Here’s a mortgage primer on which loans are no longer the flavor of the month on Wall Street. They’re the Michael Vick’s of the mortgage world, they were once very popular on but now nobody wants to be associated with them. Okay, that’s a little bit too harsh since these loans didn’t kill dogs. Then again, these loans have put families in dire straits so lets keep the Michael Vick analogy.

Loans the Wall Street doesn’t like:

• THE LOANS WITH THE REALLY REALLY REALLY LOW RATE AND LOW MONTHLY PAYMENT

Also called: 1%, NEGATIVE AMORTIZATION, NEG AM, OPTION ARMS, PAY OPTION ARMS or

“A CAN OF WHOOP ASS WAITING TO HAPPEN”

• THE LOANS FOR BORROWERS WITH REALLY REALLY REALLY BAD CREDIT HISTORIES

Also called: SUBPRIME, NON PRIME, POOR CREDIT, 2/28s, 3/27s, or

“I GUESS THIS IS WHAT I GET FOR NOT PAYING MY BILLS”

• THE LOANS FOR BORROWERS WHO HAVE GOOD CREDIT BUT WHOSE OVERALL LOAN APPLICATION DOESN’T MEET FANNIE MAE OR FREDDIE MAC’S STANDARDS

Also called: ALT-A or

“SO I’VE GOT GOOD CREDIT AND A GOOD JOB BUT I’M PENALIZED FOR NOT SAVING ANY MONEY”

• THE LOANS FOR BORROWERS WHO CAN’T REALLY REALLY REALLY SHOW HOW MUCH MONEY THEY’VE MADE OR HOW MUCH THEY HAVE SAVED UP

Also called: STATED INCOME, STATEDSIVA, SISA, NO DOC, or

“DON’T THEY HAVE LOANS FOR PEOPLE WHO DON’T HAVE JOBS?”

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY DON’T WANT TO PUT ANY MONEY DOWN

Are called: 80/20, 100% Financing, NO MONEY DOWN, 103%, 107% or

“I WANT A LOAN WHERE I GET TO KEEP MY MONEY IN CASE MY JOB GETS OUTSOURCED TO INDIA”

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY DON’T WANT TO PAY AN AMORTIZED PAYMENT

Also called: INTEREST ONLY, IO, or

“IF I LIKE PAYING DOWN PRINCIPAL MY PAYMENT GETS RECAST TO A LOWER PAYMENT EVERY MONTH”

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY WANT TO BUY A HOME THEY HAVE NO INTENTION OF LIVING IN

Also called: INVESTMENT PROPERTY LOANS, NON OWNER OCCUPANCY, NOO or

“I’M GOING TO BE THE NEXT DONALD TRUMP”

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY MAKE A LOT OF DOUGH

Also called: JUMBO, NON CONFORMING, SUPER JUMBO, MILLION DOLLAR LOANS, ANYTHING OVER $417,000 or

“THAT’S PRETTY LOW FOR A RATE OF RETURN AND PRETTY HIGH FOR A MORTGAGE INTEREST RATE”

It remains to be seen if Wall Street still likes:

• THE LOANS FOR BORROWERS WHO REALLY REALLY REALLY HAVE NO INTENTION OF LIVING IN THEIR HOMES FOR 15 to 30 YEARS

Also called: ADJUSTABLE RATE MORTGAGES, ARMS, 3/1, 5/1, 7/1, 10/1, TEASER RATE LOANS, HYBRID LOANS, BALLOONS or

“THE AVERAGE PERSON MOVES EVERY 5 to 7 YEARS, SO WHY SHOULD I GET A LOAN FOR 30 YEARS?”

Wall Street will always like:

• THE LOANS WITH REALLY REALLY REALLY NO RISK

Also called: FHA, VA, CONFORMING, FANNIE MAE, FREDDIE MAC or

“THE LOANS THAT MAKE UP THE MAJORITY OF THE AMERICAN MORTGAGE LANDSCAPE”

For some reason I get A LOT of visitors searching for “Fix and Flip in Denver” and “Fix and Flip loans.” Most people I’ve talked to regarding “fix and flips” simply don’t have a clue how much time or money is involved in a buying a house, remodeling, then selling it for a profit. People who are unprepared either go broke or wreck their credit or both. However, buying a home, fixing it, and then flipping it has always fascinated me.

Growing up I really enjoyed This Old House and Hometime. 20 years later and much to my surprise these shows are still on Public Television. The cast of characters has changed but the premise remains the same, remodel an aging house.

