KMG Blog

TransUnion BUSTED! for selling YOUR credit information!

For the reading pleasures of my fellow "bloggers" I have always tried to keep the tone of my blog educational, but light.  This post, however, is anything but light and it's not funny at all!

Thanks to a settlement over allegations that TransUnion Corp. improperly sold consumers' personal data, you can now take advantage of their credit monitoring services at no cost!

If you have opened credit of any kind and at anytime since 1981, this applies to you!

Turn up your speakers and listen to this VERY important broadcast from NPR Radio.

How can you improve your credit score?

Never before has your credit score been this important when applying for a mortgage loan.  Once upon a time it was virtually impossible to change your score in the time between deciding to buy a home, or refinancing an existing mortgage, and making application.

Now, however, KMG Mortgage Group can help! Our credit agency will provide insights into what you can do to improve your credit score. Often times it will include paying down a credit card or using an old credit card with an established history.

Best of all?  We guarantee the result!

If our credit agency outlines a plan, and you follow it, and your credit score does not improve as much as they said it would - YOU DON'T PAY FOR THE SERVICE!  Other mortgage professionals can offer this service, but cannot (or will not) guarantee the result.

Keep in mind, KMG Mortgage Group is not a licensed credit counselor.  Therefore, we don't get paid for this service.  We are doing it as a service to you: to get you the best interest rate possible!

If, however, you are looking to improve your score for reasons other than obtaining a mortgage loan, following are basic guidelines on obtaining, maintaining, and guaranteeing yourself the best possible credit score:

• Make sure that the information each of the three credit reporting bureaus has on you is consistent and up to date. Order a copy of your credit report about once a year, and dispute any inaccuracies.

Note: Theoretically, if a series of credit reports is requested on your behalf during a limited amount of time, your score goes down until time passes without any inquiries. Changes in the law, though, have made "consumer-originating" credit report requests not count so much.

Also, a series of requests in relation to getting a mortgage or car loan is not treated the same as a number of credit card requests in a limited time. This is because the credit bureaus, and lenders, realize that people request their own credit reports to keep up with what's on them, and smart consumers shop around for the best mortgage and car loans.

• Unsolicited credit card solicitations in the mail don't count against your credit report, so don't worry.
• The two main components of your credit score are your payment history and the amounts you owe. Bankruptcy filings and foreclosures, which can stay on your credit report for as long as 10 years, can significantly lower your score. It's never a good idea to take on more credit than you can handle.
• Late payments work against you. It's extremely important to pay bills on time, even if it's only the monthly payment.
• Don't "max out" your credit lines. Since the size of the balance on your open accounts is a factor, lower balances are better. A general rule: keep balances 30% or lower of your high limit.

It's said that by carefully managing your credit, it's possible to add as much as 50 points per year to your score.

If you want to learn more about credit, please visit our CREDIT CENTER!

Your Mortgage Company is NOT subject to your Divorce Decree:
Get your former spouse to remove you off the loan - NOW!

I heard it ALL the time when I was working loss mitigation: "But my husband got the house in our divorce.  Why do you say this will affect MY credit?"

I can't tell you enough: the mortgage company is NOT subject to your divorce decree.  If your spouse gets your home in the divorce - MAKE IT MANDITORY THAT THEY REFI THE LOAN IN THEIR NAME ONLY - make it a stipulation in the divorce decree if you have to!!!  A Quit Claim Deed is not enough.

In fact, a Quit Claim Deed only takes away your rights to the property, but you are still liable for the loan!!!

Imagine: your former spouse falls into default.  They decide, for one reason or another, to walk away.  Foreclose, Short Sale, Deed in lieu - you name it.  Now you find out that they never refinanced the house and your name is still on the loan.  Now imagine: you filed a Quit Claim Deed removing your rights to the house.  Not only are you going to have a foreclosure on your credit, but now you have NO LEGAL RIGHTS to move into the house, sell it, rent it out, NOTHING!!!!!

And, unfortunately, it has been my experience that divorce attoneys don't tell their clients this small but VERY important piece of information.

If your spouse gets the house in the divorce, make it a stipulation that they refinance before the divorce is final.  That way you protect your rights and your credit!

To submit an application on-line, CLICK HERE!

Coeur d'Alene Public Library Fall Programs begin ...
Sept 23rd - Nov 11th

Besides being one of the most beautiful public buildings I have ever seen (see photos below), the Coeur d'Alene Public Library is an institution of learning and a place for families to grow and come together.

Once every week I take my daughter to the Cd'A Library to participate in one of their numerous children's reading programs.  Since the summer session ended, however, we have been wanting for our "library fix" and have made several trips even though class was not in session.

