Carlsberg beer crate house in the Netherlands

Borrower with great credit, income and value are easy.  But there aren’t an abundance of them right now.  You have to qualify with lower debt ratios, lower loan to value and more documentation than ever.  So, you can still get a loan, but be prepared for the process.

We have some newer excellent jumbo programs that just came out.  Lenders and investors are working hard on coming up with more solutions and resources for borrowers, in spite of all the legal hurdles in their way now.  FHA just adjusted their pricing, so that’s more expensive now.  They had to make some allowances for the added risk from the absorption of all the new borrowers into their system.

Keep an eye out on bank earnings reports around year end.  It’s thought by many that with the mid-term elections over, they’ll have to come clean on the “shadow inventory” of loans on their balance sheets.  The Fed has allowed them to state that if they thought a debt or obligation was “collectable”, they wouldn’t have to show it as a bad debt.  This is from a good source of mine.  Thus the banks have been able to keep the bad assets off their balance sheet and show a much healthier picture as a result.  Their stock prices are up and the top brass is happy and earning praise for their work.  Much of it is justified, but the markets may think otherwise if, indeed, they have to open up “all of their” books at year end and all of these undeclared foreclosures and defaulted mortgages spill out.  It could be a real mess.

I know firsthand that one of the Big 4 is not too pleasant to deal with when a qualified borrower seeks relief through a loan modification.  I had a client who had some loans with a previous lender taken over by the big bank.  The big bank never read paperwork sent, lost it several times and eventually decided to deny any request for relief through a loan modification.  The client took legal action to protect themselves, only to find out that the bank would use the court to their own ends.  Another client lost their home to one of the big Four, the one who refused to stop their foreclosures, after 20 months of trying to get a loan mod.  They just kept stalling him and losing his paperwork.  Finally they offered him a workout and bumped his original payment up 50%!  Nice.  This all came after that bank was bailed out with our tax dollars in order for them to be able to offer relief to homeowners.  That went well, don’t you think?

So, my perspective on many of the banks has changed.  They seem to be looking out only for themselves, keeping their shareholders at bay, using the government as a valued idiot partner and turning their back on those they were supposed to help in the first place.  They control the mortgage industry now and it won’t change for the better anytime soon.  That’s the facts and we’re going to have to learn to live with it.

I’ve narrowed the field of residential lenders I deal with to concentrate on using those valued relationships with them to effectively get loans done.  The pricing is excellent, competitive with anyone out there.  But the service is even better.  So, if you’re thinking of refinancing, it’s still a great time.

Thanks for all of your support and helping to keep our 26 year track record going strong!

If you’re still waiting and wondering if now is a good time to refi, just keep watching the 10 year Treasury Bond.  If you want to chart it, go to Stockcharts.com and type in “$TNX” and you’ll see what’s been happening.  If you don’t know what you’re looking at, there are some help guides on their webpage.  If you want an interpretation and some guidance on this trend, then contact me, I’ll be happy to explain.  I can give you a quick analysis of what makes sense for you to do.

Talk about living in cave, these guys did it!

If you’re thinking of buying a home, now is a great time to be looking.  There is still a lot of “shadow inventory” out there, seller’s who haven’t listed and bank owned properties that are not being put on the market.  In addition, most of the loan modifications granted are failing within 6 months, so those will eventually be absorbed into the REO market.  Don’t be in too big a hurry to buy, in my opinion, unless your situation dictates it such as a job change, relocation or growing family.  There are some very good buys out there and more on the way.  With the summer buying season upon us, activity will pick up, especially with the current low rates.  Try to go conventional, if at all possible, though FHA remains a good program for first time buyers.

All the underwriting and approval processes have continued to tighten, so be prepared to show everything about your income and assets.  You’ll need very good credit as well and low debt ratios.  If you have a lot of balances on your consumer credit, such as credit cards, car loans and student loans, start paying them down.  Get some guidance on which to pay down first, what your target should be and how long it will take.  Dave Ramsey has some good information on his website, DaveRamsey.com.

So, there are good opportunities for those prepared to take advantage of them.  We’re here to help you be in that position, so call me if you’d like to discuss your situation.

