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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)

   Much ado had been made of the tax refund checks that will be going out to taxpayers after they file their taxes this year, with the intention that people will go out and spend these refunds and stimulate the economy. Polls do indicate however, that these refunds will go towards current debt service, or put back in the bank for a rainy day, thereby casting doubt on the results of this exercise.

   However, another benefit from the Package that has not been well publicized at all is that the Conforming Loan limit, currently $417,000, will be temporarily raised based upon the median home prices according to local metropolitan statistical areas (MSA’s).

Here in the San Francisco Bay Area, we will qualify for the maximum new conforming loan amount of $729,750. Conforming loans are underwritten and purchased by Fannie Mae (Federal National Mortgage Association), and Freddie Mac ( Federal Home Loan Mortgage Corp.), both of which are known as GSE’s ( Government Sponsored Enterprises). These corporations are hybrids that are partially owned by the US Government, but whose stock is publicly traded. They are designed to provide liquidity to the mortgage marketplace- what they do is buy loans from Banks, Mortgage Bankers, Credit Unions and other lenders, package them in securities, either stocks or bonds, and sell them on Wall St., which then generates more cash for them to buy more loans from lenders.  This ingenious system was created 60 years ago, and is responsible for consistent mortgage loan money being made available to home buyers and owners.

   Fannie and Freddie are more important than ever now, because the other investors in mortgages have fled the Market- the “Credit Crunch” you have heard so much about. Fannie and Freddie are left as the most reliable and consistent source of mortgage money to lend now. FHA loan limits will be raised also to match the conforming loans.

Why This Development is Huge For Us

  California, and other “high cost” areas should have had this higher loan limit formula long ago, but now until the end of December 2008, we have a window to take advantage of.

Who will benefit from this development?

1. People who have jumbo loans now that have adjusted, or will be adjusting.
2. People who have Jumbo fixed rate loans now with a rate over 6.00%
3. People who are looking for homes in the $417,000-$740,000. price range, who otherwise would have been stuck with a Jumbo loan rate.
4. People who have homes for sale in that price range that were Jumbo and now are conforming- greatly increasing the affordability to potential buyers, and marketability of the homes, just in time for the prime spring buying season!
5. People who have subprime loans that have adjusted or will be adjusting, and need some flexible underwriting guidelines can utilize the FHA as a replacement. There are essentially no more subprime lenders in business- those left are like hen’s teeth. If FHA loans limits were higher in the first place, we wouldn’t have had nearly as many subprime loans.  FHA is known and designed for more flexible underwriting guidelines than Fannie and Freddie, and will accommodate credit scores as low as 570.

This is all wonderful news folks! Things are looking up, as long as you or your friends are paying attention to this great opportunity. If you are in the above categories, or know someone who is, you should definitely check this out.

At this time, the conforming 30 year fixed rate are around 6.00% and the Jumbos are around 7.00%, so for a $650,000 loan, the difference is $427.47 per month! Could you use a $427.47 per month raise in your income, or reduction of your outflows? Of course you could-

Don’t wait—

The Real Deal Guy (SM)

George L. Duarte, MBA, CMC, CMPS

March 3, 2008

CONFORMING LOAN LIMITS PROPOSED TO RISE TO $729,750 AS PART OF THE ECONOMIC RELIEF PACKAGE FOR HIGH COST STATES!

    The White House and bipartisan Congressional Leadership has agreed to raise the FNMA/FHLMC (Fannie Mae and Freddie Mac) conforming loan limits from the current $417,000 to $729,750. The formula is the new “high cost” state loan limit is 125% of an area’s average median cost, which here in Alameda County is currently above $600,000. This is a huge development for California in particular, and will have a dramatic and immediate effect in helping to alleviate the real estate and mortgage crisis here. As I’ve mentioned before, there are severe problems currently with people who need to get jumbo loans refinanced, or to purchase a home – the jumbo investors have fled the market, and those that are still in it have tightened their underwriting guidelines, and raised their rates

    In the Bay Area, almost two-thirds of the homes were purchased using Jumbo mortgages last January-July 2007, but at the end of the year this percentage dropped dramatically, reflecting the lower sales activity.

