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Jimmy Buffett, in his song “Volcano” starts out singing, “Well, I don’t know, I don’t know, I don’t know where I’m a gonna go when the volcano blows.”

I find myself remembering that lyric and repeating it over and over in my mind quite often lately.

I find myself saying those words, “I don’t know,” out loud often, too.  I say them to clients and to Realtors and to attorneys.

The “ground is moving under me” as Jimmy continues to sing.  Lending practices, regulations, underwriting criteria and guidelines, all are changing rapidly as the markets and the banks react to the continuing mortgage meltdown.  Where once I was so sure on my clients’ behalf, knowing exactly how to get their loans approved, nowadays I often say, “I don’t know.”

I don’t know exactly how I can get your loan request approved.  I don’t know how long it will take to approve your loan once we actually figure out how—and with which Lender—to get it approved.  I don’t know if the underwriter will suddenly develop cynical dementia and decide she doesn’t like the loan and creates “obstacles” to block the path to a successful approval.  I don’t know if the bank will dump that loan product a week before we’re due to close, thus causing a scramble for a replacement bank and product.  I don’t know if the bank will be in business by the time we’re ready to close—or even the day of the closing.

I don’t know.

I don’t know if your property value will dip, or remain steady, or decline further.  I don’t know, in the event values decline further, how much you can regain in the future when the market begins its return to vitality.

I definitely do not know where interest rates are headed—but, then again, I’ve always said that, and who the heck knew rates could stay so low for so long?

There is a lot I don’t know about our industry today, and about the varying conditions that affect your ability to sell or buy a home.

I do know one thing for sure.

I know that it is a wonderful thing to own your own home.  I know that, in several conversations with clients this past week, it’s fun to put up Christmas lights on that house you own.  I know there’s something special about arriving home in the dark of a winter’s chilly evening to see the lights in the windows of your home and immediately anticipate the warmth and comfort awaiting you within.

I know it’s nice to go to bed at night feeling a certain sense of peace that you own something as worthy, as valuable, and as life-enriching as a home of your own.

Not only do I know these things about the homebuying experience, I accept them as “givens.”

These are concepts and standards and quality of life issues that cannot be affected by crazy markets, high interest rates, falling home prices, and worrisome newspaper stories.  These are tried and true facts of life that affect each and every homeowner, and, by extension, home buyer no matter what we mortgage professionals “don’t know” about loan approvals and other such nonsense.

I like that certainty; it’s a feeling that informs how I conduct my business.  Because at the end of the day, when I tick off my long list of “I don’t knows” that one certain thing I DO know—buying a home of your own is a great thing to do—is worth the aggravation, the impatience, the uncertainty, the worry, and ultimately, the struggle, to fight for a loan approval for my clients.

So, the heck with what I “don’t know” and here’s to more of what I know.

I really don’t follow the statistics or the bad news in the newspapers. No, not at all.

But on average, we’re receiving at least one referral a day—that’s about 7 to 10 per week—of people in trouble. They’re one or two months down on their [tag]mortgage[/tag] and they want to save their home. Pretty much there’s nothing we can do. There’s no value in most cases to refinance the client, even if it’s going to be at a terrible fixed rate. In just about every instance we’re passing on the referral.  We don’t even want the telephone number.

Many of these clients are Hispanic and they have those nightmarish I/O Option ARMS that have now adjusted to a higher rate. Once again I’m thankful of the fact that I refused to originate those types of loans for my clients—many of whom are Hispanic. Of course, in refusing to originate anything but 30year fixed rate loans, I lost a lot of business in the past three years. So much so that my originations within the Hispanic community—which has been a consistent 80-90% of my business since 1997—dropped off significantly. In fact, these originations went to less than 10% of my business.

Still, I stood firm. I knew what was waiting down the road for any client with these types of loans and I simply would not, and could not, in good conscience originate these radioactive loans for my clients. Too, I never subscribed to the “…your house will go up 25% in value and you can [tag]refinance[/tag] next year…” theory, either. No, I never said that; not ever.