As always, we’re in a great position to fund your loan, using our banking partners, whether FHA or conventional.  We also have jumbo loans and second mortgage lines of credit, too.  With Jayco Capital, we can fund quickly, have our own appraisal network and escrow company, so we don’t have to go outside to get those services.  We have all of the conforming, FHA and VA programs and great jumbo programs as well.  I check us against the market constantly and we are always at the lowest in rates and points.  So, find out for yourself, you’ll be glad you did.  Plus you get my old fashioned personal service and problem solving!

When it comes to residential finance, I’ve said repeatedly, it’s not the same game anymore either, and it’s not necessarily a POV issue.  The good guys that are still in the business are now hampered by increased regulation, steps, forms, disclosures and procedures.  As a borrower, you don’t have as much freedom to shop around for pricing anymore once you’ve committed to a broker/lender.  So, if your lender can’t get your deal done in time to capture the great lock rate, you’re stuck.  If you have an appraisal done with one lender for a Fannie Mae or Freddie Mac loan, you can’t take it to another lender if the lender fails to get your deal done.  So, choose wisely grasshopper.

VW house in Austria. No bailout needed.

That being said, there are great opportunities for borrowers now.  Rates are at historic lows.  Watching the markets, stocks are being whipsawed by the crisis in Europe and particularly in Greece.  There is a crust of confidence, but it’s not too thick and thus you saw the dramatic plunge earlier this month that broke all records.  When folks ask me what’s going to happen, I tell them I don’t know, let’s check the market and if you like it, let’s get your deal done.

So, we’re focusing on doing business in the present, in real time and not worried too much about what the future holds.  If you still have equity in your home, have income documentation and decent credit, you can get these ridiculous rates in the mid to low 4% range for a 30 year fixed.  We also have the advantage of using Jayco Capital for all of our residential conforming, FHA and VA loans.  Not only do we have our own funds to close your loan, but we have our own escrow and appraisal network.  That means that you’ll be taken care of within a family of services that are top flight professional and reasonably priced as well.  We can get you approved quickly, processed and funded as fast as anyone, all in a friendly environment.

We also have other programs for folks who have taken some shots financially and whose credit isn’t so perfect anymore.  Additionally, we have multifamily loans, commercial property loans and bridge loans to meet the needs of those borrowers.  With SBA bank loans and stimulus loans from the city and county for businesses seeking financing for refinance, acquisition and expansion we can match you up with excellent sources for financing.  Call or email for details.

As you can see, we’ve adapted and expanded our services.  I’m continually seeking more sources for good financing, the kind you can rely on and the kind I can recommend.  In this market and environment, relationship and results are what can really make the difference.  I look forward to the opportunity to serve you and helping you resolve your financial situation.  Best wishes to you all as the drama unfolds.

More underwater real estate and fishy deals

Times like what we’ve been experiencing should bring us all together as well.  I know that folks who were suffering before are really suffering now.  Agencies can’t do what they used to, companies are cutting back and charities are seeing donations way down.  With that in mind, we’ll need to keep an eye out for one another more than ever.

My job for decades has been solving problems for folks who needed to buy, sell or refinance real estate.  The last two years, it seems like it’s been a hobby.  So, we’ve adapted and now offer asset based lending services and muni bond financing through our other entity, Redbridge Development Partners, LLC.  RDP also provides advisory services to trust banks who custody IRA and 401k accounts, helping with business development.  We also provide solutions for development projects that need funding for acquisition and construction, primarily projects that are called Transit Oriented Development or TOD.  In San Diego, L.A. and Austin, Texas, we’re involved with lots of stalled projects and expect to get them moving forward this year.  These are primarily mixed use housing with retail and office, park and ride and senior housing.  We’re partnering with a company that provides grants for these projects and another company that provides robotic, automated parking solutions.

Our asset based lending arm has been funding deals for small businesses to free up capital so they can stay alive and grow.  Banks haven’t been lending to them for some time and government programs have tightened up as well.  So, we have some good solutions for them to convert some of their assets into cash while keeping things under their control.