I am happy to let you know that the Coeur d'Alene Library fall programs begin today and will continue until Nov 21st.

First three photos courtesy of Blackstone Finish and Trim Company.
Following three photos courtesy of myself, Maryellen Garasky.

For a schedule of children's reading programs, please visit the Coeur d'Alene Public Library website.

Real Estate is Local:
The Top Ten Reasons to Use A LOCAL Mortgage Broker

1. TEAMWORK
2. UNDERSTANDING VALUES
3. LOCAL TESTIMONIALS
4. MORTGAGE COMPANY IS A PLACE IN YOUR COMMUNITY, NOT A WEB ADDRESS
5. MORTGAGE BROKER IS A FACE AND A NEIGHBOR, NOT JUST AN E-MAIL ADDRESS...

For full articile, CLICK HERE!

Points: "To Pay Or Not To Pay - That Is The Question"

When it is time for you to get a new loan, either by buying a new home or refinancing your existing one, it's important for you to keep your end goals in mind.

With the recent shake up of the financial markets, a lot of KMG Mortgage Group clients have been inquiring as to whether buying points is a good idea.  That depends COMPETELY on your long term goals.  More about that later...

Because it is important for you to know the difference between "Origination Fees" and "Broker Fees" and "Discount Points", let me get a few definitions out of the way before we begin - what a complicated game we play, eh?

Origination Fee - what a Loan Officer charges a customer to do a loan.  This is how a Loan Officer gets paid, sometimes also in combination with a "referral" (for lack of a better term) fee from the lender called a Yield Spread Premium (different post).

Broker Fee - what a Mortgage Broker charges a customer to do a loan.  This is (in essence) the SAME exact thing as an "Origination Fee" with one exception: the Federal government.  Federal guidelines require that Mortgage Brokers call their "origination fee" a "broker fee" - Why?  Because they want it that way.  Sounds typical for the government, doesn't it?

Discount Points - Unlike Origination Fees and Broker Fees, Discount Points (as defined by Federal guidelines) are to BUY DOWN YOUR INTEREST RATE - and for NO other reason.  It is VERY important for you, the homeowner, to know the difference.

Whereas your Mortgage Professional is earning income when you pay an Origination Fee (aka: Broker Fee), a Discount Point is not to be credited to them as income (at least it's not supposed to be).  If your Mortgage Professional is making money on your Discount Points, you need to HIGH TAIL IT OUT OF THERE and find someone else!!!!

So, to address the issue at hand: should you pay Discount Points to lower your rate?  Again, it depends entirely on your long term goals.  Let me give you a real life example:

Borrower is purchasing a new home for $210,000 and putting 20% down.  Their new loan amount will be $168,000.  Both loan options below are based on a 30 year fixed rate without mortgage insurance at today's rates - and do not include taxes and homeowner's insurance.  All other fees being equal (EXCEPT IN OPTION #2 THERE IS ONE DISCOUNT POINT), this is what you have:

Loan # 1:	Loan # 2:
Loan Amount: $168,000	Loan Amount: $168,000
Interest Rate: 6.250%	Interest Rate: 5.875%
P&I Payment: $1,034.40	P&I Payment: $993.78
Monthly Savings When Buying 1 Discount Point: $40.62

In example #2 above the borrower is paying "1 Discount Point" (which equals 1% of the loan amount) and he/she is spending $1,680 dollars now to save $40.62 a month.

Does this equal a good loan?  Remember your goals?

At this rate, in the above example, it would take this borrower 41.36 months (almost 3 1/2 years) to make their money back.  So, if you plan on being in this home, and keeping THIS loan, for 3 1/2 years, then YES this is a good deal!  If not, you don't want to pay discount points.

Still not sure?  Let's look at the life of the loan.

Example #1, if paid off after 30 years, will cost you (in terms of principal and interest) $372,384.00.

Example #2, if paid off after 30 years, will cost you (in terms of principal and interest) $357,760.80.

So, by paying $1,680 now,
you save $14,623.20 later.

So, when paying buying discount points, it is always important to think of your long term goals.  But, let's be realistic.  You don't have a crystal ball and neither do I.  Who knows what's going to happen tomorrow, let alone in 3 1/2 years from now.  Right?  The best you can do is make an educated decision - which is our goal here at KMG Mortgage Group.

The more you know and understand the process, the more comfortable you become.  Which is, let's face it, in OUR best interest, too.  Because that's the only way you will send your friends and family - if you trust us and know that we have you in mind.

Best regards to you and your family.

Mudgy & Millie are HERE!

