First of all - this is NOT an instruction to you to avoid calling these places.  Go ahead…  These are mostly lead capturing services - the lead will be farmed out to numerous mortgage companies who will fill up your inbox and ring your phone off the hook.

What everyone has to understand is that there are no “economies of scale” in the mortgage business.  What I am talking about is, there is no concept like where a Wal Mart, with their tremendous buying power, can sell bicycles cheaper than the local store can buy them for.  If there was, micro companies such as myself, could never exist.  Mortgage rates are basically set with economic factors - there are no volume discounts (not exactly true but these don’t make much of a difference)

My advice to you is check these companies out - if you can stand the amount of soliciting you will get bombarded with - then check out a company like mine.

You will find these MAJOR differences:

1.  I have had the same phone number for 20 years.  If you call it at 2:00 in the morning - I will answer it - try that kind of service with any bank or nameless company from a website

2.  Our rates and closing costs will just about always be lower - I mean after all, I’m not paying a lead generator for business - someone has to pay for it.

3.  Ok it’s two days before closing and you can’t get the guy from Omaha on the phone - what are you going to do?  You can always come and smack me over the head if you feel you haven’t been getting the service you need.

4.  You have a problem with the company you are going to deal with - what protections do you have.  Yeah there’s RESPA and all that but trust me, we fear the State of Florida and it’s investigators - we never do things that would get us in trouble because if you complain - they follow up - every single one.  If you deal with an out of state lender - they are going to tell you “Sorry - no jurisdiction”  The state has only come to my office one time - about 15 years ago - I had not filed my audited financial statements within the first 90 days (didn’t know I had to back then).  I had them when the guy got there so he didn’t make trouble but trust me - when they say jump - we say how freaking high!!!!

Well you get my point - check them out but don’t let me catch you only going that route - I know where you live.

Give us a call - can’t hurt!

The aforementioned Mr. Dimon - head honcho at Chase, came out in a public meeting with Bernanke and said - we’ve gotten rid of most brokers - mission accomplished.  Does this scare you too?  A large corporation doesn’t like the fact that there is a section of the mortgage business that they don’t control, so what do you do?  Well get rid of them any low down underhanded way you can.

As head of one of the big banks he has a bully pulpit that my industry can’t defend against.  Bernanke doesn’t call in our trade associations to these meetings - so they get to say whatever garbage they want.  In the meantime this spew becomes part of the public consumption.

Chase - STILL has sub-prime loans offered on their website - Their rate today - right off their website for a 30 year fixed rate loan was 4.5% plus 1.25 points - now first of all, for the very same product we are 4.5% with 0 points plus we will process the same file, probably twice as fast, plus you can call me anytime you want with questions (try getting any bank LO on the phone, let alone a processor etc.)

Yeah we’re the bad guys - it’s not as simple as this but on a $300,000 loan - they will make an extra $3,750 gross profit on the deal PLUS they will get a service release premium that we won’t get - yeah I can see why they don’t want us around.

I don’t want Chase out of the mortgage business - brokers need these banks.  What I want them to do is tell the truth, get their facts straight and play fair.

Do you know why we have to order appraisals through 3rd party sources now.  It’s because the Attorney General of NY (Andrew Cuomo at the time) sued Fannie because of all of the appraisal fraud perpetrated by Washington Mutual (a huge bank at the time) .  They went so far as to “blacklist” appraisal companies for not playing along.  The AMC or Appraisal Management Companies have  been one of the largest single reasons for the eroding of our property values. 

I mean by definition, we are the intermediaries - think about it - you buy an Impala and the AC breaks - do you fire the salesman?  He sold the product he was given.  We as brokers didn’t make these toxic programs, we were just given them to sell.  We didn’t underwrite or approve the loans - we submitted them for approval to the banks.

We had Chase, WaMU, BofA, every week in our offices begging us to allow them to train loan officers to sell sub prime loans or option arms.  Bayside Mortgage NEVER did an option arm (pick a pay) and we may have done 5 subprime loans in 20 years.  99% of what we did was standard Fannie 30/15 year fixed rate loans - yeah and we’re the bad guys. 

Were there some bad guys out there in our biz - of course there were but there was just as many in the banks.  I had an equity loan on one of my rental properties - the Loan Officer changed the loan all around to “make it work” I didn’t even see the changed application until closing - I refused to sign it unless it was returned to the way I submitted it - they got really pissed off about it - but then they closed it anyway.  They were under tremendous pressure to make their goals so their bosses could get their new BMW’s - the bank - Wachovia (now Wells).

