Georgia FHA Home Loans - (& Opinion)

Try 'iss out, y'all, and if'n you don't laugh yer not cool.

http://rinkworks.com/dialect/

Type in your own Active Rain homepage or any other page and it will "translate" into redneck. Sort of - but it is amusing! 

This is a paragraph from my AR homepage: 

Unnerstan'in' whut it means t'be able t'delivah is whut separeetes NOVATION MORTGAGE fum th' "lenner jungle". Like yo' we don't git paid until th' deal closes - so, eff'n it kin be closed NOVATION kin close it. Yo' give us one shot an' beatin' yer inhouse bustedr an' yo''ll be amazed, cuss it all t' tarnation. Thar's a reason professhunal investo's, mo'tgage bustedrs an' builders trest NOVATION MORTGAGE wif ALL of their deals - we git it done!

Have you seen these ads or spam in your email?

CREDIT REPAIR - INCREASE SCORES BY 200 POINTS

YESTERDAY = BAD CREDIT, TOMORROW = NEAR PERFECT CREDIT

SAVE THOUSANDS ON YOUR LOANS WITH A BETTER CREDIT SCORE

IMPROVE YOUR SCORES TODAY!

INSTANT SEASONED ACCOUNTS FOR YOUR CREDIT REPORT! 

I corresponded via email with these and similar ads. They all had one thing in common:

MISREPRESENTING THE BORROWER'S TRUE CREDIT HISTORY

Oh, they'll tell you it's not fraud and point you to an FTC Article but like anything else: Give them an inch and they'll take a mile. If you are involved in this scam or you don't understand why it is fraud let me show you the letter:

=== 

Dr. Cook;

Thank you for your questions and I am sure I can rechieve [sic] some of your fears and concerns. We can increase your credit scores in less than 30 days by as much as 200 points with no risk to you and no violation of any laws! Read this article at the FTC (and they link it) showing this practice is allowed!

How It Works

Blah Blah Credit Services Group has teamed up with people who have established great credit who will, for a fee, allow you to be added to one or more of their excellent credit accounts as an Authorized User. Since they have established good credit on these accounts and many of them have been open for at least 3 years or more you will instantly have a seasoned trade line on your account.

Studys [sic] show that just one of these trade lines can raise your credit as much as 50 points or more. You said you believe your credit score might be around 590 so that would make your score jusmp [sic] to a 640 in just 30 days. If we add two of these type accounts you should see an increase to 680 and for 3 accounts it could jump as high as 720 or more than [sic] you can get about any type of loan you want.

The pricing is a gradiated [sic] scale:

50   Points $1000
100 Points $2000
150 Points $3000
200 Points $4000

The 200 point increase could save you tens of thousands of dollars per year - legally! Beware of other so called credit repair companies who offer to "challenge" negative credit on your report or to "settle" with collections companies because that can actually lower your score! 

The lenders will only see that the account has been opened for months or years and that it has been paid on successfully. 

===

Wow. You mean I can commit mortgage fraud for only $4000?

But, Ken, you jerk, it is legal to add an authorized user to a credit account. Businesses do it all the time!

Yes, I say, but it is NOT legal to do so for the PURPOSE of defrauding a lender by MISREPRESENTING your credit history. Here is how to discover it:

Borrower has a monthly income of $5000
Borrower has 5 active trade lines other than mortgage
3 of borrower's trade lines have a high credit of $2000 with a balance of $1950 and 2 lates in the last 24 months
2 of the borrwer's trade lines have a high credit of $500 with a balance of $675 and no lates and borrower is shown as an Authorized User

ANYTIME A BORROWER IS SHOWN AS AN AUTHORIZED USER we request documentation from the creditor which shows how long that borrower has been on that account. We also ask the borrower WHY they are on that account.

THE KICKER is that we haven't seen this type of fraud but have heard the stories of people who paid a credit repair company to repair their credit only to never see their money again! If we do see it we will deny the loan and report the activity.

YOU CAN REPAIR YOUR OWN CREDIT and do so legally. Anything a "Credit Repair Company" can do you can do. 

The REAL FTC article. 

Lack of knowledge, discipline, preparedness or any combination of the three.

This may sting a little but don't shoot the speaker for delivering the data. This is long but I encourage you to read it, share it, pass it along, invite others to read it. After all, we're either working to fix the problems or we are a part of the problems. Silence is only golden when I'm watching TV.

