George's Blog

Last night, April 15th, I had the opportunity to participate for the 3rd time as a panelist at the Pleasanton Real Estate Town Hall, at the Veterans Memorial Hall on Main Street in Pleasanton. It was sponsored by the Bay East Association of Realtors, The Pleasanton Chamber of Commerce, The City of Pleasanton, and Mayor Jennifer Hostermann. The other panelists were Ms. Pat Huffman, past President of the Bay east Assn. of Realtors, and Dr. Stephen Shmanske, Professor of Economics at Cal State East Bay.

I spoke about the current mortgage market, loan programs, interest rates and predictions for the housing finance future for California and the nation for the next year.

There were over 100 people in attendance, and after initial presentations, the florr was opened up to a general Q & A from the audience, with some quite stimulating questions. At the end of the session, the crowd agreed it was quite informative and that the series should continue next year.

The IRRRLs (Interest Rate Reduction Refinance Loans) are a loan program for Veterans who already own their home, and they used a VA loan to purchase it. Like everyone else, they may want to take advantage of the lower interest rates, and historically they would have used the IRRRLs to do that. This loan is a streamlined loan, meaning that there is minimal documentation- the credit is checked, history of the loan payment being made on time, verification of employment were sufficient- and NO APPRAISAL was ever needed, until last year.

In mid 2009, lenders started requiring appraisals on the properties, whereas for the previous 60 years they did not. Immediately veterans whose homes were "underwater" were unable to refinance, losing a valuable benefit, and the ability to save hundreds of dollars a month. In many cases this makes the difference of a veteran being able to keep their home.

The US House of Representatives VA Subcommittee is looking into this, and how to fix it- write your Member of Congress- No Appraisals for VA refis!

What Does a Best Mortgage Broker Do?

Author: Benard Worseley

Finding the perfect house is stressful, exciting, and takes a lot of hard work. After you’re through with this process, the next step is to make an offer and find a mortgage lender. This presents a different challenge altogether. Finding the best mortgage broker isn’t easy. There are a lot of people who would simply take your money and go. It is important to find a broker who is experienced, competent, and most of all, concerned about your well-being. There are different ways to find a mortgage broker. Some borrowers prefer to browse the internet for reviews and recommendations. Your local real estate agent can also refer you to some mortgage brokers he knows. Meanwhile, friends, family, and acquaintances can also introduce you to the brokers they have used in the past. But in order to get the best mortgage broker, it is important for you to understand what their work is and what you can expect from them: What is the work of a mortgage broker? At its core, the mortgage brokers are simply professionals who are paid to do a job. They connect borrowers with the lenders who are likely to approve their loan and give a competitive rate. The best mortgage brokers stay updated about the real estate market. They have a network of contacts they can tap into anytime for the sake of their clients. In addition, it is also the job of a best mortgage broker to find the best type of loan that will suit the individual need of the borrower. Why not go directly to a loan officer? The mortgage lender is the bank, credit union, thrift institution, or any other financial enterprise that will finance the loan. Majority of financial institutions have their own loan officer who will educate the borrower and approve their loan application. You may be wondering, if there is already a loan officer, what use is the mortgage broker? Well, you need to realize that the best mortgage broker will help the borrower save time and potentially a lot of money if they connect him with the right lender. Brokers can also iron out any problems in qualifying for the mortgage loan. If you have credit issues, a mortgage broker can help greatly in the process. And once the loan has been secured, they will act as agents who secure all necessary documentations to make the transaction successful. Why should you get a mortgage broker? As was mentioned earlier, the best mortgage broker has a variety of functions. Working with a broker has several distinct advantages. For one, their access to different lenders allows them to find the best lender that will suit your needs at the most competitive prices. Secondly, they have access to the type of industry information that an average person cannot get. Because of this, they can browse the lending market effectively and find the best deal for you. Sometimes, it might not be necessary to get a mortgage broker to secure a loan. However, the amount of time, effort, and money you can save by getting their services should be considered. PR: wait... I: wait... L: wait... LD: wait... I: wait... wait... Rank: wait... Traffic: wait... Price: wait... C: wait... PR: wait... I: wait... L: wait... LD: wait... I: wait... wait... Rank: wait... Traffic: wait... Price: wait... C: wait...