"Mudgy Moose and Millie Mouse play a game of hide-and-seek.  Millie hides while Mudgy searches along the shores of Lake Coeur d'Alene.  Children join in the fun as Mudgy wanders along the lake, across town and through the park in his quest to find Millie, who was hiding close by all along."

Please join author Susan Nipp and illustrator Charles Reasoner on an historic quest around our very own Coeur d'Alene!

To learn more about Mudgy & Millie, please visit the official Mudgy & Millie website.

Photo courtesy of http://www.mudgyandmillie.com/

"Alice the Musical" at Spokane Children's Theatre, Oct. 11th - 26th

If have children and are anything like me, you find it difficult to just pack up and go to special events at the last minute with and for your children.  Diaper bags, a change (or two, or three) of clothes, snacks, water bottle, favorite blanket, favorite baby doll, you name it.  But, you still want to expose your child(ren) to more than just the TV.

For this reason, Kevin and I are always looking for events and evenings out for our 2 1/2 year old and ourselves.  We make a special "date" with her and go out for a dinner and a show.  We usually always tell her about it ahead of time in order to give her something to look forward to and know that we value spending time with her.  So far, it seems to be working.

The Spokane Children's Theatre is in its 63rd season and, starting in just a couple of weeks, they will be performing "Alice the Musical" - based on Alice's Adventures in Wonderland by Lewis Carroll, adapted and dramatized by Mark & Helen Johnson and Richard Davis, and directed by Maria A. Caprille.

Visit the Spokane Children's Theatre website for ticketing and show time information.

Hope you like the show!

A lesson in phonics ... North Idaho - Legendary Lake Country

North Idaho does it again!  This time making "Sunset" magazine's list of wonderful places to live and visit!

Caroline Patterson starts her article by saying, "Plan an escape to northern Idaho, where the lakes are deep and blue, and each one has a story..."

From there she goes on to detail the wonderful things about this region that, those of us who are lucky enough to call it home, already know.

For those that don't live here, but hope to visit some day, the names of our towns and lakes have a heavy French influence.  For your better knowledge, note the following pronunciations:

Hover over images to use our helping tool!

Coeur d'Alene = Core duh Lane

Pend Oreille = Pond Errrr A
   

Priest Lake
(If you're able to read this, I don't think you'll need my help on this one.  But, you never know!)

And, note!
The photo above of the "lake" is just not any lake!
It is actually PRIEST LAKE in north Idaho.
One of my family's favorite camping destinations!

I hope you enjoy the article as much as I did!

Legendary Lake Country by Caroline Patterson

Best regards to you and your family!

United Way Day of Caring & Community Roots
A "1/4" Ton of Success!

I am please to inform you that Community Roots was able to pick their way to 453 pounds of success!

Wednesday, September 17th was the United Way Day of Caring and Coeur d'Alene local charity "Community Roots" harvested 453 pounds apples and pears from only two trees.

This fresh produce will be given to local food/soup kitchens, food assistance facilities, and transitional centers to help those in need in our community.

The photo attached to this entry is a scan from this morning's Cd'A Press.

Congratulations and "thank you" to everyone who participated!

Don't Lose Your Home in a Foreclosure Recovery Scam!

For those of you who may not know, I (Maryellen) started my mortgage career working for Mellon Bank in their Loss Mitigation department.  My job was to contact homeowners in default of their home loans and let them know that they had other options besides filing for bankruptcy and/or letting their home go to foreclosure sale.

I would negotiate Special Forbearance Agreements, Deeds in Lieu, Short Sales, etc. and acted as a liaison between the borrower and investor who owned the loan.  I wasn't a "contractor" - but an actual employee of the bank and contacted only OUR customers.

Our current market conditions have seen an uprising of less savory characters who offer miracles for a fee.

One thing for you to know!
Anyone who contacts you trying to
help you "save" your home
isn't doing anything for you that you
can't already do for yourself!!!

There are legitimate companies out there who offer their services in order to help those who feel (and rightfully so) in over their heads.

I thought, therefore, that this post from Lynnette Phillips (Loan Officer, San Bernardino County, California) is most appropriate if you are trying to determine the legitimate offer from a scam artist.

To make certain you don't fall prey to a Foreclosure Recovery Scam, please read on:

Scam artists look and act just like the rest of us. They may be just a little more charming, friendly, likeable - but, beware they're ruthless!

The current wave of foreclosures swamping the nation has been increasing at an alarming rate. March 2008 marks the 27th straight month of rising national foreclosure filings. Foreclosure scams are also on the rise with the callous eagerly waiting to prey on the elderly, the unenlightened, and the desperate.

