DID I MAKE THE WRONG CHOICE?

So I had a closing yesterday, that was supposed to close the day before. In this environment , it has happened to a lot of us. But the abnormal part was that it ever closed. In the last 15 years of my lending experience , I have had my share of difficult transactions and I always kind of knew if I was able to close a transaction. This one was unique, I looked at their credit profile when I got the referral and I told the clients it was going to be very difficult to get financing. They went somewhere else and started the process , only to find out it could not be done.

They called the Realtor again and asked for my phone number. My wonderful Realtor told them if it can be done , this lender will get it done(meaning me) So now we go back to the drawing board and I give them preapproval for a loan amount with a word of caution, that it is going to be rough.

We write multiple offers on multiple homes and I keep coming back to my original numbers which are all lower than what they insist upon buying . The buyers finally get an agreement on a FNMA property, and at a number that is higher by $20,000 than what my number was and $150 higher in real estate taxes.

Now the fun starts, I put the loan package together, and the Realtor tells me , the borrower is on disability leave but she is getting paid. The client never shared this with me. Everytime I ask for documents , she gives them to me after telling me that it is hard to get them and why am I asking for them. I need a letter explaining a judgement on her credit , which looks like from a rental management company for non-payment of rent which she had insisted did not belong to her. After 2 weeks of going back and forth with the credit bureaus , they come back that it is hers along with her mom's and it is on a house for not paying home owners association dues and the house is going into a foreclosure. I go back to her and ask her about this and she tells me that she is not on the mortgage or the title, ,I believe her again and fight with the credit bureaus , only to find out she is on the title .

We are doing a FHA loan , and now I have a previous home that is going into foreclosure , ratios are at 44%, there is job change 3 times within the last 29 months with 3 months of unemployment , and the down payment is not her savings but a result of insurance claim on the foreclosure home that belongs to her mom per her. Better still , we have student loans that are deffered only till septermber 1st of 2012, that means I have to close by September 15ht or we cannot close because we will have to count our loans against her debt and her ratios will climb to 72% .

So what do I do, per my underwriting team , I issue a committment and get it scheduled for the 15th at 2.00 pm, as we are still collecting conditions. At 11 a.m on sptember 15th, I find out that the underwriter is not going to sign off on this but my ops manager tells me , we will get the decision reversed. I leave my office and get working on the file again to see what we can do to change the underwriter's mind. While I am working on the file , I turn my phone off so I can concentrate, as I am getting calls from evrybody every 5 moniutes. Remember we still have not told the title company that we are not closing at 2.00p.m. At 4.00p.m. I finally get it all set and ask the attorney if we could dry close , meaning sign but not have the funds there , they say absolutely not.I give up and tell them that it is going to be done on friday now, and now again , since I don't have signatures I need to get the underwriters approval for 1 day extension on my student loans.

I get to work at 7.00 am on friday morning , and promptly send an apology to everybody for wasting their time on thursday and let them know that we will be informing them once we have everything squared away. I get a nasty response from the attorney , they will not do anything till they see the documents. I tell them that I understand. By 10.00 in the morning , we get all the paper-work sent , and inform the client how much money we need for the closing .

We finally close at 2.30 pm , and I get this nasty email from the attorney from her blackberry at 7.30p.m. , that she has never had a worse experience and we wasted her time on thursday and not answered her phones for two hours .I ask you , people who are in this battle everyday, that should I have spent my time updating everybody or even cancelled the transaction when the underwriter told me it is no go or worked on it so I could close it? I chose to close this transaction as I thought after spending so much effort and clients money and time , in my mind closing was the right decision, even though my customer service was not the best on thursday. I need to put this to bed so please tell me what would you have chosen?

YES YOU CAN REFINANCE EVEN IF YOUR HOUSE HAS LOST VALUE!

It is estimated that over 20 million American homeowners owe more on their mortgage than the value of their homes. You don't need to sit on sidelines and feel bad because you can't refinance because your house has lost value. There are several things you can do to make refinancing a reality for yourself.

First go to these sites and check who owns your mortgagge

• 1-800-FREDDIE (8am to 8pm EST)
• www.freddiemac.com/mymortgage
• 1-800-7fannie(8am to 8 pm EST)
• www.fanniemae.com/loanlookup

if your loan is owned by either one of these you can refinance under government's initiative for homeowners who have lost value in their homes. Call your trusted mortgage lender and ask if they can run the automated underwriting to see if you are eligible for that program,

Now let us say you loan is not owned by either one of these , check if you have a FHA mortgage and if the answer is yes, you can still refinance under the FHA streamline option.