Article Source: http://www.articlesbase.com/mortgage-articles/what-does-a-best-mortgage-broker-do-834638.html

About the Author:
I am 23 year old student on my last year of study at the University of Sydney (Sydney), majoring in Information technology.

The HVCC ( Housing Valuation Code of Conduct) looks like a good idea, but in fact is bad for consumers, and is actually technically illegal.  The article was only one sided, and did not go into all the facts:

1. The HVCC was developed as part of a settlement by Fannie Mae and Freddie Mac in a lawsuit by Andrew Cuomo, Attorney General from the State of New York. Fannie and Freddie are Federal entities, and the Attorney General has no jurisdiction to determine regulatory guidelines for Federal agencies, there is a very well defined procedure for that. There have been many letters of protest from heads of Federal Departments that this agreement violates Federal rulemaking protocals, and is therefore invalid and unenforceable.

2. The article was inaccurate by stating that the HVCC does not require the use of AMC's, becuase it does. The only exception is when a large bank lender can order an appraisal through it's own in house appraisal division, which is clearly not an arms legnth transaction.

3. AMC's are large corporate appraisal clearinghouses that will charge the consumer more for an appraisal than a local small business appraiser would- about $500 vs $350, while giving a smaller amount of the fee, like $150-250 to the actual appraiser, keeping the difference. This raises a Section 8 RESPA violation issue- prohibiting an unearned fee. What service does the AMC provide to the consumer for the extra charges?

4. AMC's will seek out the cheapest and least experienced appraisers by paying the appraisers less, and experienced, professionals who specialize in particular towns or neighborhoods will suffer accordingly and be put out of business.

5. The appraisers in the articles mentioned that they have been requested to come up with a certain number for a value. In a purchase transaction this is absolutely required, for a neutral third party appraiser to independently determine through standard procedures the value of a property that a seller and a buyer in a free market have agreed to. The appraiser needs to know this proposed purchase price accordingly. In a refinance, a preliminary inquiry of an appraiser by a broker is routine, to determine if it is worthwhile to pursue a refinance process. If brokers are not allowed to speak with appraisers for verbal estimates of value, a full blown appraisal will have to be ordered and paid for by the consumer (committing $500) for an appriasal that may come in too low to justify going ahead with a refinance, and having the homeowner out the $500 for nothing.

Is this consumer protection- higher fees, less quality, less accountability, less competence?

An example of another stupid regulation made by an ambitious, publicity seeking politician who knows nothing about what he's regulating, at the expense of the consumer.

Just say NO to HVCC! Write your Member of Congress!

Duarte Earns The Lending Integrity Seal of Approval

George L. Duarte, CMC Earns Lending Integrity Seal of Approval

Achieves Status For Professionalism in the Mortgage Business

Fremont, California, Feb. 4, 2009 – Wentworth Enterprises, Inc., parent company of Horizon Financial Associates today announced that George L. Duarte, CMC has earned the Lending Integrity Seal of Approval from the National Association of Mortgage Brokers (NAMB). The new seal recognizes individual brokers and loan officers who meet the industry’s highest standards for knowledge, professionalism, ethics and integrity.

“I am proud to bestow this symbol of excellence on George L. Duarte, CMC,” said George Hanzimanolis, President of the National Association of Mortgage Brokers. “By earning this recognition, George has demonstrated a strong commitment to achieving the highest ethical standards in the mortgage business.”

In order to display the Lending Integrity Seal, a broker or loan officer must:

· Pass a national criminal background check.

· Possess a state license or registration.

· Submit three business references (new members only)

· Attend professional education, including ethics training.

