Tuesday, April 21, 2009

FEAR, boo!

Change is coming. So everyone just calm down.

The last two days I've spent my entire day calming down people, fixing and addressing errors and getting people through issues based on FEAR. Fear of appraisal changes, rate changes, program changes or any other change that seems to be happening.

I'm reminded of the latest Batman movie, The Dark Knight. The Joker has a scene where he says that chaos is caused by fear and fear is caused by chaos. If he says he's going to kill 10 people tomorrow and does it, everyone is fine BUT if he just says someone is going to die and no one knows who / what / why / when, then everyone flips out. This, in a strange way, is exactly what's happening with the real estate and mortgage business.

There is so much change happening and not a lot of people know how to handle this, which results in a lot of chaos. I don't want to sit here and give every example because I don't have the time or space. Just know that if you're a client, co-worker, associate, employee or partner just calm down and we'll get through this. I leave this vague because all of you have an unique issue but my answer is pretty much the same. We've got it under control and we'll work through your particular issue together. Whether it's a rate question, appraisal question, submission question, credit question.... It's all the same answer. We'll handle it. "Relax, We've got it covered." is our slogan and I plan on making sure we live up to that.

There is a reason I'm working 12 - 15 hours a day. Stay calm, let us do what we do best and you'll get the best result possible. Always feel free to email me willie@1bearfinancial.com to stay on top of me. I don't mind because we're in this together. We just need to be patient and not so frightened of change because in the end we can't stop change.

Thursday, April 16, 2009

Thinking about rates

I want to thank everyone who's been calling and emailing. I know we're super busy and I really appreciate all the business. I'm doing the best to stay caught up and make sure I get my hands dirty on every deal.

These are amazing times. Everyday there is economic news, good and bad. There are changes happening all over with every lender and every program, some good and bad. And rates are really good still!

To everyone waiting for rates to drop, stop. We're at 5% or better on average, so what are you waiting for? Pay a point, pay two points, with money this cheap you don't want to miss it because over the long run no one has seen much better. Besides, I had an interesting conversation the other day. I was getting into rates and there was a realization (to which I could be wrong) that rates can't get much lower. You can't have 3% rates and here is why; investors can find that elsewhere. Our whole system is based on rates selling on the secondary market, even with all this Fannie and Freddie intervention, we're based on a secondary market. If you could get 1 or 2% in a bond or straight interest savings or money market from the bank, you would take that over a 3% government backed mortgage instrument. Your money would be liquid and there is no risk. So there has to be a natural bottom to where the rates will go. How low, I don't know? but somewhere there is a bottom.

I can't imagine that rates are going to ever be at 2%. I hope they do and I can refi everyone again, but I just don't think so. I often relate rates to the stock market and say "you never buy at the low and sell at the high, so we can just get close" and along with that stocks just don't go to 0, unless they go BK. Rates aren't a company, they're a tool or equation. You can't touch a rate so can it go BK? I will say no. I'm sure there is a flaw in my thinking but until I see it, this makes sense to me. Now, I'm getting a little too Andy Rooney, next thing you know I'll hate water because it's too wet.

Monday, April 13, 2009

Not all that shines is Gold

I'm learning and reading about the new Freddie and Fannie programs and the biggest problem that I see with them is that they don't help the people that need help the most.

If your loan is currently owned or backed by Freddie or Fannie, refinancing could be very easy. But if you where someone who got a subprime or alt-A loan you probably aren't backed by either of these two companies. So for all the people who have ARMs coming up or where on 2 - 5 year subprime / alt-a loans, you can't capitalize on these great programs with great rates.

For instance I got a 5 year ARM. It is now coming to the adjustable period. Out of easy 5 years ago I went through a subprime lender for less documentation. I do not qualify for either of these lender's new programs because who knows who backs my loan. I'm probably one of a million good, always have made my payment, borrowers that would love to get a lower interest rate and a long term 30 year fixed loan. I can't for right now. maybe they'll change the guidelines but not tomorrow they aren't.

As I predicted there are going to be some good things that come out with these programs but there are also some drawbacks. It's going to be a long process to help so many people out. I suspect a lot of changes in the coming months.

Also, this is another sign that things are not going to get better anytime soon. A few good pieces of news last week and people are ready to proclaim the bottom is near. Not so fast my friends. We may be plateauing before another shoe drops.

Tuesday, April 7, 2009

New Programs - UPDATE

I've been very busy trying to keep up with all the lenders and all their changes. They're starting to slowly but surely roll out the changes. I've got only one or two lenders that have pricing but almost all of them have been rolling out the guidelines. By next week I hope all the lenders will be set.

As I feared there are some hits that may take away the usefulness of the new programs but I still think that there is a lot of good that's going to come out of these programs.