Today there are several shows devoted to flipping homes and I’m addicted to each and every one of them:

Property Ladder: By far the best of the shows not named This Old House or Hometime. Candidates for this show are fix and flip novices. The show is an hour long and typically the show focuses on the struggles these novices endure while flipping. They do receive guidance from Kristen Kemp a real estate investor. What I like is that follow through to the end and show some flips as complete flops.

Flip That House: If you have a short attention span, this fix and flip show is for you. It’s only 30 minutes long! Experienced and inexperienced flippers are depicted in a quick view of the fix and flip process. The show usually ends with a how much the home was purchased for, how much they spent, and the new price with the expected profit highlighted.

The Real Deal/Real Estate Pros: In one hour this show follows successful real estate flipper Richard Davis and his company, Team Trademark. It’s a pretty interesting show laden with extremely tight deadlines. Getting a house ready in a week only to get one of your employees into the property seems a little far fetched.

Flip This House: I liked this show because of Team Trademark but there was a lawsuit and Team Trademark moved on. There are other “teams” that are featured, one in San Antonio, TX, one in Atlanta, GA and the latest is in New Haven, CT. If you’re in drama you might want to skip the last team, the New Haven group seem to be as cohesive as the 2004 Boston Red Sox.

Flipping Out: Last week a new fix and flip show debuted on Bravo. It’s about Jeff Lewis, a professional real estate investor. Remember it’s on Bravo, the network that brought us Queer Eye for the Straight Guy in other words, expect a lot of drama.

Interesting links from the web:

The Denver Post has a great article, Sales surge for digs over $1M, on why the upper end homes are selling like hot cakes. Denver homes in the million dollar range are doing very well because move up buyers have done well with their investments in the stock market. Moving up like George and Weezie!

Speaking of luxury properties, I ran into my friend Dan at the Denver based real estate and mortgage blogger meet up last week. He now works for LuxuryProperty.com, a site that specializes in million dollar homes nationwide. Look for their launch very soon.

Jonathan Miller of Miller Samuel discusses when prices rise, people remodel. Anyone who links to a Roxy Music clip is pure genius in my book!

Just like every kid, I grew up playing soccer. It’s the premier sport in the world. Somehow it just doesn’t have mass appeal in America. Consider that Denver just hosted the Major League Soccer all-star game, did anyone care?

Chinatown real estate is hot according to CBS. This begs the question where is Chinatown in Denver? My best guess is Alameda & Federal area with their wide array of Chinese restaurants.

I’ll be blogging about the major news regarding mortgage broker registration later today in the mean time I wanted to discuss two recent hip hop flip flops in sports:

Kobe Bryant

I can’t stand Kobe Bryant. Don’t get me wrong, I think he’s the second coming of Michael Jordan (sorry LeBron and D-Wade) I just don’t care for sports divas. He ranks up there with Terrell Owens, Alex Rodriguez, and Barry Bonds. You simply can’t root for these guys because they act more like Diana Ross than Derek Jeter.

Kobe recently said in an interview that he wanted out of the Los Angeles Lakers. That’s right, he wanted out of the marquee NBA franchise on the planet. A few hours later in a different interview he reneged and didn’t want out after all. Kobe is a phenomenal talent but I just don’t think he plays well with others. He could’ve played an individual sport like wrestling, bowling or even poker but he opted for a team game like basketball.

The NBA is a joke. The two worst teams (the Griz and the Celts) got jobbed in the NBA draft lottery. The Suns got jobbed in the NBA playoffs. The referees in the NBA are the most biased in professional sports. If LeBron and the Cavs don’t beat the Pistons their would be no interest whatsoever in the NBA finals. So who really cares where Kobe winds up, the NBA has other problems.

Billy Donovan

On the other end of the spectrum is Billy Donovan, the head coach of the Florida Gators. I like Billy Donovan. As a point guard in college, he led the Providence Friars to the Final Four in the mid-80′s. He played briefly for the New York Knicks in the NBA. He began his coaching career shortly thereafter.

After winning two NCAA championships with Florida, Donovan decided to take an Orlando Magic offer and try his luck in the NBA. However after a weekend to think about it, Donovan reneged and decided to return to Florida.

Donovan is an outstanding coach. He has busted my NCAA bracket many times. Every time I thought his teams would choke, they did well. He’s a legend in Florida. Why in the world would you leave the college ranks for the NBA and the Orlando Magic? It didn’t make any sense when they announced that Donovan was leaving for the NBA so I wasn’t surprised that he had second thoughts about returning to Florida. I hope that Donovan returns to the college game. He belongs there and he makes the college game that much more exciting.

What does this have to do with the mortgage world?

