Occasionally I am surprised myself at what we can offer. We never really know until we use the automated underwriting system and that is what makes it a surprise. Obviously if we can sell a loan at a lower rate and still make enough to stay in business and meet our obligations we are going to do so. But today I was really amazed.

Borrower is full doc but makes only enough to qualify for a home. They don't have any other debt like cars or credit cards. FHA would not approved them for this property even though they have steady employment for years and years at the same job, good assets and good income and a decent score but a 60% DTI. One submission through D/U and this:

He is approved - nothing down, fixed thirty 6.25% (APR 6.6%) - AND they accepted his offer at 85% of the appraised value on a home that needs very little work.

You can NOT tell me this is NOT a great time to buy! 

(This is not an advertisement to lend. Rates and terms vary.) 

Quite frankly friends I am not going to hush. I am not going to stop telling you that Clark Howard is a horse's ass when it comes to knowledge about real estate and mortgages. I am not going to cease beating the drum that global negativity on the part of the media fueled the massive fall out we just experienced and, as I did the lawyer who totally destroyed the definition of YSP, I will continue to provide FACTS to contradict the totally erroneous statements which proliferate the internet and the media.

I really do not know how I encountered this post titled Another “Realistic” View of the Housing Market but the "realistic" part is based on absolute lies and conjecture. In the article (actually editorial of a complete article copied and pasted as a blog post (found in MarketWatch) quoting a citation by Andrew Jakabovics of the "progressive Washington think tank" The Center for American Progress. (The link, by the way, goes to a page once titled: Islamo-Phobic Awareness Week - any hint about where THIS group is headed?)

Wow - if this is the kind of tripe that comes out of that group they are now totally discredited in my world. Here is the quote from Jakabovics in MarketWatch:

"The typical family with an ARM will see mortgage payments rise by $10,000 a year, according to Andrew Jakabovics of the Center for American Progress, a progressive Washington think tank."

And my reply repeated here:

Obviously Jakabovics pulled that number out of thin air. Most adjustable rate mortgages increase a MAXIMIMUM of 2 points per year. The average price of a home in the United States is $213,900. If the average loan also was 100% of the sales price and 7% interest the payment would be $1,423 per month. If the rate adjusted up 2% the payment would be $1,721 or $3600 increase per year. In fact , to have a $10,000 increase per year that one mortgage rate would need to rise a full 5% - a FULL FIVE PERCENT in one year on an AVERAGE home with a 100% loan!

Once again we have someone being quoted who is obviously way off base and that tells me his joy would be for the economy to crumble like most of the others who are pulling numbers out of thin air. 

I WILL NOT GO QUIETLY IN THE FACE OF ECONOMIC TERRORISM BUILT ON LIES AND DECEPTION 

People you BETTER start paying attention because if you don't think there are very negative influences with very powerful reasons for the American economy to crumble you better OPEN YOUR EYES. Reporting from groups like this Center For American Progress who are very obviously anti-Bush if not anti-American and are certainly PRO-ISLAMIC can spread like a cancer and infect the media who are too lazy to do their own research. 

Wouldn't you just love to turn on the tube or radio, pick up a newspaper or surf your favorite 'Net news and see this headline?

REAL ESTATE MARKET REBOUNDS OVERNIGHT
Millions of closings expected in  the next 30 days!

Let me share some better news to every person who lives in The United States of America. We are not perfect but we have freedoms not shared by most of the world. When you awakened this morning you did not have to worry like our friends in Cuba if your neighbor may report you for listening to a Miami radio station. You work at the job you have selected and you can change jobs at any time or as soon as your contract period into which you willfully entered expires.

Your children and cousins, nephews and nieces decide IF and WHEN they will serve this great country as a member of the Armed Services. You didn't stop at a government checkpoint to see if your papers were in order as you went from one county to the next or crossed the state line.