    Now that the White House and both houses of Congress have agreed on the general terms of the stimulus package, a bill has to be introduced, first to the House, then the Senate. The legislators plan on fast-tracking the bill so it gets to the President for his signature by mid-February. At this time, this proposal has only a one-year window, then the loan limits revert back to the way they are now. There is speculation, however, that once this higher loan limit is in place, there will be great pressure to keep it permanently in the higher cost areas, simply because it makes sense to do so, and it helps consumers.

    This will help a lot of people who have jumbo loan amounts who need to refinance out of their ARM loans or their subprime loans that have adjusted or will be adjusting. However, these are still prime loans requiring good credit and equity, documentation of income and cash reserves. If these factors are not available, even these loans may not help some people. Fannie Mae and Freddie Mac have automated underwriting engines that make decisions on a borrower’s circumstances, and there are three different levels of pricing decisions that can occur depending upon how the risk factors are judged. This won’t help people of marginal credit who bought properties with no down payment in the last 2 years, with property values eroded in many places.

Stay tuned for more developments-

George L. Duarte, MBA, CMC

“The Real Deal Guy” (SM)

    The prognosis for the mortgage industry for 2008 pretty murky, but there are several things that are clearly going to occur, and are starting already. There is a lot of legislation on the Federal level, and in California that is already having a big impact on consumers’ ability to get home loans. Politicians have been under fire from constituents and consumer groups to “Do Something” about the mortgage meltdown, and all sorts of proposals are being written into new laws and regulations, that may very well have the effect of “overreacting” and chilling the mortgage market (and housing) recovery. After all, it stands to reason that if fewer people can get loans to buy or refinance homes, fewer new and resale homes will sell, dragging out the eventual housing prices recovery. It’s all about the financing.

    Like all legislation and regulations, there are some very good things occurring, and some things that are actually bad for the consumer and are not well thought out. One of the good things happening is the greater Federal control and regulation of who can be a mortgage loan originator (loan officer or mortgage broker). On January 1^st, there is a new federally based system being put into place a standardized and mandatory process to more thoroughly license and track mortgage brokers and loan officers. 7 states have joined this system immediately, and 42 are expected to be included by the end of 2008. The new system creates a uniform application for mortgage brokers and a database that banking regulators can use to track down loan officers who have been banned from one state from moving to another. This registration covers all loan officers(originators) for state chartered banks and financial institutions, independent mortgage brokerages, credit unions, but does not include those who work for federally chartered banks ( their lobby was too powerful). This system is being put into place and managed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators (CSBS/AARMR). The Anti-Predatory Lending Bill passed by the House of Representatives in November goes further by requiring that loan originators (except federal bank employees) pass a written test, take continuing education courses every year, pass an FBI criminal background check, have their personal credit reports checked, and declare the predominant color of their spouses underwear (just kidding on that last one). There will be even more restrictions developing in California as the year progresses. There is talk in Sacramento about the Dept of Real Estate (DRE) developing a new, separate license for mortgage loan origination from the current Broker or Salesperson license, for example.

    What this even means for the consumer and loan originators, is that far fewer loan agents will be able to get in the business, far fewer will be able to stay in the business and will have to go out of business. I’m ok with this, because I believe the net result will be far fewer competitors in the business, which always had a very low barrier of entry to it, allowing all sorts of amateurs and others who really shouldn’t have been in it. The survivors of the Mortgage Meltdown and these new regulations should be of a much higher caliber, and more professional, thereby being able to render a greater quality of mortgage loan service to consumers, rather the “rate hacks” who just sold the lowest rate and payment regardless of the consequences, as we have seen.

Other Big Changes that will affect consumers-

    There will be reduction and elimination of loan programs, especially “stated income” and “light doc” loans, that will seriously impact self employed borrowers, and others of unconventional or hard to document income.