It’s painful to speak with these folks who are in very real danger of losing their homes. I started in the business helping people out of [tag]foreclosure[/tag] in the early 1990’s. I learned a lot about the mortgage industry, people’s dreams of homeownership, and how to get loans approved through that experience. But today there’s nothing I can do to help most people in this situation.

And many [tag]Realtors[/tag] are listing “[tag]short sale[/tag]” foreclosure homes. This means the bank holding the loan has to agree to take less than they’re owed on the mortgage before the house can be sold to another buyer. This, then, seems to be the latest hot trend in real estate sales.

It disgusts me.

Recently I’ve been speaking to a lot of “experienced” mortgage originators. Not only speaking to them, but interviewing them to work with our company.

The common denominator with this bunch of bananas is they all have little experience with “real” mortgage loans, care very little about their originations after the fact, and ALL want to someday (soon) own their own company. They all want to be a star and the captain of their own ship.

That’s all fine and dandy to want to be a successful entrepreneur and business-owner. But there’s something amiss when you have very little understanding of the “big picture” of our industry and don’t even know the basics of underwriting even a fundamental FNMA or FHA mortgage loan (you would not believe what comes out of their mouths when we ask questions aboutf basic guidelines!).

So these “burger-flippers” (that’s where they really belong, after all) continue to screw up our industry, home buyers and homeowners, and ultimately the economy. You want to be a STAR? Put in the time, gain the experience, develop some ethical standards, and learn the damned RULES!!!

Success is long in the coming and requires the investment of your character as well as your time and sweat.

Yeah, again, I have to say, “It disgusts me.”

The smoke hasn’t yet cleared from the [tag]mortgage meltdown[/tag]; trouble continues and foreclosures rise. Finger-pointing, the blame-game  and failing mortgage companies color the autumn landscape. Rampant
mortgage fraud is suspected and being investigated. Yet a new source of fraud looms on the horizon.

“Short sale” is the buzzword on the street. Realtors talk about it constantly; seminars and workshops abound for attorneys, homeowners, and Realtors.

When a [tag]foreclosure[/tag] looms, a homeowner asks the bank to take less than the balance of the mortgage so the house can be sold on the open market instead of the courthouse steps. A short sale is the negotiated price on a house when the mortgage is in arrears and the bank has no real prospect of achieving a recapture of its total mortgage loss. The mortgagor—the homeowner—negotiates with the bank to take less than is owed on the mortgage.

This saves the bank the trouble of picking up yet another undervalued real property asset, allows the homeowner to walk away from a potential foreclosure somewhat whole, and provides at least some financial recompense to the lender.

Better for the Lender to get some money than none and be stuck with a rapidly depreciating asset.

I’ve heard recently this “[tag]short sale[/tag]” buzzword in nearly 8 out of 10 conversations with Realtors and attorneys. I have heard of, but not attended, seminars, supposedly teaching the “secrets” of negotiating short sales with banks.

I did attend a recent seminar for attorneys dedicated—in the best legalese possible, and thus unintelligible to me, as I’m not an attorney—to foreclosures and the correct legal proceedings attendant with these matters. I attended solely for networking opportunities, of which I will say I was quite successful; but I avoided for the most part sitting through the actual seminar. The phrase “short sale” was included in the seminar invitation, but did not make an appearance during the actual seminar; nor was the process of negotiating same discussed.

I know of a California mortgage professional (from my Craigslist Housing Forum days) who now spends her time negotiating short sales instead of originating mortgages.

Last Saturday a Realtor told me about an attorney in Queens who has created a division of his law firm—staffed with something like 50 people or so—dedicated to negotiating short sales on behalf of homeowners.

I have participated in at least a half dozen conversations concerning the sale of a home with a negotiated short-pay on the mortgage. Can the potential buyer of such a home ask for a Seller’s concession for part or all of the closing costs? The overwhelming consensus is, “No,” but there are some who think it may be possible.

All of that is just background. The “witches brew” for a new form of [tag]mortgage fraud[/tag] finds its recipe in the short sale process.

Yesterday a Realtor related a story that blew my mind.

