Lewis Poretz - - Maryland Mortgage Expert - FHA

Ok everyone - here is the first question in what will be a weekly series on -

what would you do? ----

You have excellent credit - 785 scores...

you have been on your job 15 years and make a solid income....

you have money in savings and a very nice 401K built up.....

you purchased your home at the very height of the market------- you owe 400K and you home is now worth 275K...

you have made assumptions and believe it will be 8 - 10 years before you break even on the value of your home......

what do you do?

1) - continue to pay the mortgage?

2) - request a short sale?

3) - tell the bank the keys are in the door and like they say in old Mexico city AMF

I am not looking for the ethical answer nor am i looking for a expose on what is right or wrong...... just a simple decision on what would be best for you and your family....

so What would you do?

All those billions of dollars earmarked to modify American consumer mortgages have not been policed. Loan modification departments at the major lenders are jokes! I have personally been involved with attempting to help modify clients as well as my own loan. I do not do this for a fee. If you want to understand just how much the US Government is in touch with the billions they targeted for these programs, simply call your mortgage company and ask if you qualify...... Overworked, Unqualified and no authority are the qualities of the people you will talk with. Most clients get turned down over a phone interview..... How can these banks turn someone down without documentation? How can these institutions not be held liable for helping consumers..... The US Government is nothing but ENABLERS who turn their back on policing the very guidelines they create.....

here is a scary thought -

what if every American homeowner who is upside down STOPS paying their mortgage?

Thinks the banks would start modifying their homes now?? This could become a reality in the upcoming months if foreclosures continue to drive down property values.....

It seems as if every week there are new guidelines, requirements, licensing etc. to remain operating as a mortgage broker these days. It appears as if the big banks want to be the only option to turn to when you look for a mortgage.

Every day I recieve a call from long standing veterans in the industry asking my opinion of the state of affairs in the mortgage broker world.

People - It ain't pretty.....

There are several options consumers can turn to when looking for a mortgage.

Mortgage Brokers - known to produce 65% of all loans originated.

Mortgage Bankers - a mortgage broker that utilizes a warehouse line and then typically sells the loan off to an investor.

Banks - we all know about them. I reccomend to support your local banks and leave the big boys alone. - Before dealing with a bank, be ceratin the will be around long enough to fund your loan. More bank failures are imminent!

Credit Unions - very strict underwriting guidelines but possibly the best terms in home financing if you qualify.

Private Investors - typically equity lenders that will make certain the reward far outweighs the risk.

OK - Mortage Brokers and Mortgage Bankers are being slammed with new guidelines such as increased net worth, more liability to repurchase bad loans and generally more sructiny with their closed loan packages. Broker cannot make loan decisions. Mortgage Bankers can make lending decisions but are very scared to do this currently because investors do not have to buy a closed loan and it could remain stuck on the mortgage bankers warehouse line - which creates a whole new set of issues.

Banks march to their own set of rules. Yes, some of the rules are more stringent, yet some of them definitely tip the scale in favor of banks surviving this mortgage meltdown and outlasting the survival of mortgage brokers and mortgage bankers.

In this risk/reward world we live in, expect to see more mortgage brokers and mortgage bankers close their doors. In a recent report I have read, 75% of mortgage brokers/bankers that were in business in 2005, just a few short years ago, are now defunct. Consumers are witnessing a new breed of loan originators and should expect more to come, possibly at an even rapid pace.

The intention of our government is to regulate the loan process but in my opinion, when you destroy an industry and eliminate 75% of the competition, You know what happens when competition disappears? You got it... inflated rates..... I will keep everyone posted on the state of the industry but for now... rates are at the lowest point ever and it is a great time to refinance or purchase a home.

Imagine - A new business model where consumers actually put their trust in the company handling their mortgages, banking, insurance etc.....

It's coming people.... and you are the one's who have been forcing the issue...

yep - a financial institution with a heartbeat and a real honest feeling for the American consumer... an institution that has the consumer in mind first and foremost as opposed to the bottom line....

A place where you will be able to turn to for lending, banking and investments but in addition, a financial institution that listens and offers high quality advice regarding non traditional services such as helping consumers get out the financial mess they are in rather than attempting to discipline consumers for poor decisions.......

Hang tight - I feel a new model being written... the winds of change are shifting...... and everyone of you should be congratulated because the American consumer's distaste for the way things have been done for a long, long time is coming to an end.....

As a mortgage professional I always ask other business owners, " how's business"? Just the other day my AC repair man was in the office attempting to get me some more cool air pumped into my suite as the heat was becoming unbearable. As he wrapped up his visit I asked my typical, how's business"? Man, I did not expect such a long conversation to follow.

He went on to tell me how life had been so good the past five years or so. He remained small all these years offering personal service to builders, socked plenty of money away and pucrhased several rental properties that had great cash flow and plenty of equity........

Fast foward five years......................... These properties now sit vacant. Most of them have lost so much value they are now upside down. Of course the loans he got on these properties were the flavor of the day at the time, 5 year interest only arms that are due to reset in 2010. And also of course, based on his great credit and some money in the bank at the time, they were stated income loans. And worse yet, those awesome builders who helped stack his money to purchase those properties who had always paid when the job was finished are now paying 30, 60 and even 90 days net..... and by the way.... stated income loans ain't no more................

If this situation sounds familiar, stay ahead of the curve before it is too late, understand your options and seek high quality advice from people who understand this business. Put a solid plan together to eliminate debt and monthly payments and stick to it.