If you choose to worship a dead rose bush at the corner of the junk yard you may do so. You do not have to worry about a Taliban soldier executing your wife because the wind blew off her burkha. You can go to a Pentecostal church or a Catholic church or a Jewish synagogue or a Buddhist temple as your choice changes. Yes, the Catholics made some terrible mistakes in the middle ages but we cannot stand aside and let another religion get by with another campaign of violence as they spread across the world.

Yes my friends, America has her troubles but you have the right to vote in an open and free election. You have the right to campaign for change. You can say virtually anything you want to without fear of judgment with the exception of a very few things.

But your liberties are being challenged every day. Vote my friends. CAMPAIGN for decency and peace and self-reliance. The coming 12 months need you to pay attention and share and be a part of the continuing change and growth of our nation.

In a time of much needed transparency and truth in advertising I would think all Active Rainers would be very cautious with the words they choose to use in advertising - especially on Active Rain. Unfortunately I see it is not so. A fellow rainer is advertising a FOUR HOUR APPROVAL. They don't exist - well, not from the first phone call.

Four hour pre-approvals, yes. Four hour approval on a conventional, FHA or non-prime loan isn't possible unless all of the supporting documentation including title, insurance, appraisal, supporting borrower documentation including assets, income and credit.

So, unless you already have the appraisal, already have the insurance with the correct loss payee information, already have the clear title and the borrower has already supplied all of the information requested in the findings either by automated underwriting engine or manually by the underwriter all you have is a pre-approval.

So while you may "call" it an approval it's worthless until there is a CLEAR TO CLOSE. 

Ever heard of flipping? There are two types: honest business people with integrity and morals who buy low and sell high and scumwad dirtballs who cheat, lie, steal, and spoil the system. Remember when you could take out a little pad of paper with some numbers on it, scratch out some words and a monetary value, sign it at the bottom and hand it to the person behind the counter and leave with your stuff without so much as showing a driver's license? Like the days of writing checks with no ID gone are the days of unseasoned sales without jumping through a great lineup of hoops.

INVESTORS AND AGENTS READ THIS:

If you want a smooth transaction and you want the best loan for your client, buyer, self, remember the lender is the one who is actually purchasing the home unless you are paying 100% cash. If there is a lender involved the home belongs to them. They are giving you permission to use the property under very specific conditions until they are relieved from their exposure. What they, for the most part, want to see is six to twelve months passing between closing (A) and closing (B). This is called "Seller Seasoning" and it refers to the amount of time the seller from closing (A) has their name on the title before closing (B) to the new buyer. It matters not if (A) and (B) are related. 

Title on seasoning is what virtually killed simultaneous closings where in buyer (A) closes on the property and immediately becomes the seller to buyer (B). Lenders and closing attorneys/title agents are very concerned when this happens and generally are not going to allow it. An even bigger problem is encountered when there is an increase in value between closing (A) and closing (B) even within a couple of months. 

INVESTORS PLEASE READ THIS:

There are a number of "gurus" who continue to teach you that you can and should title all of your investment acquisitions in the name of an LLC for protection reasons. Okay, if you've read my blog more than once you've likely seen me write "just because you can does not mean you should". In this case, where you plan on refinancing or selling, you really should not from a conventional financing standpoint. (I am not giving you legal advice I am telling you how the finance industry views this.)

I constantly receive new clients who purchased a property using either conventional or private funding and either at or after the closing titled that property in the name of their LLC. Conventional lenders do not allow titling into an LLC so a Quit Claim Deed had to have been issued after the closing contrary to the binding agreement the borrower (individual) made with the lender not to transfer the title. But that's another story.

The real problem is encountered two years down the road with the owner, who has the property titled in their LLC., wants to refinance outside of conforming limits to liquidize the equity. Since conventional lenders do not offer financing to companies and the title and existing loan must be in the name of the person requesting the refinance the title must be Quit Claimed back to the individual's name. Why is this a problem? It resets the clock on seasoning on title.

