No Country for Mortgage Brokers

Over the weekend I finally caught the movie, No Country for Old Men. It’s critically acclaimed and several friends recommended that I go see it. At times the movie was boring and slow. At times it was quick witted and interesting. However, most of the time nothing about the movie made sense.

In the current mortgage landscape nothing makes sense.

I still get several refinance requests from the internet where people are shopping and getting quoted rates that haven’t existed in years. Moreover, to get a loan closed today is much more difficult than ever before. So for anyone to do a loan at the lowest possible rates doesn’t make any business sense.

Some requests are for home purchases by real estate investors. Every day lenders are limiting their risk by limiting what a mortgage broker can and cannot submit. Every day programs are disappearing. There are very few high risk loans available. It’s only a matter of time before buying a home with no money down will become extinct.

Most of the inquiries I get are questions. Simple questions such as “Is now a good time to refinance?” or “Will not paying my bills hurt my credit?” The people who ask these don’t give me any information about themselves just a name and an email. That’s like asking your optometrist (eye doc) “Do I have ocular degeneration?” without having him/her/it look at your eyes.

Just like the movie, No Country for Old Men, there is no end in sight to all the madness.

Video: The Subprime Meltdown of 2007

Reuters video on the Subprime meltdown via youtube:

Why don’t we save?

I caught the New Hampshire debate on Saturday night in between watching the Pittsburgh and Jacksonville game. (Note to the NFL, enough already with the Jeep Liberty commercial with the singing animals.) Where was I? Oh yeah, the debate. While watching the debate I heard the politicians speak about the American Dream becoming harder and harder. They said that health care costs are rising. They said that gas prices are out of control. They said that it’s harder to feed a family today than ever before.

Not once did any of them mention that saving money is no longer a priority in America especially at the government level.

Why don’t we save? Saving is simply a habit. Just like watching television, eating healthy and exercise. Most people just don’t think about saving. Today while checking out my rss feeder, I came across 7 ways to save :

  • Look for discounted dinner entrees
      Don’t throw out the Valpak or Money Mailer they’re chock full of coupons for local restaurants. Skip the appetizers and the desserts while you’re at it skip the booze, the alcohol is always over priced and you shouldn’t drink and drive anyway.
  • Return unopened, unused items
      Lowes and Home Depot don’t even require a receipt if you bought it in the last 90 days or something like that and they automatically credit your credit card.
  • Look for extra grocery savings
      Cutting coupon sucks, ok it sucks big time, but if the coupon says $2 off 5 Lean Cuisine Panini sandwiches and you were planning on buying 5 Panini Sandwiches, go ahead and pick up a 6th, your wallet won’t know the difference.
  • Check out materials from the library
      If you live in Denver, our library system has the most unreal DVD collection in the world. Sure you wait a few more weeks for new releases and the mailman doesn’t drop it off or picks it up at your house but it gets you out of your house and you might run into an old friend who looks really good in wingtips but really bad in birkenstocks.
  • Bundle cable, phone and Internet services
      Get rid off cable and your phone altogether. Television is just more noise in an already noisy world. Sure you’ll miss watching Family Guy at 1 AM on Cartoon Network but you won’t miss spending $50 each month. To entertain yourself learn how to juggle or get DVD’s at the library. As for your telephone, it will only serve one purpose in 2008 – for politicians start calling you to ask for your support.
  • Negotiate with monthly service providers
      Sure the cleaning people clean great the first time. Sure the landscapers mow your lawn great the first time. Wait till they “forget” to show up or when they’re on the 3rd go around, you’ll be less than thrilled with their service and you’ll end up doing it yourself.
  • Stash money for easier savings next year
      Money will double in 7 years. I deposited $250 in a mutual fund in 2000 and it turned into $500 by 2007. The money even withstood the dot com and stock market drop off in the early 2000’s. I couldn’t buy a laptop for $250 in 2000 but I can definitely buy one for $500 today.

No more excuses.

Mad World

2008 is predicted to be one of the worst years for the American Economy.

It’s also an election year and the year of the Summer Olympics.

Mad World indeed.