Scam artists are dependant upon the borrower knowing little of the foreclosure process for their scam to work, and want to keep homeowners in the dark about their legal rights and the alternatives they might have to save their home.

A report by the National Consumer Law Center points out that these scams all boil down to two main forms:

The first comes in the form of the "foreclosure consultant" who asks for a hefty up-front fee and assures the homeowner of a refinance of the loan or a delay of the foreclosure will be arranged. The "foreclosure consultant" then does nothing, costing the borrower crucial time and money besides.

Second, the "foreclosure rescuer" takes title to the property in a sale/leaseback arrangement. The homeowner signs the home over to a third party agreeing to make rent payments in the belief that their home is going to be saved. Eventually the homeowner loses the home to the supposed savior along with any "rent" money paid.

How do these supposed defenders of the despairing make contact?  Foreclosure notices are public record, so as soon as the first Notice of Default is printed in the newspaper, your mailbox is inundated with offers of assistance. Some rescuers prefer to meet initially face-to-face and knock on your door but, no matter how initial contact is made, it's important to guard against anyone who advertises their services as "foreclosure services" or offers "fast cash".

To help ensure your safety, the US Department of Housing and Urban Development (HUD) provides listings by state of HUD approved Housing Counseling Agencies. You may contact HUD by calling 1-800-569-4287 or on the web (CLICK HERE) to acquire a list of non-profit agencies in your area.

Before considering the use of any non-approved "foreclosure service," first verify that the individual or company is listed with the Better Business Bureau, Department of Corporations, Department of Real Estate or the corresponding agency within your state.

If you do decide to deal with a foreclosure adviser these pointers may be of some help:

• Do not respond to demands for money before services have been rendered. Most states make it illegal for a "foreclosure consultant" to ask for an up-front fee. All contracted services should be completed before any money changes hands. A scam artist will ask for a fee up front and then do nothing to help you save your home.
  
• Don't sign a Quit Claim Deed or Deed of Trust giving title in whole or part to a third party - as in a "rent" or "sale/leaseback" scam. Although you may be able to avoid a foreclosure showing up on your credit report by giving the lender a deed in lieu of foreclosure, giving title to your home to a third party does not necessarily relieve you of your legal obligation. In many cases the hidden clauses in any paperwork may cost you your home after all.
  
• Don't be pressured into signing a contract or incomplete document regarding your home without reading and understanding it beforehand.

It's very convenient for contract pages to end before allowing room for signature lines. The signature line then appears at the bottom of another blank page making it easy to attach it to another document. The paperwork presented by the scam artist often tends to be very complex and complicated making it easy to hide critical phrases and conditions allowing them to defraud the signer.

• Another fraudulent technique scam artists use is to present you with stacks of paperwork and, of course, they don't sit there and explain anything to you.

Safeguard yourself and your home against loss to a foreclosure scam!

* Re-posted with permission

I hope you have found this article to be helpful.  For those of you who find yourself in desperate situations, please note that KMG Mortgage Group is only weeks away (maybe days away) from getting our FHA approval.  FHA loan guidelines are much more flexible in regards to credit and do allow for foreclosure bailout situations.

Please contact us today if you are interested in learning more.  Remember, KMG Mortgage Group is licensed in Idaho and Washington and we are regulated by the Idaho Department of Finance and the Washington Department of Financial Institutions.

We don't get paid unless your loan closes - with YOU on title!!!!!

Best regards to you and your family!

Winner of the Outer Critics' Circle awards for the best off Broadway musical and for the best book and best music - and seen at London's Fortune Theatre in 1987.

Nunsense is a hilarious talent show staged by five survivors at the Little Sisters of Hoboken nunnery, the rest of the sisterhood having succumbed to botulism after eating vichyssoise prepared by Sister Julia, Child of God.

Nunsense offers a cornucopia of hilarity for the whole family, proving conclusively that nun rhymes with fun!

For times and ticketing information, please visit the Lake City Playhouse website.

USDA - A Legitimate 100% Loan Program - From an Underwriter's Perspective

With the tightening of lender guidelines and the shrinking of pocketbooks across America, USDA is growing in popularity among middle to low-income families and individuals.  However, very few Mortgage Professionals know how valuable this program is and, even more importantly, don't know how to structure the loan for a fast and smooth review.

Because program literature and copy written material often provides "Program Highlights" and don't get into the nitty-gritty, I called my local USDA contact and asked for a copy of the underwriting guidelines.  He was happy to oblige, and I have (while trying to be more in depth than program fliers and handouts, but not dictate the underwriting guidelines - 24 pages of SMALL font that will bore you to tears) provided you with information I think you will find valuable.