We’re still doing residential and commercial loans, bridge loans and the like, just not as much.  The feds have now put so many regulations on transactions for residential conforming loans that you have to really know the rules if you plan on buying a home.  So, be forewarned, get a good plan in place before looking and making an offer.  You can’t just use a pre-approval on any old house anymore, you have to get a new one for each offer you make.  Short sales are long waits.  REOs are tough.  Buying foreclosures is a reality show.  So, this is not your Mama’s real estate market, this is a new day and time.  Get good advice, put together a good support team and you’ll have a lot better success and experience.

As always, we’re here to serve you and look forward to doing whatever we can to help you, your family and friends in our capacity as lender, broker and advisor.  Thanks again for all of your referrals.  Best of luck in the March Madness pool as well!

But, I have much to be thankful for, my family, my friends and to be able to still be around after all that’s happened.  We’ve made a lot of adjustments, expanded our services and increased our reach.  Now, through our relationship with Jayco Capital, we’re able to fund loans in the following states:

Talk about a cold reception...

Arizona, California, Colorado, Florida, Hawaii, Idaho, Nevada, New Mexico, Oregon, South Carolina, Tennessee and Utah.  Some states have restrictions, call for details.  We appreciate any referrals to friends and relatives.  Our rates are very competitive and we have a wide variety of programs covering all aspects of residential lending.

Thanks again for all the business in 2009, we look forward to serving you in 2010.  Merry Christmas and Happy Hannukah to all!

The residential lending business doesn’t resemble what it used to in times past.  Some of that is good, but most of it is regulatory reaction and ultimately hurts the borrowers.  The Feds locked the barn door after all the damage was done.  There are many more thresholds now of compliance and disclosure for conventional loans.  Brokers are now required to quote a rate and fees within 72 hours of receipt of a loan application.  If that rate changes slightly, you have to re-quote and re-disclose.  It’s a bit tedious, since the market moves regularly, that’s why we prefer to lock in the rate upfront and close as soon as possible.  We used to play the market a bit to get the best rate, but the new rules make it more difficult.  So, we adapt and make the adjustments to help protect our clients and make the process as seamless as possible.  Borrowers and brokers don’t have as many shopping options once they’ve decided on a loan and applied.

Fish for Dinner?

With tighter standards and guidelines, it’s a lot like it used to be before computers came in and took the place of common sense.  Now with both credit scores and automated underwriting along with those tighter standards, only the best borrowers will get mortgage loans.  I’ve had calls from folks who would normally have been able to get a loan, but now can’t and it’s pretty frustrating.  Even good credit isn’t enough, you have to have full income documentation and good reserves.  There are some stated income loans out there, but you need superior credit and a lot of equity.

The good news is that if you’ve made it this far, things have stabilized and prices shouldn’t be going much lower.  In many cases, they’ve started to rise.  Investors are buying bulk REO portfolios (bank owned) of single family homes and flipping them for a profit, paying cash in most cases.  When they jump in the market, you know it’s priced right.  So, it would appear that we’re at or near a bottom in residential pricing.

The actual volume of loans is extremely low compared to previous years.  There are fewer sources for financing and people know what’s happened.  We’re still taking care of our clients and find that those with rates of 5.5% and above can save money with no points in this market.  Some of the banks that used to take our loans and then our clients are gone.  We’re still here and hope you are as well.  Drop me a line or give me a call, it would be good to hear from you.  My email is “bill.beal@verizon.net” and you can reach me at 818-800-1714.  I hope you had a wonderful Thanksgiving and are looking forward to a very special holiday season this year.

If one were to believe the press, we’re coming out of this mess about now.  Depending on which expert you believe, we’re in danger of inflation or deflation.  Maybe stagflation, too.  There is lots of inventory piled up on bank balance sheets that hasn’t been marked down for sale yet, even though they received TARP funds for that purpose.  First time buyers are encountering multiple offers on every house they like.  That’s because there’s too little inventory out there in many places while the banks hoard it hoping for prices to rise and then they’ll get a better return.  You can’t blame them for that, they are trying to maximize the returns to their shareholders.  But, Hank Paulson & Co. gave them a blank check a year ago and they cashed it with little or no strings attached.  Why wouldn’t they use it to stay afloat?

Stop the presses!

