Susan Templeton

You know one of the most powerful aspects of Active Rain is how elegantly this medium brings together so many different perspectives from all walks and levels of our industry. From newbies to old hands who both have much to share about our business and business in general!

MYTH-OLOGY: On a recent post of mine, a commenter quoted an inaccurate fact that was slanted with opinion, based on that fact. While I was blissfully working with clients that day, the commenter was corrected and later graciously retracted and edited their comment. When I returned to my post later, I was discovered what had transpired from another member who communicated this to me. Cool! Folks here are amazingly generous and fair in sharing ideas and information among co-pros; it's a great place to research, test ideas and yes, check our facts. And the best part: we are among friends who respect each other and bother to let you know what's what!

MYTH-INFORMATION: Which brings me to a conversation I had with a Realtor about a program I am feeling pretty enthusiastic about: USDA Rural Home Loans just happen to target large tracts of our tri-county area where the average income is considered inadequate to meet average housing costs. These are true 102% loans, funded by the USDA with some amazing features. While lenders charge a funding fee on top of the loan, there is absolutely no monthly mortgage insurance. And the best part: sellers can contribute any amount within reason to assist the borrower as long as the home is sound and they can afford it using standard full documentation guidelines. Credit risk and underwriting are 'make sense' make it happen. There are eligibility zones and 'average income' limits to effectively subsidize rural home ownership, but it's certainly not handout material! So...why would every Realtor and lender on the planet NOT support this a 102% program?

MYTH-QUOTE: Well, it seems some folks in Whatcom/Skagit/Island Counties (where this program is a godsend) have a wrong headed notion that I had not heard before: an esteemed competitor has been perpetuating the notion that USDA Loans have an 'equity sharing' function which means when a person sells the home they lose a percentage of their equity. Upon hearing this, I suspected the lender was either uninformed or not accredited to fund these loans. Just to be sure, I immediately contacted my 15 year veteran AE of the Rural Division of the SAME BANK as the person who quoted this factoid... and his one word reply was: myth.

MYTH-TRUST: OK, so why spread myth? You notice I didn't use the 'lie' word. I suspect, like the commenter on my earlier post, it would be literally impossible for everyone here to be in possession of the facts about every program. For starters, they keep changing!!! That's why you need folks whose business it is to know such things. So do I. Sure, things have changed a lot in the last five years (make that five months) and sure there are a lot of old hanging-on notions about very good loans because we forget and...well...who would TRUST a BROKER these days? Well, who else is motivated to tell you the truth? We don't get brownie points for leading folks on or wasting your time. I only get paid when I succeed and I only succeed by using my noggin for something besides holding my pillow down.

MYTH-BUSTERS: In conclusion, my I suggest we use Active Rain and check our facts before being tempted to spreading myth-information among our less knowledgeable buyers and investors. Many other very good programs are MYTH-UNDERSTOOD. I know the half truths are out there. They hit me at every turn: one Realtor swore the VA would NEVER approve a home because it was old. WRONG! Not only did the VA appraiser approve the home but the value came in much higher than the sale price and he assisted in helping verify a repair was made prior to closing so it would fund on time. Another told their client that ALL Reverse Mortgages are a rip off and she was too young to get one. WRONG. Sigh.

We could all use more accurate, up to date and and useful information to become better professionals!

Any popular myths you'd like dispelled here? Bring 'em on! Blessings!

susan templeton mortgage planner www.loannetter.com

If the leaking of CEO memos and overheard Starbucks conversations are now constituting grounds for 'market confidence' heaven help us! Wall Street followers are awash with disbelief about the sudden convenient rallies. The surge in Financials on Tuesday was inexplicable. Oddly, Bonds have been moving sideways and later today we got mortgage rate improvements suggesting something is afoot among insiders. Now I understand that insider trading is illegal. But is Big Bank manipulation of our money supply similarly illegal? The powerful influencers in our market are trying to figure out who is in charge and where the money is. Our confidence and our fear move our market and we have the power to change it. Not our government. US.

