« Your sales people can burn your business. | Home | The Florida Real Estate Bubble….of the 1920’s! »
…Take a Deep Breath…Stay Focused…Revise Your Strategy.
By The 800lb Gorilla | July 26, 2007
If Stephen King were writing financial horror stories his titles would read like today’s headlines:
Dow Plunges 400 Pts on Credit Concerns; New home sales fall, durable goods orders weak; Things go from bad to worse for U.S. home builders; Wall St. plunges on credit fears; Dow sinks two percent; New home sales down substantially; Housing mess to create big losses for investors; HSBC braces for $9 billion in mortgage price hikes; Sub-prime coming home to roost?; Foreclosure rates could soar; Investor losses seen in housing slump; Wells Fargo shuts non-prime mortgage unit, cuts jobs; Sales of new U.S. homes decline in June; Stocks Plunge on Lending Worries; The Big Mac beats The Whopper; Beyonce’ slips and falls down 5 steps in Orlando concert;…
With a glass of Alka Seltzer in hand I am sure you get the idea.
No matter how things look; No matter how rough things are in The Jungle, people still need to borrow money and buy a home. I know there are some of you going cold turkey and having night sweats because you were doing so great in a hot market. Right now you need a fix. Guess what? You can create your own fix. There are lending alternatives to assist people to buy a home. BUT first thing’s first, you must now build real alliances with people who know how to think and work. You need real alliances with people who work smarter, not harder. You can not hang out with “those flashy guys” at the Hard Rock until 4 in the morning who talk champagne with beer money. You now need to get your butt in bed before 11pm and start talking to people as soon as you wake up. You need the same alliances of like minded people who will do the same.
A past favorite hip hop group, EPMD, had a line in one of their songs that burns in my skull this very day,” If you have nine broke friends, you’re bound to be the tenth one.” Take that literally. Whomever or whatever you are spending your time with is what you are going to become. As a matter of fact eagles are never seen clucking with chickens! Eagles are never hanging out with “those drama queens” at the bar who are whining about how rough it is.
Of course you know how rough it is. You have read the RSS news feed on the right of this page! Tell them you just had wine for dinner and you are not there for seconds! Also let those complainers know you love rough times because new opportunities are born! Speak that language and keep walking and leave those babies in your dust.
At the crossroads you must choose wisely. Speak with optimism, show character, focus and work with perseverance and you will attract those of the same attitude and ethics. If you want a friend, then be a friend. If you want an orange tree, you must plant orange seeds. Just keep working, stay focused, and have patience. Those alliances will show up in due season. In the meantime, keep your welcome mat clean and the leeches off your bandwagon. You are not alone because many of us are going through the same thing.
When The Jungle straightens out in the next several months, or couple of years, you will be at the bank with “those happy guys” who have multiplied their profits because they took a deep breath, stayed focused, and revised their strategies. Those happy guys will be your new, tested and true alliance of eagles.
Now about those lending alternatives…
Today, CNN had an interesting article about three sub-prime lending alternatives brokers in the hot market nearly forgot about: FHA’s, VA’s, and CRA’s. (see http://money.cnn.com/2007/07/23/real_estate/subprime_alternatives/index.htm?section=money_realestate .) Of course these are tedious painstaking deals to close, however the key is dotting your I’s, crossing your T’s, and never being a penny off in the numbers. These loans became unpopular due to sub-prime and alt-A’s infamous stated doc programs, looser underwriting guidelines, and faster closings. If you click on the link for the CNN article above you will read about a new FHA campaign for guidelines to accommodate “sub-prime profiled borrowers.” Such changes include; eliminating a 3% down payment, increase the max loan amount to reflect the market appreciation, and a rate scale to reflect a borrower’s score. An individual with a higher score will now be awarded with a lower interest rate.
CNN reports the FHA current loan advantages, via Assistant Secretary for Housing, Brian Montgomery, “
FHA loans with low interest rates can be approved with low down payments. Adjustable rate mortgages (ARMs), which can help buyers to get through the first, and often most difficult, year of ownership, are also available.
The FHA ARMs reset yearly at no more than 1 percent higher than the original rate, and can rise no more than 5 percent above the original rate, keeping them affordable for borrowers.
Another advantage to FHA loans, according to Brown, is the credit counseling that comes with, which the agency recommends. They also requires lenders to help borrowers in trouble instead of simply foreclosing on their homes.
FHA’s mortgage programs typically have no maximum income limits for qualifying; many high-income borrowers have FHA loans…”
In regards to VA loans, CNN reports,
“Many veterans who don’t qualify for a sub-prime loan may still be able to get a VA loan, according to Nathan Long, Chief Executive of Mortgage Research Center, a VA approved lender. VA loans are often made to borrowers with a couple of dings in their credit histories.
“Even severely credit damaged borrowers can qualify for a VA loan after only 12 months of clean credit history,” said Long.
Rates are extremely competitive. A 30-year fixed carries about the same rate as a normal prime rate loan, currently about 6.75 percent, according to Long.
It’s an even better deal than that, because 100 percent of either the purchase price or the appraised value of the property (whichever is lowest) can be financed without separate mortgage insurance, which adds a point or two to the rate of a prime loan for the final 20 percent of the principal.”
The best news of the three is profiled towards property purchases in lower income communities; Community Reinvestment Act loans or CRA. This type of loan is going to be gaining popularity very fast. This is a product born from competitive retail banking expansions in economic deficient areas where there are not many accessible financial institutions. A CRA loan can also be advantageous to a borrower with a 600 FICO score who may not even want to purchase a home in a low income neighborhood. It can also benefit a borrower with lower interest rates.
CNN continues their story with Steven Habetz, a mortgage broker with Threshold Finance in Connecticut,
“…many banks are looking to make these loans. They may subsidize them by a half percentage point or more and a large portion of most urban areas are eligible for them…We can do a 30-year fixed at 5.75 percent right now for a couple of points…If your income is 80 percent or less of the median for a county, you can qualify, wherever the house is located,”
The story also notes high income borrowers can get a CRA loan if they are purchasing a home in a low income demographic. To know if an addressed is identified as a low income zoned property go to the website for the Federal Financial Institutions Examination Council’s Geocoding/Mapping System; http://www.ffiec.gov/Geocode/default.aspx.
This is actually very good news and leverage for mortgage brokers and loan officers to take heed. It is now absolutely necessary to specialize with these three loan programs. Eventually, Realtors will be checking their lists to see whom in their alliance can originate FHA, VA, and CRA loans. If you are a broker, make sure you make their list! This is what the real estate market in South Florida needs.
Regardless of the situations and circumstances of today, make tomorrow a new day for success. There are many needs out there to be satisfied from new potential clients. That is profit waiting to be made. Either you run The Jungle or The Jungle will run you…out of business.
Have a great weekend! See you next week!
Topics: Editorial, Mortgages, Real Estate |
Fatal error: Call to undefined function: sexycomments_print() in /home/content/r/q/t/rqteck/html/jungleblog/wp-content/themes/The Jungle Blog/comments.php on line 42