It’s okay to change your mind when it comes to your mortgage. Once the emotion involved with making a decision subsides, you return to your senses and sometimes your senses tell you to back out. There are millions of people who wished they changed their mind regarding their mortgage broker and/or their mortgage. If a deal seems fishy, you can and should back out. On a refinance transaction (assuming it’s not an investment property) you have 3 days to rescind your mortgage. On a purchase transaction, it’s a lot more complex, but you can still back out of the deal.

I came across a fsbo blog that discusses using technology to create a classified ad of a real estate property and post the ad to services on the internet:

1. Backpage
2. Edgeio
3. Google Base
4. Oodle
5. Hotpads
6. Local
7. Propsmart
8. Trulia
9. Vast

The name of the service is called Postlets. Create one, post to all. Seems like a great concept. The only drawback is that it the service doesn’t auto post to craigslist; you have to do it yourself.

Most consumers use the internet to search for information on mortgages. Here was a recent question on making mortgage payment by an investor:

“I bought an investment property last year. How many months can I skip paying my mortgage before I lose the property?”

The politically correct answer:

“After four missed payments, the foreclosure process will begin.”

The not-so-politically correct answer:

“Stop watching Carleton Sheets infomercials.”

Here are some interesting articles from across the web:

• After seeing numerous potential clients who’ve filed bankruptcy to stave off the medical bill collectors, this statement/article is extremely true: “Scholars say medical debt is the No. 1 cause of bankruptcy.”
• Higher rates, less house explores how rate increases reduces the property amounts people qualify.
• Dan Green of the Mortgage Reports has a keen mind when it comes to the market. Here are his thoughts on why rates are rising:
  

  • Mortgage-backed securities lost 84 basis points over 5 days
  • Fed Futures currently price a greater chance that the Fed will raise the FFR in May than it will lower it
  • Since January 5, the Fannie Mae 30-Year 5.5% bond closed worse on 81% of trading days and has worsened in pricing by 146 basis points
  • Since December 5, the same bond has been down on 23 of 36 days, or 63.89% of the time

• Federal Reserve Chairman Ben Bernacke did well in his first year. Meanwhile his predecessor, Alan Greenspan, is writing a book called “The Age of Turbulence”.

From time to time I’ll be addressing client questions that are frequently asked and some questions that are quite obscure. Some questions are mortgage related, some are real estate related, and some are Denver related. My answers won’t be the canned answers you see on most mortgage sites.

Q: “How do I get the best rate?”

A: Let’s assume the following:

• you’re asking about a mortgage on a single family house that’s considered your primary residence
• you’re asking about a first mortgage without a second mortgage
• you have either 20% equity (refinance) or you’re putting a 20% down payment (purchase)
• you have credit scores over 720
• you don’t have any late payments of any kind
• you have assets i.e. money in a checking account, savings account, 401k, mutual funds and/or stocks at established financial institution(s)
• you have statements from the aforementioned financial institution(s)
• you’ve been in the same line of work for quite some time for the same company
• you have a limited amount of debt
• your debt to income ratio is far below the 40% threshold

If you fit this profile you’ll get the best rates because mortgage institutions view this profile as little to no risk. These loans are typically run through an automated underwriting program i.e. computer software that runs an algorerithm (software geek joke) and gives you a loan approval in seconds. Even if you don’t fit this profile 100%, the automated underwriting program may still grant you an approval in seconds. Your history of paying debt (credit score), capacity to pay the loan (income/assets), and the collateral backing the debt (property) all plays a role in getting the best rate.

I’d like to think that my blog is unique, I don’t just blog about mortgages cause quite frankly mortgages isn’t the most exiting subject on the planet. Most mortgage brokers don’t blog (do they even know what a blog is?) so I thought blogging would separate me from the pack. Most of my traffic is derived via Google searches. When I started blogging I sent my url to my past clients, friends, etc. and over the past couple of months I’ve received links from other blogs and sites, but I still get more traffic from google than any other medium. It’s not even close.

Here are some of the search terms (in UPPER CASE) that were used to find my site:

• NY PIZZA in DENVER: If there’s something I know, it’s NY Pizza. The site for Original New York Pizza is www.originalpizza.us and it’s located here: 1300 W Midway Blvd in Broomfield, CO 80020 to order a pie call (303) 469-9117. Pantaleone’s is another good NY Pizza joint despite the owners being from Soprano country (NJ) here’s their address: 2120 S Holly St # 6 Denver, CO 80222 and number (303) 757-3456.
• My DENVER BLOG covers Denver real estate, Denver trends, Denver mortgages, and just about anything the gooey substance above my medulla oblongata comes up with.
• TEDY BRUSCHI of the New England Patriots is one of my favorite NFL players because he plays the way the game should be played and yes, he’s HALF-FILIPINO and HALF-ITALIAN. DEAN CAIN and WILL FERRELL are not Filipino.
• You can buy STARBURY SNEAKERS in DENVER, Colorado, you can go to Steve and Barry’s located at 8501 West Bowles Avenue in Littleton, CO 80123 call them at 303-904-7513 for directions.
• FORECLOSURE is a hot topic in COLORADO and DENVER. Fellow Colorado bloggers have tried to minimize the problem. When 90% of the leads that I get from my websites is from Colorado Home Owners facing foreclosure, I’d say foreclosure is a problem. Any way you cut it, people don’t want to lose their homes and saying “sorry, I can’t help you” really sucks!
• KOSI 101 plays CHRISTMAS MUSIC. Tune to 101.1 on your FM dial.
• DENVER is not going through a HOUSING BUBBLE BURST. Denver may have flat lined in terms of property value over the past 4 to 5 years but Denver’s real estate hasn’t popped. Who in their right mind would want to move to a booming city that features 300 days of sunshine a year, skiing in our backyard, hiking, biking, great sports, light rail, international airport, great restaurants, and affordable housing? (sarcasm)
• THE NEXT WASHINGTON PARK could very well be Stapleton, Lowry, Riverfront or anywhere near the Pedestrian Bridge. A realtor would probably be a better person to ask (now there’s an idea for a blog post) so if you need a realtor, just ask. I only work with realtors that won’t waste your time or mine.
• The DIFFERENCE between a MORTGAGE PLANNER and a MORTGAGE BROKER: a mortgage planner actually gives a rats ass about you as a human being and your long term future. For the record, I consider myself a MORTGAGE PLANNER.
• HGTV is scouting for new home buyers in the DENVER metro area for their show, MY FIRST PLACE. However, I think this train came and left.
• REAL WORLD DENVER takes place in LoDo (Lower Downtown) and no I won’t be making any cameos on the show. I believe they filmed the show on Market Street a stone throw away from Coors Field. I’d actually like to see MTV show music videos like they did when I was a kid.
• CASEY SERIN is facing FORECLOSURE and blogging (www.iamfacingforeclosure.com) about it. The guy is going through hell.
• DENVER FIX and FLIP and FLIPPING HOUSES in DENVER, please refer to Casey Serin’s blog before you call me about a loan.
• Yes, there are NY JETS FANS IN DENVER. I’m a die hard NY Jets fan but I don’t know what bar the NY Jets fans congregate. A few years ago it was the Sports Column but when I showed up in my Vinny Testaverde Jersey, there were more Pats fans in the house. Old Chicago on 14th and Market is always a good bet, they show all the games.
• ALTUS HOME LOANS is not the most reputable mortgage company in Colorado. Their DECEIVING ADS are what they are that’s why they’re in trouble. What’s more concerning is that we want politicians to clean up the mortgage mess. What’s the difference between politicians and a mortgage company? They too make just about any promise necessary to get the deal (elected), then fall short of expectations time and time again.
• You really need TITLE INSURANCE in Colorado it’s necessary and not a JUNK FEE.
• WHAT IS WRONG WITH THE DENVER BRONCOS? I don’t have that line anywhere on any of my posts but here’s my answer is “Jake the Snake is not John Elway and neither is Jay Cutler!”

I’ve queried several friends, colleagues, and people in my sphere if they’ve ever filed a title insurance claim. No one ever did. Yet everyone pays for title insurance when they buy or refinance a home. Not satisfied with the result of my informal query, I asked a probate attorney I knew and he said that title insurance is not evil and indeed very necessary.

According to wikipedia:

Title insurance is insurance against loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. It is available in many countries but it is principally a product developed and sold in the United States. It is meant to protect an owner’s or lender’s financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.

Here are those title defects:

• Forged deeds, releases, or wills
• False impersonation of the true owner of the property
• Undisclosed or missing heirs
• Instruments executed under invalid or expired powers of attorney
• Misinterpretations of wills, or discovery of a later will after probate of first will
• Deeds by minors, by persons of unsound mind, or by persons supposedly single but in fact married
• Liens for unpaid estate, inheritance, income, or gift taxes
• Mistakes in recording of legal documents, or deeds recorded but improperly indexed and therefore not found through a title search
• Disputed release of prior mortgage or lien, as given under mistake or misunderstanding or ineffective release of prior mortgage, as
  fraudulently obtained by predecessor in title
• Undisclosed divorce of one who conveys as a sole heir of a deceased former spouse
• Deed to or from a “corporation” before incorporation or after loss of corporate charter
• Claims resulting from the use of “alias” or fictitious names by a predecessor in title

For more on why you need title insurance, check out this bulletin by Land Title.