I stumbled onto these very informative YouTube videos (links below) which neatly explain how we got here. It's our party folks and most of us played into the greed on some level, however unknowingly. These animated charts are easy to understand, if painfully obvious.

Crisis of Credit-Part 1 http://www.youtube.com/watch?v=Q0zEXdDO5JU

Crisis of Credit-Part 2 http://www.youtube.com/watch?v=iYhDkZjKBEw&feature=related

These two YouTube videos well illustrate how Fed Chairman Alan Greenspan's lowering of the Treasury rate to 1% (to strengthen our economy post the dot.com bust and 911) caused a run on cheap money by the banks, eager to lend for a higher profit margin. Investors who wanted more than the 1% Treasury Rate of return created complex Credit Derivatives. The resulting demand for these high profit instruments led to the creation of easier mortgages, generating higher risk, and voila: our housing bubble was born, which in turn has frozen our financial system. We did this to ourselves, folks.

LET'S STOP THE BLAME GAME: While I don't care how the illustration lumps mortgage brokers as the only purveyors of these loans (Countrywide and Washington Mutual invented the most egregious of these loans and sold in their own retail operations) the facts are clear that the instruments were created to meet demand for high profits based on a shell game. The end game is stopping the madness and greed. Unfortunately the pain of unwinding these complex games are impacting many small time investors in hedge funds, bank stocks and retirement accounts. We have yet to see the full effects once all these ticking time bombs go off.

What can we do? As entrepreneurs, we are the backbone, the creative first responders who can quickly adapt to meet the needs created by the consequences created on Wall Street. We were trained to supply the demand that created the need that sold the land that funded the loans that built the houses that Jack unbuilt! Meeting real needs more creatively is our greater goal. We can choose a longer term commitment to ourselves, our businesses and our region. What are you doing about growing your business to meet new 'needs gaps' and earn an honest living?

DREAM MORE? I dreamed last night I was outside on a cold night and others were preparing a bed of deep mud to sleep in --which seemed odd to me but they were perfectly fine as they settled into the wet earth to sleep. It was a full moon. I think the dream was about reconnecting with the earth at this important time. I'll be thinking about that image as I ponder what next.

Creative solutions come in many forms. Blessings!

susan templeton mortgage planner www.loannetter.com

OK, I'll admit it: I've been watching the behavior of myself and others around full moons all my life. I'm pretty sure I was born on a full moon. I am convinced that people go a little lunatic around those times. The week or so leading up to the full moon feels literally like a rising tide of emotion...people get a bit jumpy, things seem more dramatic. I drink more coffee, sleep less, talk faster. I've even been known to go shopping at midnight on a full moon.

Am I imagining this? Well the moon is a pretty big thing in comparison to our mere bodies, most of which is water. The moon DOES without a doubt affect the tidal movement of the oceans, i.e., all that water... literally moving the oceans to one side of the earth in attraction to the moon's gravitational pull. Could it be the extra light at night around full moons making us howl due to lack of sleep?

More importantly: Am I worried about a closing coming up on the full moon? Heck no--I'll use what I know about the human psyche to encourage my underwriter, subtly through the power of lunar suggestion to get excited and PUSH that approve button, GET those docs out, SCATTER those insurance binders and last -minute verifications. Like a WAVE crashing to the shore we'll SIGN those papers! After which we can all fall in a heap as the tide ebbs, the loan records, funds change hands and a few days later we are all wondering what all the high emotion was about.

Time to Conceive: Full moons are great for working on new ideas, hatching plots, getting a little crazy energy going! It's a fact that more babies are conceived and therefore born on full moons. Turtles do it, birds do it, even fishes in the sea do it! I recall when a friend was in psychiatric nursing training that they put extra strong men on during those rotations around the full moon. My personal astrologer/economist Madeline Gerwick, predicts the 10th of March will be a 'HUMDINGER of a full moon' with Saturn conjunct Uranus setting up a simlilar to pattern to September when AIG, Merril Lynch and WaMu all tanked. She is predicting a financial market challenge and Citigroup could de-list going under $1 buck so if you are betting around that day just remember you read it here! You can subscribe to her e-news at www.polarisguides.com

For another perspective, check out: www.farmersalmanac.com As I write this the moon is Waxing Gibbous
92% of Full on Sun 8 Mar, 2009 EST. OK-you suspected that I was crazy...this just confirms you have to be to stay in this business! I love all the folklore about the different moons and seasons and how farmer's decide when to plant and when to harvest. Much of this knowledge is still in use today. If you have ever watched the seasons and migration of birds and buds of spring defying the weather you know what I mean...we live on the most wonderful mysterious planet in the universe!

