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| Reverse Mortgage Legislation and Leads |
| Saturday, March 22, 2008 |
One interesting area that could be significantly affected by this is the reverse mortgage market. If the government continues to prop up subprime loans and prop up the banks (and preventing the market from performing necessary corrections, home values should stabilize and possibly even rise in the coming future.
Reverse mortgage lead generation companies, which watch changes in the marketplace and legislation closer than anyone other than the lenders themselves. Know that this will benefit the loan officers that are in the field trying to make living allowing seniors to access their equity, before there is no equity there. For many seniors, a regular forward mortgage is out of the question, because they cannot make the additional payment on their fixed incomes. Rising costs and the need for medical care have them trapped in a bad situation. Even though this does not, by any means, mean that all seniors are in the same position; many seniors need to have alternative presented to them that will allow them to keep their homes for the rest of their natural lives.
Unfortunately, FHA Modernization Bill looks like a bad piece of legislation for the reverse mortgage business. This looks like the work of the AARP and other senior associations that lately have worked to the disfavor of many seniors. This legislation essentially hurts the loan officers and feeds the banks, while creating good press for the senior organizations. In the end, it looks like the senior organizations are making a play for the reverse mortgage leads generation market for themselves.
Seniors should be looking to take advantage of the low interest rates now and access the cash for other use before the equity in their homes falls more. If you are a reverse mortgage loan officer, you should use direct mail reverse mortgage lead solutions. The more seniors you reach today the better your business will be, otherwise you will be working for the bank for free.
My friends and I have been around real estate for a long time and have networked with a number of professionals that have used the direct mail lead services. I thought I would check them out and look into the company history and then I made a test call to them to see what they offered and find out how effective their products were. I ended making a purchase for my cousin for a X-Mas present and he turn the $2,500 investment (my gift) into $620,000 for eight senior couples who had less than 50% LTV in their homes or better (so he said). He had a great return on my investment. It's funy how that works - my coin his profits! On top of that the seniors were happy with the service the professional service that the received and the time that he spent with them.
So, I asked him. How much did you make? He said a fair rate for the 2 months he spent working with the clients. He also said his boss made just as much and the mortgage company would make the most, because it would sell the loan at a premium, because it was guaranteed. Then he changed the subject to the loan system itself and coming legislation.
I'm going to paraphrase what he was telling me: Keep in mind, many of the most popular reverse mortgage products that are out there are guaranteed by the federal government and lately the lobbyists seem to be deciding that the banks should make all the money and the individual agents that are on a per dollar basis exposed to the most risk (due to the long time it takes to navigate the government required loan process that includes consultations.) So, essentially, it takes 5 to ten times as long close a reverse mortgage.
Most forward mortgage brokers out there, are used to a quick fix and a customer that understands there product. This is not the case with reverse mortgage and those guys will naturally weed themselves out and only the professional senior advisers will remain. Have of the forward mortgage guys will resort to buying cheap reverse mortgage leads from some company that doesn't even understand the market, then they will get frustrated and quit Labels: Legislation, reverse mortgage leads |
posted by Domesticated Dog @ 1:53 AM  |
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| JP, Bear Stearns, The Fed - Insiders |
| Friday, March 21, 2008 |
Mortgages and the credit crisis are at the core of everything that will happen in this country for the next several years. There is really no two ways about it. I have found that it is useful to discuss these matters with people in a wide variety of discipline and professional field before coming to an opinion of my own.
This last rate cut by the Federal Reserve combined with the move to shore up the investment of JP Morgan as it raided Bear Stearns is absolutely frightening. I would recommend that any one who has them time, the interest and the money, to invest in a good insider trading tool like the ones offered by Insider Score. This tool lets you look into the guts of SEC filings and see what the insiders think about their company.
The idea that the government would allow the Bear Stearns transaction to occur without allowing the market to respond was terrible for the shareholders that were locked out of the process. The banks were the sole beneficiaries of this action. A sell off on businesses that made bad investments is a correction. The government guaranteed the riskiest part of the Bear portfolio and hand the the treasure trove over to JP Morgan. for the good of the market. This was for the good of the bankers and a few insiders and really no one else. Especially, no the $2/share shareholder, that had no ability to negotiate anything. What would bear have been worth if the market had responded to the guaranteed subprime holding portfolio? Not, $2/share. Not by a long shot.
