Susan Templeton

I was blown away on Thursday by a sudden and unexpected spotlight! You may have caught my blog about Bill Cara' top financial blog: www.caracommunity.com. Cara published my letter on the state of mortgage brokering, spurring an open debate among his many followers in over 30 countries, to, in his words, 'help get the message out' that hard working independent mortgage brokers, financial advisors, stock brokers, and other independent professionals in America are getting a bum deal. He had asked for my thoughts and naturally he got a little more from me!

A tireless and committed professional himself, Bill is an extremely generous and wise man. He somehow manages to author his daily market commentary in addition to managing his trading company in the Bahamas (between dips in the ocean). His blog is followed closely by the financial editors of Forbes, The Wall Street Journal and the New York Times, including traders from beginner to professional around the world. His influence is felt in many influential circles.

If you have any interest in the market at all, I highly recommend checking out his site, literally a springboard into other resources shared by his community chat members. I have been following Mr. Cara for about a year to get a feel for the market trends as they relate to our business. Cara also wrote a very astute guide book on investing in equity markets titled: Lessons from the Trader Wizard available on Amazon.com (a stock he tracks in his Cara 100) http://www.amazon.com/Lessons-Trader-Wizard-Bill-Cara/dp/1897403003 . Cara does not offer trading advice or pontificate as some personalities on the financial entertainment television. He instead offers wisdom from his own experience in bucketloads on how the market works. He refers to big banks and brokerage firms as HMB&B, "Humongous Banks and Brokers" and and he does not pull punches when commenting about the many players on the global financial stage, including political figures.

If you missed my previous posting, here's the link to the letter that Mr. Cara published on his site: http://caracommunity.com/content/president-speaks-well-he-listening He welcomes the voices of others who like him, are passionate about our building social equity for the common good.

May you be blessed today as I have been! Loannetter

susan templeton mortgage planner www.loannetter.com

OBAMA Rescue Plan Thread: I recently shared my observations on the state of mortgage brokering with Bill Cara, a top commentator on the global banking and financial system. Bill published my thoughts and a discussion thread ensued to raise awareness in this circle of influlence: http://caracommunity.com/content/president-speaks-well-he-listening

Members of this community may find this blog relevant to your own investment perspective. I have been following Cara, a noted Canadian trader who is now based in the Bahamas for about a year. He wrote a very astute guide book on investing in equity markets titled: Lessons from the Trader Wizard availableon Amazon: http://www.amazon.com/Lessons-Trader-Wizard-Bill-Cara/dp/1897403003

Enjoy his generous perspective! Thanks for your support of honest mortgage professionals everywhere.

susan templeton mortgage planner www.loannetter.com

WHICH BOATS? Good news hit the airwaves today about the Stimulus Bill in regards to Distressed Homeowners. SO--What exactly does the term 'assistance for homeowners' mean? I can tell you that is one very long piece of string. The promise of homeowner assistance boils down to helping folks who may have lost their jobs, experienced a business closure, suffered a bankruptcy, experienced serious medical issues, seen their home values tank and cannot sell their homes (without a huge loss) or have otherwise become unable to help themselves climb out of their particular pit since they originally took out their mortgage. Many many of these good people have perfect credit history and have never missed a payment in their lives. They are not, NOT I can tell you looking for a free ride. Life has tossed them the proverbial curve ball.

The promise of homeowner assistance via 'loan modification' is another very long piece of string! Banks themselves don't have clear-cut rules (yet) on who even qualifies for help. The loan modification process is frustrating and time consuming for homeowners who are attempting to negotiate with their lenders themselves. Unfortunately, there are plenty of sharks in the Loan Modification waters if late night TV and the increase in my SPAM level is any indication.

Fortunately, the state of Washington and our State Attorney General has been hard at work on guidelines and budget tools to assess homeowners in trouble. The SAG is proactively participating in the loan modification process due, in part, to their own outrage and successful lawsuit against banks including Countrywide and Washington Mutual for their rampant misuse of the lending laws to help more people find their way into homes they patently could not afford.

