Georgia FHA Home Loans - (& Opinion)

I think I was I who said, "we'll have less sales and refinances and more fraud" in reference to changes in the lending environment. Trust me - I'm not making excuses for these scumballs and thugs - it's just common sense. Make the dream harder to acheive and people are going to take more risks and break more rules (and laws) to acheive it.

According to a report in National Mortgage News "Florida led the states in mortgage fraud, accounting for 24% of all properties with material misrepresentation for loans originated in the first quarter, according to the MARI Quarterly Fraud Report." Well, housing values are still fluttering, lenders do not want to lend there and people need a place to live. So guess what? Right! Lie, cheat and steal!

MARK THESE WORDS: Just wait until there is no more seller funded down payment assistance and see what happens to fraud numbers. We're talking about eliminating over 1/3 of all FHA loans from people who actually can afford the payments but simply have not, for any number of reasons, saved enough to pay the newly required 3.5% from their own funds. I'm telling you all right now we will have to even more closely check employers (Loan officers/Processors: do you investigate employer licensing/addresses and phone numbers already? You should!) to make sure they aren't shell companies or websites who offer VOE services AND W2's. They disappeared for a while but you can bet your brown eye they are coming back. And THIS time they will be funding the DPA because employer's can still do so. Again, ending seller funded DPA is the most boneheaded, asinign legislation I have seen in this whole debacle. Well, next to the crap that keeps coming out of North Carolina. (North Carolina is the first state to ban YSPs - and don't comment some BS you don't understand about how that's a good thing. Politicians who take illegal kickbacks, job opportunities, speaking engagements that pay thousands of dollars, telling honest workers they don't deserve their pay. Marxism.)

If you want to be a mortgage fraud fighter you can. There are many types of fraud perpetrated by many individuals. Almost all fraud you hear about is insider fraud but there is a lot of ousider fraud as well. If you know of an appraiser, a banker, a real estate agent, or a buyer (or anyone) who is making a false statement or creating documents in order to get a loan closed you can try the FBI but they will tell you (A) we're too busy to handle just one case but we'll keep their names in case we see them again or (B) do you have any evidence a real crime has been committed? Or, you can contact Rachael Dollar who, among other things, operates the Mortgage Fraud Blog.

See you at the polls in November. I dare you to vote for inexperience in a time like this.

THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender

First let's set the record straight and say that HR 3221 did not end Down Payment Assistance. What it ended is what is called seller funded or interested party down payment assistance. DPA is still available in a much less regulated way than the type of DPA which was just "outlawed".

I know there are many people who do not care either way about DPA and there are people who care passionately about DPA. What I also have come to realize is that any who oppose it do not fully understand it. They have relied on numbers that are textbook examples of red herrings and even members of the government have been misled. See the following video for an example:

You Tube Video - Stop, Listen

Did you understand what Gary Miller was addressing? Maxine Waters hits it on the head. Even Jim Beavers from FHA admits it. And AL Green - I normally detest regulation but if it is regulation over elimination of something that HELPS our economy, home buyers, home builders (and the thousands of trades that touches), and real estate agents - then I will take a regulated program over no program at all.

Twenty-eight percent of all FHA homes purchased using DPA end in default? NOT TRUE - this is an absolute fabrication and what was started by HUD and is now leading to more of those "unintended consequences" that are carried on the backs of working Americans. Even to comprehend the misuse of this data the hearer or reader must understand that default does not mean foreclosure and foreclosure does not mean foreclosed. Numbers are easily manipulated and used like an onion skin over a basket full of lies.

What blows me away is that there is even one so-called "real estate professional" who thinks DPA is a bad thing. In fact it flabbergasts me. One even recently insinuated that people who use DPA cannot afford the home. One commenter made the statement, "only mortgage people support this" which is absolutely false and a very short sighted statement. Even if that were true that should tell you something because who knows home finance better than educated, seasoned and experience home finance consultants? (Chances are the person who made that statement has no idea how many hundreds of hours of training loan officers, not to mention mortgage finance directors, recieve every year - most without your prized CE credits - we do it because we have to know, not because we get a gold star.)

DPA is BAD --> FALSE!

Firstly, just because you are using DPA does NOT mean you have no reserves. In fact, more often than not, it means you are smart enough to keep all of your reserves instead of sinking them into your home. Then what some people do not consider is renters coming from paying $1300 or more rent going into house payments under $1000 per month PLUS getting the homebuyer's tax credit PLUS getting the home owner's depreciation. Don't tell me it doesn't matter to a lot of people because they don't take deductions because that is their own fault - it is available and if they go to a tax preparer it doesn't cost but a few dollars more to do it right!