Availability
USDA loans are not available in all areas.  Contact us today to learn if you are buying a home that will qualify.

Term
30 year amortization, fixed rate = no exceptions.  Primary residences only.

Interest Rate
Varies by investor - contact us today!

Mortgage Insurance
None - 2% guarantee fee (see below)

Guarantee Fee
2% - the maximum loan-to-value for purchase loans can exceed the appraised value to include the amount of the guarantee fee.  This applies only to loans for which the guarantee fee is being financed.

Loan Purposes

• Existing or new homes, modular, manufactured (only new units), townhomes, condos.  If the townhome or condo has a PUD, it is automatically acceptable for the program.
• Take out/end loan including construction-to-perm.
• Property repairs/improvements - must be completed before the final guarantee is issued.
• All typical buyer closing costs, including the one time RD guarantee fee.

Minimum or Maximum loan amount
None

Payment Shock
Do not allow additional risk layering with very strong documented compensating factors when the new PITI is double or more than their existing housing expense, or where there is no history of housing expense.

Credit Criteria

• No foreclosure in past 36 months.
• No bankruptcy discharged within 36 months.
• No more than one-payment 30 days past due in last 12 months.
• No accounts converted to collections within past 12 months.
• No tax liens or delinquent government debts (including student loans).
• No judgments outstanding in past 12 months.
• No outstanding collections.
• No two or more late rent payments within 24 months.
• No debts written off or charged off within the past 36 months.
• Chapter 13 Bankruptcies will be handled on a case-by-case basis.

Exceptions to Credit Requirements

• The circumstances were of a temporary nature, were beyond the applicant's control and have been removed.
• The adverse action or delinquency was the result of a justifiable dispute because of defective goods or services.

Streamlined Underwriting and Additional Compensating Factors
Primary wage earning is 660 or above AND co-applicant (if any) is 620 or above:

• Payment Shock - may use credit scores with no further documentation
• Ratio/Credit Waiver - may use credit scores with no further documentation
• Rental History - may use credit scores with no further documentation
• Non-Federal Outstanding Collection accounts - may use credit scores with no further documentation

Credit scores between 620 and 659

• Credit scores CANNOT be used as compensating factor.
• Adverse credit must be addressed and documented with compensating factors other than credit scores alone.

Credit scores under 620

• Requires full underwriting analysis.

Non-traditional Credit
Allowed

Income Limits
The adjusted gross annual household income must not exceed the limits posted for your state.  However, I have included the income limitations for Idaho as an example to you.  The numbers below are for all counties in Idaho except Blaine County:

1 person - $49,550
2 person - $56,600
3 person - $63,700
4 person - $70,750
5 person - $76,400
6 person - $82,050
7 person - $87,750
8 person - $93,400

*revised 3/19/2008

Homebuyer education
Required for first time homebuyers

I hope you have found this to be helpful.  If you wish to find out if you are buying a home eligible for this valuable program, contact us today!

A very inciteful post from Florida's Mortgage Professional Robert Ashby:

Unless you have been asleep or not paying attention to the news today, you have undoubtedly heard about Lehman, Bank of America (B of A), Merrill and AIG. With the news sending the DJIA down over 500 points today, traders are comparing the move to Black Monday of 1987, dubbing this as Black Sunday.

The good news for homeowners, or homeowner wannabes, is that mortgage rates drop when bad things happen in the stock market, or bad news develops surrounding the economy. That is, except for news of higher inflation, which causes mortgage rates to climb. Today is a good day for mortgage rates to say the least, and is probably a good day for you overall.

Lehman filed for bankruptcy protection, essentially killing themselves. Since the government has stepped in to save Bear Sterns and recently bailed out Fannie Mae and Freddie Mac, it only seems right for them to continue their bailout program and save Lehman as well. After, the Fed cannot play favorites, right?

Next on our list is the announcement that Bank of America (B of A) will buy out Merrill Lynch, putting an end to 94 years of independent trading. Bank of America did make a bid to buyout Lehman, but walked away from it, favoring the bull of Merrill instead. Barclays also bid and balked in regards to purchasing Lehman, proving that none in their right minds would touch Lehman with a ten-foot pole. That means the Fed should be all over it, possibly next weekend.

Oh, and how can I not mention AIG, the world's largest insurer, struggling to stay afloat as well. AIG is looking for someone to lend them $40 billion and they may face insolvency today if the S&P cuts their rating and causes nearly $18 billion in collateral calls and swap payments. AIG has asked for Bernanke's help and, believe it or not, Bernanke and his gang turned their backs on them. I guess they will play favorites after all. Wait, I figured it out. They will go to great lengths to bail out financial institutions, but when it comes to insurance companies, they just let them fall.