Happy Spring (a neap tide coming very soon near you)!

susan templeton mortgage planner www.loannetter.com

WOW...were locking between 4.75% - 5.0% this week for our best 80% LTV, 30 year fixed terms for perfect and I mean perfect applicants. So many caveats exist on your final loan offer that it is literally impossible to quote a 'rate' until we have reviewed your equity position, the kind of property you are financing, your credit, liabilities and income. Still --every person who calls or stops me on the street asks: "What is today's rate?" and "Will they go lower?"

If only it were that simple. Watching rates has become like watching a volleyball match or the stock market for that matter. If you are the gambling sort you could wait.

May I ask what are you waiting for?5.25% is an incredibly good deal for 80% LTV. FHA 5.5% is AMAZING for 96.5% LTV or 5.75% for 100% VA purchase. You would be CRAZY to pass those prices up now if you qualify. Actually, lots of smart folks have gotten the word and we are busy as bees right now.

But what about the BAILOUT? Apparently $10 TRILLION is gone already! While bazillions of Stimulus Bailout dollars are going to some very big banks--the main purpose is to shore up their balance sheets. This is NOT the money coming to Joe Six-pack. Once those particular banks are in better shape that will instill confidence in lending again. The banks being bailed may have been unduly risking depositor's (your) money! If your bank was lending too much on loans not being paid back they may be out of compliance with FDIC rulings on how MANY times they can lend depositor's money. Yikes.

Check out your bank on this rating site: http://www.bankrate.com/brm/safesound/ss_home.asp

Side bar: Banks are being served with FDIC 'cease and desist' orders these days. Such a bank will most likely turn down your application rather than admit they are not in the mood so to speak. Or they might offer you a 'go away' rate that is suspiciously higher than the one across the street.

What is 'A-Paper ' these days? A-Paper loans are basically best terms offered to the best borrower who basically gets to call the shots. Or did. Leaning to live with risk-based pricing adjustments will be THE challenge this year. If your middle FICO score is below 680 you will pay more for your loan. Period. If your FICO is over 740 you will get the best rates and higher loan allowances. These new Fannie Mae/Freddie Mac pricing hits apply to all conventional loans. We have been getting updates about once a month on higher scores and lower LTV's required by most of our lenders. Different lenders have different niche markets and products/prices to offer. So it's a good thing I have seventy banks to call upon.

Similarly, FHA and VA and even USRDA are becoming 'score sensitive' and setting their baselines higher requiring traditional credit reports. To avoid surprises, it's more important than ever to get your credit in tip top shape! A strong FICO score could save you tens of thousands of dollars via lower interest rates. Read more about credit issues on my blog http://www.netcredit.blogspot.com

What's the HOLDUP? Rate swings generate a lot of sudden, sporadic business. While we can and do fund refinances in 21 days for folks living well within their means, less than 30 days to close is rare these days. It seems we have a lack of patience with the whole lending thing. Why is that? Maybe a few years of living on plastic has taught us to think that money is something you push a button for?

Things have gotten a tad complicated with all the new laws and redisclosures on our redisclosures! We are all working hard to build your case and place your loan with the right lender at the precise moment to get you the best terms in a changing market. Imagine your work load doubled and your pay didn't? Oh yea, it did. So you can sympathize! Our underwriting teams appreciate sales dates pending...so let's cut everyone a little slack. What we don't need is more angst. Most of the Realtors in our world get it and their patience and encouragement really pays off for everyone!

FYI: The BEST banks are just fine and lending. They just happen to be very busy doing just that. We make it our business to know which ones are lending to whom and for what (and how quickly--the ever moving target).