THREE GOALS: Today's Plan Unveiled for $75 Billion Housing Rescue

1. Simple Refinancing of Distressed Homeowners--Due to declines in values you may be 'upside down' if your loan is higher than your home value which means you cannot refinance traditionally. This part of the Stimulus Act aims to lower the foreclosure rate and save 4-5 million homeowners by lowering their payments to what they can actually afford. Income and debt will be strictly analyzed to meet traditional banking guidelines based on actual income and actual indebtedness.

This does not mean that people who got into debt irresponsibly will be saved from their bad habits. Each case will be reviewed on it's own merits by the lender that holds the mortgage.

This also does not mean that folks who can afford to refinance will get a dime. Hopefully we will all see that 'helping the least of us' succeed will help our communities to thrive and recover more quickly.

2. Helping Homeowners With Exotic mortgages: While many folks with Sub Prime mortgages have already refinanced or gone under, this part of the plan will somehow pay for a program (yet to be detailed) to help Lenders and home-buyers agree to find a new payment somewhere in the middle of what their rate adjustment would be and what the buyer is paying prior to said rate adjustment. Exotic Mortgage may be defined as a Pay Option or Option ARM, a hybrid rate buy-down that balloons into the stratosphere or a combination of these. The idea of principal reduction is being bandied about here--but payment lowering is the goal here. Expect 40 and 50+ year terms to lower your payment.

WHOA! Do you realize that the longer you pay a mortgage the more you pay in interest over that longer time frame? Do you think for one moment the banks who are getting all this funding to hire more people to negotiate new terms with borrowers are going to GIVE money away? Not a chance. Banks are in business to make money and as Warren Buffet advises "you make money by not losing money". Not losing is what this is all about. It's a loss mediation exercise. Give a little to get a lot.

3. Passage of New Bankruptcy Legislation. This part of the plan (yet to be detailed in full) would allow Federal Bankruptcy judges to write down the value of the mortgage principal (during a bankruptcy proceeding) to the actual value of the home (again those who have lost value in states like California, Florida and Arizona) so the homeowner does not also suffer Foreclosure. This particular part of the plan will be strenuously opposed by the huge banking lobby. Watch carefully on when and if this part materializes, folks.

I predict new twists of this snake. I would love to think our government is able to sufficiently motivate the private banks to make this work for citizens. I have heard from credit counseling agencies that 'some banks' may negotiate a lower principal or rate in order to get a larger stake of your home equity. Oh, and some of the people these banks are hiring as negotiators are paid on comission...which suggests they will have an incentive to help themselves by keeping your loan rate higher.

By the way, Fannie Mae, Freddie Mac and any other lender can choose to modify or refinance borrowers any time they like. HIGHLY unlikely they will call you and offer to lower your payment or interest rate! Considering many folks have 6.5% loans or higher, today's 5%-5.25% range is quite an improvement toward lowering payments. If you recall, Fannie and Freddie are getting approxmiately $200 Billion to backstop their losses. Let's not loose too much sleep over their level of pain here.

DON'T MISS THE BOAT: Pending the dust settling on exactly who is qualified to borrow how much from whom...your local mortgage planner has the best access to best terms so don't miss today's smokin' hot rates! Tighter guidelines have been announced (thanks to Fannie and Freddien and HUD) so don't wait for those new rules to land in March. FHA, for examle will limit 'cash out' loans to 85% Loan to Value, down from the current 95% loan. VA, FHA and USRDA are all raising their credit score requirements. Ouch. Just who will qualify for a mortgage in March remains to be seen.

This writer is hopeful that the Obama team will wake up and smell the coffee to help more follks get into home ownership by revisting the arcane and increasingly irrelevant FICO Scoring system. Yes we can!

Pass this Credit Link on to your buyers and we will discuss their tri-merge lender report with them. Our firm is licensed in WA, Oregon and Idaho.