You can bet these moves will not be good for the job market, or the economy in general, but it will help to lower mortgage rates, at least for the short term.

So, why is this all potentially good for you?

Besides the fact mortgage rates are ticking lower as a result, allowing you to potentially to access cheap money to buy a home or other investment, you likely have a great opportunity.

As the "herd" heads for the hills, now is the time to buy up the solid leftovers and take advantage of when the herd comes back to the feast.

*re-posted with permission

Coeur d'Alene, USA Today's 10 Best ... AGAIN!

As you may already know, North Idaho (Coeur d'Alene specifically) is an amazing place to be. That's why some of you have already decided to make it your home and/or business location.  That's why thousands of people vacation here every year!

My husband has been a lifelong resident (he remembers when "The Resort" was "The Cloud Nine" and the only stop light in town was at 95 & Kathleen) - WOW!  How far we have come!  I consider myself a "native by marriage" - and wouldn't want to be anywhere else!

Click on the attached link to the "USA Today" article Life on Vacation: Dive in to Divine Weather in Idaho, and learn why so many people are making North Idaho and Coeur d'Alene their second home destination!

And, when you're finished, learn more about KMG Mortgage Group - North Idaho's leading mortgage broker for your perfect 2nd home loan!

And for those who already live here, enjoy the confirmation that we live in the best town in America!  Of course, I'm biased!

Enjoy!

Why the Government's Takeover of
Fannie and Freddie has Lowered Rates*

We have received many phone calls inquiring into what we are seeing in the news the last few days.  I wanted to post an illustration in order to make it a bit easier to understand the world of mortgage bonds and how they affect rates, but I ran across a blog post from Scott Fowler (Mortgage Planner in Greenville, SC) that illustrates the point perfectly.  I couldn't have said it better myself.  Thanks, Scott!

When comparing two investments with equal risk, a rational person will choose the investment with a higher rate of return.

This behavior is called Risk Aversion and is a basic tenet of personal investing.

An off-shoot of Risk Aversion is that a rational person will only invest in an instrument of greater risk if the returns are greater, too.

The chart at right illustrates this concept, comparing return rates on two investments:

• U.S. Government bonds
• Mortgage-backed bonds

The difference in investment return rates is sometimes called a "spread" and the historical spread between government debt and mortgage debt is somewhere near 1.5 percent. 

However, notice how the spread started to grow starting in July 2007.

July 2007 marked the "official" start of the Credit Crunch and as mortgage delinquencies grew nationwide, so did the market's perceived risk of investing in them. 

By the start of this month, the spread had nearly doubled.

But that all changed Sunday.  When the government announced its takeover of Fannie Mae and Freddie Mac, it put the same "risk-free guarantee" on mortgage debt that has helped keep U.S. government debt so cheap to finance and the spread immediately shrunk.

This is one reason why mortgage rates fell Monday and why they should continue to stay low over the near-term.  With the U.S. government backing the mortgage market, there's no room for the risk premium that helped keep rates high this past year.

It doesn't mean more people will qualify for conforming home loans, but for the ones that do, financing should be cheaper.

I hope this spread some light on the world of mortgage bonds and how they affect interest rates.  For more information on what affects rates, please see our "Daily Rate Lock Advisory" for help.

And, keep coming back for more!

* Re-posted with permission

Changing Jobs Before Your Loan Closes?

We had a borrower call us today and ask an excellent question that I thought you all could benefit from.

Q:  Is it okay if I change jobs before my loans closes?  I will have the same position, same title, and same responsibilities.

A:  Historically speaking, this kind of change would be of less concern than others.  However, as we have all seen on the news, and in my blog post yesterday titled "Feds Take Over: Are We Just a Dog Chasing Its Tail?", things are a-changing.  We are seeing underwriting demands that, if it were this same time last year, would have sent us away scratching our heads.

Our recommendation to our customer?  Let us talk to our underwriters BEFORE you make any changes.

And, that's the benefit of having your loan through a mortgage broker and NOT a direct lender or bank.  What might bother one underwriter, might not bother another.  Direct lenders and banks, typically, have only ONE underwriter on staff.  Mortgage Brokers are only limited to the number of underwriters they have by the number of lenders they are approved to do business with.  In KMG Mortgage Group's case, that's over 40.

So, don't take your chance with just one underwriter.  Use KMG Mortgage Group and have over 40 underwriters at your disposal!