We are fighting for our lives because of this crap - if you as consumer’s don’t see the value of a free marketplace - if you want the recipients of 125 BILLION dollars in bail out money (mostly unregulated) to control your future with no competition - well I have no answer for that.

In any case, review our rates against these banks and then give us a call.  Can’t hurt!

James Carville mentions on Imus that if something doesn’t happen to the employment picture - civil unrest is possible.  Could that be?  We saw the demonstrations in Wisconsin when Governor Walker slapped the unions around - but they were civilized - no violence - by the way, I agree with what Walker did, further I hope that Scott Walker  gets drafted to run in 2012.  Viva Wisconsin!

Last night they had this segment of Dateline (congrats to “do it all”, Ann Curry finally getting an anchor chair by the way) on the efforts of Grafton, a wonderful middle-American town, to renovate a house for a family in need.  Great story - great TV but what really came through to me was the volunteers that were there working because they had nowhere else to go.  There was one fellow, a bank manager, recently unemployed,  in his late 50’s who had never been without a job in his whole life,  working there - he looked absolutely lost, he was losing his home, his marriage had broken up.  This is a guy who has never applied for food stamps or been on welfare and he looked absolutely unprepared to be one of the unwashed masses.  Let me tell you, I sympathized with the family the town was helping but I really felt for that bank manager.

This is bad and getting worse.  Our politicians are letting us down.  That crazy loon down in Texas, Perot - he had the right idea.  There was no way he could be elected, he made too much sense.  He wanted to run one term because he knew he would never get elected to a second one.  He would have pissed too many people off - but the special interests, greedy politicians and all the pork barrel issues would have at least had their foundations rattled.  I mentioned this before but I read where if the federal government quit paying anything but debt payments and it paid $100 million a day - it would take 250 years for the US to be debt free.  Look at the news - China is making noise - they are going away from short term American bonds, they are warning others about holding large amounts of American dollars.

A person’s self-esteem is based to a large part on his or her ability to meet their obligations, pay their bills - the jobs are disappearing folks - the equity in people’s homes has disappeared - civil unrest??? Yes it is damn well possible and I hope that the rest of the country can be as polite as those folks in Wisconsin when they start “unresting”.

Hey check out our rates compared to the banks - I want to put it on a crawl at the top of the website but my webmaster tells me that is so 90’s - tough - I’m getting it anyway - or there will be some civil unrest in the office - hey give us a call or drop us an email - we are proud to say we are available 24/7 - can’t hurt.

First of all, let me congratulate all of us for making it through the apocalypse - according to David Letterman we didn’t get called to heaven because we’re all too fat - yeah probably.  Secondly, he had Lady Gaga on as a guest.  Now I’m 60 years old, so I don’t get most of what she’s doing, yeah she’s a weirdo, she’s Madonna 2.0, her music is overproduced crap to me BUT she’s very popular and I’ve got to tell you, I have a grudging admiration for her.  She’s doing it her way, to hell with everyone else and it’s working for her.  She was relating a story of starting out in the New York underground club scene with a partner - Lady Starlight - she said they performed in matching bikinis and were very well received.  She went on to say - it’s amazing what you can accomplish when you take your clothes off - I have been mulling all evening if there’s a corollary to the mortgage business.  Don’t try and get a mental picture, your retinas are important to you!

Ok, Pam Bondi, our pin-up Attorney General.  When all the Attorneys General got together to investigate abuses by mortgage lenders and mortgage servicing companies, they came up with some settlement demands.  One of them was the concept of “Warranted Principal Write Downs”.  Well our aforementioned Kewpie doll Attorney General refused to endorse the plan.  Her main gripe was Section M on Page 18 which stipulated that when modifying a mortgage, some folks should have part of their principal written off.

She argued that making this part of the deal would lead to a free-for-all of underwater homeowners demanding write-downs.  She further argued that this would tempt folks who are paying their mortgages to simply stop in the hope that eventually their bank would erase part of what they owed.

Ms. Bondi is a former prosecutor and an Asst. States Attorney and was swept into office thanks in part to the Tea Party movement in Florida.  She is not without controversy - she didn’t vote in a number of elections and forced a victim of Hurricane Katrina to sue her to get her dog back.  Apparently she adopted a St. Bernard (in Florida????) from an animal shelter in St. Bernards Parish, LA after the storms.  When the family who owned the dogs finally was able to return to their home, they tracked the animal down and asked that Bondi return it to them.  She refused to return the dog.  The family was forced to sue her for its return.  Bondi, was then making a name for herself on Fox News and figured the whole thing would hurt her image, so she returned it.