The good news: not all predictions (iMac) come to pass .

Just don’t get rid of the lunch boxes

First thought upon reading this article: Annie’s Cafe may join hotel

Developer Charlie Biederman plans to incorporate the beloved Annie’s Cafe restaurant into a hotel he intends to build at Colorado Boulevard and East Eighth Avenue.

Just don’t get rid of the lunch boxes!

If you’ve never been to Annie’s Cafe give it a go. They have the BEST breakfast in Denver when it comes to price, ambiance, and service.

Buying a Denver Home online

If you know what Redfin is all about, this article, Buying or selling a home? Forget the traditional realtor may intrigue you:

The Internet is increasingly taking on the duties once performed by real estate agents. And while no one – yet – is suggesting that it’s a good idea to buy a house over the Internet sight unseen, a new business model is emerging that takes advantage of the convenience of Internet shopping.

80% of all home searches start on the internet. So it’s no surprise that companies are using the internet to transform the way they buy and sell real estate.

More on online home buying:

Buyers and sellers can save thousands on sales commissions and through rebates using online real estate agencies, such as Real-a-Save:

FOR A BUYER

  • Home sales price: $300,000
  • Traditional 2.8% buyer’s agent commission: $8,400
  • 66% Rebate Real-a-Save clients would receive: $5,400

FOR A SELLER

  • Home sales price: $300,000
  • Typical 3.2% sales commission: $9,600
  • Real-a-Save’s standard sales commission: $2,500
  • Savings: $7,100.

It’s really too soon to tell whether or not online real estate brokerages will be around or just another passing fad. If you talk to most people they love the idea but would prefer to stick to using a real estate agent no matter how much they despise agents. Why do people despise agents? Same reason people despise the government – a lot of upfront promises, not much after that. The internet won’t solve that problem.

Gates Project or: How I Learned to Stop Worrying and Love Urban Redevelopments

I have never been a big fan of the new Denver urban redevelopments: Lowry and Stapleton. When I first moved to Denver, Lowry was an aging military base and Stapleton was an airport. Things changed when friends of mine moved into these urban redevelopments. They’re vibrant neighborhoods. They’re near the airport, city, zoo, museums, restaurants, and more importantly for my friends they’re family friendly.

Enter the Gates Project:

From fan belts to greenbelts – at long last the urban revival of the former Gates Rubber plant is taking shape.
Read the full story: Long-awaited Gates project gathers steam

It’s going to be a while before the Gates Project will be complete. I’ve learned to embrace these urban redevelopments and I’m looking forward to having another Linens and Things, Office Depot, Chili’s, et. al. fill our landscape. Who knows they may even add a Chipotle or a Qdoba or both.

These rates are freezing

Five-Year Mortgage Rate Freeze Looms
Wednesday December 5, 8:42 pm ET
By Martin Crutsinger and Alan Zibel, Associated Press Writers

Bush Mortgage Plan Will Freeze Certain Subprime Interest Rates for 5 Years WASHINGTON (AP) — The Bush administration has hammered out an agreement to freeze interest rates for certain subprime mortgages for five years to combat a soaring tide of foreclosures, congressional aides said Wednesday.

The aides, who spoke on condition of anonymity because the details have not yet been released, said the five-year moratorium represented a compromise between desires by banking regulators for a longer time frame of up to seven years and mortgage industry arguments that the freeze should last only one or two years.

Another person familiar with the matter said the rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.

The administration said President Bush will speak on the agreement at the White House on Thursday and the Treasury Department announced that Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson would hold a joint news conference Thursday afternoon with mortgage industry officials.

Treasury also announced there would be a technical briefing to explain more of the proposal’s details.

Paulson, who has been leading the effort to craft a plan, said on Monday that the program would only be available for owner-occupied homes — to ensure the break is not given to real estate speculators.

The plan emerged from talks between Paulson and other banking regulators and banks, mortgage investors and consumer groups trying to address an avalanche of foreclosures feared as an estimated 2 million subprime mortgages reset from lower introductory rates to higher rates.