Secondly this is for FIRST TIME HOME BUYERS - not savvy home owners who have learned the important things in life. In fact if you think DPA is the problem you are way out of touch with reality and have fallen hook, line and sinker for the opposition's propoganda. The elimination of this specific type of down payment assistance will cripple the entry market for home owners. It has been the primary form of first time homebuyer loans for the last several years.

This will cripple not only buyers but builders, sellers and agents.

What can be done? Meet your friend HR 6694

UPDATED: I would like to thank Michael4DPA from the Mortgage Grapevine for all of his efforts in gathering this data for us from HUD. Michael supplied the week's worth of research and I took the 5 minutes to put it into a spread sheet.

Thank you Micheal4DPA! Source: US Department of HUD - Percentage of Fallout with Down Payment Assistance - Seller Funder vs. Government, Family or Buyer's Own Funds

See you at the polls in November. I dare you to vote for inexperience in a time like this.

THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender

When I was younger I always thought older people were out of touch and out of date because they didn't get excited easily about change - at least the ones I later found out were the wisest.

Now with the age of the internet change spreads faster and gets deeper into society. It also comes with red, bold, oversized font and streaming video. But that's really not the point of this breif posting. As I relax after lunch I have been going through my spam box to make sure there are no real morsels in there I may have missed. Hard to tell with 2378 spams since Friday at 6PM. I do, however, see a trend: new and exciting ways to make a boat load of money and make it now! I guess I just had too much fun reading my email today.

First I see that what in reality takes about 5 years to perfect in a strict working environment can now be acheived in one short course for only $1500. Yes, Virginia, you can be a professional certified Loss Mitigator right from the comfort of your own home! I have a feeling the course teachers are the ones getting loaded on this deal. As a seasoned loss mitigator I find this rather laughable. I guess the problem I have with it is the choosing of the name: Loss Mitigator. But here's the really funny part - about once a week or so I get a phone call or email from someone wanting me to turn over my collection list to them because they have completed their "Loss Mitigation Certification" and are working with home owners in my area to help them save their homes and help us not to have to foreclose. Yippee! Thank goodness a foreclosure messiah is on the job!

One that really burns my tail feathers is lenders who accept FHA loan applications from un-approved brokers. Perfect comes to mind. "Oh we have a letter from HUD saying it's okay to do." Careful, you might step in your own letter and get it all over your shoes. I have a statement from the Deputy Director who says you are high on their list of priorities to cease and decist. Still, I get the emails regularly: Nationwide FHA, no licensing needed. Mmmm hmmm ...

Next I see that as a real estate agent I can line my pockets by doing BPO's and REO's and all I have to do is buy the BPO program which comes with hundreds of dollars worth of freebies just for me! Too bad I'm not an agent this sounds so exciting! I wonder if that book talks about all of the letters, emails and phone calls I get from agents telling me about their impeccable record of selling REO's for top dollar or providing BPO's faster and more accurately than their competitor? I bet right this very second I can find at least 12 letters and 50 emails from agents pitching me on those very subjects. I bet if they bought that BPO program they would know the magic words to say to me to get me to drop any relationships I may currently have developed over the last 20 years.

Please, I'm not ragging on agents for doing that. I have actually met some very good people and I do always try and respond and explain our status and situtaion. I am having my say about the "latest and the greatest" ways to ply money from our pockets with the newest, most rewarding opportunities.

And how this will change momentarily. Like sands through the hourglass, so are the ...

Join me and my guests for this very crucial conference call regarding the changes mandated by HR 3221 (Housing Rescue Bill) and how it WILL affect your transactions. It is urgent because this is in play now - not at some phantom future date - and many of you will be caught in the cross fire. Especially if you do not know the Seven Deal Killers that are in play right now.

This is probably the most important conference call you will participate in this year. It contains assembled information not available from any other source of this type at this time. The information is so crucial to families and any one involved in selling or financing that if it is not learned within the next 14 days will definitely leave people without any further options.

Who should attend? All real estate agents, home buyers, home sellers, and home owners.

Why should I attend? Because there is no accurate detailed information like this assembled in on place where you can hear it from live people and ask live questions.

Who is speaking? Ken Cook

How long will it last? About 1.5 to 2 hours depending on how many questions are asked.

Will it be recorded for later listening? I do not know the answer to that question at this time.