Over half of her constituents are upside down on their mortgages, so you would think a smart politician would want to support a provision that would allow qualified folks to receive a principal reduction on their homes as part of a mortgage mod.  I mean it’s happening out there, JP Morgan Chase is doing this on some of the option ARMS originated by those bandits at WAMU.

So where is her trepidation, you ask?  Remember my premise from past blogs that politicians do whatever is politically expedient - what helps them get contributions - forget what helps the populace.  She didn’t vote nay because of a “moral hazard” or some ideological political dogma. (let’s also not forget she switch from Dems to the GOP when people told her she had a future in politics)  She voted in the negative to keep her money spigot from her sugar daddies flowing with the mother’s milk of any politician - PAC money!

Last year, Bondi and the GOP received $453K in contributions from Banking and Real Estate Lobbyists.  $126,500 came from the Florida Banker’s Association who last year unsuccessfully lobbied the legislature to make Florida a non-judicial foreclosure state (read easier).  The Florida GOP also helped bankroll her campaign by giving her $800K to cover consultants, phone banks, office rent and campaign staff.    Part of this came from the $448K that was given to the GOP by the above mentioned groups.  Groups like the Florida Banker’s Association or the Realtors PAC often give money to the various state or national parties or both with the intent that it will be used for a specific candidate.  This is done to cloud over who gave what to whom and when.  Well, unfortunately for Ms. Bondi - it is pretty obvious where the money went.

Politicians all start out in the game to serve their communities and to help people but invariably this morphs to feeding their egos and personal and financial gain.  It doesn’t take very long either.  If politicians made the hard choices that need to be made - the money would stop - they would never get re-elected.  Consider this statement:

You get my point - they will say anything to get their ticket punched - then when that happens they will do anything to stay there and max out.  Well enough for today - remember, we have the best rates and service out there - give us a call - it can’t hurt!  I’ll keep my clothes on.

Not to get all esoteric on y’all but as of April 1st, companies like mine are compensated in two distinct ways. We have to choose one or the other and combining them is not allowed. We can be compensated in what are called Lender Paid Transactions or Consumer Paid Transactions. In both cases the net effect to the consumer can still be a rate plus points or a rate plus no points. So what are the differences:

Lender Paid Transaction - in this type of mortgage, we set up agreements with wholesalers to offer the consumer a mortgage at a fixed compensation. We cannot make less we cannot make more. The interest rate can change but what we make won’t change. In most cases a rate will be chosen that completely covers this contracted amount of compensation but if a rate is chosen that doesn’t cover - then the consumer must pay the difference as a closing cost. We are not allowed to waive it. If a rate is chosen that more than covers the amount - it must be given back to the consumer to defray his other closing costs. As an aside, in the past, we were allowed to pay for things that came up at the end - say a rate lock extension or chip in to pay some minor fee that rose at closing - well the powers that be have said this is verboten - why, no one has given me a good answer yet - basically it’s “because we said so”. But you poor addled borrowers don’t know any better, so they will protect you from us helping you.

Consumer Paid Transaction - in this type of mortgage, we offer a rate to a consumer. Now it gets a little confusing here but we will typically offer you a rate that is over par, or in other words, the rate will have built into it a premium that we just used to retain for our compensation. The premium still exists but we can no longer retain it for our compensation. However, we can rebate it back to you to pay part or all of your other closing costs. I said it was confusing - stay with me here and remember this because this is what I am bitching about today. This premium used to be called a YSP (Yield Spread Premium) and we were duty bound to disclose to you exactly how much it was. Somehow the YSP got singled out as one of the problems that caused the mortgage mess. They were called kickbacks - well I suppose they were, but it is how we were paid. When we offered you a rate with zero points - how the hell were we supposed to get paid? It was with the YSP. The bottom line - did I provide you a no points deal lower than the corner bank - well yes I did and in its lowest common denominator, if you will, I was kicked back a YSP - but you got a lower rate and fees - I mean every commercial transaction has a profit margin, from buying a candy bar to a car. It was a very convenient bete noir for politicians to hang their hats on as something that was screwing the consumer.

