#Refi Now or Forever Hold Your Peace

Those who know me, know I am not a happy all time cheerleader about market.  I am a realist and feeling good about it.

Reality?  Here is todays.  As predicted by me on @CNBC, rates have tanked into a death spiral.  The stock market funny money just could not survive.

Companies does want to hire people when they can automate, the 3D printer will also kill jobs. Add to the oil glut, ebola scares, European economic weakness, VC dudes finally realizing that they can’t give a 15 year old $1,000,000 to do a fart app and bingo, here we are!

I priced a 30 year fixed purchase today and the zero point rate was 3.625%.  Wow…..the low was 3.5% during the recession.

Add those low rates to peaking values, somewhat looser mortgage underwriting rules and you have the recipe for the best refinance market ever…..ever.  We are at the pinnacle of low rates and high values  This just does not happen.

If you don’t refi now, you may never have an opportunity this good ever….ever.

Fill in the form with your basic info and I will get back to you. 


#iPhone 6, #iOS8

To the idiots waiting in line since September 3rd, can I check your voter ID?  What?  You won’t wait in line to vote but you’ll wait to get a cell phone?  A phone that does things only a bit better than the one you have.  Wow, you’re life will really change……NOT!

About 85% of the voters in Scotland stopped by the polls yesterday to vote.  LA county had about a 20% turnout for the last elections.  Hello?!?  OK, off topic.

I downloaded #iOS8 on my phone.  Two suggestions.

First on the flip up screen that you can turn on or off bluetooth, wifi, etc., you can’t control the location option.  Hello?!?


Second, they were nice enough to now show you what is draining your battery  (General-Usage-Battery Usage).  Why couldn’t you have made a swipe to close the item that you want to close to save the battery.


Mr. Cook, “it’s the battery, stupid.” If the battery lasted 5 times longer, we would all be in line for 12 days.

Give the people what they want!


Does brand matter?

That’s a question that real estate brokers that have a big brokerage say yes and small brokers say no.

The bigger discussion is who is going to be the most effective person to handle your transaction and what back up do they have.

If the person you are dealing with has a great grasp of your needs, able to handle negotiating for you where you get most of what you want, knows how to communicate and have positive relationships with others in the industry, the only you and they need is a back office and leader that follows the same path.

Many times, there are great agents that do a super job but have staff that does not understand that time is of the essence. Also, they have a title or mortgage person they involve in the transaction that does not call people back. Not good!

And when there is a real problem, you have to make sure that the broker of record or the office manager is accessible and knowledgeable.

So, don’t just interview an agent, don’t just go to a company, look at the whole picture and the people behind the people.


More Expensive Mortgages, Sneaky Style

Rural Development has announced an increase to the USDA guarantee fee for both purchase and refinance transactions that will be effective for all Conditional Commitments issued on or after October 1, 2014. The annual fee, which is paid monthly, for both purchase and refinance transactions will be increasing from .40% to .50%. The upfront guarantee fee will remain at 2%. 

So, it means that if you can get through the proctology exam that the underwriting guidelines put a person through now, you are going to pay more because of the people that did wrong behind you.

If the idea is to increase sales, let’s give more people the opportunity to buy in. USDA loans are increasing not as bad as the usury rates with the FHA monthly mortgage insurance (currently at 1.55%).

FHA should make the financed upfront fee higher and lower the monthly payment.  It is a simple calculation that will add more money to the coffers AND help more people buy homes.


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As I wear my mortgage broker hat today, I have found out that Fannie Mae now allows 100% gift for any and all conventional loan products.

Never before have they ever done this. FHA, VA and USDA have allowed it for years.

So, now you can get a 5% down payment loan with absolutely no skin in the game and be underwater.

Since it cost people money to sell their home because of commissions, possible transfer taxes, title, etcetera, are we asking for trouble?The “experts” blasted that this was one of the reasons that the bubble bursted.

And to add another layer, the CFPB under Dodd-Frank is asking the banks to take a “skin in the game” position on any loans they originate.

