Archive for the 'Rants' Category
I Thought Flippers Were Out of Business!
I was talking today with a woman referred by a past client. She and her husband were in the middle of a 100% cash-out refinance on their home. They have a small handyman business and need a “stated income” loan because their tax returns don’t show adequate income. She was upset because her lender had quoted her 12% on her 2nd loan.
After telling her she should feel lucky to get any kind of 100% stated income financing right now, I asked why it was so important to pull all of their equity out. She replied that they had just paid $12,000 to go through an on-line school to learn how to flip properties, and they needed the money to get started. In fact, she said, they were just dying to get started.
read comments (3)Are You Working With a Part-Time Lender?
“I can’t talk right now, I’m at my day job,”
…came the whisper from the other end of the phone.
Escrows are falling apart at an alarming rate these days. Most of the fallout—according to my agents—is caused by incompetent lenders.
On a recent visit to Keller Williams, Chris DeMattei and his team shared a story with me. They had an escrow that was late in closing. Loan docs had not arrived in time, and they couldn’t get any information or a return call from the lender. Unsure how bad the problem was and totally in the dark, they were anxious and frustrated.
Like so often these days, the buyer had come with his own lender. This person was unknown to the team and felt no accountability to the relationship. When things got tough, she stopped returning calls. Elaina, the team’s buyer’s agent, had finally caught up to her late one morning… Read the rest of this entry »
Most likely nothing!
He could care less right now, having just won Stage 5, the second time trial of the Tour. Levi also won the opening Prologue and holds the yellow jersey as the overall leader. Congratulations Levi!
So rather than trying to create a cheesy tie-in to explain this digression, let me just simply say:
THANK YOU SACRAMENTO!!
for your tremendous support of the AMGEN Tour of California! May Sacramento forever remain on the tour route. Think about this: the television coverage of this year’s event exceeds what ESPN use to give the Tour de France just a few short years ago. Thanks to Lance for that, (Lemond, just get over it).
As a recreational cyclist, I have the pleasure of riding some of the most beautiful country to be found outside of France and Italy. From the Sierra Century to the Markleeville Death Ride and the Davis Double, Northern California offers spectucular scenery, unbeatable weather, coastal terrain
as gorgeous as the Amalfi Coast and mountains to rival the Alps. I’m just happy that so many of the great European cyclists and team are here this enjoying it. How could they not want to return after experiencing this first hand.
Anyway, these great photos were taken by Randy Pench and Lezlie Sterling, and poached from the Sacramento Bee’s photo gallery. Please go check that out at: http://data.sacbee.com/photography/view/tour?&. Credit and thanks to the Sac Bee, Randy and Lezlie!
Have a wonderful weekend, and hey, about that subprime meltdown thing. Don’t worry about….at least until next week!
There is a famous story about legendary Bluesman Robert Johnson. It is said that while travelling up and down the Mississippi Delta, he met the Devil at a crossroads and sold his soul in exchange for musical genius. Taking an Option ARM—a neg am loan by its former name—is like selling your soul for a low mortgage payment. But what happens when it’s time to pay up?
The Good
Don’t get me wrong. In the right circumstances—a client with fluctuating income or a business owner with unpredictable cash flow—a neg am loan is a great tool. As a former financial planner, I like neg am loans for their ability to better manage cash flow and income taxes. Read my article in the Creating Affordable Payments series. But only one person in 50 has a valid reason to use one. For everyone else,…
4 Reasons to Keep the Wage Earner Stated Income Loan
In the eye of the hurricane, where mortgage fraud mixes with over-inflated real estate prices, lies the stated income loan. For those unfamiliar with this bit of mortgage slang, stated income loans allow a borrower to claim a level of income they don?t have to prove. How?s that for temptation?? Care for a bite of apple?
Dubbed the liar loan by mortgage pundits and blamed universally for the current foreclosure crisis, there is an irony in all this that I can?t allow you to overlook. The irony is this: the liar loan was created to allow another tribe of liars?the self-employed, who perpetually lie?
A Rising Tide Lifts All Boats
That was certainly true of the appreciation that carried real estate values high up the beach in the first half of this decade. However, the tide has since rolled out, exposing the rocks and broken glass on the beach and leaving many a boat on its side in the sand. This is the story of one such wreck.
A real estate agent with whom I do business called a few weeks back. She had a friend in financial trouble and wanted to bring her in for advice on her loan. The friend had refinance in 2005 into a loan that she thought was fixed but later discovered it wasn’t. She was not sure what to do.
If anything makes me spit nails these days, it’s the way lenders are pushing “Pay Option” Arms. Back in the day, if you uttered the words “negative amortization”, people would leap up and run the other way. Everybody knew somebody with a horror story to tell. So we shelved these loans for a few years, gave them a face lift, and hauled them out to help folks buy homes they can’t afford.
My wholesalers tell me stories of new mortgage shops full of inexperienced telemarketers hyping these loans. My title company reps talk of 22 and 23 year olds bragging about the fees they’ve earned duping little old ladies. And befuddled clients file through my office each week trying to figure out this weird loan their daughter’s boyfriend put them in All too frequently, I have the unpleasant task of telling them that there’s not much they can do. You see, aside from creating artificially low payments that can jump suddenly, these loans carry stiff prepayment penalties that make them difficult to escape. And all the while, your loan balance is growing. Think of it as a Trojan horse.