Ok now here’s the rub - you take two mortgage transactions that are identical in every respect - same interest rate, same net closing costs, same payment, same amount of cash brought or received at closing EXCEPT one is Lender Paid and one is Consumer Paid. Now if no one told you and you didn’t look at any paperwork - you would not have the slightest idea that the two transactions were different - you would end up with the same interest rate, you would have the same amount of net closing costs so that would mean you pay or you would receive the same amount of proceeds at closing, you would make the same payments for the 30 years of the transaction - so what is different???? Well what is different is the APR. Now the APR is defined as the actual cost of borrowing - but the truth of the matter is the APR is higher on the Consumer Paid Transaction. Now you ask - how is that possible? Well this is how - when you receive a Lender Paid Transaction - the lender pays me so the there is a zero sum of origination fee and credit that will not affect the APR. On a Consumer Paid - you have the origination fee but the credit must be used to offset costs OTHER than the origination fee. So as the origination fee is part of the APR calculation and most of the other costs are not - even though everything is identical - the APR is higher. How can this be - did you pay more somehow - no you didn’t - were your costs of borrowing higher somehow - no they weren’t - they were just different. Doesn’t this make the value of looking at the APR when comparing lenders kind of useless?

To my mind this is not a good thing - there are other nuances of difference between the two types of borrowing but they’re not germane to this conversation.

Consider

1. All retail Loan Originators - i.e. people who work for banks offer their deals at almost 100% Lender Paid - so put their deal beside my deal - everything identical and their APR will be lower than mine. Normally you are instructed to compare APR’s because a higher APR means you must be paying more somehow. So from a financial standpoint, are you paying more dealing a company like mine - of course not but this idiotic rule makes it look that way - banks love it. (I should also point out that this is a really dumb example because banks charge so much more for a mortgage than we do, its absurd. Look at our rate sheet - I post our rates and then below that the bank rates taken right off their websites daily - they make SOOOOOO much more than we do on a transaction, its beyond criminal - and yet you are being protected from us rather than those bloated bastards.  In some cases, because of the way this works - it is entirely possible that they could have a WORSE deal but a lower APR - yep you consumers are really protected with this!

2. Now as we cannot offset the credit in a Consumer Paid transaction - the origination fee, which is a form of pre-paid interest may possibly be considered a tax deductible cost. On a Lender Paid this is not so because our compensation or origination fee is completely offset in a Consumer Paid - it is not offset as by definition, the credit has to be used to pay for OTHER closing costs. Again, does that make sense - the transactions are basically identical but you may get something extra to write off if you pick Consumer paid (check with your CPA before trying this)

3. Some of the OTHER closing costs are APR related, but we don’t give an APR credit because it is impossible to decide if the credit we gave you paid for an APR related item or a non-APR related item - so the value of the APR is further diminished

Well you have a taste of how political expediency is messing up everything these days. The pols are still trying to make you believe that mortgage brokers got us into this mess - yeah, there were some bad ones but the damage done by them wouldn’t add up to a hill of beans compared to the big lenders and Wall Street - we just can’t defend ourselves like they can - kick our asses so you can say you’re doing something to improve the situation when all they did was jump all over the folks who had the best rates but contributed far less to political campaigns. Personally, I like most of the changes - we have gotten rid of quick buck artists. And man sakes alive - it has illustrated very clearly what a killing banks make on transactions. When we can offer MUCH lower rates and make a living, plus our wholesaler makes a profit and then compare that to much higher rates that a bank charges - and you know the dirty little secret, they get paid after the fact also in something called an SRP or Service Releast Premium - we don’t get that - they have marginalized us so well that they don’t have to have as sharp a pencil anymore - (Today I’m 4.5% and 0 points and BofA is 4.75% and 1.25% and don’t forget the SRP - isn’t a competitive marketplace grand!!!!).

Well as my nephew told me - when in doubt - Rum! Give us a call, anytime, round the clock - I will answer and I will give you a lower rate than the banks - Can’t Hurt!

This weekend I did some shopping - as a single guy, I am unaware of what anything costs, I just grab it and throw it in the cart.  Well I get to the check out and the bill was a little higher than I thought it would be.  I didn’t really think about it again until later in the day, I decided to look at the tape - man groceries are expensive - but the thing that really caught my eye - I bought two yellow apples - they cost $2.74 - I mean $1.37 for a mid-sized, freaking apple - is that what stuff costs really?  Then I read that the nation is borrowing money at over $50K a second.  Not sure but that appears to be adding up to real money.  A little further research - I found out that if the federal government, quit paying another dime for anything and only paid down debt - if we paid $100 million a day - it would take over 250 years to pay back everything we owe.  People, this is getting scary.  These politicians will do or say anything to get elected - case in point - they are severly limiting company’s like mines’ remuneration.  Why??? Because it is politically expedient - in the meantime, we offer mortgages at a lower rate and cost structure than the banks but we still have a burden of paperwork they don’t have plus we have to disclose every dime we make - up front.  Now they have a national registry of mortgage loan officers - it includes our credit histories, our home addresses - there is only one other registry with this much detail - the National Sex Offenders list.