The stimulus money isn’t being spent quickly enough to make much difference, infrastructure contracts are held up by red tape and the checks aren’t being written on those billion dollar deals yet.  They’re actually laying people off waiting for the funds to arrive in order to start work.  This is the typical way that big government solves our problems, with more work for themselves and less for us.  But we keep paying for it.  It’s not to say that no good is being done, just not nearly as much as promised, falling woefully short of the least of expectations.

So, should you buy or sell, refi or not?  If you like what you can get and it makes good financial sense, consider it.  Prices are somewhat stable now on single family homes, interest rates are very low and things have settled down in the lending arena.  You might want to lock in interest rates fairly soon.  Indications are that around the first of November, rates should begin to rise to accommodate some of the recent prices of bond auctions and futures.

Common sense being at a premium, we’re sticking to it.  We’re very busy with commercial and development deals due to our unique financial programs.  The last quarter of the year is going to be a doozy.  As for residential, with rates down in the high 4% range, activity has picked up recently.  Consider getting a mortgage check up and see what you can do to improve your position.

Loan modificati0ns are picking up as well.  Banks are coming to the table more than ever now.  Typically, you have to be behind in payments for them to pay attention to you.  It’s analogous to ER personnel being more apt to treat the bleeding patient than the merely sore patient.

In all of this, it is my humble opinion that most of the financial sector is still a bit lost.  With the big 4 banks now controlling the residential arena, we have fewer resources, increased scrutiny and regulation coupled with a fearful populace which is a troublesome mix.  I’ve never seen a time like this in all of the 40+ years in the housing business.  Yet, we are surviving, thriving occasionally, but getting through it.  So, I want to encourage you all to have some faith in the rest of us, less in the government and let’s hope that we get a chance to make this right before it is too far gone.  In the meantime, we remain at our post, looking forward, not backward, ready to help you out when needed with the same personal service, quality programs and great pricing.

Ice Hotel- Talk about a cold reception...

There’s a lot of speculation that the worst is over and we’re heading towards a recovery.  Consider the source before believing it.  The underlying signs are subject to interpretation and it all depends on your perspective.  If you want to believe it bodes well, that’s what it will mean to you.  But last October many thought the worst was over and bought into the housing market and realize now that there was still room to fall.  I think we’re at the bottom and residential prices are in a “trading range” due short supply.  Banks are not releasing REOs, preferring to hold onto their bad assets as long as possible and keep their stock prices up for now.  Entry level homes are generally multiple offer situations with investors competing with home buyers because you can make money again on SFR rentals.  Builders are downsizing and down-featuring homes to compete with the REOs on the market.  Folks are buying because it makes sense economically, not to have a dream home on an unrealistic financial scenario.

When compared to the 1929 crash, the current charts could be overlayed with one for 1929-1932 and the similarities are stunning.  There was a huge rally after the initial crash was over, fostered mostly by wishful thinking and then that ran out of steam.  The ensuing crash wiped out more people than the initial crash.  Governmental policies were a big contributing factor, not able to determine the cause, many “solutions” were implemented only to later find out they created more problems and solved few.

So, my advice is to cross reference your data and keep an open mind.  If you’re thinking of buying a home, pencil it out and make sure that if you had to rent it out, you’d be able to at least cover your costs.  If you don’t know whether to buy or wait, do your financial homework first, then you should know if it’s the right time or not.  There are many sites that offer help in planning this decision out, whether to buy or rent.  It’s more important than ever to be prudent.

As for our latest news, we’re mortgage bankers now.  Our recent affiliation with Jayco Capital has opened many horizons for us and we now are direct lenders of all types of residential loans.  Coupled with great pricing, superior service and a variety of choices, we can offer quick approvals, our own appraisal network and interactive status updates.  Appraisals can be ordered from the website and you can check your loan status at your convenience.  Check out the website here:  www.jaycocapital.com.

We also are now offering nationwide loan modification services through a firm that is attorney-based.  Clients who are behind in payments and need relief can take advantage of this proven service with the confidence of a full money back guarantee if unable to reach a satisfactory arrangement.  Call for more details.  We are also offering short sale assistance through the same company.