WHAT ONCE WAS IS NO MORE BUT MAY RETURN

Until just a few short months ago it was fairly simple to find a lender who had expanded criteria and underwriting guidelines. Unfortunately there were those who took advantage of the generosity of the lenders and caused everyone, legitimate and scurvied, to have limited ability when it involves seasoning on title. This does not mean there may not be some lenders who are toying with bringing this back under certain circumstances. 

***

Ken Cook is Director of Operations for Novation Mortgage, a direct mortgage lender in Georgia and also licensed in Florida. A a Georgia real estate investment financing leader they have vast experience with issues such as these and are second to none in quick efficient decisioning for investors. Georgia Department of Banking and Finance numbers don't lie ... they blow their "competition" out of the water with experience, ability and service.

Rule one: Money talks everything else walks. So, essentially and within the limitations of the law (normally) the lender gets to make most of the rules about how many people look at the property during valuation. The first thing we do when we receive a loan package is put it through some quality and compliance checks. One of the methods we use is an automated fraud detection system called DISSCO from a company called Interthinx. This returns automated information that is cross checked against Interthinx' national database as well as comparing to other information we have submitted.

The automated system compares sellers, real estate agents, appraisers, loan officers, brokers, etc., to see how many times those name appear together. If the system establishes that the same loan officer, appraiser, agent and seller or buyer have worked together on other loans that raises suspicion and causes a lower score. This also makes us look more closely at the appraisal and the value.

While DISSCO has a built-in automated valuation method engine we also double check against another national repository for a second AVM. If one or both of those AVMs are more than 5% lower in value range than that indicated on the appraisal we may request what is called a desk review. This is where any one of a handful of trusted appraisers are called on to look at the appraisal, compare the comps, re-check using their system and offering their opinion. Sometimes they agree with the appraiser who actually did the appraisal. If they lower the value based on their findings we and they understand that it is much more difficult to establish a value sitting at a computer than it is if the property is visually inspected.

Welcome to the field review. The field review is essentially a new appraisal. The applicant will have an additional appraisal fee and the value may be lowered as a result of either or both of these types of manual reviews.

What can you do if the value has been lowered and you are absolutely sure the review appraiser is missing some very key information that would support the original appraised value? Simple, state your case and make it count. If the review appraiser missed a sale or missed the fact that one of the sales was a short sale or sold out of probate, etc. You can rebut and if the review appraiser agrees then you are okay.

One thing you do not want to do: lose your temper and pitch a fit. If you want the review appraiser to work with you the relationship needs to be built on nothing but facts and verifiable data. And for Pete's sake, if you are the buyer why in the world would you not be just over joyed that the value came in lower???

Keep smiling, things are looking brighter. We're closing more loans and taking more applications. We're even making special offers to our friends and associates in Georgia and Florida! 

Non-Recourse loans are available nationwide through Novation Mortgage at 866-946-0120 ext 107

Let's start with the A-B-C's or rather the I-R-A's. No, the is not the Irish Republican Army. It's your Independent Retirement Account. More specifically your Self-Directed Independent Retirement Account. I first learned of this some years ago through a friend who is also now a client and who built part of my home. He owns multiple investment properties, all single family, and some of them free and clear but in his SDIRA. When he told me about this possibility my eyes must have spun. I'm fairly finance savvy so he laid it all out for me an I was hooked.

There are a few simple rules about using your SDIRA to invest and they are hard, fast and immutable. The most important rule is that any loan used to acquire this property into the IRA's LLC must be a Non-Recourse Loan. And guess where one of the only places you can get one of those happens to be? Ahem, call me, let's talk.

Non-Recourse means the borrower it, him or her self is not responsible for the debt. The collateral (we're talking real estate) is the only way the lender can recover their debt. So obviously the borrower isn't as important as the property. Need equity and reserves. Reserves so the borrower can make their payments and equity in case they can not.

Want to know more? Call me at 678-946-0101 or just ask here! Leigh Brown says I am to have a conference call on this soon. She's that way you know. If you're interested in participating in such a call ... let me know.