Washington Licenses: 510-LO-31434 510-MB-24707-50145

RURAL CONDOS? It recently dawned on me that the very folks seeking affordable housing in our tri county area would be best served by our USRDA Rural program. This 102% (yes 102%) government subsidized loan program is designed for buyers who have not owned in the last 3 years, who can document sufficient income (41% DTI) and fall under a median average income cap (1-4 persons up to $70,750 annual income in non high cost counties). Credit standards somewhat flexible.

The great boon of this program is that the seller can contribute to the buyer's needs as long as the transaction makes sense and the appraisal supports the sales price. And that 102% is for the appraised value, not just the sale price...which really comes in handy to find costs to close. A 2% RD fee is financed and there is no monthly mortgage insurance. Too good to be true? We have several lenders who specialize in this program. Some banks have a limited access to USDRA funds and others are not limited...so it helps to work with a broker who has all these resources.

WHERE? I have funded several county condos and am aware of other projects in our rural towns including Ferndale, Blaine, Everson, and Lynden that would qualify...basically anything outside Bellingham to Mt Vernon city limits.

Search the USDA Rural Housing site: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do Select single family on the left side menu (or multi family if you are looking for duplex-fourplexes) and you can plug in your property zip code. Print out a map of your area for future reference.

THE CATCH: The project must be warrantable and HUD approved. So at least 51% must be sold and the developer cannot be in control of the HOA or own more than 10%. A savvy developer will team up with a couple of local banks or private investors to fund the filrst 51% and we can step in on the last 49%.

OTHER OPTIONS: If the project does not have HUD or FNMA we do have private or hard money loans. In some cases, closing via private money and sitting tight for a couple of years while the project is completed and becomes warrantable will work. Condos that fall within the city limits of Bellingham do not qualify for USRDA. For city or kiddie condos (student/parent owned), FHA works well @96.5% financing.

OUTSIDE THE BOX: Rural condos and cluster homes that may be PUD or Leasehold properties are very valid options in our region to meet the needs of today's buyers. You just need a lender worth their salt who can find your funds. Not all lenders are FHA/HUD/USDA approved so needless to say call Loannetter first!

Give your buyers this Credit Link and we will discuss their tri-merge lender report with them. Our firm is licensed in WA, Oregon and Idaho.

Washington Licenses: 510-LO-31434 510-MB-24707-50145

Condominiums seem to be suffering a lack of investor interest to say the least these days! I know several of owner/developers who have done the right thing by their prospective buyers by building new or sensitively converting older buildings into very solid investments for first time owners and investors.

Meanwhile: Lenders who will fund 'unwarrantable condos' are scarce as hen's teeth. I have several who are OK with Jumbo loans on condos for excellent borrowers (high net worth individuals). I am talking about our local emerging market: teeming with first time buyers, people scaling down, retirees and college students who would really benefit from kiddie condo loans (essentially loans to parents for 4-6 years). Presently, we are stuck with the 'Spot FHA Approval' as the baseline. If the project does not have HUD or FNMA approval ie 51% sold, an HOA in place and tenancy is largely investors, we are stuck with hard money loans, which defeats the purpose of 'affordable' housing. 95% financing would be a real boon or this audience is otherwise doomed to seek single family residences which may not meet their needs and budget. Believe it or not we DO have rural condo loans on offer... but the bulk of our condos are within the city limits of Bellingham and do not qualify for USRDA.

I would dearly love to speak with individuals or investors interested in funding pirvate loans for very deserving folks in the $150-250K range.

We have many great projects in our Pacific NW Region including some mixed use urban and rural condos that are slightly left of center and so timely for the needs of today's buyers.

Thanks for your support!

Give your buyers this Credit Link and we will discuss their tri-merge lender report with them. Our firm is licensed in WA, Oregon and Idaho.

Washington Licenses: 510-LO-31434 510-MB-24707-50145