Maybe you’ve seen the news: as of today the
Federal Government
is in charge of Fannie Mae and Freddie Mac.

What prompted the Feds to step in?  Fannie and Freddie, which together own or guarantee about $5 trillion in home loans, about half the nation's total, have lost $14 billion in the last year and are likely to pile up billions more in losses until the housing market begins to recover.

Is this a good thing?  Depends on your perspective… Many are claiming that the move was necessary in order to bring stability to the marketplace. Others are saying that what is happening in our housing and lending markets is a necessary “correction” and should be left to come to its own, natural conclusion.

What do these perspectives have in common?  Though analysts may disagree whether this is a necessary move or just another political game in an election year, they do agree that whether the Feds stepped in, or by allowing this “correction” to ride, is of little consequence to the endless Americans who have lost their homes due to lax underwriting guidelines and plunging home values.

What is the hope of the new Federal Housing Finance Agency (FHFA) – the new Governmental body now in charge of Fannie and Freddie?

1. That it will significantly lower the borrowing costs for the agencies, thus improving interest rates immediately. In fact, upon coming into the office Monday morning, Mortgage Brokers everywhere were pleasantly surprised to see rates did, in fact, take a nose dive.

2. Agency Mortgage Backed Securities (MBS) will resume trading in sympathy with Treasuries. It is hoped that the margins between T-bills and Agency MBS will narrow now that the government is in full control, thus improving rates even further.

3. It is, also, hoped that this move will give the Feds a new tool to kick start a slowing economy, or put the breaks on an economy moving too swiftly with threatening inflation. If the Feds view rates as too low, they will sell Agency MBS. If rates are too high, they will be active buyers of these securities.

Think of it as a dog chasing its tail. If it runs too fast, it will spiral out of control, get dizzy and end up on the floor. If it moves at a glacial pace, it won’t ever get the chance to have that victorious feeling of having caught the prize (in this case, its tail).

It’s an elementary example, but I think you get the point.

How much will this cost?  Analysts were split on how much the takeover could eventually cost taxpayers – although all agreed the up-front costs will be substantial, possibly hitting $100 billion as the Treasury is called upon to bolster the capital cushions at both institutions.

Is there an end is sight? If the plan does the trick of stabilizing the housing market and home prices stop falling and do rebound, then the assets of both Fannie and Freddie should rise in value and the government should be able to sell off the companies and recoup its investments.

Is this permanent?  Will Fannie and Freddie ever be able to run on their own again?  No.  It would be up to Congress and the next president to figure out the two companies' ultimate structure and the conflicting goals they operated under, but suffice to say, Fannie and Freddie, as we once knew them, are gone.

One thing is for sure, don’t expect underwriting guidelines to ease anytime in the foreseeable future.

Stay tuned for more…

Help Feed Coeur d'Alene's Hungry!

The United Way will be teaming up with Coeur d'Alene food assistant charity organization "Community Roots" to get fresh produce to those who need it most in our community.

The Day of Caring is Wednesday, Sept 17th.  Starting off at 8am with breakfast at the Coeur d'Alene library, then volunteer teams and project teams connect and head off for the days activities.

To learn more about "Community Roots"
CLICK HERE!

Your day will be spent outside picking fruit trees (plums, apples and pears), weighing them, charting them, and then delivering them to numerous food assistance facilities that "Community Roots" has partnered with.  The days activities should wrap up around 2pm and you will be free to return to your day's activities.

Those who are interested in forming a team of 3-4 people, please e-mail me by CLICKING HERE!

The Clock is Ticking People!

Time is of the essence, especially in this market of anxious sellers, nervous buyers, and Real Estate Agents and Mortgage Brokers with thinning pocket books.

So, how can we all, as a TEAM (you, me, the buyer) work together to get the deal done, get it done fast, and get it done without a gigantic headache?  Read on...