RealtyTrac reported approximately 1,260,000 foreclosures in 2006. Here is a look at 5 select states and their relative percentage of foreclosures to housing units.

What this chart does not show is: number of units and foreclosures that we non-owner occupied, ratio of vacant to occupied units, new construction vs. existing, price of new sales compared to foreclosure value, etc.

What I can tell you as a lender is that any loan that goes into default during the first 12 months is a business killer. Get enough of them and you're going down for the count.

What I can also tell you is that the normal suspicious characters are not the only ones that contribute to the number of foreclosures. For example I have a current client who is paying their first mortgage ontime every month but has yet to pay their second mortgage. High credit scores, great assets and solid DTI ratio ... why not paying?

There are some "teachers" who tell investors that lenders can't foreclose on properties because of a defaulted second. Word from the lender: Try me. I will get my money.

So what other reasons might people default on their loans?

LACK OF KNOWLEDGE - a commonality in many owner occupied foreclosures. Sure there are scum-bag loan originators out there but if the borrower had a modicum of knowledge about the most important documents they can ever sign other than a marriage certificate perhaps they wouldn't find themselves in this predicament. I blame the government for enslaving the American people by creating a false air of educational supremacy and for continually projecting the image that Uncle Sam is always around to bail people out when they fail.

REMEDY - require every borrower to obtain a Certificate of Mortgage Understanding before they can sign for a loan document and leave the education up to the industry but have each industry insider offering the Certificate to be approved by an industry group as well as a state licensing commission at LOW COST to the provider.

LACK OF DISCIPLINE - this alone is a 500 page book about how America has lost our touch on discipline. Home discipline and guidance of our children has been stolen from us by the socialist agenda and given to a public school system which in turn fails miserably and puts it back on the parents who are threatened with imprisonment if their form of discipline does not conform to socialist guidelines and I'm not talking about beating children with a baseball bat. American children need to learn the immediate consequence of their actions from birth and they aren't getting it because of socialism in America.

REMEDY - If you bounce a check at the bank it costs roughly $35 to $50 in most banks. This should be lesson enough. If you know you have a $1500 house payment and you can only afford to spend $900 per month on food - why do you take your family out for even 2 meals a week much less 10? (I see this in a couple I really care about but they despise me because I won't lend them anymore money.) Why do you buy a car with a $600 per month care payment when the one you already owned ran fine and just needed a little TLC? Stop spending what you don't have to spend!

FAILURE TO PREPARE - not everyone can prepare for their entire life but everyone must make it a priority to stockpile at least six months of living expenses and I strongly recommend thirty six months worth! And, I admit, as of today I do not have enough reserves to match my plan but it is my goal. Eat out? Nope. It's home cooking for my family. We have long been warned that we do not have enough personal savings/assets in America. Because we have a lack of knowledge and a lack of discipline we fail to prepare.

REMEDY - strong rewards for saving and investing. If the social agenda kills some of the tax advantages for investors it will only punish the weak, undisciplined, uneducated citizen. True investors will continue to invest and those who may have invested or saved small amounts weekly or monthly may no longer be driven to do so. But too many in our elected government have the Robin Hood mentality of steal from us and give to them. Talk about weakening our strengths! But, many of you will keep voting for social agenda because you either don't truly understand economics or because you dislike a candidate for some high-schoolish reason.

TELLING IT LIKE IT IS - some people may never "get it". They can be from good families with great educations and fall flat on their face. It's not the man who falls in the water who drowns, it's the many who doesn't get out of the water who drowns. THERE ARE LIFE BOATS! If you do not get educated from reliable sources with proven track records you are being foolish. If you don't make your payments ontime you can lose your investment or your very home. Take 5 jobs if that's what it takes to pay the bills. I have worked as many as three full time jobs at once - it hurt physically and emotionally but I learned a lesson AND I recovered from the situation I got myself into.

TAKE RESPONSIBILITY - it doesn't matter, in the end, what the loan officer, real estate agent, seller or guru told you it's your duty to fulfill your obligations in life. If you can't do it alone find someone who will at least help point you in the right direction. Do not let yourself be vulnerable to the bottom feeders and cretans. Get educated, gain some knowledge and use that power over the scum.

STOP SPENDING - quit being so anxious to outdo your neighbor. Learn to have joy in abundance of living and not having to strap yourself to your job. Never use your credit card to purchase a disposable item and only use it sparingly for wise investment decisions. Most of my large appliances, yard equipment and entertainment systems have been purchased on credit cards which had no fees and no interest for a minimum of twelve months.