He described these short sale seminars in his area—one of them, if I remember correctly, conducted by a local mortgage person (I won’t call this person a “professional.” If you read my blog with any regularity, you’ll know why).

The Realtor went on to tell me how a homeowner came in to his office proposing to negotiate a short sale with the bank, then sell the house to a relative. In this way the homeowner could, in the words of the Realtor, “…cheat the bank out of its money and still keep his house.”

As if the Sub-Prime debacle wasn’t enough of a nightmare, now we have this short sale madness threatening to create even more opportunities for mortgage fraud.

I worry when a single idea takes a stranglehold of the industry—the way 100% [tag]Sub-Prime[/tag] financing and Never-Ending-Equity-Appreciation did in their time. Too many people jump on the bandwagon looking to profit in the basest ways possible.

While the banks and their depositors and the investors on Wall Street who purchase mortgage-backed securities feel the bulk of the pain when things go bad, in the end, it is the hard-working first time home buyer who is dealt the worst hand.

People who have the dream of owning a home will find the loan products, the (real) mortgage professionals, and in fact, the money sorely lacking. Their dreams will become ever more difficult to realize.

And that, at the end of the day, is the worst effect of the entire [tag]mortgage meltdown[/tag]. If people can’t buy homes, so many other areas of the economy are affected.

This new short sale demon lurking in the shadows of the mortgage meltdown will provide more opportunities for fraud, more problems for banks, and more misery for [tag]homeowners[/tag] and [tag]home buyers[/tag].

It’s disgusting.

I’d like to wish you and your family a very Happy [tag]Thanksgiving[/tag]!

 

I hope this day finds you happy, healthy, prosperous and momentarily reflective of all those things in life for which you are thankful.

 

If you own a [tag]home[/tag], I hope you are thankful for the moment when you accomplished that goal. 

 

If you don’t yet own a home, but have the dream of doing so, I hope you are thankful that, in this great country of ours, that opportunity is always open to you, no matter the circumstances of the economy, the housing market, or the latest bad news broadcast on the radio.

 

 

I’m thankful for the opportunity these many years to help families realize the dream of [tag]homeownership[/tag].  When I got my first “Loan Officer” business card in 1989 (the week after Thanksgiving!), I thought, “Wow, I’m going to help people buy homes!”

 

Instead of considering myself a salesperson—which is really what I am, at the end of the day—I saw my role as that of information-provider, problem-solver, and ultimately, a helping hand for those with the desire to own a home.

 

I come from an immigrant family.  We came here with nothing and made a life.  We lived in apartment buildings in [tag]New York City[/tag].  The dream of owning a home was always living with my Mom and Dad, but somehow never realized.  Within three years of my start as a mortgage professional, I helped Mom and Dad buy their first home.

 

That dream is something so many people hold close to their hearts.  If the [tag]mortgage[/tag] meltdown demonstrates anything, it’s that the average American family wants to own a home, so much so, they’re willing to go to extraordinary lengths to do so.  The fact that so many of these families were taken advantage of is symptomatic of the basic human failing of “greed” and not the broken mechanism of the home buying experience.

 

I’m thankful, too, that there have always been and remain to be so many avenues open to families to help them accomplish the goal of homeownership.

 

The [tag]American Dream[/tag] is alive and well, and, whether you now own, or will someday own, I’m personally and professionally thankful of the reality of that dream. 

 

Again, Happy Thanksgiving!

The bad news continues. More homes go into [tag]foreclosure[/tag] everyday; the blame game continues. I don’t think any single group or party is to blame for the [tag]mortgage[/tag] meltdown of 2007. “Too many cooks…” as it were.

That having been said, let me say this (as I’ve often said before) about the “professionals” in the mortgage business: please, please, PLEASE, if you haven’t already applied for that fast-food-burger-flipping job, please do so now, and get going on your exit from our industry. Yes, I’m talking about the quick and easy money seekers who jumped on the mortgage bandwagon in the past few years, lied to people, trashed our industry, purchased their luxury cars and expensive watches (all of which, now in hock!), and contributed greatly to the meltdown and the ever-eroding consumer confidence in all things mortgage-related. Get out.

