Monday, September 10, 2007

Broker or Lender? are you kidding......

Unless you have been hibernating for the past few months, you are aware of the ongoing subprime loan crisis. The ripple has crossed into good credit markets, hitting rates hard, especially jumbo loans - (loans over $417,000). This crisis has almost single handedly eliminated a lot of other "niche" programs (Alt A loans) especially no doc and stated income loans. A question that must be raised is am I safer with a broker or lender?

To answer this question you must understand the differences. I experienced a perfect example last week while shopping for life insurance. My insurance broker input personal information into the computer and in seconds I was supplied with 10 different quotes from major rated companies. Now if I was to call one of the larger companies I probably would have received one quote. I am not sure if this is good or bad but in my opinion the true value of the broker was choice and expert knowledge of different programs available.

Open Mortgage offers similar choices while acting as a mortgage broker. Utilizing relationships with most, if not all of the top rated investors in the industry, we have become experts at where to place loans. We know the real ins and out of the secondary market and this proves to be a value added for our clients. The last thing anyone wants is a deal to die at the table because the investor pulled the plug.

Sure, we can act like a lender and offer one line of products, but why? In these tough financial times, when every deal counts, partnering with mortgage bankers that can offer high quality advice is essential.

You have questions? We have answers - as always, we are here to help.

Lewis Poretz lewis@openmortgage.com
President
Open Mortgage
http://www.openmortgage.com/ 877-345-OPEN

posted by Lewis Poretz  # 9/10/2007 09:13:00 AM

 1 Comments

Thursday, August 23, 2007

Where have all the programs gone?

The era of the one page rate sheet is here!

As a mortgage banker, my job is to find the best investor for my clients. In the past that meant sifting through pages and pages of rate sheets and programs I receive daily from investors. Well folks, I am here to tell you my job has just become simplified.

A typical investor rate sheet could be up to eight, even ten pages long containing so many programs and options a mortgage banker would need to attend a class on how to interpret each investor's display. Fast forward to August 2007, the average rate sheet in today's market being one to three pages. Many, many programs have gone by the wayside, hopefully to return someday in the near future.

Here are some changes in the mortgage lending industry you should be aware of -

No Doc loans are gone. Stated income loans typically require scores of 680+ and are only for the self employed. Second mortgages and lines of credit are now only offered to the best credit borrowers. Pay Option arms are very hard to find. Interest only loans now must be qualified at fully amortized payments. Most programs are now looking for a minimum of two months reserves in the bank.

Remember, a loan is not completed until it has funded - not just closed. Nightmare stories are posted daily on the net of loans that have closed only to have the investor close their doors during your three day right to cancel or even worse, before the deed on your new home was drawn up. It has become a realtor's nightmare! If you are in the midst of home financing, ask your banker what investor the loan is being sold to. Make sure they are not an "ailing" lender.

Do your research and do not get left stranded at a closing table. Check out www.mortgageimplode.com for up to date lender implosions. You have a right to know!
The scenery of the mortgage business has changed drastically. Loans are becoming much more difficult to qualify for. Yes, even for people with A+ credit. Now more than ever is the time to contact your trusted mortgage banker and make sure your financing is maximized to your lifestyle. Do not get left behind.

Call me for any mortgage related questions and remember to visit our website at www.openmortgage.com for high quality calculators, actual customer testimonials, secure online application and local links. Call me -- I am here to help.

Lewis Poretz
President
Open Mortgage
877-345-OPEN
www.openmortgage.com

Labels: loan programs

posted by Lewis Poretz  # 8/23/2007 08:42:00 AM

 0 Comments

Monday, August 13, 2007

Credit .... now more than ever!

Everyone by now is aware of the crisis that has destroyed many secondary investors. As money disappears, so does many niche loan programs such as stated income, no doc, high loan to value and even home equity loans. Interest only loans may be the next casualty. Surviving loan programs have tightened credit requirements. Many loans now require reserves. The good news is loan applications are up sharply and we are approving loans.

The makeup of a loan ----

Loans are approved on three basic premises.

Income - debt ratio is a percentage of how much money you make vs. how much you owe. These ratios in the past few years were very liberal. Ratios are tightening. Fewer and fewer exceptions are being granted.

Loan to Value - how much your house is worth vs. what you owe. In other words, how much equity you have available. High loan to values are extremely hard to qualify for in todays market.

Credit - the big C... During the refi boom the past few years it was not uncommon to say a 580 credit score, assuming a lower loan to value and debt ratio, could get approved for financing - even 100% financing! Liberal lending is now a thing of the past. Credit is more important now than ever. Loans are no longer considered slam dunks based on a high credit score alone.

All three of these make up the characteristics of a loan but reserves are now becoming very important in the decision making. Underwriters are looking for three to six months mortgage payments tucked away just in case.

Consumers should are entitled to a free copy of their credit report from all three credit bureaus - Equifax, Trans Union and TRW. For information on how to contact these credit bureaus or for clarification of an existing credit report you have, call me. I am here to help!

Lewis Poretz

President 877-345-OPEN

Open Mortgage http://www.openmortgage.com/

Labels: credit

posted by Lewis Poretz  # 8/13/2007 08:16:00 AM

 1 Comments

Thursday, August 2, 2007

Times are a changing .........