REGISTER NOW

What does he know? Everything about the bill that directly affects real estate. His FHA information comes directly from the mouth of Jim Beavers, Deputy Director of FHA's Single Family Housing Product Division. His Fannie and Freddie information come directly from Fannie and Freddie, OFHEO, NAMB, MBA and others.

Who is Ken Cook? I am Vice President of Novation Mortgage, an FHA/Fannie/Freddie/Portfolio lender in Georgia since 2001. Regular contributor to the Georgia Real Estate Report, featured guest on real estate radio talk shows, and lecturer at the John Adams Real Estate Institute at Emory University. And terrible golf hack who can't play often enough.

What's the cost? The cost is $30 per line. This means you can get 3000 people together in one room and pay 1 penny each to listen.

Why is there a cost? This is not a valid question. This is months worth of research, campaigning, meeting with "who's who's", and writing blogs and articles about the impending changes in our industry.

What are the topics? FHA changes, elimination of OFHEO and why you care, creation of the FHFA and why you care, elimination of seller funded down payment assistance and how thousands of deals will be lost by people who do not know all of the information covered in this conference call, changes to Fannie and Freddie, new price floors and cielings, changes in the way FHA treats condos, the FTHB tax credit and everything agents need to know about it. On the finance side it also contains information about Hope for Home Owners and FHA Secure as well as the national originator's registry and ongoing licensing.

Why so urgent? Because good American people are caught in the cross-fire and an uninformed agent can easily blow the dreams of American families in less than 6 weeks from now if they do not know this information NOW. By the time this information streams down through the normal courses thousands of deals will already be lost.

Please share this with your friends. At $30 per line I am not doing this for my wealth building plan, trust me. That simply covers the cost of the telephone lines and the massive webserver lease needed to present this information as well as the cost of the advertisement to get it out to all the people who need to hear it. Please forward this to your friends immediately.

THERE ARE NO CE CREDITS FOR THIS COURSE AND IF YOU'RE WAITING FOR A SCHOOL TO GET THIS INFORMATION APPROVED FOR CE YOU'LL HAVE ALREADY MISSED A VERY IMPORTANT DEADLINE.

Yes, I am passionate about this and believe every American needs to know this information now because 2 weeks from now my be too late and will be too late for thousands.

See you at the polls in November. I dare you to vote for inexperience in a time like this.

THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender

I will be slowly, for the sake of accuracy, disseminating the changes in lending laws that will directly impact your world. In HR 3221, American Housing Rescue and Foreclosure Prevention Act of 2008, is filled with good and bad. Unfortunately the bad outweighs the good. But let’s look at what we need to know now to avoid being ensnared by a couple of the traps in this bill that will definitely impede your ability to get people into homes.

RESERVE YOUR EMERGENCY CONFERENCE CALL LINE RIGHT NOW - only 25 lines available

This is an ACT NOW warning and I guarantee there will be people boohooing in October because they (a) didn’t know what I am about to tell you (b) didn’t believe me or (c) didn’t give a rip.

If you or your client are planning on using seller funded down payment assistance (Nehemiah, Liberty Gold, Ameridream, etc.) the loan absolutely MUST have a CLEAR TO CLOSE – FINAL APPROVAL prior to October 1, 2008. There is one work-around but I’m not even going to tell you what it is because if you have to resort to it you’ll probably lose the deal anyway.

The elimination is not of down payment assistance it is of seller funded down payment assistance. Now I know I’m not always right, just usually. I wrote letter after letter with example after example of not only how this would affect Mr. and Ms. First Time Buyer but also the American economy. You see people can still use down payment assistance – and here is where we prove emphatically that even though individual members of Congress may be intelligent and wise that when they get together in their gang meeting it goes out the window.

If you work for me and you want to purchase a home using an FHA loan but you do not have the funds for the required 3% down (which is actually 2.25% down because of motion of funds but is facing a mandated increase) I can give you the money. In fact, as your employer, not only can I give you the money but I can lend you the money for your down payment. Yes, and I can put a second lien on your property to make sure I am repaid! Oh, and wait, there is no CLTV limit so I can lend you more than the value of your home!

Yes, ladies and gentlemen. It’s true. Congressmen and Congresswomen, most of them, are intelligent people. Congress, on the other hand, appears quite dim (remember, it wasn’t “George Bush” who believed the reports and sent us to war in Iraq – it was Congress & GW). So I can lend my employees their down payment taking the CLTV of the property to, say for example, 110% and charge them interest or get my money back when they sell or refinance their home! However, the seller cannot fund the down payment and have it repaid at FHA rates. Don’t believe it? Call James “Jim” Beavers, the Deputy Director of the Office of Single Family Program Development at FHA.