· Live up to NAMB’s Code of Ethics and Standards of Best Business Practices

· Pledge to abide by NAMB’s formal ethics grievance review process.

When a loan officer or broker displays the Seal, it means they have voluntarily met the only national standards for mortgage originators, established by the National Association of Mortgage Brokers.

“The Lending Integrity Seal of Approval is transforming the mortgage industry,” Hanzimanolis said.

For more information on the Lending Integrity Seal of Approval, visit www.lendingintegrity.org.

Contact George L. Duarte, CMC at Horizon Financial Associates, 39860 Mission Blvd., Fremont, Ca. 94539, 510-793-1900x107, cell 510-377-9059, gduarte@horizonfinance.com, www.horizonfinance.com.

The National Association of Mortgage Brokers is the voice of the mortgage broker industry with more than 25,000 members in all 50 states and the District of Columbia. NAMB provides education, certification and government affairs representation for the mortgage broker industry, which originates over 50% of all residential loans in the United States.

House Passes Housing Stimulus Bill HR3221 CONFORMING LOAN LIMITS GO DOWN

BAD NEWS FOR CALIFORNIANS AND OTHER HIGH COST AREAS!

This bill is over 700 pages, very comprehensive and very complex. I won’t go into all the details now, except the most important one, that is the current temporary conforming loan limit of $729,750 which is due to expire on Dec. 30, 2008, will be replaced with a LOWER limit of $625,500. That’s great, huh? The conforming loan limit is the maximum loan amount that Fannie Mae and Freddie Mac will buy, and FHA will insure, and is very important because even with all the recent financial turmoil that they have had, they are still the most dependable source of mortgage loan funds available right now.

The temporary loan limit increase to $729,750 occurred earlier this year in emergency economic stimulus package. Because it was only temporary, it is actually a two tiered pricing system- the regular conforming loans up to $417,000 (the old conforming limit), and "conforming jumbo” loans from $417,001-729,750. A whole new secondary market had to be established for the new confumbo loans, with new mbs (mortgage backed securities) instruments created, and whole new set of underwriting guidelines, as well, resulting in a lot of confusion and limited utility to the consumers it was meant to help.

The new loan limit was the result of intense negotiation between the House and Senate. Representative Barney Frank, the Chairman of the House Financial Services Committee, was a very strong advocate for making the temporary limits permanent, but ultimately lost to powerful Republican members of the Senate Banking Committee, who originally wanted only a $550,000 limit, but settled on $625,500. The California Congressional Delegation, lead by Senators Boxer and Feinstein, and Members Gary Miller, Ellen Tauscher, Maxine Waters and Brad Sherman fought valiantly on behalf of California consumers, with Representatives from other high cost areas, but lost out to powerful conservatives from the Midwest on this issue.

WHAT THIS MEANS TO CALIFORNIANS-

If you currently have a loan over $625,500, and have been considering refinancing it, then DO IT NOW. You have until Dec. 30^th to get the loan closed at the lower rates, then you are in Jumbo territory, and the rates are in the high 7’s range, with much stricter underwriting guidelines, and less choices. Also, all the rates have been going up in the last 2 weeks, under fears of inflation, the longer you wait, the worse the rates could get.

If you are thinking about purchasing a home, now is a great time because values have dropped, but that benefit could be negated by the higher rates. Like Bobby Weir said “can’t win for losin”.

The window is closing!!

George Duarte

The “Real Deal Guy” (sm)

Current State of Mortgage Financing...What's Going On?

Anyone watching or reading the financial news over the last few weeks has seen a lot of angst and consternation over the state of the mortgage industry. In fact, one of the larger lenders in the US, American Home Mortgage, was forced to shut down operations recently. But why? What is happening, what does all this mean to you and most importantly... what should you be doing do right now to make sure you are protected?

Here's the scoop.