Please make sure you contact your local congress person and senate person AND president to encourage them to get rid of this appraisal change that coming in May. It's going to be a disaster for you the consumer and for everyone involved in the loan process. Here is a link to find your representative http://www.usa.gov/Contact/Elected.shtml

Thanks.

Monday, April 6, 2009

New Programs

I know many of you have heard me say that there are new changes coming. Now that April is here, we should start to see the new "stimulus package" guidelines. I've only received one set of guidelines from a lender so far and no pricing from anyone. We still have another week or two before you'll start to see the guidelines.

I still urge everyone to start the refinance process. Even though I don't know the exact guidelines or pricing yet, it's best to get started now. If you thought the lenders were backed up when just the rates dropped, imagine what's going to happen when they get flooded with a bunch of new loans with guidelines that no underwriter has ever used before.

Some of the features are loans that on just the first mortgage can go up to 105% loan to value, streamline refi's with little or no documentation, first-time purchase credits, no minimum credit scores, no mortgage insurance for loans over 80%, AND MORE. There will be changes along the way and each lender can overlay any additional guidelines they want. Assuming that pricing stays where it is and there isn't a lot of additional hits, this is going to be great for home owners.

Feel free to email me, willie@1bearfinancial.com , or call 818 264-0999 to find out more or just to see what you'll need to get ready. This is the first time I've been excited about up coming changes in our industry. I'm not and I hope that you all don't get too excited because until we see what really happens we don't know for sure... But even if this means one person can capitalize on these new programs it will help, at least me :) Seriously, these programs do look to help lower the average person's monthly payments.

Friday, April 3, 2009

Bear's Method

There is a method to my madness. I speak to a lot of borrowers. I know I can get caught up in my craziness and will bounce from one topic to another. It's part of my charm. I have to toot my own horn and use it as an example.

Rates are bouncing all over the place. For weeks they can sway slightly back and forth or in a day drop or rise tremendously. As I've told many borrowers, let's get the loans into the system and be ready for the one or two days that rates drop. We can always flip the loan elsewhere or in some cases lender are renegotiating rates so that they can keep the loan.

I say this because not everyone listens to me. But I just did this for a borrower who did listen to me. We had the loan sitting at the lender for about two months. We set a goal for the rate and points that this borrower wanted to get and spend. The day that the market tanked a few weeks ago we where able to get that rate, in this case an even better rate than what our goal was. We were able to lock on a short term lock and close the loan out. The plan worked perfectly. It takes patience but this can work. Sure enough rates have gone up since that one day.

So if you want a great rate and want to make sure we can get that rate if rates drop for only a day or two, listen to my madness. Get your loan information in and let's set a goal for the rate. And keep the goal realistic, no 3% with no points. If you want 4.5 with one point cost, that's doable (hell, it might be doable now). Then when that hits, I don't have to track you down. I'm not lying when I say sometimes these rates are only around for a few hours or a day.

Wednesday, April 1, 2009

Investments VS. Investors

A lot of people have been talking to me about investment opportunities and what may or may not be out there. Whether or not this is a good time to invest is a whole other post, but I wanted to make the clear distinction between investments and investors.

It's good to have investments. I think the only way to amass true wealth in this world is if you take some risks and invest your money. At some point you have to put your chips on the table and go all in or you'll never win. The key is knowing who and what to invest in. Just because you make an investment doesn't make you and investor.

An investor is someone who knows a certain business or program. Even having some knowledge of a particular market or area does not mean you are an investor. There are two examples that I'd like to give.

1) When the real estate market was soaring everyone and their mom thought that they could jump in and do a few loans and sell a few houses. People would jump in and do a few family members' loans or sell a house or two and they made a ton of money fast. Never learning the business, just put it through a broker or a processor who did all the work. Now all of those types have spent the money as fast as they made it. I can't find anyone who just "jumped" in, still in the business.

2) I love comic books. I read them all the time. I buy them every month and have a huge collection. I read at least one book each day if not more. It's ridiculous. I know the history of the books, characters and companies who make the comics. I'm by NO means a comic book investor. As much as I love them, I don't know anything about investing in them. I can tell you that the first appearance of Spider-man was in Amazing Fantasy but I couldn't tell you what it's worth or what condition a book is in. It takes someone who's job it is to know this stuff.

So my point is, with the drop in the market, there are a lot of people putting together plans and calling themselves investors but you have to be careful. I see all the time people wanting to buy an investment property just because it's in foreclosure. We've got some things in the works for people to invest in and this is a good market to look for good investments. Just be wary of people calling themselves investors and wanting to deal your money around, just because they went to a seminar or think that the word "foreclosure" means "bucket full of money".

I've heard and seen a lot of ideas lately, some good and some not so good. Just like anything else, if you're going to give your money to someone, make sure that you trust them and believe that they know what they're doing and what their knowledge is in what they're selling. I've known college grads who couldn't make a good investment work and I've seen high school drop outs know how to turn a bad deal good.