Let us say you don't qualify under any of these options , all is not lost yet. Here is my last suggestion. Everybody has heard of " CASH OUT MORTGAGE", where you can pull cash out of the house to take care of your financial needs but what about a 'CASH-IN- MORTGAGE" .

so what is a cash-in-mortgage? This is a strategy where you lower your balance with using your own personal funds is called a cash-in-mortgage. Using cash to pay down your mortgage may allow you to refinance into a lower interest rate and lower your monthly payments. For example, consider a homeowner who owns a $200,000 home that has declined in value to $150,000 . Here's what would happen if the homeowner uses $60,000 in cash to reduce the balance of their $180,000 mortgage to $120,000.

how would you like to earn 10.5% TAX FREE(AND RISK FREE) RATE OF RETURN ON YUR $60,000 INVESTMENT.

STEP 1: $525 monthly savingsX12= $6300 annual savings.

STEP2 : $6300 annual saving/$60,000 investment = 10.5% CASH ON CASH RETURN ON INVESTMENT .

There are two ways to get the $60,00 in cash to make this strategy work:

1. You can use cash from your retirement account or bank account that may be currently earning you 0% or 1% interest .This might not be the right option for everybody , so please talk to your financial advisor.
   

2. You could sell some other investment assets that are earning you less than 10.5% after tax.

So let us say , that we don't have access to the cash, you could still refinance and take advantage of really low rates if you could ask your lender to build PMI into the rate . What that means is that you don't pay mortgage insurance monthly but it is paid up front and it can be paid by taking a slightly higher interest rate. The difference is usually a quarter percent .

Either way , the strategy makes sense as long as you can earn a higher after-tax return on your money by paying down your mortgage than you would by leaving your cash wherever it is right now.

So , why am i sharing this with my Realtor friends, because it is a win-win situation. Go back to your past clients and tell them that you can help them lower their payments by sharing these strategies with them and you get a chance to deepen your relationships with them and maybe they will have a referral for you . So yes, you can refinance even if your house has lost value!

Call your lender today

Dow Jones lost 635 points in today's trading . Should you care as a Realtor , as a consumer or as a person who sells mortgages? I wish the answer was simple. Everybody kept on saying if our ratings get downgraded , our short term rates would go up and borrowing costs for everybody would go higher including our country's . No body would want to own our debt. But Guess What , our rates did not go up , at least not yet.

This is today's Dow Jones chart for the day:

According to number of expeerts at CNBC, Standard and Poor's historic downgrade of U.S. debt on Friday won't have much impact on the Treasury market, instead most of the impact will be felt by the equity markets and we saw that today when the Dow lost 635 points.

So what does that mean in plain English. It means that even though our borrowing costs did not go up and China did not get rid of all our debt, we all saw a loss of confidence in our economy. Now that the rating has been downgraded, more people are worried about the slowing down economy and see recession as a bigger possibility.

If the economy falls back into recession, as many economists are now warning, the bloodletting could be a lot more painful than the last time around.

New York University's Nouriel Roubini, writing in the Financial Times, said the United States and other advanced economies were odds-on for second severe recession even before the latest panic. Former U.S. Treasury secretary Lawrence Summers puts the odds of a double dip at one in three. Harvard University professor Martin Feldstein says one in two.

Consumer spending, along with housing, usually drives a recovery. But with incomes so weak, spending is only barely where it was when the recession began. If the economy were healthy, total consumer spending would be higher because of population growth With construction nearly nonexistent and home prices down 24 percent since December 2007, the country does not have a buffer in housing to fall back on.

So coming back to my original question, should you care? Yes, as it will be a cause of even less business for us and less consumer spending .When people feel poorer they spend less and want to hold on to their cash. So what do we do ? Do we quit our jobs and look for something else to do? But there are no other jobs out there that give us everything that we get out of our Real Estate Career.

So , this is my solution and I am sticking to it . I am going to continue to work hard and stay focused because there are plenty of people who are going to get discouraged and lose their motivation .This business has been good to me and for a lot of years this business was easy. Now I will have to earn my compensation every day. I will leave you with these last words. We have been here before as a nation and we have come out of it stronger and better. Here is a chart showing the unemployment index since 1950.We were almost at 10% unemployment in 1982 and interest rates at the highest levels and then came the 1990's when life was good and it lasted till 2007. Hopefully it is going to be similar.