford. If your annual gross household income < $60k, you shouldn't be shopping for homes in the $400k+ range.

Hahah, then you may as well close up shop and leave town MixedPlateBroker because if anyone applies your "common sense" and affordability rules, then ALMOST NO ONE IN HAWAII could purchase a home.

September 2007 Honolulu Median sales price was $650,000.

If 3 or maybe 4 times your annual income is still as good of a common sense rule of thumb, then the household who buys the MEDIAN home in Hawaii right now should be making between 162,500 and 216,667. That's for a tiny 70 year old shack on 4000 sq ft of land in kapahulu which needs some work. Hawaii's median income in 2005 was $58,112 which suggests a more appropriate median home price range of 175,000 to 232,000.

By your suggestion, I declare Hawaii economically non-viable. There are no more loans to make. You have made a good arguement for you not having any more customers. What are you going to do? Only sell to rich mainlanders? Last one who leaves, please turn out the lights.

You're kind of late to the "use common sense" and "if its too good to be true" parade Mixedplatebroker. Mortgage bORKers across the nation had too much rotten food on their mixed plates over the past 3 or 4 years. Not you of course.

[sinjin]

When real estate "professionals" are holding up cardboard signs on off-ramps I'll start looking to buy. Could be soon.