In conclusion, we’ve adapted and are confident that these changes represent a real improvement in our ability to meet your needs as a client.

For the consumer, borrower and business community, it means that banking will cost more, borrowing will cost more and be more difficult and access to capital will be more restricted. The Feds have more problems than they know how to solve, some self inflicted like looming inflation from printing money with abandon. By continuing their lack of support of the dollar, each one they print is essentially worth less. So, your buying power is being diminished and thus you’ll pay more for things in the future because the money in your hand is worth less and less as more is available. That’s a double whammy, more dollars in circulation and worth less due to the Fed’s lack of confidence in them.

Clipped Roman Maximinus denarius

It reminds me of where the original term “getting clipped” came from. Back in the old days of government currency, when the coin of the realm was the only means of payment, there were times when the raw materials were in short supply. So, the remedy was to trim the edges of the coins to conserve and thus create more material, yet still hold out the reduced coin as equal to the previous value. Back then, it was valued on the weight of the coin and the material it contained. Thus, the less weight, the less value. Merchants weren’t stupid. They knew the modified coins were worth less, so they charged more for their goods to make up the difference. That way, they didn’t get “clipped” selling their goods. This didn’t make the rulers happy and they tried in vain to stop this practice. But back then, as now, the markets voted with their feet and made their adjustments to survive and set their own “mark to market” practices.

With our own dollar devalued, the presses running 24/7 on new ones, calls for a new international currency and no apparent change in policy in sight, prepare yourself so you don’t get “clipped”. More to come on that in our next blog entry.

Here’s an update on the markets for real estate, home loans and other various and sundry topics of interest,

The stock market is in a trading range for now, bonds are stabilized and there’s cautious optimism on Wall St. about recovering in the latter half of this year. That won’t make you feel good if you’ve lost your job, taken a pay cut or had your hours or benefits cut. But, they see down the road and the “feeling” is that the worst has been absorbed.

Real estate is going through an interesting transition. Entry level homes are selling at a brisk pace, since you can buy most of them and rent them for a profit after financing is factored in. It’s been a long time since investors were able to do that on single family homes. Thus, buyers that have waited are not happy to find that there are multiple offers of most of those homes now. That is driving prices up from the historical lows that were achieved just a few months ago. What’s not factored in is the upcoming surge in foreclosures that will depress and possibly push down prices. Banks are taking a more aggressive approach to foreclosures, wanting to clean up their own balance sheets and get the worst behind them. Since there have been so many mergers, it is essential that the remaining banks bolster their bottom line and keep from having to take any further assistance from the Feds.

Interest rates have settled back down slowly from their rapid increase a few weeks ago. They’re just above 5% for 30 yr. conforming fixed rates and it looks like they should remain in that range in the short term.

Of particular interest is the growing concern over inflation. When you borrow as much as the government has to spend on the bailouts and you can’t get it back soon, there is a historical tendency for production to slow down, supplies are diminished and the costs start to climb. The bailouts haven’t increased productivity, the huge tax increases proposed will sap any profits businesses are making and the administration has made it clear that they are on the hunt to close down any means of tax avoidance for businesses in the future. Higher taxes have usually led to inflation and then a further downturn in the economy. So, as much as I’d like to go along with the recovery crowd, we still have some ominous clouds on the horizon and they’re getting larger.

The sheer magnitude of the spending by the Federal government is unprecedented. The only historical references point to restrictive taxes and inflation in the marketplace. So folks, be prepared, make your purchases wisely and plan your taxes and finances accordingly.

Now for the bad news, your retirement isn’t going to be like the previous generation’s. Most baby boomers are going to work longer, some by preference, most by necessity and you’ll have to pare down your lifestyle to survive. There is ample data to support this. Just the numbers are significant:

64 million +/- in the baby boomer category
Retiring at the rate of 10,000 per day
The average IRA is around $ 40,000 +/-
The average life expectancy has gone up to over 70 years
So, you’ll have to live longer on less, how will you do that, how will we do that?

I’ll be writing about that in the next installment. I’ve been working with some very bright, experienced and talented folks on this dilemma and have some interesting information to share.

In the meantime, be well, take good care of one another and count your blessings!