PAY CASH FOR - things that go down in value: televisions, refrigerators, boats, cars, vacations. Twelve months same as cash is only as good as cash if you do not spend the cash on something else instead of making the payments on time.

USE FINANCING TO PURCHASE - things that go up in value: homes, land, buildings. Even then be smart about it. Right now it's my real estate investments keeping me in line with my wealth building plan. Business is down just a bit for a short term and my investments are more than taking up the slack. 

I am currently angry at the dark side of my industry, dissatisfied with my elected government and eager to fix both! If there is ANYTHING I can do to help you, a friend, a client or anyone to have more knowledge, more preparedness and more discipline please PLEASE come my way or send them my way. I have free seminars regularly and I don't pull any punches or teach any trash. I don't do seminars to sell my books, DVD's or charge thousands of dollars to join my program. I am a lender in Georgia and my wife is a Mortgage Broker in Florida and I will help anyone in any state at any time to jump up a notch!

I don't know why I had so many emails and questions during my seminars last week regarding 1031's. Regardless here is a short (very short) expose about IRS Code 1031 Tax Deferred Like Kind Exchanges.

If you've only heard the term and don't know what it is this will help. If you've never heard the term this will help you, too! It's a brief, very brief, introduction to using 1031 Tax Deferred "Like Kind" Exchanges to defer any capital gains taxes you may have otherwise faced with the sale of a piece of real estate.

In the investment industry I answer this question at least 2 or 3 times every week.

You have, as a seller who has placed the proceeds of a sale into the management care of a Qualified Intermediary, 45 days to identify the property you intend to purchase and 180 days to close on the sale. This is from the date of the sale of the initial property.

1031 exchanges must be administered by a Qualified Intermediary. You cannot hold the proceeds from the original sale - they must be placed in escrow by a Qualified Intermediary. I prefer and use Starker Services since it was Starker who first identified this tax opportunity and began to market his services commercially.

It does not have to be residential for residential or commercial for commercial exchange but can be mixed. Like kind, in this case, means real estate properties held for investment or for some other productive business use. Your personal property cannot be used in a 1031 exchange.

Tax will eventually be due. Either you or your estate will one day pay the capital gains taxes on any profits you've realized through the sales of the property(ies) traded through the 1031 exchange tax deferment method.

If you do not identify your property within 45 days or do not close on it within 180 days your exchange defaults and you will be responsible for paying the capital gains tax on any profits you earned on the sale at the rate of the tax on the date of closing.

If you have individual questions I'll be happy to answer them.

When:

Tuesday, March 20, 2007, 7:00 PM 2007

Where:

Innova Center
2501 E Piedmont Road Suite 111
Marietta , GA 30062
678-946-0100

• Info/Map

Description:

1st meeting - no dues, no fees. This 1 hour meeting will be to meet and greet and vote on the bylaws and membership details as will be proposed. This group is not intended to replace your existing memberships but to enhance them.

There will be a 20 minute presenation on how to find Short Sales (pre-foreclosures) opportunities.

More information will be available here soon.

RSVP limit:

Only 50 members (including guests) can RSVP 'Yes' or 'Maybe' for this event. There's still room for 44 more.

I almost went to bed before reading my email tonight ... good thing I didn't. This was sent to me by a banker friend of mine ... 

Dear Bank Manager,

I am writing to thank you for bouncing the check with which I endeavored to pay my plumber last month. By my calculations some three nanoseconds must have elapsed between his presenting the check, and the arrival in my account of the funds needed to honor it. I refer, of course, to the automatic monthly deposit of my entire salary, an arrangement which, I admit, has only been in place for eight years.

You are to be commended for seizing that brief window of opportunity, and also for debiting my account with $50 by way of penalty for the inconvenience I caused to your bank. My thankfulness springs from the manner in which this incident has caused me to re-think my errant financial ways. You have set me on the path of fiscal righteousness.

No more will our relationship be blighted by these unpleasant incidents, for I am restructuring my affairs in the second half of 2007, taking as my model the procedures, attitudes and conduct of your very bank. I can think of no greater compliment, and I know you will be excited and proud to hear it.

To this end, please be advised about the following changes:

First, I have noticed that whereas I personally attend to your telephone calls and letters, when I try to contact you I am confronted by the impersonal, ever-changing, pre-recorded, faceless entity which your bank has become. From now on I, like you, choose only to deal with a flesh and blood person.