So if the regulators want the banks to do it but the largest conduit doesn’t require it from the borrowers, all I can see is the lenders getting tougher and the real estate market getting worse.


Could Rentals Kill the Economy

Greed is good.  The rich get richer.

We’ve all heard these expressions but are they right?

Landlords are so excited that the economy is coming back, more people are working and homes are harder to buy because mortgages are strangling the market.

Since there are no more option arms and no docs, people have to qualify for loans. Even without the CFPB overregulations, the housing market is exactly what it would be without the idiocracy of paperwork and restrictions imposed by the government agency.

So, the supply and demand features of rentals have been rearranged.  Everyone needs to live somewhere.  But the $750 a month rental that they had is now $1000.  Why, because they can.

But, if you take $250 out of people’s accounts that they have to spend on rent, that leave $250 less to spend on basic goods and services.  The landlord’s $250 does not go towards less basics but towards either improving the property, savings or a new car.

The $250 times the many, many people that can’t provide adequately leads to a lot of people to beg for increased wages.  And if the owner of the company gives it, it will be passed on to the consumer.

The problem?  You either shut too many people down that will need government assistance causing higher taxes or inflation that will cause interest rates to rise and a slowdown in the general economy.

When anyone raises prices, it is a gamble.  What they don’t usually look at is the effect on the overall economy.  Maybe major companies do, but landlord don’t.

Solution?  Loosen mortgage guidelines back to reality.  Stop all the crazy regulation that was born from the option arms and no docs because they do not exist anymore so that more people can buy homes.

All the CFPB had to do is ban those loans and their job would have been done.

Tenants can sign long term leases so they don’t get jacked after a year.  This makes easier for landlords and tenants to plan.



This Way to Happiness!

Important ideas in homebuying to think about.

The best way to figure if a home will work for you is to close your eyes and imagine your day-to-day life from the time you wake up, make coffee, get showered, dress, eat yogurt, search for your car keys and then get in the car and drive away.

Then, coming home.  You walk in, take off your shoes, have some chardonnay, turn on the music, make dinner, eat, read, take a swim, a shower and read again before bed.  (And yes, you can freely replace any other activities with what I described above).

The bottom line is, this will be the place that will formulate your happiness for years to come and obviously, happiness rules.

Home, Sweet Home.

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And Now, the End is Near

Two events today have indicated to me that the economy is about to go nose dive.

One came from Federal Reserve Chairperson Janet Yellen in her prepared remarks in front of the Senate Banking committee.  She announce “Irrational Exuberance 2″, the sequel to Alan Greenspan’s mention that tech stocks are too high based on no backbone.

Yes, there is no basis to the valuations on some companies that have not put together dollar 1 in profit, yet have spreadsheets making them worth billions.

I am sure there are a few that deserve that price, but many don’t.  Even the people writing the algorithms don’t agree with the numbers that are projected.  In order for free markets to exist, they must have valuations based on realities, not wild speculations.

The other came in the form of an email.  Our new hero for ending the economy is Kevin DeLory, Regional Sales Manager at Carrington Mortgage Wholesale.  I received an email from Mr. DeLory today since I am a mortgage broker that he wants to do business with.

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Even though I have told Carrington on numerous occasions that I do not want to wholesale to them, they continue to keep me on their list….lucky me and now you!

Today’s email threw me back to the good old days of 2005-2008.  Notice what he touts as a great reason to use them: Low Credit Scores!  Yes, everyone, you can have crappy credit and get a home loan!  Your score can be at dogdew level of 550 and get into a home with No Money Down.  Haven’t we heard this before?

Yes, you may have to qualify to make the payments. but the bottom line is, Mr. DeLory and his company are begging the federal government to insure and/or guarantee mortgages that we, the taxpayers will be liable for after they go bad.  It’s the late ’00 decade all over again.

If you are a mortgage broker, I urge you not to do it.  Don’t originate these loans.  Real estate agents should do the same.  Make people improve their credit and understand what they are getting into.

FHA, VA and USDA, please change your guidelines with the guidance of the CFPB and Senator Elizabeth Warren.  Help….stop the madness!