Here’s a good example of the kind of things these slimebags said to consumers to convince them to sign loan applications. The quote is from a National Public Radio show, “Marketplace.” If you don’t listen to this most excellent business report, you should start tonight.

Before I post the quote, let me say this about me, my business practices, and my career: I never said anything so ridiculous. I will certainly have advised a client that traditionally, over time, and accounting for the cyclic nature of real estate markets, homeowners can look forward to reasonable market appreciation of say, 4% a year. But I would never advise a client to take a high-cost mortgage only to have to refinance a year later. Absurd. You cannot peg your ability to make mortgage payments based on the notion that your property will appreciate forever and you can just refinance over and over again. Yes, truly absurd concept.

Here’s the quote:

“And they would say stuff like, you know, you’re in a prime area and property is going to keep going up and up and up, and you’ll be building up equity.”

I never said that. Ever.

HAPPY THANKSGIVING!

[tag]November 11^th[/tag] is Veterans Day.

This day of remembrance began after the end of the “Great War” in 1918. A moment of silence on the 11^th hour of the 11^th day of the 11^th month commemorated the loss of millions of young lives in a deadly conflict. That moment marked the anniversary of the end of WWI, the war to end all wars.

 

In 1954, President Dwight D. Eisenhower—a famous [tag]Veteran[/tag]—signed a proclamation that November 11th would be known as Veterans Day.

The gruesome fact is, wars have not ended. American military personnel continue to go out into the world and fight for us and for others—non-Americans. The spirit of freedom and belief in liberty required to do so too often goes un-appreciated by we “ordinary” Americans back home.

Whatever the military or political reasons why Americans go out to sacrifice their time—and some, ultimately, their lives—the fact remains that the United States has a long history of stepping in to conflicts to support liberty, democracy and just plain freedom.

Americans who serve in our military forces believe in that vision. They serve often without question and with a belief they are doing the right thing.

The least we non-serving citizens can do is support them in the smallest way possible: by saying, “Thank you,” on Veterans Day.

I have long made it a point to say “Thanks” to any [tag]veterans[/tag] I know; when I meet them for the first time I will stop, shake their hands and say, “Thank you for the time you spent in service to our country.” Often, this expression of gratitude takes the Veteran by surprise.

It should not, and, on this most solemn of American holidays, while American troops serve voluntarily in conflicts around the world, a few words of thanks are most necessary.

Please take a moment to say, “Thank you,” to a [tag]veteran[/tag] you know. Your gratitude doesn’t have to be expressed eloquently, nor delivered with candy or expensive gifts. Just stop what you’re doing for a brief moment and say, “Thank you.” The few seconds it takes you to express your appreciation for the sacrifices that our Veterans have made in our behalf are all that is necessary.

In so doing, you’ll come to reflect on the idea that veterans are an important component in our American way of life. The work that veterans have done is a reflection on our viewpoint of freedom: everyone should have it. Without the work they have done—and continue to do—by serving our great nation, much of the freedom and rights we take for granted every single day might not exist.

It is easy and simple—and very necessary—to say thank you to a Veteran on Veterans Day.

I love Ben Stein. And I especially love Ben Stein’s advice. If you’ve read my rambles here about all things mortgage and home-buying-related, then you’ve read my previous article about Ben and his sage advice.

Ben Stein is a lawyer, writer, actor and economist. He’s probably best known for his game show, “Win Ben Stein’s Money.” He is also the author of many excellent financial advice books. He writes a fairly regular column called “Everybody’s Business” in the Business section of the New York Times.

My Sunday morning routine involves coffee and a visit to NYTimes.com where I proceed to check the headlines. A few sips of hot coffee later and I’m looking for Ben’s column. His wry observations of the stock markets, investing, and corporate shenanigans, combined with sound investing advice make for an interesting—and entertaining—read.