    There will be much tighter underwriting guidelines- higher credit scores, more cash reserves required, qualifying at fully indexed rates on ARMs, higher down payments, restrictions on cash out amounts, lower debt ratios, etc.

    Pre purchase planning is more critical than ever-More on these subjects in the next installment.

George L. Duarte

“The Real Deal Guy”(SM)

End of the Year Housing Report for Alameda County, California

Report from the Bay East Assn. of Realtors®, Pleasanton, California

    For single family residences, the median price for an existing single family detached home increased slightly compared to the same period a year ago in Southern Alameda County, according to statistics compiled by the Bay East Assn. of REALTORS ®. The October 2007 median price was $645,750, an increase of $5,750. from the October 2006 median of $640,000. For Condos and townhouses, the October 2007 median price was $497,000 an increase of 2% over the $488,000 median of October 2006.

    Single family dwelling sales year to date declined 26.3% from the same period as last year. Sales were down from 5,662 in 2006 to 4,167 for the same period in 2007.

    Days on Market (DOM) continues to increase for existing homes in comparison to last year. The average year to date DOM for a single family detached home was 58 days, an increase from 31 days in 2006.

    What, the average home price ROSE in 2007? That’s not what the pundits and doomsayers have told us! Property marketing times have increased, true, but the values have, on the average, gone up this year.

    In this type of market, in order for properties to sell, it is imperative that they are spotlessly clean, uncluttered and “staged” both inside and out, curb appeal is critical; priced very well and realistically for the market; available for open houses, have a lockbox for convenient showings; and some patience.

    A famous politician once said “all politics is local”, and the same is true for Real Estate. There are many places in the US that have strong housing markets that are appreciating, all due to the factors of their local economies, especially employment. Here in Alameda County, we are well located close to the major employment markets of the Silicon Valley in the South Bay, and San Francisco, both places having strong employment for some time now. High Tech in particular is expected to continue to do well, and be one of the bright spots in the economy for the foreseeable future. History has proven that strong employment almost always equals a strong housing market. Further good news is that we are coming soon into the prime Real Estate sales season- the Springtime. It is well known that buyers are very interested in the home buying process throughout the Spring, so that they can be settled in their new homes in the summer, with the kids all set for their new schools in the fall.

    What factors can cause the wheels to fall off this cart? There is much uncertainty in the economy right now- overreaction in the mortgage markets causing elimination of loan programs, and greatly increased restrictions on the loan programs that are left; possibility of a recession, caused by inflationary pressures on oil and other consumer prices; consumers just getting burned out and feeling overburdened with their debt loads.

Till next time,

George L. Duarte

The Real Deal Guy(sm)

The “mortgage meltdown” has certainly created a lot of chaos, uncertainty, inconvenience and pain for many people, but is it truly disastrous as many claim?

Some Facts to consider-

-Housing starts are at the same levels as in 2002

-Mortgage volumes are projected for 2007 to end up at around $2.5 trillion, either the fifth or sixth largest in US history

-Housing is only about 5% of the US economy

-Sub-prime mortgages account for about 15% of all mortgages, only about 25% are delinquent-about 3.8% of all mortgages. 50% of these expected to go into foreclosure-only 1.9% of all mortgages, 98.1% are good—

-There is no recession- the FED said so in their August and September meetings, and that the economy is suffering from a labor shortage, not a surplus of unemployment (except in the mortgage industry)

-Corporate profits are historically high, with strong balance sheets (except for some banks and most mortgage lenders)

-The Fed has pumped hundreds of billions of $$ into the economy to provide liquidity to the “frozen” secondary market, cutting the FED Funds rate and Discount Rate 3 times in the last 5 months. This translates into lower rates and payments for all types of consumer and corporate debt- car loans, credit cards, lines of credit, all debt that is based on the Prime Rate. The Fed lowering rates DOES NOT AFFECT FIRST MORTGAGE LOANS OR THE FIXED RATES. These are impacted by mortgage backed securities, the behavior of which is similar to the 10 year bonds.

