Mortgage Mayhem

[68-eldo]

Re: Mortgage Mayhem

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.

Re: Mortgage Mayhem

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.

Re: Mortgage Mayhem

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.

[Mokihana]

Re: Mortgage Mayhem

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.

[MixedPlateBroker]

Re: Mortgage Mayhem

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.

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 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" 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. 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 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.

[SusieMisajon]

Re: Mortgage Mayhem

Thanks for the reply.

[MixedPlateBroker]

Re: Mortgage Mayhem

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]

Re: Mortgage Mayhem

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

Re: Mortgage Mayhem

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]

Re: Mortgage Mayhem

http://afp.google.com/article/ALeqM5...pjRy9lr1u3nIzw

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.

[MixedPlateBroker]

Re: Mortgage Mayhem

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 –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 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.

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 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.

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]

Re: Mortgage Mayhem

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]

Re: Mortgage Mayhem

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!

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.

Re: Mortgage Mayhem

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.

[tutusue]

Re: Mortgage Mayhem

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!