Ken "Yes You Can" Cook

Once upon a time in a land where gas was 75 cents a gallon and bread was 33 cents a loaf interest rates were in the high teens. Of course I'm writing of the 1980's when our economic situation was not too unlike the one we have today although there were vast differences. Yet during this time and shortly thereafter the FHA streamline refinance was born with one purpose in mind: Get FHA borrower into a lower rate and lower their monthly cost of home ownership.

It was much simpler back then to see the savings. Many families came in to refinance from interest rates as high as 15% or 16% down into rates like 9% or 8.5% - that was then - this is now. Families today are scurrying to refinance from 6.25% to 5% and I can't say I blame most of them. After all on a $250,000 loan we're talking about a couple of hundred dollars a month in savings on interest alone.

First let's dispel a couple of myths about the FHA streamline refinance program. Most importantly the FHA streamline is not a "no closing cost" refinance. There are closing costs and they can be paid one of three ways:

The borrower (home owner) can pay them out of pocket
The lender can pay part or all of them with an interest rate higher than par
They can be rolled into the refinance loan amount

However you choose to pay them, paid they must be. The attorney will not work for free. The underwriter will not work for free. The processor and loan officer will not work for free. Now I know there are a couple of very large banks/lenders telling people they are offering no cost loans. No, they are not. The home owner is paying the closing costs one of those three way. If you are dealing with a mortgage broker instead of a direct lender they are require by Federal law to show you how their commission is applied in the closing costs. Banks and direct lenders are exempt from it but it's still there - nobody does loans for free except maybe a very minuscule number of true non-profits which I have not lately seen.

Qualifications for an FHA streamline refinance vary from lender to lender. Oh I know you thought HUD made the rules. In a way they do make the rules but those are the base line rules. In other words FHA will not insure a loan that does not conform to their qualifications. The lenders (who actually write the check for the loan) have what are called "lender overlays" to make sure their investors are satisfied with the quality of borrowers getting the funds. In other words if you're a deadbeat you ain't getting no money. (Ain't is Greek for "are not", "can not" or "is not".)

Most lenders today are requiring a minimum middle credit score of 620 or higher even to qualify for a streamline refinance. Fortunately we can still get FHA streamline refinances closed with:

No credit examination (all we may need is a mortgage payoff statement - we order it)
No verification of income (employment is required to be verified)
No verification of assets (no bank statements or tax returns)
No appraisal of value (this applies in almost every instance but check with your FHA professional)

Keep in mind the above applies in most cases when I am doing the loan but you really need to check with your loan officer (not all of them are qualified to handle FHA streamline refinances so I can give you names if you're not in Georgia or Florida or the southeast).

Marietta, Georgia is one of the most progressive cities in the South. Our schools in the city and surrounding county are rated some of the highest in the nation and our State School Suprintendent, Kathy Cox, was the first person to ever win $1,000,000 on "Are You Smarter Than A Fifth Grader?"

If you are planning a move to Marietta, Georgia there is plenty of information avaiable. From condos and town homes to luxurious multi-million dollar mansions lining the Chattahoochee River the Marietta area is highly diverse in people, culture and opportunity. We have produced many great names and boast many opportunities for entertainment, worship, work, education, and socializing. In fact one of my old high school friends has a son who stars in the hit television show "Heroes". You may know Randall Bentley the star. I know his father Randall Bentley the attorney.

Marietta is home to Lockheed/Martin as well as dozens of other major national employers and thousands of mid to small sized businesses. It is the county seat for Cobb County one of the most conservative counties in the nation. Newt Gingrich is one of our most well know politicians. Other celebrities from Marietta include Travis Tritt, Julie (Julia) Roberts, Robert Patrick (T-1000 the metal cop in Terminator 2 and a thousand other roles), and if you like the Food Network you are probably familiar with Good Eats star Alton Brown.

Having said all of that if you are moving to Marietta, Georgia I can tell you things your agent can't and I can also get the check for you to buy your home. FHA, VA, Fannie Mae, jumbo and construction loans. I am a life long resident of the area (that's 50 years worth) and know where the old oak tree used to be by the cow farm that is no more. I know Marietta, Georgia very well.