Over the past several years, many loans were made to homeowners with somewhat nontraditional or "nonconforming" situations, be it a poor credit history, inability to document income, or any number of factors that do not fit within the traditional "box" for home loans. These loans are often called "Sub-Prime", or "Alt-A", meaning that they were somewhat riskier in nature than A credit, prime, or traditional loans. Another type of "nonconforming" home loan is one where the credit and income might be perfectly fine, but the loan amount is higher than $417K, which is the current maximum loan that can be done using pools of money from mortgage giants Fannie Mae (FNMA) and Freddie Mac (FHLMC). If the loan amount is higher, it can certainly be done - it's called a "jumbo loan" - but the end money comes from private institutions, not from the large government sponsored entities of Fannie and Freddie.

Most nonconforming loan product rates popped significantly higher recently. Here's what happened.

The end investor for Subprime or Alt-A loans will charge a premium for taking on a pool of these loans, because they know that traditionally, they might have a higher rate of default and delinquent payments within that risky pool. But lately, default and foreclosure has been on the rise - partly due to the fact that with credit tightening and a soft real estate market, many troubled homeowners are unable to refinance or sell in order to get out of trouble. So now, these end institutions are demanding a much higher "risk premium" for taking on these pools of loans, as they see the rates of default are climbing higher.

But since these institutions are purchasing these pools of loans sometimes months after the borrower has actually closed at a given rate, this increase to the risk premium means that instead of paying $101K for a $100K loan that will bear interest, they may only be willing to pay $95K for that $100K mortgage to account for the risk. Multiply that times thousands upon thousands of loans...and you have millions upon millions of dollars in loss for the company trying to sell the pool at a much lower price than they were expecting. This is called a "liquidity crisis", and is exactly what happened to American Home Mortgage - there was no mismanagement, but they simply got caught holding too many "hot potato" loans, forced to sell them at massive losses...and eventually they had to make the decision to close the doors and stop the bleeding.

Further, even when a lender is able to take some losses, they may be subject to a "margin call". This means that as their losses and risk premiums increase, the value of their loan portfolio decreases. As the value decreases, the credit lines that are secured by those portfolios begin to issue margin calls as the value of the asset that they are secured on is now diminished. This is exactly like margin calls in the Stock market. If you have a loan against a Stock that is losing value, you will get a "margin call" and need to pay down the loan, as the underlying Stock is losing too much value to be considered adequate collateral any longer. So for the big lenders, as their portfolio is losing value due to increased risk premiums and losses...the margin calls start coming in, and they are required to pay down their balances. In turn, this means that they have less availability to fund their new loans, which then exacerbates the problem.

In response to seeing this situation play out in the demise of American Home Mortgage, lenders of other nonconforming loan products increased their interest rates dramatically almost overnight to be better prepared - and likely over-prepared - for increased risk premiums down the road. Even though loans above $417K are not presently suffering from increased delinquencies like the Subprime and Alt-A loans are, these rates popped higher as well, because they are being purchased by smaller private entities that can't afford to take on any margin of risk.

What happens next? The major damage is probably already done, and the present situation will likely settle out over the coming year. Lenders will stop pulling products off the shelf, and the rates on products that have moved so significantly higher now should trend lower down the road as delinquency rates stabilize.

But here are a few important things you should DO RIGHT NOW:

ONE: Even if you are not presently in the market for a home loan of any type, make sure that your credit standing is as solid as possible. Many people in the market for a home loan didn't expect they would have a need, and didn't plan in advance to ensure their credit would qualify them for the best possible financing. With no immediate need for a home loan, time is on your side... why don't we take a few minutes together and just make sure you are prepared, should a need arise down the road? Call or email me right away.

TWO: If you are in the market for a home loan, or know someone who is - understand that now is the time to be working with a real qualified professional who can keep you informed of changes in the market and get your loan funded quickly. Now is NOT the time to be playing the risky game of trying to scour the entire nation to find someone who promises to save you a paltry amount on costs, or deliver a rate that seems too good to be true.

Your home and your financing are just too important, and times have changed. I am here to help and advise during these volatile times - and would welcome calls from you, your friends, family, neighbors or coworkers.