Everyone has it wrong. Why #Apple is really buying #Beats

Don’t you just love the speculation, the “I have it figured out” noise from all over the web as to why Apple overpaid for a headphone maker?    I’m no expert, but I think I put two and two together and got four instead of 3 1/2.

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Before this announcement, the speculation on new products from Apple had to do with acquisitions of biometric companies.  The world thinks that #TimCook and crew are coming out with the iWatch to measure what is going on inside of your body.

I think it may, but the real place they will get their data to help you is not from your wrist, but through your ears.  When Apple announces their new iPhone 6 soon, I believe that they will also introduce a new type of earplugs that will measure medical items in your body.

It can get your temperature, pulse, heart rate, etc.  But, as in any first generation release, it will be limited (remember the first iPad that had no camera?).  So for it to grow, the oversized headphones from Beat will be able to take in and store more information, have the ability to transmit directly if needed  as Bio-wireless communications.  Imagine the possibilities.

We could have caught Lance Armstrong cheating live!  You won’t have to go to the doctors office when you have the annoying bad cold.  And how about measuring people’s vitals who are on medications or an internal device like a pacemaker.

Fascinating.  And Apple will control it if I am right.  If I am not, please have Tim Cook call me and hire me or I am sure the Apple anti-Christ (Samsung) would be happy to have me.


Top Reasons the Real Estate Market Could Crash Soon

Crash? Don’t be alarmed. Don’t sell your business, but realize that the economic structure and outside occurrences can shape a real estate market.

I am a normally upbeat guy, but I do like realism. We have to step away from being happy all the time to an honest view for our clients — both sellers and buyers.

Here are the top reasons that the real estate market could fail soon, in no particular order:

11. Rates are dropping. What? Aren’t rates dropping a good thing? Actually, no. The market is telling us based on macroeconomic reports that the economy is not cooking and jobs are not being created to make people buy homes. The only good news that will come from this is that those who forgot to refi, especially the HARP2 eligible, will be able to get better rates. Speaking of HARP, it’s being reported that FHFA Director Mel Watt may waive the eligibility date!

10. Robots. CNBC did a report called “Robots Rising” highlighting the fact that robots will continue to take over human jobs. Simple. No job, no house to buy. Also, 3-D printers are all the rage. Instead of ordering a part for your car that has to be manufactured by someone, you or your mechanic will just hit “print” and voila, you have your part!

9. 43*. No, it’s not about a home run record. It’s the magic arbitrary number that the people at the Consumer Finance Protection Bureau (CFPB) felt would be the maximum debt-to-income ratio for mortgages under the Dodd-Frank “qualified mortgage” rule. So let’s see. There are no more “no docs,” no more option ARMs, practically no more interest-only rules, but they felt that 43 percent of your income should be the maximum for your mortgage payment plus other qualified debt.

The crappy liar loans of the past decade are gone. Guess what, you actually have to qualify for a loan now!

You can’t get your favorite character from ‘Goodfellas’ to put a gun to someone’s head and force them to buy a house.”

Why the asterisk? There was a seven-year “exception” to that rule if your loan got approved in the Fannie Mae or Freddie Mac computer system with a higher ratio than 43. Sounds great, right? Here’s the problem. If a lender gets a computer approval for more than 43 percent and makes the loan, Fannie or Freddie can come in an audit the file. If they find that there was one T not crossed, they can claim the loan is NOT QM exception compliant, make the loan worthless on the secondary market and possibly make you buy it back.

So, that leads to the big boys in mortgageland, the banks and the big mortgage bankers along with the brokers — the only ones left in the business since the small/middle-sized mortgage bankers would be killed if they started having to buy loans back.

What does that mean? Higher rates to compensate for the lawyers they will have to hire to protect them against the 30,000 auditors who work for the agencies. Or, it could mean that fewer and fewer companies would be interested in being in the mortgage business resulting in loss of jobs all over the country and more people unemployed.

It also comes down to decisions made by who I will call Mister 43*, Raj Date. We will hear about him later!