We had a drywall shortage. It was no secret many drywall (sheetrock, gypsum board) suppliers had to go to international suppliers for product. Some of the drywall from China has the distinctness of emitting sulphuric acid fumes into homes. The big scare is about what it does to condensers but what about electrical contacts, refrigerators, air filters, and let's not forget LUNGS!?

It can be a frightening thought considering there are an estimated 250,000 homes in the United States with the offending drywall. While this offgassing material has been used since about 2001 it really became prominent from about 2004 to 2006 - just the period of time where MY home was constructed. Since then I have developed asthma - mild but present. This brought me to team up with Ray Palermo, one of my builder clients and building experts, and start a long investigation into the Chinese drywall issue.

Because the information is vast and some a little technical to explain I won't take this short blog post to that scope but will be offering live BlogTalkRadio shows over the next several weeks to address the issue. Join my and me guests on BlogTalkRadio on April 4, 2009 at Noon Eastern for an hour long live broadcast on the subject on BlogTalkRadio for "Chinese Drywall: Destroying American Dreams"

One of the easiest ways to tell if your home is infected with bad Chinese drywall is to compare the color of bare copper wiring or piping with a penny. Even a handled penny will not turn black but bare copper exposed to sukphuric acid fumes will turn black and begin to grow green corrosion crystals.

While it may be possible to smell the offgassing which gives the odor of rotten eggs or ammonia it is also possible that you will not smell it. What you will be able to see is the damage to copper. The ultimately devastating result of corroded copper comes when the electrical components in your home start to fail: dryers, washing machines, anything with an electrical motor from vacuums to fans, light switches, air-conditioning relays, and even DVD players and computers all have bare electrical contacts and windings made of copper.

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Credit to The County Clerk for the photo, which is NOT Chinese drywall to my knowledge.

As a mortgage banker I have the distinct privilege of being simultaneously a genius and an idiot. The viewpoint is reached as a matter of perspective and today I get to be an idiot because I have to, once again, undo what the news networks have done. This means I am spending extra time (15 minutes or so) with all of my customers and educate them in what most of the media needs an education. You see it's all over the news today that rates are headed to the fours. Orly?

First let me say I agree that rates are down and may stay down for a week or more. The danger of reporters (here I go again) putting forth information that "rates are headed down into the fours" is that they have no idea what would cause this or even if it is a fact. Having attended a University where many journalism majors have gone on to great things and having known some of them in school I still have to wonder if they are as ditsy today as they were 30 years ago. This is not intended to disrespect all journalists just most of them - BECAUSE they terribly muddy the waters on highly important issues by delivering information they do not understand to the masses who also do not understand.

Next let me add rates are driven by the market - the government does not (yet) mandate rates. Once we become fully socialist then the government can set rates but we are not quite there ... yet. If Mortgage Backed Securities are not producing a profit for investors rates are up - if those same securities are producing a profit for investors rates are down.

Rates are still based on risk. Riskier loans still have higher rates. FHA rates are not the same as straight Fannie rates. Rates in Florida are not the same as rates in Georgia. Rates on a $60,000 loan are not the same as rates on a $180,000 loan. Rates on a loan with 20% down are not the same as rates on a loan with 10% down. Rates with a 680 credit score are not the same as rates with a 755 score. Some investors (Fannie, Freddie, Ginnie) offer programs at Fixed 30 terms that others do not offer. It's not as simple as saying, "the mortgage rate today is 5% and tomorrow will be 4%".

The biggest lie the mortgage industry has ever told you is "Today's Fixed 30 Rate Is ..." and the second biggest lie they have ever told you is "No closing costs ..."

One thing you could see happen over the next few weeks to help keep rates down is based on the very basic economic principal of supply and demand. It is possible that so many people will be buying and refinancing over the next few weeks that rates will need to adjust to help keep the supply of money in check with the demand. This is where the rubber really meets the road and we get to see how many deep pocket investors step to the plate. I don't know the answer, CNN doesn't know the answer and the mighty supreme Congress does not know the answer (they don't seem to know the answer to many questions).