There ar major changes, no doubt about it- the lending industry is turning the clock back to what it was like 10 years ago, with borrowers having to qualify for loans with good credit scores, verifiable income, down payments, cash reserves and an emphasis on fixed rate loan products.

So the vast amount of people are completely unaffected, and actually have good opportunities to get good deals on refinancing low rates, and purchasing reasonably priced housing, and having a lot of choices in doing so.

We feel the pain of people who have been hurt in this market correction, but it has happened recently in the “dot-com” crash, the stock market crashes, and other markets where there has been a speculative frenzy take place.

Remember, things are never as good, nor as bad as they seem. This too shall pass.

George L. Duarte

The Real Deal Guy

Hi Blog fans, on Friday Dec. 6^th, Treasury Secretary Paulson unveiled the results of many discussions over the previous few weeks- the ARM Freeze. The plan proposes that certain subprime borrowers who have gotten the ARM loans between Jan 1^st 2005, and July 31^st 2007, and will adjust between Jan. 1^st 2008 and July 31^st 2010, will have their interest rates frozen from adjusting for a period of 5 years.

This proposal covers only subprime adjustable rate loans that are typically fixed for 2 or 3 years, then go to the fully indexed margin and index. The index on these loans is usually the LIBOR index, which currently is 4.502%, to which you would add a margin of 5.5% or 6.00%, and you would get a new rate of 10.00% to 10.5%, that is subject to adjusting every 6 months. Clearly this is a substantial increase in payments. Conventional adjustable rate loans, and the “pick a pay” monthly ARMS do not qualify as subprime loans, and are not covered by this proposal at this time. This is also only for owner occupied properties, and is intentionally not designed to bail out amateur “speculators”, who bought properties without rational analysis expecting to “flip” them a year later for a fat profit, and who are now stuck.

Word has it that the Fed was pushed into action for several reasons, not the least of which was the announcement by California Gov. Arnold Schwarzenegger three weeks earlier that he reached an agreement with four loan servicing companies in California to consider freezing adjustable rate loans. The actual details and mechanics of this agreement remain to be seen, but Gov. Arnold sure got out in front on the PR campaign, which caused more pressure on the Federal Government.

The Democrats are criticizing the proposed Freeze, saying that it does not go far enough, and Hilary Clinton has suggested that the rate freeze should be for 7 years, indicating clearly a true lack of understanding on how the whole process works, and having a knee-jerk reaction, just because she has to say something.

This Freeze proposal will help a good number of people, but ultimately will have very little impact on the overall Real Estate problem, and won’t halt the slide in values in the markets where this is happening. The slide won’t stop until the excess inventories of builders are exhausted, and the people who bought properties on “no down” speculation lose them to foreclosure, and they get absorbed back into the market. This is expected to take anywhere from 1 -3 years depending on the location and general economy.

What is the Real Deal with the Real Estate economy, is it as bad as the Press and pundits say? Stay tuned to the next installment of the Real Deal Guys Blog.

George L. Duarte

MBA, CMC, CMPS

The Real Deal Guy

“Where you find out the Real Deal story”

The Real Deal Guy sez:

“The Baby is getting thrown out with the bathwater!”

There has developed a lot of emotion and hysteria surrounding the current Real Estate and Mortgage market, based upon the statistics of delinquencies and foreclosures occurring. People are crying out to our Regulators and Legislators “Do Something!”, and all sorts of proposals are circulating around, ranging from a moratorium on adjustable rate loans adjusting, to the government bailing out anyone in foreclosure, and everything in between.

Consequently, our elected and appointed officials in many states and on a national level are responding with many different measures, all of which will have an impact on some or all of the mortgage business, and borrowers ability to get loans, and have a choice of loans to pick from.