The thing is, no politician can get elected with a program of austerity.  Everyone wants changes as long as they don’t get inconvenienced themselves mind you.  There’s going to be anarchy here if we don’t quit borrowing money and if we don’t severly limit entitlements.  How do you tell a soldier his pension will be cut or a social security recipient there monthly check is going down.  How do you tell all those welfare folks they have to get jobs or else.  Ask yourself - what would I give up to make this better.  I’m a Canadian by birth and at my parents house - they get trash pickup - once every two weeks.  They HAVE to segregate trash into trash, recyclables and also organic pickup - mix them up - they won’t take it.  They are also restriced in how much those loads can be.  It forces people to compact stuff and organize stuff.  Also, yard waste has to be taken to the dump yourself.  Where I live in North Palm Beach, I get a pickup 5 days a week - trash 3X a week - garbage (which is yard waste and used appliances etc.) and recycling another day.  They do not get mail on Saturdays - couldn’t we do that?  Most of all I want to see us quit spending so much in other countries.  I’m not going to mention examples because I just get angry.

In the meantime, rates are lower than last week very slightly - need a Florida mortgage - call Snets - can’t hurt!!!

How many of you are out of the mortgage game for the foreseeable future - probably not that many if you’re reading this.  Ok How many have family, friends and neighbors that are out of the mortgage game.  They have screwed up their credit - their houses are underwater or whatever.  We used to be able to convert the majority of folks that called us for assistance.  Sadly that is no longer the case.

All of the no income programs for Florida mortgage are gone.  Some would say that is a good thing.  Underwriting standards are much tougher than they used to be.  Some would say that is a good thing also. 

The problem is it has reduced the pool of folks that qualify drastically.  Now you combine that with all the short sale and foreclosure inventory and shadow inventory out there and property values are under siege.  With one investor we deal with 13 out of the last 15 appraisals have required “further review”.  (never mind that you have to order appraisals through 3rd party sites that you have no contact with - thank you Governor Cuomo)

The mortgage business is not easy and it’s not for the faint of heart.  We spend many toss and turn night worried about conditions and appraisals.  But we manage to get em closed - that’s the important thing. 

Anyway - need some mortgage 411 or advice - give us a call - we have been doing Florida mortgages for 20 complaint free years.  Give us a call or stay thirsty or whatever and Miami HEAT in 6 - can’t hurt!

This is a topic I have been really pondering lately.  Shops like mine used to get a much larger percentage of the business than we do now.  Why - because the banks have done the best job they can in marginalizing us.  Today for instance for best credit we are offering a 30 year fixed rate - with a 30 day guarantee for 4.5% and zero points.  Of the Big 3 (or should I say the Bloated 3 or the Bailed out 3 or - well you get the point).  The closest rate to ours was Chase - and they were 4.625% with almost a full flipping point besides.  Plus they take twice as long to process and (and pay attention to this one) - you have to deal with a Loan officer, a processor, a closer, a funder etc. etc. - with brokers you deal with a single person typically from start to finish.  Recently we completed a transaction for a lady who works for the evil empire - Bank of America - she came to us because, our rates were better than what she could get internally (how is that even possible).  The transaction was atypical because the day after the application was taken, she went on a business trip to Singapore for 2 weeks.  Now, this is a very type A lady and wanted a lot of feedback on how things were going.  Bottom line, she was calling me at all hours - once at 3AM - we answered every call.  I have had folks tell me they can’t get their bank LO’s during office hours let alone the wee hours.  So I offer you the point again - why would anyone wanting a Florida mortgage not at least investigate what a shop like mine would offer.  Remember that little Oriental guy that was all over the TV touting real estate scams - he used to scream - What are you Stupid?  Well I’m not that crass, I’ll just say - do yourselves a favor - spend 5 minutes on the phone with us - we will answer.

Well - I have more on this subject but I will continue tomorrow.  In the event you are looking for a Florida mortgage - give us a call (even at 3AM) Can’t hurt!