Yes, rates are down. Your local mortgage broker (the one within driving distance from your home so you can throttle them when they mislead you) is required by Federal Law to show you ALL of their income. The lender 3 states away is NOT required to show you all of their income. With a local broker from your area you should easily be able to get the best rates and best closing costs and if you can't that's simply because you don't know how to shop for a mortgage and are continually misled by the media.

I can fix you. If you are in Georgia or Florida visit my work blog and subscribe for almost daily updates.

EDITED: Only five hours after posting this the rates did a U-turn and headed back up. What say ye media geniuses now, eh?

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Want to learn how to maximize your online outreach for free ... every week?
Listen live to Twitter Tuesday Radio on JCKC with Jason Crouch and me at NOON Eastern on Tuesdays.

Guilty. Not you - me. I am guilty of wasting time on Twitter and Facebook. In fact I have wasted so much time on Twitter and Facebook that I now waste even more time keeping up with at least a dozen new prospects every week. Then the closings that I am seeing are really cutting into my week - like the $300,000 FHA 203(k) loan I am doing because of a referral I got from a Twitter "friend".

Sure, I will back up just a bit. Twitter is a "micro-blog" and so named because users post messages called "tweets" of a maximum of 140 characters - including spaces. While at first thought 140 characters seems limiting just remember many of today's and most of yesterday's cell phone text messages are limited to 140 characters. This service, developed by a group of four men for the purpose of group communication related to development communication internally at Odeo in San Fransisco. From that point the service has grown to an estimated 6,000,000 users.

Twitter is also a social media networking site in that you can "follow" other users and other users can "follow" you. If you follow each other you are considered "friends". This is where we will concentrate during the first ever Mortgage Breakout Session at the lunch hour. Management of friends and followers can be handled through learning a few simple uses of the Twitter API (beginner skills required) and a number of tools developed for this purpose.

Facebook is nothing like Twitter but does have a feature similar to Twitter. While Twitter is limited to a stream of 140 character micro-posts Facebook is a robust social media service which is growing at an incredible rate with some estimates placing the growth trend at over 400,000 new users per day. It also allows "pages", groups, invitations, events, and all times of applications have been developed to run inside of Facebook.

While Twitter's user base of 6,000,000 members is very respectable and nothing to scoff at Facebook claims a user base of over 175,000,000 people. In case you are slow in math that is more than one-half the population of the United States. Certainly you can see how easy it would be to waste hours and hours building your global social media network of friends at Facebook.

So you ask, "why is this a topic of conversation at REtechSouth and what does it have to do with mortgages and real estate?" If you read my blog often you will know I am about to write, "I am so glad you asked." Since December of 2008 when my co-host Jason Crouch joined me on my Blog Talk Radio show which is now titled Twitter Tuesday we have heard from guest after guest about their successes in social media networking. In fact both Jason and I have had success from Twitter and Facebook.

We are now joined weekly on Twitter Tuesday by Mike Mueller for "Mike's Minutes" (or whatever we call it) where Mike introduces some technology to us and the listeners. Mike shows us everything from how to tie networks together to how to enhance our blogs with plugins and more.

Twitter and Facebook are the new golf course. It is where mortgage bankers, like me, meet developers like Ray Palermo, private investors like Wade Munday, insurance executive like Rick Abbott, and real estate brokers like Jason Crouch. Twitter and Facebook is a global handshake where you meet and interact with and really get to know the people you need and the people who need you.

During the Mortgage Breakout at REtechSouth I will be presenting a short series on how to use multiple social media networks for three purposes:

1. Building your list of contacts on a national or global scale
2. Providing a new level of contact for your prospect or client base
3. Sharing in up to the minute changes in your industry and company

This breakout session, for the majority, is not geared specifically to people in the mortgage industry. Anyone interested in learning how social media will, not can but will, enhance your business is encouraged to attend. We will have room for up to 75 people and you can eat during the presentation. We will also have a live demonstration of the power of social media and the more people we have in the session the more impact the demonstration will have.

Go to REtechSouth for full details and join me on March 20th (Friday) at lunchtime for this Mortgage Breakout Session regardless of what business you are in. The information will not be mortgage only but can be used for any business that needs reach.

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Tune in to Twitter Tuesday Radio live each week at Noon Eastern.