SELF EMPLOYED BORROWERS

One group of people who are being particularly affected by almost all proposals are those who are self employed, business owners, commissioned salespeople, and people who have unusual or hard to verify income. You know where I’m going on this- the “stated income” loan, also known as the “low doc”, “light doc”, “no doc” or some sort of variation of this, where the borrowers do not provide income documentation. Such documentation includes pay stubs, W-2’s, 1099’s, 1040 Tax returns, payroll records, verification of income forms, or anything having to do with proof of income.

This loan program was originally started about 25 years ago, and was specifically for the real self employed borrower, or others as mentioned above, and was not for salaried wage earners.

Over the years, this program grew with many lenders, and guidelines got sloppy and abused allowing people who made low salaries to state their income much higher, and getting loans they couldn’t afford, leading to the situation we find ourselves in now.

Consequently, this loan program, or loans that have this feature, is being specifically targeted, and regulated out of business. Investors who used to buy these loans, are no longer doing so, or to a much reduced degree.

State and Federal regulators are now requiring that anyone who is getting a residential real estate loan must provide documentation of their income, whatever it may be, AND THAT THEY MUST QUALIFY FOR THE LOAN BASED UPON CONSERVATIVE UNDERWRITING GUIDELINES AND THE INCOME THEY SHOW.

Well, there’s the problem, because legitimately self employed people declare very little net income on their tax returns, because that is one of the benefits of self employment. They may have a great gross income, but a small net income, and the problem is that is what a lender will qualify a borrower on- net income, with depreciation added back in.

So the result is that self employed people are going to have a very difficult time getting a loan, particularly if they have a credit issue or two.

The other revision on the new regulations is on qualifying for the loan. From now on, all adjustable rate loans have to be qualified at the fully indexed rate, not the start rate, and all interest-only loans have to be qualified at the fully amortized payment. The question is why bother getting one of those loans if now there s no benefit to th consumer. The direction that lending is headed right now is FIXED RATE LOANS-

Yes, ladies and gentlemen, that light you see at the end of the mortgage mess tunnel is not redemption and resolution, but a freight train for many thousands of borrowers. The Law of Unintended Consequences will rise up, and cause a further delay in the recovery of the Real Estate Market, and keep many borrowers from the Dream of Home Ownership in America.

I welcome all comments on this or any related topic

Keep smiling

George L. Duarte

The Real Deal Guy SM

Real Deal Guy sez Caveat Emptor- “Let the Buyer Beware”

If it sounds too good to be true, it probably is. Too many consumers have been taken in by unscrupulous mortgage loan originators who are in it just for the quick buck, and have no intention of making a career of this business, and providing a beneficial, consultative service. The mortgage loan origination business, like the Real Estate Sales business is just too easy to get into, with low barriers of entry. This ease of entry facilitates fast talkers whose intent is simply to get people to take a loan product that will generate the most income to the loan agent. Mortgage Brokers are most frequently singled out as the culprits, but there are plenty of these types who work at mortgage bankers, banks, finance companies, credit unions as well.

The Trust Issue

How does a consumer determine who is worthy of their trust? What questions should be asked? (HINT- what is your rate is just about the LAST question that you should ask). Everyone wants the lowest rate and the best deal. I have never met a person who didn’t!

But in our haste and greed to get “the best deal”, someone can fall into the trap of being told what they want to hear creating the environment of the “bait and switch”. Believe it or not, there are many loan people who purposely tell people what they want to hear, regardless if it is true or not, never intending to honor what they say. When the customers go to sign their loan docs, the deal is completely different than what they expected. Unfortunately, many people are in a bind, and actually end up taking the bad deal instead of walking out the door, thereby reinforcing and rewarding this outrageous fraudulent behavior. These guys actually base their business model expecting the majority of people to walk out, but count on that there will be a certain (profitable) percentage of people who will take it anyway, either because they are desperate, or don’t read the loan papers.