Times are a changing in the mortgage biz.

Just this week, Bloomberg news reported that American Home Mortgage can no longer fund loans. In addition, Inman News reported that IndyMac Bank was forced to repurchase 443 million in loans and earnings plummeted 57%. These are two heavyweights! The ripple effect is being felt in the wholesale market this week with a bulls eye on the home equity market and limited documentation programs being hit the hardest.

Many very, very large investors have pulled out of the second mortgage / home equity market entirely. Other top ten wholesalers have stopped funding stated income, limited doc and especially no doc loans. Pay Option Arms could be the next to vanish. 100% financing guidelines have tightened like a snake. Certainly damaged credit loans have led this debacle but I feel we are simply at the top of a very steep hill and the train is gaining steam. Get prepared!!!

If at any time in the last few months you have been contemplating refinancing, getting cash, paying off bills or purchasing a home using any of the programs mentioned above - review your options now! Programs are changing daily. When pricing a loan these days, my focus on many scenarios is no longer just on locating my clients the best rate, it is simply to find my client a loan.

The best website available to view mortgage industry happenings is linked below - see for yourself and get prepared for some rough times ahead ----

http://www.mortgageimplode.com/

Call me with any home financing related questions. I am here to help.

Lewis Poretz lewis@openmortgage.com
President
Open Mortgage 877-345-OPEN

posted by Lewis Poretz  # 8/02/2007 07:57:00 AM

 0 Comments

Monday, July 23, 2007

Does your credit score make a difference?

You better believe it. In just the past few weeks I have noticed credit scores dropping on a majority of loan applications I have taken. Keep in mind that a credit score is a reflection of a person's credit. It is NOT entirely how well a person pays bills on time to their creditors.

Credit scores are derived from numerous factors which include the percent of available credit, the percent of used credit, number of open accounts, number of inquires and of course timely payments. In other words, even though you may pay all your bills on time, if the majority of your cards are maxed out, you may have a low credit score regardless if you have never made a late payment in your entire credit history. I have recently had to turn down several clients, ones that have a high income and pay bills on time, because their score was not there. With the collapse of the subprime market and record credit card debt and bankruptcies, Stated Doc and No Doc loans now require higher credit scores than ever.

Excessive credit inquiries made within the same period can drop your score as well. It is a good idea that if you are looking to purchase a car or home to ask the person who pulls your credit for a copy of it. Then if you decide to shop around, supply that credit report instead of getting hit with another credit pull. If a lender is not willing to do that, find somebody else.



Give me a call for any credit or financing related questions. I am here to help.

Lewis Poretz
President
Open Mortgage http://www.openmortgage.com/ 877-345-OPEN

posted by Lewis Poretz  # 7/23/2007 08:39:00 AM

 0 Comments

Wednesday, July 18, 2007

No Fee Mortgage? - real facts you need to know!

the real truth!!!


Ok This is what NO mortgage banker ever wants you to know ----Mortgage money is purchased from wholesalers just like any other product. Whether you are a lender or a broker, there is still a cost at what you can get the money for. Here is how it works:

I get your loan approved and shop several different investors for a price. Lets say I can get your financing done at a rate of 6.5% after shopping my investors. This is where it gets a bit tricky. I can charge you “points” and give you the loan at 6.5%. OR I can charge NO points and give you the loan at 7.25%. The difference in the rate is called yield spread premium. What that actually translates into is a very big commission to the originator. Very simply, it is wholesale vs. retail.

Please keep in mind that the really, really big lenders have huge overheads and typically need to mark their interests rates even higher to cover their overhead, commission to the loan officer, etc… This is where a smaller broker has a huge advantage. They simply do not have the same overhead and expenses as the big names and can pass that on in the form of a smaller mark up to the interest rate.

Remember that other factors go into obtaining the best interest rate. Credit of course plays a big role as well as loan-to-value and your debt ratio. Give me a call with any mortgage related questions.

And most of all always remember, if the deal looks too good to be true, well, nobody does anything for no cost.

Lewis Poretz
President

Labels: no cost mortgage, No Fee Mortgage

posted by Lewis Poretz  # 7/18/2007 12:19:00 PM

 0 Comments

Friday, July 6, 2007

Pay Option Arms

Interest rates have risen steadily this past week as well as the week before. I expect that trend to continue with a typical 30 year fixed rate well in the 7% range shortly.

PAY OPTION ARMS - or otherwise known as a flex pay, 1% loan, minimum payment loan etc..... I have not always been a huge fan of this loan as it can have massive negative effects upon your loan balance in addition to the fact the true interest rate changes every month! Loan Originators typically sell this as a means to increase cash flow and advise to invest the difference. The truth is, it takes a very disciplined person to actually accomplish this.

There is a new twist on this pay option loan.... fixed % rate for five years - minimum payment is 50% of regular P & I payment - limited documentation programs available - you must understand these loans before you agree to one. Call me with questions if you are considering this type of loan. I have become well versed in explaining this difficult to understand program.

Labels: minumum payment loans, pay option arms

posted by Lewis Poretz  # 7/06/2007 01:23:00 PM

 0 Comments