IMPORTANT IMPORTANT IMPORTANT!

If you have a client who must use seller funded DPA for a purchase their file must have final approval from an FHA underwriter – not AU – prior to October 1, 2008. If the file requires any adjustments or amendments or any changes on scorecard on or after October 1, 2008 your deal is dead. If you are the listing agent and you accept an offer on a property where the borrower is using FHA and seller funded DPA you must absolutely and positively do everything you can to get that file approved by October 1, 2008.

Let me repeat because this is so very important. If the home buyer is using down payment assistance such as Nehemiah, the file must have the final approval – final approval not just an approval – prior to October 1, 2008.

Okay – I have more detailed information just as important to your industry coming. There are at least SEVEN more items equally important that you need to know in detail. I will be hosting a conference call on Sunday, August 17, 2008 at 6PM Eastern time. Cost will be $30 per line for the call. It will last between one and two hours based on the number of questions I receive. I will only be opening 25 lines so reserve your line now to make sure you get in.

RESERVE YOUR LINE RIGHT NOW - only 25 lines available

See you at the polls in November. I dare you to vote for inexperience in a time like this.

THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender

A modification is when the borrower or a professional consultant submit proof and evidence to the existing lender that the home is less valuable than the payoff and/or the rate has adjusted and the client can no longer meet the obligation and there is zero or negative equity in the property due to bad lending practices or a declining market - and the lender agress to change the rate and/or terms of the existing loan.

Many people claim to be "certified loss mitigators" but there is no industry designation by that title. Real loss mitigators work for the lender and mitigate the risk of the lender's investors. Late night internet "loss mitigators" paid $1500 to take a course from some ingenious marketer promising them this is the next great piggyback ride to millions in the bank. So here are these thousands of people who took an internet or live course and are now calling themselves Certified Loss Mitigators. They have no professional licensing, no errors and omissions insurance, probably no professional insurance, and almost certainly no audited financials or bonding to back them up in case they screw you.

Loan modifications are made using the existing lender and modifying the existing loan. No new loan is necessarily created. No fees are paid to the broker or attorney in relation to a new loan. The fees are paid directly by the borrower for the service of loan modification negotiation. Which, by the way, requires several hours of research on the part of the negotiator and the part of the attorney. Yes, you can request your own loan modification and not pay anyone anything. What you pay for is all the research and papwerwork time and professionally submitting your requests/demands by a licensed attorney.

Practical Example (I love those):

Say you borrow $10 from me to buy a chicken and you are going to sell the eggs to repay me. I based the loan on the chicken's eggs being worth 10 cents each and you being able to give me a nickel for every egg you sell. The caveat is that you can give me a nickel per egg for the first 3 months but after that it may go to 7 cents per egg. It is an adjustable rate in other words.

If the value of the eggs stays the same that means now you are only making 3 cents per egg - not enough to feed your family on. The loan officer told you not to worry about it because the value of eggs was going up at least 10% per year and before the 5 cents payment became 7 cents repayment they could to to another egg-backed funding and refinance that loan into a long term, fixed rate.

But what happened is eggs went down to 8 cents each and you're paying me 7 of those 8 cents. Additionally the cost of chicken food went from $2 per gallon to $4 per gallon and your income stayed the same. Plus have you seen all of those broken eggs just laying around all over the place?

So you call me and tell me that story and prove it all in writing and ask if I will go back to 5 cents per egg and let you sell 2 eggs without paying me anything from them. I see, because of your pages of data, you are correct and I agree. Besides, I recognize the name of the attorney who submitted it to me.

We just modified and did a forebearance on your chicken loan but I didn't give you a new loan to do it. Besides, now you can't qualify for a new loan because I don't lend 100% of the future value of eggs anymore and even though a professional egg evaluator assured me your eggs were worth 10 cents at the time, because of all the broken eggs in your barnyard, your eggs are now worth only 8 cents each. And because you didn't pay the farmer on time your credit smells rotten.

Why did I do it? I don't want to take care of your chicken or sell the eggs. I just want my money back. Besides: Interest is front loaded. (But that's another farm animal story for a later time.)

See you at the polls in November. I dare you to vote for inexperience in a time like this.

THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender

I love it when I'm right. For months I have been challenging these renegade lenders allowing unapproved brokers to send FHA loans in and be compensated saying it is a violation of HUD's policy and an impingement on the public trust. "No, no, no, Ken. We have a letter from HUD okaying the way we do it", said my friend.