People who author articles and perform skits, I mean give speeches, and use a set of initials after their name to build credibility really should double check their facts, figures and the validity of their statements before they proceed. If you are one of the five people who read my blog last night about the Worst Definition of YSP I Have Ever Seen will really enjoy today's insertion.

I saw a link to an article from ML-Implode (which I read mostly for comedic entertainment) titled THE "SUBPRIME" MENTALITY: A Metaphor For the Whole U.S. Financial Market - I wanted to read it. It actually is very well written by a guy with some initials after his name. CFA I assume means Certified Financial Analyst. Doesn't tell me how long he has been in the industry, what degree of education he has attained, how many people he has actually helped or whether he actually has any knowledge of the thousands of nuts and bolts that make up a single mortgage throughout its stages of life. Or maybe he just likes to blog on pages with a nice background.

I can tell you this for a fact - part of his premise has a serious flaw because of the leading statement to one of his paragraphs, "Because subprime loans, by definition, are made to borrowers who are unqualified".

FALSE-O  Tommy! Statements made out of ignorance like this one are definitely a part of the problem and doing nothing to promote integrity in my industry.

I have a "sub" prime loan. Rather I have a "non-conforming" loan - also referred to as sub-prime. I fully qualify for any conforming loan on the market. I can fully document my income, have an acceptable debt-to-income ratio, have more than two years on my current job, my credit score is superb - I have a sub-prime loan because I don't qualify?

Listen, Tomster, I have a non-conforming loan because of the value of my home. No agency provides a loan for me. I had to go outside of FHA, FNMA, FHMLC whatever guidelines to get my loan. To my knowledge there is not one agency conforming loan for which I may not qualify except possibly My Community because of my income.

I'm on the warpath and ratting you guys out. People who slander YSP including the X-Broker. Fortunately I have been invited to write for a national magazine the Truth about YSP and why it is the borrower's best friend when they learn what it is and how to use it. 

Don't get me started on Stated Income. Unless, that is, you are a self-employed borrower with massive taxes and depreciation on your taxes dropping you out of scope for agency conforming loans! But that's another story.

I LOVE ACTIVE RAIN! 

This is from the home page of the Dayton Daily News online:

"Mortgage Rates at 4.65% $170,000 loan for $656/month. See New Payment - No SSN Rqd. Save Now!"

I admit I clicked the link hoping it cost the advertiser $1500.00 but knowing it didn't. But what did I find when I clicked the link? A lot of transparency and truth? Why don't you be the judge ...

The page title assured me I could get a FREE MORTGAGE QUOTE - woohoo!

Then I got this:

Mortgage Rates at 4.65%.
See APR and Terms Below.**
$100,000 loan for under $386/month
$170,000 loan for under $656/month
$350,000 loan for under $1349/month
$500,000 loan for under $1928/month

I'm not even going to mess around, just head straight for the ** in the grayed out print at the bottom of the page. 

With principal amounts of $100,000, $150,000, $170,000, $200,000, $350,000, or $500,000 the 4.65% interest rate has an APR of 7.771, 7.677, 7.656, 7.631, 7.572, or 7.548 percent, respectively. This is an introductory variable interest rate on a first priority loan that is fixed for the first 6 months then is subject to increase no more than 1% every 6 months thereafter (until rate has caught up to fully indexed rate). See Terms A 30-year first priority loan with an introductory interest rate of 4.65 percent in the principal amount of $100,000, $150,000, $170,000, $200,000, $350,000, or $500,000 (APR of 7.771, 7.677 .... blah blah blah

A "30-year first priority loan" that is absolutely deceiving. Scum.

SCUM! This is the lowest form of advertising especially at a time when our industry is turned on its ear. I absolutely detest government interference so if you are really interested in doing something about it just avoid any lender/broker who has ads like this like the plague. Problem is too many people are still ignorant.

Once again people - I provide free training and consultations even if I have no chance in the world of getting the business.

Ken Cook 678-946-0101 

And if you work for or own this company - come on down to Atlanta personally.