My mortgage and loan repayments will, therefore and hereafter, no longer be automatic, but will arrive at your bank, by check, addressed personally and confidentially to an employee of your branch, whom you must nominate. You will be aware that it is an offense under the Postal Act for any other person to open such an envelope.

Please find attached an Application Contact Status which I require our chosen employee to complete. I am sorry it runs to eight pages, but in order that I know as much about him or her as your bank knows about me, there is no alternative. Please note that all copies of his or her credit history must be countersigned by a Justice of the Peace, and that the mandatory details of his/her financial situation (income, debts, assets and liabilities) must be accompanied by documented proof.

In due course I will issue your employee with a PIN number which he/she must quote in all dealings with me. I regret that it cannot be shorter than 28 digits but, again, I have modeled it on the number of button presses required to access my account balance on your phone bank service. As they say, imitation is the sincerest form of flattery.

Let me level the playing field even further by introducing you to my new telephone system, which you will notice, is very much like yours. My authorized contact at your bank, the only person with whom I will have any dealings, may call me at any time and will be answered by an automated voice. By pressing buttons on the phone, he/she will be guided thorough an extensive set of menus:

1. To make an appointment to see me
2. To query a missing repayment
3. To make a general complaint or inquiry
4. To transfer the call to my living room in case I am there;
Extension of living room to be communicated at the time the call is received;
5. To transfer the call to my bedroom in case I am still sleeping. Extension of bedroom to be communicated at the time the call is received;
6. To transfer the call to my toilet in case I am attending to nature. Extension of toilet to be communicated at the time the call is received.
7. To transfer the call to my mobile phone in case I am not at home.
8. To leave a message on my computer. To leave a message a password to access my computer is required. Password will be communicated at a later date to the contact.
9. To return to the main menu and listen carefully to options 1 through 8.
The contact will then be put on hold, pending the attention of my automated answering service. While this may on occasion involve a lengthy wait, uplifting music will play for the duration. This month I've chosen a refrain from The Best Of Woody Guthrie:
"Oh, the banks are made of marble
With a guard at every door
And the vaults are filled with silver
That the miners sweated for"

After twenty minutes of that, our mutual contact will probably know it by heart. On a more serious note, we come to the matter of cost.

As your bank has often pointed out, the ongoing drive for greater efficiency comes at a cost. A cost which you have always been quick to pass on to me. Let me repay your kindness by passing some costs back.

First, there is the matter of advertising material you send me. This I will read for a fee of $20 per page. Inquiries from your nominated contact will be billed at $5 per minute of my time spent in response. Any debits to my account, as, for example, in the matter of the penalty for the dishonored check, will be passed back to you.

My new phone service runs at 75 cents a minute (even Woody Guthrie doesn't come for free), so you would be well advised to keep your inquiries brief and to the point. Regrettably, but again following your example, I must also levy an establishment fee to cover the setting up of this new arrangement.

Best Wishes,

Your humble client

This two hour workshop provides an indepth introduction to the Short Sale process, how to source them, how to negotiate them, who to speak with, and how much to offer.

Because I am a lender I will also share with you why Short Sales are so advantageous to lenders, homeowners facing foreclosure and the real estate investor.

Inhouse Seminar

Online Seminar 

Okay, enough already. So I get the emails all the time. Usually I simply ignore them and mark them as spam so future editions go straight to the dump. But this morning I just wanted to ask, "Explain how this is not defrauding me."

I thought you may enjoy the exchange:

Dear Ken

Do you or your clients need seasoned trade lines / aged credit to boost their credit scores?

COMPANY NAME, Inc. can help.

COMPANY NAME is an exclusive network of businesses and individuals with prime credit that have joined together to benefit you & or clients.

With our Seasoned Trade Lines, you can instantly have established, reported seasoned credit lines with ongoing timely payments, and well calculated balance to credit limit factors to verify to future creditors that clients are not a high risk candidate. Through our extensive co-op of businesses and individuals with prime credit, it is now possible to share their seasoned account history.

This technique has been used for years by top Mortgage Brokers to help their clients raise their credit score by 100 points or more in a very short amount of time. This allows you to share virtually an unlimited number of established, reported unsecured credit cards. This technique alone has been responsible for credit scores to jumps as high as 240 points!