1. Buyers need to select a mortgage broker BEFORE the contract is tick, tick, ticking ... Buyers do not understand that time is of the essence.  We have had buyers select us as their mortgage broker 15 days into a 30 day contract and never tell their Agent that they were still "shopping" for a loan.
2. Agents and Mortgage Brokers should communicate BEFORE the contract is written ... Just because the seller would LIKE to close in 25 days doesn't mean that your buyers qualify for the kind of loan that would allow it.
3. Understand that a pre-approval is different than a lender approval ... Pre-approvals do matter, no matter what people say.  But a lender approval, even with conditions still pending, will put you ahead of the game.
4. Keep in mind that your buyer might not qualify for a loan program that can be underwritten without a contract ... Sounds silly, but it's true.  Some buyers require a loan program that can't, won't, be underwritten until there is a contract in hand.  Refer to item #2 above!
5. Paperwork, paperwork, paperwork ... Mortgage Brokers need copies of the contract, SIGNED and legible.  If you're not faxing updates often enough to think you're being a burden, YOU'RE NOT FAXING ENOUGH!
6. Lender approvals still come with CONDITIONS, no matter how qualified your buyer is ... Buyers who fantasize that because it was easy to get approved last time, it will be this time, too.  Things have changed.  The lending world has changed.  Sorry, but we must all adjust and expectations for clients need to be set accordingly.
7. Don't forget weekend and holidays ... A 30 day contract leaves 20 working days for your mortgage broker to work their magic.  Now, throw in any national holidays, and your 20 day window just got smaller.
8. Time is of the essence ... There have been instances when we have contacted a buyer for needed information 3 or 4 times before they get it to us.  We don't have the luxury of waiting.  Make certain buyers have all their important financial information in one convenient location, so that when call and ask for it, (BAM!) we've got it.
9. Delays are NOT a mortgage broker's way of trying to make a statement ... We want the deal to close as quickly and easily as you do.  And, it's not about getting paid.  It's not about moving onto the next deal.  It's about getting the job done for THIS client and getting it done RIGHT so they can move on and in to the dream home - and the world keeps turning.
10. We can't tell you everything ... We don't want to bore you with the minor details.  We don't want to scare you every time something comes up.  But, if it becomes an issue, we'll talk.  You must remember that we have a LEGAL obligation to keep the financial information of our clients' private.  I couldn't tell you everything even if I wanted (or you wanted me) to.

Agents do play an important role in making loans fund FASTER, and without the headache of extensions and misinformation.  Repeat this to yourself:

"We are on the same team!"

Happy selling!

The Top 5 Scams in America;
How You Can Beat Them!

The cost of everything is going up ... up ... up ... gas, groceries, medical bills, you name it.  And, along with higher prices comes your run of the mill low-life looking to part you and your hard earned money.  I have listed here the top 5 scams in America and how you can beat them!

Home Construction Scams: Nothing attracts fraudsters more than natural disasters (whether on a large-scale like the California Wildfires or Hurricane Katrina, or on a small-scale like a pipe bursting in your vacation home while you were between visits).  Disasters, be they large or small, have devastated homeowners while filling the pocket books of low-life contractors without any scruples.

How do you beat them at their game?  It's not enough to merely ask for references, you actually need to TALK to other homeowners who have hired them.  Others recommend withholding a portion of the payment until the end of the job to cover any work that is not completed or damage that they may cause.

Bait and Switch Mortgage Scams: Obviously this one hits close to home for me.  Lenders convince borrowers to get loans with the promise of low terms, only to switch them to loans with high adjustable rates and outrageous fees without their knowledge.

How do you beat them at their game?  Read all loan agreements carefully and be sure to understand the terms.  And, follow your gut.  If it sounds too good to be true, it probably is!

Fake Check Scams: Someone calls you and asks to deposit a check (which later turns out to be counterfeit) into your bank account and send him/her a portion of the deposited check.

How do you beat them at their game?  Don't do it!  No matter what they promise!  This is not only a leading type of fraud reported, but also boasts the highest average loss per victim - $3,274!!!

Internet Fraud - Coaching Services: In our industry we see it ALL the time!

"Joe Schmoe" Loan Officer originated $17 million in one month and closed $15.8 million that same month - and generated over $150,000 in fees in just 30 days!
Just pay $149.99 for this book (or attend some stupid seminar) to find out how you can do it too!
Put it on your VISA now!!!

GIVE ME A BREAK!

How do you beat them at their game?  I always ask myself this simple question: "If this person is TRUELY as successful as he/she claims to be, would they have the time to write a book or give a seminar?"  My answer, thus far, has always been "NO!"  And, if you don't trust your gut, ask for references for people who have had the SAME level of success!

Layaway Loans/Payday Loans: This is how it works - "You pay me $250 a month (or weekly, bi-monthly, whatever) and when you have paid me $2,500 I will deliver your brand new computer (or side-by-side refrigerator, hi-def tv, whatever)."  Then, when you've paid your $2,500, your long awaited treasure never shows up and your calls mysteriously go into voicemail or, simply, never get answered.

How do you beat them at their game? Save for major purchases instead of agreeing to high-cost financing and don't finance an item (paying for it in FULL) BEFORE it's delivered.

So, with the cost of gas and groceries going up, save your money for the important things in life, like taking your two year old out for ice cream!