Time to BUY! Once the fine weather sets in things start hopping so beat the rush and get on the bus!

Gardeners or wannabees: If you are in the area, drop in for a free packet of Heritage Pink Poppy seeds gathered by yours truly. (open 10am - 6pm most days--might want to call first). Plant now to early May for best effect. All they ask is a sunny well drained spot...even sandy, rocky soil will do. Who can look a poppy in the face and not smile?

Happy Spring!

susan templeton mortgage planner www.loannetter.com

Here's a sad expose about a Loan Officer recently convicted for mortgage fraud in Seattle. The only problem is that this article, while well illustrated on the front page of the Seattle Times, is that it leaves some doubt as to just who this crook represented (besides himself). He is apparently not blonde. We can assume seven years in the slammer will be no fun whatsoever.

Re: http://seattletimes.nwsource.com/html/localnews/2008793819_webbrooks27m.html

The article about Chris Brooks, a former loan officer at America Mortgage of Bellevue, paints the suggestion that he was working as mortgage broker. What really bugs me is their use of the term 'loan originator' on their graphic expose as the bad dudes who originate fraudulent loans in this case.

The graphic illustration occupied half the front page on February 27th. Graphic link: http://seattletimes.nwsource.com/ABPub/2009/02/27/2008792274.pdf

The reporter handily did not bother to mention that America Mortgage who employed Mr. Brooks is a mortgage lender, i.e., a national mortgage bank with their own investor relationships for whom they underwrite and package loans, and not a mortgage broker. It appears that his company, America Mortgage, actually underwrote and funded these fraudulent loans and sold them to other banks while Mr. Brooks, a convicted felon, was operating as an unlicensed bank loan officer at America Mortgage.

Surely his employer might be drawn into the discussion in a fuller examination of his complex scheme? Had his company been exercising standard underwriting practices requiring document authentication on so many transactions, staff would have been alerted to the hidden schemes outlined. The author does not mention if his employers at America Mortgage were named co-conspirators and also tried. How could they not be aware on some level? There were far too many people involved in his deceptive practices described in excruciating detail.

Please understand that the very programs named in this article, namely those featuring 'no income verification' were inventions of banks, not brokers. Brokers do not invent loan products. Only banks who are investing their money can cook up these loan products. They do so to fill their coffers with more loans to sell to the CDS market. Perhaps you've heard of the result there?

In the Seattle Times article, the story is illustrated by a colorful graphic outlines the 8 steps for "How a Loan Becomes a Scam: I note item 4 on this chart identifying the 'loan originator/mortgage broker': "Using the appraiser's report, a complicit loan originator submits a fradulent application on behalf of the straw borrower..." (you know the rest of the story, apologies to Paul Harvey, may he rest in peace).

It appears lots of folks do not realize the difference in an unlicensed 'loan officer' working for a lender or bank and a licensed 'loan originator' working under a broker's license. This story calls Mr. Brooks a loan officer in one sentence and refers obliquely to loan originators as the culprits of these scams. This is misleading; I contend that many people reading this article assumed Mr. Brooks was working for a mortgage brokerage, as did two loan originators to whom I showed the article.

The mere connection of the words 'mortgage' and 'fraud' conjure up powerful emotions blaming greedy sleazy brokers working under cover to defraud the innocent. This kind of half-reporting is a disservice to honest mortgage brokers and loan originators who must 1. only hire legally licensed staff who have passed national background and criminal checks. and 2. adhere to much stricter lending and disclosure standards that unlicensed loan officers in banks.

Why are banks allowed to have unlicensed staff (and not disclose as fully as brokers do) you ask? Because it's 'their money' for the millisecond the paper is on their books, before it is sold to another bank or Government Owned Enterprise such as Fannie Mae.

I have respectfully requested a fuller reportage of the facts with an apology for the writer's unfair slant against mortgage brokers. Really we are done to death with the tar and feathers. Please go after the real criminals.

Many Blessings!

susan templeton mortgage planner www.loannetter.com