The Bear Stearns name is worth more than $236M dollars - not to mention the trade connections that the professionals staff had developed and maintained. The shareholders got robbed.
My hats off to JP Morgan. I wonder when the shareholder's will sue? Good luck, suing the Fed.Labels: Bear Stearns, corporate raid, federal reserve |
| posted by Domesticated Dog @ 8:04 PM |
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| New Bill for Home Retention Mortgages |
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House Financial Services Committee Chairman Barney Frank on Thursday announced new legislation that represents Capitol Hill’s latest attempt to stem a significant rise in mortgage foreclosures. Under the proposed plan, the Federal Housing Administration would receive $300 billion — $150 billion over each of the next two years — to insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders.
The bill establishes terms for what it calls “homeownership retention mortgages,” otherwise called short-refis by most in the industry. Lenders and investors would be required to write off principal for first mortgages while second lienholders would likely be extinguished entirely under the terms of Frank’s plan.
The tentative bill outlines a very complex set of requirements surrounding who can get a “retention mortgage” and who can not.
In general, however, borrowers must be underwater enough that a write-down in principal to a first mortgage is required, and must also qualify for the FHA-insured short-refi under traditional circumstances — that is, at market rate, full doc, fixed-rate only, debt-to-income under 40 percent. Further, the monthly payment borrowers would receive under the “retention mortgage” would need to be less than their existing mortgage payment.
Borrowers obtaining a “retention mortgage” would also see the government put a soft second lien on the property, in order to establish a 3 percent “exit fee” if the borrower sells or refinances the home. Further, the second lien would establish a scaled “shared profits” model if the borrower manages to sell or refinance within five years.
Under the terms outlined by the bill, existing lenders would receive no more than 85 percent of a property’s currently-appraised value as payment in full for their existing lien position.
But it’s second liens that would appear to be the most pressing issue here, in spite of the fact that many lenders have begun reserving for losses on seconds at 100 percent.
Tanta at the Calculated Risk blog opines:
The draft bill says that “The Secretary (of HUD) may take such actions as may be necessary and appropriate to facilitate coordination between the holders of the existing senior mortgage and any existing subordinate mortgage to comply with the requirements.” It doesn’t say what necessary actions might be needed to force second lien holders to roll over and die–threats? bullying? shunning at cocktail parties?–but that’s likely to be a sticking point given current second lien holder behavior.Labels: Foreclosures, Legislation, Mortgages |
| posted by Domesticated Dog @ 8:01 PM |
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| Mortgage Foreclosure Crisis |
| Wednesday, March 12, 2008 |
This is a recession - and there simply aren't too many levers left for the Fed to reverse the trend. Interest rates really cannot be lowered. TIPS (a form of security) are a bargain, because of the rates as they exist and the hedge against inflation they provide.
The heavy investment in the housing sector represents investment in non-productive goods. Houses don;t produce anything for the economy, households do (and businesses do). Homes for many are a bad investment by comparison to many other, because in the absence of inflation homes do not increase in value and mortgage payment are mostly interest. Mortgages are the pledge of death.
The mortgage foreclosure crisis has caused a drop in cities' revenues, a spike in crime, more homelessness and an increase in vacant properties, a survey of elected local officials out today shows. About two-thirds of 211 officials surveyed by the National League of Cities reported an increase in foreclosures in their cities in the past year, according to the online and e-mail questionnaire. A third of them reported a drop in revenues and an increase in abandoned and vacant properties and urban blight. About one in five subprime mortgages made in the last two years are likely to go into foreclosure, according to a report released yesterday, ending the dream of homeownership for millions of Americans.
Federal Reserve Chairman Ben Bernanke publicly urged lenders yesterday to forgive a portion of the principal owed on loans. Bernanke insists the time has come for banks to consider this tactic if they want to prevent foreclosures.
This is bad news for many, but will create opportunity for many others. The level of equity in home is at a 50 year low, which makes it difficult to sell out of a property, particularly for those who recently purchased, and many people will not be able to cover the closing cost for a second time in such a short period.Labels: Mortgages, subprime |
| posted by Domesticated Dog @ 9:21 AM |
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