So, MetLife Wants to do Warehouse Lending?

Just when we thought no one wanted to lend money, we got a surprise. MetLife has decided to try its hand at warehouse lending in addition to its securities, and financial planning that it offers. From insurance to mortgages, it has now truly broadened its horizons. MetLife in addition to many other insurance and financial planning firms have been looking for ways to expand their potential, and this was one way to do it.

The managing director the for the operation, Brian Lewand made the statement that it was a “good fit” for the firm. In order to launch the financing end properly, the company hired two executives from Sovereign Bank to head up the launch of their new product. Ultimately, it takes more than two to run an operation like this, so MetLife is currently in the process of looking to add staff, but a process like this takes careful time and selection. At the end of their third quarter, MetLife plans to release more information regarding the next steps and what is going to happen.

I hope that this operations is successful, as the nation has faced so much disappointment over the past few years. Our country just can’t take anymore. My hopes are that certainly, a company that focuses on financial planning and insurance, will take all the right steps to grow this endeavor to the best of its ability.

-Mayer Dallal

The Rise on Government Backed Loans

Can we do this without the government? What I meant to say was, can we make a recovery without their help? I guess the answer to that is both yes and no. What I mean by this, is with the increase of applications in government backed loans, we can be in a really good position to move forward and upward in our economy without needing or getting some sort of bail out.


At least with FHA loans it appears this way. Bill Gross, who operates the largest mutual fund at Pacific Investment Management Company, said that there could be as much as a 4 percent increase in mortgage yields. With that being said, we know that mortgage applications have increased by 12.4% from the previous week, and each week prior to that over the past month applications have gone up. Additionally, Gross said that 95% of mortgages that were closed over the past year, were government backed loans. This means that whether they were purchases or refinances, these loans were backed by Freddie Mac or Fannie Mae. I guess the private sector simply charges too much?

Think about the differences in FHA over the conventional loans. With FHA purchases, you can put down as little as 3.5%, or up to 10% depending on your credit score. This was one of the changes that came this year. With conventional loans, you would need to put as much as 10% to 30% down. A majority of families need the lesser of the two, and it’s critical that consumers know that they have options in these tough economic times. I have been able to help so many families get into homes with the lower down payments, and not only that but being able to direct them in the way of how FHA works. It is important in times like this that your clients understand what options are available, and I can get their loans closed in as little as ten to fourteen days. Who likes to wait?

For more information on FHA loans, and how to get your clients qualified, go to www.fhaloansnow.net and take a look around. I have an FHA calculator there where they can put in the information to determine their affordability and payments, and there is valuable information on guidelines and requirements. You can also email me directly at mdallal@fhaloansnow.net, or call me at 310-498-2700.

-Mayer Dallal

The Changes to Mortgage Insurance Premiums

Right at this moment upfront mortgage insurance on an FHA insured loan is 2.25%. Effective on new FHA loans October 4, 2010 and later, the new upfront mortgage insurance premium will be 1.00%. On a $400,000 loan the 2.25% premium pencils out to $9,000 which is typically financed (added to the FHA base loan amount); in a month the upfront premium will be reduced to $4,000.


This might sound like good news, and a break for those who wish things would let up; but there is a catch. The yearly mortgage insurance (paid monthly) is increasing to 85-90 basis points (currently it's 50-55%). An increase of 0.3% of the yearly premium will increase the monthly payment (based on a $400,000 loan amount) to $300 (0.90 x $400k =$3,600/12) from $183 (0.55 x $400k =$2,200/12) an increase of $116.47 per month.

Using an interest rate of 4.25% and a based loan amount of $400,000, this is how it breaks down.

FHA Case Number BEFORE October 10, 2010:

$400,000 plus $9,000 = $409,000 amortized for 30 years at 4.25% = principal and interest of $2012.03 plus the yearly mortgage insurance of $183 = $2,195.03

FHA Case Number issued October 4, 2010 and after:

$400,000 plus $4,000 = $404,000 amortized for 30 years at 4.25% = principal and interest of $1,987.44 plus the yearly mortgage insurance of $300 = $2,287.44.

The new FHA mortgage insurance premiums have an increase in payment of $92.41 based on this example. This impacts both purchases and refinances using FHA insured mortgages.

For more information on the changes, you can go to www.fhaloansnow.net, or you can call me directly at 310-498-2700.

-Mayer Dallal