8. 580 credit score with 3.5 percent down and 50 percent ratio. Yes, folks, the same CFPB that decided on 43 has let the FHA do 3.5 percent downs with 580 credit scores and 50 percent ratios! Talk about disaster! What will happen is that more and more and more deals will go FHA and because of the low scores, there will be defaults. Inconstancy in underwriting standards where the people with bad credit get high loan-to-value loans and the person with great credit and a lot down may not get a mortgage at all. Oh, and I don’t want to forget, FHA has lowered just about all the maximum loan amounts around the country shutting out many potential homebuyers (and refinancers). DUMB.

7. Flood insurance. You think the mortgage market makes no sense, let’s talk about the federal flood insurance program. In 2012, a bipartisan bill passed both chambers of Congress and was signed off by President Obama giving a blueprint on restocking FEMA with much-needed funds. They just went through Katrina, Sandy and other natural disasters and were running very low on funds. But the unintended consequences amounted to people who owned $75,000 homes going from paying $400 a year to $15,000. No, you did not read that wrong. From $400 to $15,000. It’s an abomination.

A bill passed in 2014 to change this, but it is only temporary until 2017. Then, the floodgates may reopen. The Tea Party wing in Congress like Sen. Pat Toomey of Pennsylvana tried to railroad the flood bill even though many of his fellow Pennsylvanians were affected and have told him so. People of ALL parties along with real estate professionals are outraged and incoherently confused by the word no from these congresspeople.

There is a massive grassroots effort under way to knock some sense into these morons. Visit for all the details. But, if people can’t pay for their insurance, they will lose their homes, values will plummet in all 50 states, and there will be more renters and fewer sales.

6. Overregulation. Let me say, I am not an advocates for change based on the “small-business person” chant. But, this time, I am telling the good people of Washington to stop. Stop making it outrageous on people to own a business in the real estate field. In the last few years, they have overreached on mortgage brokers only to limit their income, made appraisers beg and do deals for far less dollars than they should be making, and they have forced real estate agents to lose deals and money because of the way rules have been placed on vendors. I could spend hours on this, but I urge the CFPB to find a reality-based platform to deal with the issues instead of theory from people who were never involved in the business itself.

5. Non-QM loans. The architect of the qualified mortgage rule, Mr. 43, Raj Date, who left the CFPB after the announcement and was made to start his own firm to deal with non-QM loans, is now finding that this is not as easy as he once thought. The sophisticated investors in mortgage-backed securities have not come over to his way of thinking. So, all the non-QM (I called them the new subprime loans) mortgages may not come to pass. So, let’s eliminate more buyers, hence, down go values.

4. Fed tapering. The Fed is still buying a lot of mortgage-backed securities, but, it failed the country in its leadership by implementing the aforementioned changes to mortgage and appraisals and helped to slow what could have been a faster, stronger, more favorable real estate market recovery.

Now, the Fed has handed its policies and people over to the CFPB with a pat on their derrières telling them to go get ‘em! The flavor of lunacy has not left their heads, and the Fed’s overbuying of Treasurys instead of mortgage-backs was just plain silly.

You can’t get your favorite character from ‘Goodfellas’ to put a gun to someone’s head and force them to buy a house.”

3. The stock market. The market does not think the economy will kick butt. Corporate profits will slow and then the value of stocks will diminish and people will not be able to sell as much stock to buy homes. Simple.

2. Consumer confidence. If you ignore the other items above, this is the Grand Poobah of them all. You can’t get your favorite character from “Goodfellas” to put a gun to someone’s head and force them to buy a house (Sorry, Joe Pesci). People buy homes because they feel secure in their job and want to plant roots. That’s the generic majority.

1.Employment to sales. Low job creation at the same time sales are skyrocketing is saying that it MUST come to an end. Good jobs are not being created at an alarming pace. Therefore, prices have to crash. And yes, there are the “stupid” markets such as San Francisco, New York City, the Westside in Los Angeles, but for a place that is dependent on regular W-2 jobs from large companies, this can be the killer.

So what’s the solution? Ahhhh, that’s going to take more coffee!