In many cases, the higher rates will boost monthly payments by as much as 30 percent, making it very difficult for many people to keep current with their loans.

The plan is aimed at homeowners who are making payments on time at lower introductory mortgage rates but cannot afford a higher adjusted rate.

Through October, there were about 1.8 million foreclosure filings nationwide, compared with about 1.3 million in all of 2006, according to Irvine, Calif.-based RealtyTrac Inc. With home loan defaults still rising, the trend is expected to worsen next year.

The plan represents an about-face for Paulson, who until recently had insisted the mortgage crisis could be handled on a case-by-case basis. However, he and other administration officials became convinced the tide of foreclosures threatened by the mortgage resets represented such a severe threat that a more sweeping approach was needed. They opted for a proposal that was along the lines of a plan put forward in October by Sheila Bair, head of the Federal Deposit Insurance Corp.

Paulson and other federal regulators began holding talks with some of the country’s biggest mortgage lenders, mortgage service companies, investors who hold mortgage-backed securities and nonprofit groups that provide counseling for at-risk homeowners.

Under the typical subprime loan — those offered to borrowers with spotty credit histories — the rates for the first two years were at levels around 7 percent to 8 percent. But after two years, those rates were scheduled to reset to levels around 9 percent to 11 percent.

For a typical $1,200 monthly mortgage payment, the reset could add another $350 to the monthly payment, greatly raising the risks of loan defaults by homeowners struggling with the current payment.

The wave of mortgage foreclosures threatened to make the most severe slump in housing even worse by dumping more foreclosed properties onto an already glutted market, further depressing home prices and shaking consumer confidence.

The deepening housing slump has already roiled financial markets, starting in August, as investors grew increasingly concerned about billions of dollars of losses being suffered by banks, hedge funds and other investors.

The administration plan is designed to deal with the crisis by letting subprime borrowers who are living in their homes and are current on their payments to avoid a costly reset for five years. The hope is that by that time the housing downturn will have stabilized, clearing out the glut of unsold homes and halting the steep slide in prices that is hitting many parts of the country.

With sales and prices once again rising, the expectation is that homeowners will be able to renegotiate their current adjustable rate mortgages into a more affordable fixed-rate plan.

The housing crisis has become an issue in the presidential race with Democrats Hillary Rodham Clinton and John Edwards putting forward their own proposals this week that would go further than the administration.

Clinton said her own proposal that would impose a 90-day moratorium on foreclosures and freeze the rates for five years or until they had been converted to fixed-rate loans was a better approach that would help more people.

“Although the administration is finally giving the foreclosure crisis the attention it deserves, it seems that President Bush is going to give struggling homeowners far less than they need,” she said in a statement.

Mark Zandi, chief economist for Moody’s Economy.com, called the administration plan a good first step, but said the government eventually will have to go further given the problem’s size and the threat to the economy.

“This is the most serious housing downturn we have seen in the post World War II period,” Zandi said. “It is a threat to the broader economy. The risks of a recession are very high.”

Associated Press reporters Deb Reichmann and Nedra Pickler contributed to this report.

Rates are really low again

I’ve had severa mortgagel inquiries lately so it probably had something to do with this

National mortgage rates fell sharply last week, with rates on 30-year mortgages dropping to the lowest level in more than two years.

As of today 30 year rates are pretty low:

  • One point will get you 5.5%
  • Want no points, you’ll get 5.75%
  • Want zero points, you’ll get 6.5%

Of course to qualify for these mortgage rates you’ll need superb credit, decent income, an 80% loan balance to property value ratio, and decent assets.

Links: Million Dollar Deals

Million Dollar Deals in Colorado:

Steve Forbes got rid off his:

Trinchera Ranch in the San Luis Valley has changed hands – from a man worth almost $500 million to billionaire hedge fund manager Louis Moore Bacon. Read the full story: Forbes sells Colo. ranch

Bandar bin Sultan decided to keep his:

A Saudi prince who put a $135 million price tag on his Aspen-area estate has taken the property off the market because he got no suitable offers, his attorney and agent said. Read the full story: Saudi prince’s Aspen estate off the market