George Duarte

the "Real Deal" Guy (sm)

Blog13.doc

Foreclosures/Short Sales affecting Neighborhood Property Values & a Radical Solution Idea

By George L. Duarte MBA, CMC

“The Real Deal Guy” sm

May 15, 2008

One of the most unfair and disturbing things about the foreclosure situation that is not necessarily readily apparent is the knock-on effect on the other neighbors who may be having no problems making their mortgage payments, but who may, for their own reasons, want to sell or refinance their homes in the normal course of their lives.

I recently have had several situations with previous clients who are in that exact position. The problem is with the property valuation process- most of us know that the primary valuation method of residential properties is the “comparative sales” method, meaning that the value of a subject property is primarily derived from a comparative analysis of houses that have sold and closed in the neighborhood, preferably within a half-mile radius. There are 2 other methods of property valuation, but they are used primarily for commercial properties, and not very relevant to residential properties.

So the problem is when a bank owned property (REO) goes on the market, the bank only wants to get paid back what it is owed or close to it. If there was a lot of equity in the property, or if there was a second loan on the property, the bank doesn’t care and will price the property low enough to get their loan back, (wiping out the second loan, by the way, more on this later). If the bank loan was a high LTV, with little equity to begin with, the bank will decide how much of the loan it is willing to eat and price the house accordingly, which could be a substantial discount of 25-30-40%. This could represent a great a opportunity for a speculator investor, or someone who has been priced out of the market in past years, but is terrible for the rest of the neighbors who may wish to sell their homes legitimately, or refinance.

Another side effect of this situation is that now it is also very difficult to get a second loan or equity line of credit, most of these lenders have fled the market completely, primarily for the reason mentioned above.  There are some lenders who are servicing these loans, Countrywide and GMAC in particular, who have notified their customers that the customers would no longer be able to take any additional draws on their lines of credit, particularly in areas of “declining market value”, which California is.

Is there anything that can be done about this situation? As long as this process keeps occurring, it will just prolong the recovery time of the residential property values.

I have an idea that has no chance of being adopted- what if the appraisal and valuation process were temporarily altered to allow the REO’s and short sales infection of a neighborhood to be ignored in valuation of “legitimate” transactions of people who are not in trouble on their loans? In effect, creating a two-tier system of valuation along the lines of a statistical bell curve- the REO’s and short sales would be at the low end of the scale, or better yet, ignored completely. I think this valuation method would be completely fair to everyone, and in fact, would help to hasten the property values recovery by A. limiting the valuation damage exposure to “good” homes”, B. recognizing that low property values are an anomaly relative to a statistically insignificant number of “bad” properties, and C. creating incentive to purchase and therefore creating inherent higher value in foreclosed properties, because as soon as they sold, they would then have instant equity created by being valued as a “good property” again.

I think we have to look at this foreclosure situation like a virulent epidemic- it is unfortunate for the people whose loans went bad and “caught” the disease, but like a plague, those properties should be “quarantined”, and not allowed to “infect” the good properties, whose loans are being serviced and in good standing.

Wow, I thought of that all by myself! It’s amazing what can happen when you have a chance just to sit down and think for awhile.

What do you think? Let’s go to Congress with this, I’ll bet Barney Frank would love this—

Till next time- won’t be so long, I promise

George Duarte, MBA, CMC

“The Real Deal Guy” sm

Blog12.doc

Manage Your Credit and Credit Scores, Pt 2

By

George Duarte

The “Real Deal Guy” (SM)

In our last installment I discussed what a credit score is, some of the inputs that affect your scores, and the great importance of strong scores (over 700). In this part, I will give you some tips to help manage and increase your score, and keep it high.