Another very popular scam is based upon the much maligned monthly adjustable ARM loan, which goes by many names- the Pick-A-Pay loan, the neg-am loan, etc. This is the loan with the very low start rate of 1%- 3%, and can have a negative amortization feature where the loan balance goes up, and can have a prepayment penalty up to 3 years. Many people sell this loan telling consumers that this is a 30 year fixed rate loan at 1%, which is flat out purposeful, fraudulent misrepresentation. The loan has a 30 year term, the interest rate is fixed for only one month, the minimum payment is fixed for one year at a time, and if the interest due every month is not paid, the difference is added to the loan balance. The loan can be had with no prepayment penalty,a one year prepay or a three year prepay. The prepayment penalty should be used as a tool by the loan originator to reduce the closing costs and monthly payment. With no prepay, the closing costs are higher, and the margin on the loan is higher, resulting in a higher fully indexed rate, and with the one year or three year prepays, they can be used to offset some or all of the closing costs to the benefit of the customer. But what happens is that the con artist will not disclose that there is a 3 year prepay, charge the maximum margin resulting in the maximum rebate, and still charge the client full points and closing costs on top of this.

This still happens all the time, and the naïve customer ends up thinking they have a 30 year fixed loan at 1% with no prepay. Hello!! Does a 30 year fixed rate loan at 1% sound too good to be true? Of course it does!!

This is clearly a Fraud, a crime, but sadly, these crimes are extremely difficult to prosecute, and are white collar crimes, not very sexy, consequently the fraudsters who do this are almost never prosecuted.

I also want to make the point that it is not the fault of the loan program, either. THERE ARE NO GOOD OR BAD LOAN PROGRAMS!! Whether the loan is good or bad or not is relative to the needs of the customer, and if they are given the right program for their specific circumstances, if the loan features are explained to the customer AND THEY UNDERSTAND IT!!

I can’t tell you how many people I have spoken with recently who were in trouble on their loans, who admitted they never bothered to even look at their loan papers they signed, and had no idea what they had. DIDN’T YOUR MOTHER TELL YOU TO NEVER SIGN ANYTHING UNLESS YOU READ IT?? LISTEN TO YOUR MOTHER!

Consumers have to be smart, and not engage in behaviors that will facilitate the fraudsters that are out there-

Consumer Tip-

Do some research on who you are dealing with-

Red Flags-

Fast talking telemarketers working out of “boiler rooms”

Selling the lowest payment, not specifically mentioning the rate

Internet websites with no corresponding “bricks and mortar” presence in your county or state

Not giving a good faith estimate of closing costs in writing, or an incomplete verbal low ball quote

Not asking you a lot of questions to determine your needs or goals

Quickly quoting a really low rate

QUESTIONS TO ASK:

Where are you located?

Are you a mortgage broker, mortgage banker, bank, credit union or finance company?

(Yes, it does make a difference)

How long have you and your company been in business?

Are you a member of the Chamber of Commerce and the Better Business Bureau?

Do you or your company have a license? What kind- from the Ca. Dept. of Real Estate, or Ca. Dept of Corporations? What is your license number? (Then go the DRE or DOC websites and look it up!)

Do you have any testimonials or references of local satisfied customers?

Are you a member of your state Mortgage Broker Association, or Association of Realtors?

Do you have any continuing education, higher education or special credentials in the mortgage or real estate field?

Have you or your company supported any local or national charities or non profit organizations or do any community services here in my town or county?

Ask your friends, relatives and co-workers if they have had any good experiences with their mortgage loan originator, and if so, would they refer them to you?

If your prospective loan person can answer these questions confidently and at least most of them in the affirmative, then you are probably dealing with a reputable company.

ONGOING FEATURE-

Play “Stump the Broker”

This is an ongoing opportunity to ask any real estate financing and general real estate related questions of THE REAL DEAL GUY, and try and stump him. He promises to answer every legitimate question, with no Bull Durham, hence the name REAL DEAL GUY. Are you ready to handle the Truth? No punches will be pulled, no wool pulled over your eyes either. If he is stumped, or if a question is outside his expertise, he will admit it.

Please no irrational or aimless ranting, but all issues are open for discussion-

Let’s have some fun with it-

THE REAL DEAL GUY