If you are buying your first home, or recently purchased your first home, you would do well to pay attention to what this man has to say. He writes about finance and economics clearly, sanely, with wit and with charm. I’m often confounded as to why Ben’s columns don’t get more “front page” attention—especially when he wrote a very sensible column about the Sub-Prime mortgage mess—while other, more sensational news makes it front and center to the public eye. But, I guess the old newspaper adage “If it bleeds it leads” still rules the day, even at the venerable New York Times. Ben’s articles don’t sensationalize; the man simply calls it as he sees it: truthfully and serenely. He embraces the simple things in life that make living in America a great experience.

Ben’s column Sunday in the Business section of NYTimes.com is a most excellent, and simple, primer on life in general and finance in particular.

I strongly recommend you read Ben’s advice and keep a copy on hand to refer to when you think about investing your money for your and your family’s future.

I have always thought the home-buying experience creates in the homeowner a new sense of financial responsibility not just towards the idea of paying a mortgage, but in a greater sense, to the many other areas of financial success American homeowners achieve over time. When you buy your first home, you are embarking on the greatest financial decision and investment of your life.

I think there is something potent in that process that fundamentally changes you and awakens you to a new and different interest and understanding of your finances.

Almost since my first mortgage client eighteen years ago, I have provided basic advice on finance to my clients as part and parcel of the mortgage approval process. I recommend my clients buy a decent life insurance policy. I recommend they meet with their attorney to prepare a will once they have purchased their home. I recommend they discuss with their tax professional how to maximize their deductions so as to increase the income tax benefits of having a mortgage.

To me, the process of buying a home is the embarkation point on a road to financial security, success and growth. Buying a home is only the first step; take Ben’s advice and you can take the next steps in your family’s financial growth.

[tags]Ben Stein, Investing, Homebuying[/tags]

There is a lot of finger-pointing going on in the middle of the mortgage meltdown of 2007. As time goes on, the blame-game is only going to get worse. Problems in the mortgage industry with regards to Sub-Prime loans and the potential foreclosures arising from the many “bad” loans given to consumers will be a reality (and a good media-shark-feeding-frenzy) for some time to come. The blaming and the real problems will perpetuate a state of confusion for the industry, government, and consumers.

Still, there are businesses to run—loans to originate—and families with the desire to own a home of their own.
What is a person to do today? Winter approaches and those folks who are faced with the prospect of a rental apartment with poorly insulated windows, a landlord who doesn’t provide enough heat, or even something as mundane as parking the car on the street (and having to shovel it out of a snow drift instead of backing it out of your own garage), may very well be thinking, “I really want to buy a home of my own.” And they want to do it now, not later.

For those people, I imagine it’s easy to be scared by all the crazy things you’re reading in the newspapers and seeing on television. But, there must come a point where you have to say, “Enough, already! I want to own a house, and I have to trust that this will work out.”

The truth is, it does work out. It has worked out for so many millions of homeowners before you. The blame game will sort itself out, the confusion will subside, the proliferation of frightening media stories fritter to a dull buzz in the background. Sure, there will still be problems and foreclosures, but at the end of the day, life goes on. An entire industry and an entire lifestyle—homeownership—isn’t going to just up and disappear.

More regulation is called for, and consumers of mortgage products want to have a clear understanding of what it is they are signing for.
One of the hot-button items in any discussion of the meltdown is the issue of consumers signing documents at mortgage closings. Many of the people pointing fingers of blame at the mortgage industry—and, by extension, government regulators—say the documents a consumer signs at closing are so convoluted and difficult to understand that it is no wonder people didn’t know they were getting into bad loans.

There are others who claim the consumers were “dumbed down” and so eager to sign on the dotted line to obtain their dream home (or that ridiculously low interest rate of 1.75%!), they didn’t bother to read—and didn’t have the wherewithal to understand if they did bother—the closing documents. Many people are calling for more regulation to help protect the “dumbed down” consumer.

I beg to differ.

As to “dumbed-down public” let me say this: current Federal Regulations (RESPA!) require full disclosure of the terms of the mortgage. The consumer need only READ the forms or hire a lawyer to read the forms on their behalf and for their own protection.