1. Be very careful about applying for new credit- resist those offers in the stores that say “sign up for a card today, and get an additional 20% off” Whenever a consumer applies for credit an inquiry hits your report, and can deduct anywhere from 5-25 points off your score, depending on how many recent inquiries you have. Many people play the “credit card shuffle” game, paying off credit cards with lower interest rate credit cards, and transferring the balances. While this may seem like a good idea, it is in fact very bad for your credit scores for 2 reasons- you will have a continual number of inquiries, and you will also lose points because you will not have a long history of credit with the same creditors- one of the best ways to boost your score.
2. If you are in the loan process, do not pay off collections and charge offs, negotiate with the creditors, come to a payoff agreement, then pay them off in escrow, which a lender would require anyway. If you are not in the loan process, and do not expect to be applying for a loan for some time, then now is the good time to get those debts cleared up. Feel free to consult with me on the best methodologies for negotiating with creditors-that can be a whole column by itself- I don’t have a credit repair service, just help to advise consumers on how to go about it, and I don’t charge a fee for this advice.
3. Do not close credit card accounts, this is related to item no. 1 above, especially if you have had them a long time. Just pay them down to zero, but leave them open.
4. Do not consolidate your debts into one or two cards, this will hurt you in a couple of ways. The first way will be that you would probably have a balance higher than 30% of your approved loan limit on that card, and will lose points that way. Secondly, you would lose points by closing the accounts that are being consolidated, as mentioned above.
5. Make all your payments on time, even if they are the minimums! If your minimum payment is only $10 or $20, don’t skip it and pay double next time, pay it!
6. Do NOT co-sign for loans for anyone, friends, relatives, kids. More people have had their credit ruined through auto repossessions and other credit problems they have co-signed for, it is a cryin’ shame. If your friends, relatives have bad credit, that is their problem, don’t let them drag you down, too.

So those are the most important things to keep in mind in managing and defending your credit history. I cannot stress strongly enough how important it is to have strong credit-

Till next time

George Duarte, MBA, CMC, CMPS

The “Real Deal Guy” (SM)

Blog 11.doc

George Duarte, MBA, CMC

“The Real Deal Guy”(SM)

In today’s challenging mortgage lending environment, one factor that is more critical than ever is your credit score. This is the number that is determined by the 3 credit repositories- Trans Union has the Classic Score, Equifax has the Beacon Score, and Experian has the Fair, Isaac (FICO) score. A real estate credit report pulls all three databases, and all three give a score for each borrower. Therefore a husband will have 3 scores and a wife will have her own three scores as well. The middle score of the three is considered “the” credit score. A husband and wife credit scores may be very similar, or quite different.

The credit repositories are the huge databases that all creditors report payment and client histories to. Each repository has a proprietary mathematical algorithmic formula in reviewing someone’s credit history that ultimately spits out a number. The inputs of this number are based on the amount of credit, how long the credit history has been established, the debt balance relative to the credit limit, on time payment history, and many other factors that are in fact secret and obscure.

It is very important to understand that good credit scores are more important now than ever, in this very conservative lending environment. Historically, the minimum credit score necessary for a Fannie Mae “A” paper conforming loan was a 620, but now, if it is less than 680 for either party, husband or wife, then Fannie Mae has a significant points surcharge of as much as 1.75 points. The pricing and underwriting now is all about perceived risk, and lenders and their investors are very credit averse right now, and will be for some time.

Fannie Mae and Freddie Mac have lost billions in the last quarter of 2007, and are looking to make it up by surcharges being imposed. They are now charging a .25 point fee, just because they can, for no particular reason, called “adverse market” conditions. They are charging extra fees for cash out, usually .5 point, and a 1.75 point additional fee for a credit score under 680. These can add up to considerable amounts in determining the pricing of a loan in a purchase or refinance, and can even impact it is worthwhile to refinance or not.

For the best financing terms possible right now, you’ll want to have a 720 or higher credit score, 80% loan to value ratio (either 20% down or 20% equity in the property), and full documentation of your income, and at least 90 days worth of payments in cash reserves.

More on credit scores, tips and tricks in the next installment-

George Duarte, MBA, CMC

The Real Deal Guy (SM)