"Right", replied Ken. "Just because the name is Perfect doesn't mean the ethics are."

On June 20, 2008, HUD issued Mortgagee Letter 2008-17, to remind lenders and brokers of FHA existing policy regarding the use of non-approved mortgage brokers in the origination of FHA forward mortgages.
- http://www.allregs.com/ealerts/updates080811_FHA-MBR.htm

So what's the problem? Simple: everyone has to be paid. The correspondent lender, the broker, the warehouse line, the investor and everyone in between. Adding that extra, non-approved entity there in the middle who has NOT demonstrated net worth or proper liability mitigation, adds two things: higher cost of the loan and higher risk to the borrower and investor.

I have said it before and I will say it again: PLAY BY THE RULES OR GET OUT OF MY INDUSTRY.

And here, by request of Missy Caulk, the link to verify if the bank or broker originating the file is HUD approved. Go ahead, check NOVATION MORTGAGE in Marietta, GA - we're on there ;)

http://www.hud.gov/ll/code/llslcrit.cfm

Rule one: Education Not Legislation
Rule two: If they can't afford it, they don't deserve it
Rule three: Break either of the first two rules and we keep swimming in the cess-pool

See you at the polls in November. I dare you to vote for inexperience in a time like this.

THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender

The winds of change are blowing. It has nothing and everything to do with everything and nothing. Back to school time always signals a change - sometimes it's not for the good - sometimes it is. Here is the good news: there are currently 103,156 Rainers. My estimate is that 50,000 are somewhat active but 10,000 are quite active. Here is some more good news: The pen is mightier than the sword.

Those of you who have read my "stuff" for the last couple of years here on AR know I can be a little too transparent from time to time. In the hay days I blasted people in the industry for bad techniques and dirty dealings. My blood demands that I call a shovel a shovel - it is too deep to get out. Once I even blogged about my own propensity for being outspoken and not always choosing the best words or tone. Well, here I am still the same old Ken.

The news is good, that we are many. Other good news is that we are always presented with new challenges but now, through AR, we have the first opportunity in the history of the world to act as one body - one mind - and for one purpose. What is our purpose? You know, my friends, you know what it is: to correct the ills some of us helped cause while upbraiding our industry and moreover our nation.

WE HAVE THE POWER

Available units are not our challenge - we have plenty of those both new and existing. Low prices is really not our challenge - we have seen 12 to 18 months of plummets. Low interest rates is not our challenge - we are still below that 7% threshold for now. So, Ken, mr genius, what is our challenge?

CONSUMER CONFIDENCE

But we didn't break it so how can we fix it? Oh, we broke it. Every one of us. Every single one - even you shaking your head and getting red in the face. If you live in America and have for the last 5 years you helped break it. We all enjoyed the good times one way or another. We enjoyed low food prices, low fuel prices, rising home values and credit cards piled 10 miles high.

NOW WE ARE PAYING THE BILL

Here is what I would love to see happen - ten thousand word editors running once a day, every day, for the rest of 2008. Those keyboards and your fingers doing three things every day:

#1 - Post to Active Rain - show us some good news, a good technique or a good opportunity. It doesn't matter where you live or what you have to share, just share it! But don't stop at Active Rain - post to other blogs, too. You are welcome any time to post to The 24 at Blogx3.com

#2 - Write an article for a local newspaper. I do it all the time and they get published. Most of them look for something between 750 and 1200 words. Most local newspapers even have a website where you can submit your article. If they don't publish it don't sweat it and don't stop sending them. The probably will not publish everything you send.

#3 - Write your congressperson, senator, governor, or the President. Share you ideas and experiences. They WILL be read. The bigger folks all have staffers who are trained to put those letters into order and send either prepared responses or, as I get very often, an individualized response.

BE AN EVANGELIST FOR YOUR INDUSTRY

... your job and your future depend on it!

See you at the polls in November. I dare you to vote for inexperience in a time like this.

THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.

EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.

Copyright©2008 Ken Cook. Georgia and Florida real estate investment loans, FHASecure and FHA Home Loans, nationwide commercial hard money and small business loans, non-recourse loans for real estate investors

Novation Mortgage, 2501 E Piedmont Road, Suite 201, Marietta, GA 30062 Georgia Residential Mortgage Licensee 20014. Florida Mortgage Broker Business MBB 0703760 FHA Lender - Equal Housing Lender

"Freddie Mac Makes Bold Moves to Encourage Workouts" is a grand slam hit for Scott Schang at The 24. Scott is the regular featured publisher on The 24 and proves why with this powerful submission. My personal favorite part of Scott's article is, "If you are having challenges making your mortgage payments or if you are troubled by the enormous amount of negative equity you're currently sitting on, don't hesitate to attempt a work out with your lender."