Imagine for a second how life would be different with a 700+ FICO score...

How the program works:

Members of our network have aged credit accounts back dating as far back as 20 years of perfect payment history.  Credit limits can exceed   $50,000 with very low balances.  Balances never exceed 20% of the credit limit.

Primary Card Holders add clients on as authorized users. Legally authorized users can share their credit history. In as little as 30 days these trade lines will report to the credit bureaus. Because 35% of our credit score is based on payment history, authorized user’s credit scores can increase as high as 60 points per trade line.

# of Trade Lines

Approximate Credit Score Increase    Credit Repair Consultation     Pricing
1    30-45 Points                                No                                   $999
2    60-90 Points                                Yes                                  $1,900
3    90-125 Points                              Yes                                  $2,700
4    120-170 Points                            Yes                                  $3,400
5    150 -205 Points                           Yes                                  $4,000

Special pricing for the month of February $750 per trade line.
Visit us online at http://www._______.biz

Let us know if we can be of service.
Name - email - blah blah

And My Response:

Dear Larry,

Explain how that isn't defrauding me.

Thanks,
Ken

And His Response: 

Learn more at Experian or attached FTC PDF File.

http://www.experian.com/ask_max/max060105b.html

Let us know if we can be of service. 

And My Final Response:

Larry,

You may be a great guy and really feel like you are helping people but this still doesn't tell me, as a lender, why this is not defrauding me and putting my good reputation and name at risk with my investors. After all YOU know and I know that the GOOD CREDIT belongs to someone other than the borrower.

It's a crappy deal, Larry. It's part of the problem with mortgages going bad today.

Guess who gets to pay that loan back when the crappy borrower who had crappy credit gets the loan and can't pay the bills and that's why they had crappy credit in the first place? That would be me.

Just because you can doesn't mean you should. I don't like what you do in case you haven't noticed.

It may be not be illegal but that doesn't make it ethical. And just as a hint to you lenders know this is happening and we know how to identify what we call "phony" credit.

I'm sure you won't miss my business and best to you.

Regards,
Ken

And for the sake of discussion I may have hidden my feelings about this technique but to me, when you are asking me to purchase a property on your behalf with the intention of recovering my investment from you or delivering the papwerwork on that transaction to an investor with deeper pockets than my own and you have used the credit of some other borrower to increase the appearance of your value as a borrower I call that misrepresentation. It doesn't matter if all the payments are made or not.

One of the ways to identify this method in QC and Compliance is if all the other credit is bad and there are these two or three accounts that are perfect and have low balances .... not normal: That is a red flag. And, in case you didn't know it, lenders can request verification from other creditors of how long a borrower has been on the account. 

Lenders depend on accurate information to assess risk. This practice clouds the assessment. The real credit is crappy - the misrepresented credit is what makes lenders see a false risk.

If you are a mortgage broker and you see inconsistencies in the credit report (which, by the way, it is your responsibility to look for them) you should order a Pay History from the creditor. It will tell you how long your applicant has been associated with that account. If the account has been open for 24 months and the applicant has been associated with it for 20 months, 10 months or 1 month, FLAG IT.

FRAUD OR NOT? You be the judge 

An Indian chief had three wives, each of whom was pregnant. The first gave birth to a boy. The chief was so elated he built her a teepee made of deer hide.

A few days later, the second gave birth, also to a boy. The chief was very happy. He built her a teepee made of antelope hide.

The third wife gave birth a few days later, but the chief kept the details a secret. He built this one a two story teepee, made out of a hippopotamus hide.

The chief then challenged the tribe to guess what had occurred. Many tried, unsuccessfully. Finally, one young brave declared that the third wife had given birth to twin boys. "Correct," said the chief. "How did you figure it out?"

The warrior answered, "It's elementary: The value of the squaw of the hippopotamus is equal to the sons of the squaws of the other two hides."

Now the toofer:

A frog went to get a loan at a bank.

The loan officer's name was a fine Irishman named Mr. Patrick Wack. When the frog told Mr. Wack that he wanted a loan, he asked if he had colateral.

He showed him something that, to him, looked like a marbel and said "Well, I have this that my mum left me".

Patti took it to the bank president and said "there's a frog out there who wants a loan, and this is what he has for colateral (showing him the marbel)".

The loan officer said "do you know what this is, and should I give him the loan"?

The bank president said "That's a nic nac, Patti Wack; give the frog a loan".