The government mechanism already exists for consumer protection. No equivalent mechanism exists (to the degree of required disclosure and compliance with such disclosure regulations) in any other industry: not in health care, not in insurance, auto financing, credit cards, student loans (!!!), stock investing, or any other of a myriad of financial areas where consumers make important decisions about their finances.

Sure, there have been plenty of scummy mortgage people working in the industry in recent years, I dislike them as much as anyone else (maybe more, if you can believe that), but the bottom line is what the consumer wants and how the consumer obtains what they want.

Maybe the consumer reaction to this mess will be the simple act of taking the time to pore over those documents at closing, ask pointed questions, and refuse to sign anything until all issues, concerns, and questions have been addressed.

While the current government regulations provide for thorough disclosure, there is an even simpler existing mechanism available to consumers to protect themselves from harmful mortgage loans: that of hiring an attorney.
How do people make the biggest purchase of their lives without an attorney?

How do you sign mortgage documents without reading the required disclosures that were sent to you weeks before the closing, and then comparing those original disclosures with the closing documents?

The protection for consumers is built into the system already. There’s no “dumbed-down public.” On the contrary, the public today should be better informed about these important financial decisions than at any time previously.

[tags]Word Press, RESPA, attorney, mortgage closing, Sub Prime mortgage, homebuyer, mortgage regulations, Technorati, SimpleTags[/tags]

I remember exactly where I was that morning in 2001.  I was in my car; I was listening to “All Things Considered” on the Radio.  The show was interrupted briefly—dead air.   The announcer from the local station came back on the air a few seconds later with news of a small plane possibly having crashed into the World Trade Center.

The rest of that morning is a blur of news reports on radio and television (I was standing in an attorney’s office with the television on when the first tower fell); of the endless parade of emergency vehicles rushing from Long Island into Manhattan; of cellphones not working and the frustration of not being able to call family or friends (and finally reaching the wife of one of my best friends, a Port Authority Police Officer, and the relief to discover he wasn’t working at the Trade Center that day); of giving directions to a woman from Westchester stranded here on the island because the bridges were closed; of the sight and sound of jet fighters flying over head; and of brilliant blue skies on a breathlessly beautiful late summer day marred by the black-gray smear of smoke hanging on the horizon over Manhattan.

I remember, too, the days following the attacks.  I remember how we drove with our flags on our cars, and how it seemed the roadways were calmer, drivers more respectful of each other as we all came together in a solidarity of sympathy and mourning.

Those flags were something else.  Everyone seemed to have one: small flags flying from cars, flag stickers on rear windshields, flag lapel pins, flags hanging in store windows.  The flag gave us strength in the days after the attacks, and I remember that.

Here, then, as a remembrance of September 11, 2001, and of the strength we drew from the flag, a tribute to our American flag by ee cummings:

Our Flag

O flag of the nation! O Red, White and Blue!
O symbol of liberty, waving anew!
All through our lives may we reverence thee,
The nation’s bright ensign for liberty!

Dear flag, thou art sacred in peace and in war,
Where many have died for the striped and the star,
Where many have died that the slave may be free,
Have died for the nation and liberty!

Thou has seen the great battles, thou hast witnessed the strife
And the din of the conflicts, death struggling with life,
And thy bright, waving banner, the dying could see
Who had fought for the nation and liberty.

So whenever we meet thee, it matters not where;
Be thou waving at home or on battlement bare,
May we stop and salute thee, whenever we see
The nation’s bright banner for liberty.

-E.E. Cummings

My Master of all things WEB, Gary, told me to get hooked up, synched up, registered, included, mentioned, linked, and otherwise connected with Technorati.

Mission Accomplished today!

It’s a Brave New World.

By the by, I get a lot of compliments from folks about my site, especially from other mortgage and real estate professionals. I can’t take the credit for the excellent look and feel of the site beyond the copy and blog entries I’ve written. Gary AT HATrack.net is your man if you’re looking for a cool, professional-looking website. His service is superb and prices very reasonable—in fact, I’d be so bold as to say his prices are about the best you’re going to find for website development.