And brother is he right! It looks like Scott, as is my Novation Mortgage, is helping people regardless of who their current lender may be.

The 24 is a real estate only blog providing another great outlet for real estate bloggers to create more search engine juice. Just ask Scott how that's working out for him!

Keep supporting and filling Active Rain and come join us at The 24 for extra exposure and power for your services and offerings.

Scott drew an amazing 10809 views in just 7 days! Fantastic Scott!!!

Although not as popular as they were in the hands of unsophisticated borrowers and undereducated, inexperienced "loan officers" the 12 Month Treasury Average indexed loan has long been a great choice for borrowers who have a wealth plan and understand their home, contrary to the statements of that "Rich Dad Poor Dad" author, is one of the greatest assets they will ever posses. Yes, I am saying Robert Kyosaki is wrong about your home being a liability and not an asset. If you agree with him please rent one of my homes from me :)

This short blog posting in no way will present the case for using the 12MTA and a Payment Option ARM based on the 12MTA. Let me add this: If you have any doubt in your ability to play by the "rules" on this type of a loan you do not need to use it! Why am I even reviewing this loan that, to my knowledge, is available only to the very select few who have a heavy banking relationship and impeccable credit? Because it may, one day, return. I defended this loan while it was being abused and threw truth at the fact that it wasn't "the loan" it was "the loan officers" and "unsophisticated borrowers" getting together to use it as a tool for greed instead of a tool for wealth management.

Furthermore I hope this loan comes back. One of you reading this right now may actually deserve it and know how to use it! Very quickly the reason I like this loan is for people, like myself, who may not make a steady salary. Some months I sell more books and seminars, some months my company closes more loans, some months are slow. Some months I like to invest my money in something that has a tremendous opportunity for good returns such as a hard money loan. So let me think, I can lend someone $50,000 for 5% origination and 15% interest for 6months or I can make 6 months of house payments ... no thanks, I'm glad I have the choice. Whatever my choice - my choice!

So how do these loans really work? The 12 month treasury average is easy to follow. The chart below this paragraph shows it. All loans, whether fixed or adjusting, are based on some index. The 12MTA is the index for this particular loan. On top of the index is the margin. My margin is 2.25% so if the 12MTA is 2.5% my adjustable interest rate is 4.75%

The figures above are from July of each of those months so if I paid the Interest Only amount from each of these months you can see I have had some very low interest rates and some rates a little higher than average. Currently my option of the Interest Only and Reverse Amortizing Minimum Payment have been getting better for the last several month. My fixed 30 and fixed 15 options, of course, are the same as they have been since I took out the loan 3 years ago.

The Ugly Side

The ugly side of this loan is if you don't have real equity and you pay the minimum payment (the reverse amortizing option) every month and you reach the limit of your original loan, you can get hit with the loss of the option at the end of the period. Mine is set up to recast or lose the minimum payment option when my principle amount reaches 110% of the original loan amount. Don't worry - I still would have plenty of equity available and anyone using this loan should, too.

You can get upside down -- although I never did many of these loans and certainly would never have offered one to anyone who stood the chance to owe more than their home was worth. These are the loans that let the lower end of the lending spectrum advertise "A $450,000 home for $625 per month!" and they used it to get people into homes they otherwise could not qualify for. I'll be very honest and say that if I applied for my home loan today I would not qualify on DTI. Three years ago I qualified easily, even without my wife on the loan. So I have paid some minimum payments over the last 18 months - thank goodness I have this loan and not a fixed payment choice only! I am, after all, dependent on the real estate world, primarily jumbo homes, investors and commercial buyers, to earn a living.

The "trick" is that earlier I paid additional principle reduction payments when I had a windfall or didn't need to invest in something else. Likewise, as the market turns, I will do the same. At year end we used to take a partner's equity payout and use that to invest or pay down principle. Then again, there are arguments about not even do that.

The bottom line is savvy people need options and this junk we have just come through in the industry took options away from people who knew how to use them and had the discipline to do so - when the smoke clears hopefully we'll get back to common sense lending options. (Fingerprinting loan officers won't do anything to make them smarter - but your Democratic congressmen insisted that be in HR 3221 and it passed. Don't you feel safer?)