Warren Buffet has been revered as the man to look to with answers regarding stocks, bonds, and much more when it comes to investments, and naturally he has something to say about the housing market too. I have to say, while I don’t always agree with everything I hear, he made a pretty good statement regarding housing and its current state along with the government and how they fit into this mess.
Buffet said; “Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house that they can afford.” Wow! I couldn’t have said this any better, and it’s something that our country needs to get a hold of and quickly. Time is running out on our country to get wise, and we have no other option but to enforce better lending practices.
In Buffet’s opinion, there will be a recovery and he believes that it will happen within a year or so. I know that there are many who claim to believe this, and hopefully with a rash of new and young buyers we can make this all possible. A friend of mine in Ohio is seeing that there are many homes not always being sold, but many offers for lease option to buy, rent, or even for a land contract.
Our housing climate is a little different, but in some way we are seeing things a little different than we used to. My hope is that banks, lenders, and officials will adopt Buffet’s attitude, because the clock is ticking and we simply cannot afford to go through this again as a country.
-Mayer Dallal
Monday, February 28, 2011
Friday, February 18, 2011
The Option Arm Challenge
Analysts said that those families who had Option Arm mortgages would more than likely end up in default by the end of 2010, going into 2011. However, that hasn’t been the case thus far. While I understand how they work, and I think they are a dangerous product to offer, I can see why defaults were delayed.
Option Arm mortgages were designed to give consumers four different types of payments; a minimum due each month, an interest only payment, an amortized payment, and an accelerated amortized payment. The challenge with Option Arms, is that the consumer more often than not opted to make the interest only payment, which began to drive up the balance on the loan.
As balances are tacked onto the back of the loan, it means that there is potential for the borrower to become upside on their mortgage. However, in the state of California no one seemed to be concerned. Properties were accelerating in their equity each year, and so California seemed to be the exception to the rule.
Rates being low has slowed the explosion on this type of program, but let it be known that it can’t last forever. Rates are going up, and they will continue to do so as inflation increases by leaps and bounds. Once this happens, these loans will be a time bomb, and borrowers that know they are underwater like this are more likely to just quit paying.
While houses still exist, being empty no longer makes them a home. This is sad, and it was a horrible way to get homeowners to sign quickly, but this is where we are. Lenders and banks are looking at ways each day to tighten up so they don’t have greater losses, but where does this leave the Option Arm borrower who now has a balance out of control?
Some borrowers have received modifications to their loans, but it is minimal compared to the total number of people who have them. According to the Mortgage Bankers Association only 20% have been revised, but that is a very small percentage. So what’s next?
-Mayer Dallal
Option Arm mortgages were designed to give consumers four different types of payments; a minimum due each month, an interest only payment, an amortized payment, and an accelerated amortized payment. The challenge with Option Arms, is that the consumer more often than not opted to make the interest only payment, which began to drive up the balance on the loan.
As balances are tacked onto the back of the loan, it means that there is potential for the borrower to become upside on their mortgage. However, in the state of California no one seemed to be concerned. Properties were accelerating in their equity each year, and so California seemed to be the exception to the rule.
Rates being low has slowed the explosion on this type of program, but let it be known that it can’t last forever. Rates are going up, and they will continue to do so as inflation increases by leaps and bounds. Once this happens, these loans will be a time bomb, and borrowers that know they are underwater like this are more likely to just quit paying.
While houses still exist, being empty no longer makes them a home. This is sad, and it was a horrible way to get homeowners to sign quickly, but this is where we are. Lenders and banks are looking at ways each day to tighten up so they don’t have greater losses, but where does this leave the Option Arm borrower who now has a balance out of control?
Some borrowers have received modifications to their loans, but it is minimal compared to the total number of people who have them. According to the Mortgage Bankers Association only 20% have been revised, but that is a very small percentage. So what’s next?
-Mayer Dallal
Wednesday, February 9, 2011
What Coldwell Banker Discovered
Coldwell Banker recently did a survey in which they discovered that first time homebuyers were looking for something specific; a home that was move-in ready. The wave of finding a “fixer upper” isn’t gone altogether, but the numbers on that are lower than they used to be. This is probably due largely in part to the economy.
It used to be that investors wanted homes that had “potential”, and buyers were looking to acquire a home they thought would be an investment. Putting some work into the property would make it more sellable. Now, no one wants to put money into homes unless they are truly an investor, because there isn’t much disposable income after buying and regular maintenance.
Buying a home is a big step, and unless you have disposable income now on a monthly basis, don’t consider buying a home to put more money into. Right now with lack of job stability, savings is important. It doesn’t make sense to put money into something when you don’t really have it available. Right now, creating a safety net for yourself is more important. Setting aside money for emergencies is more important, and it is wise to take care of what you have now before moving onto something else.
-Mayer Dallal
It used to be that investors wanted homes that had “potential”, and buyers were looking to acquire a home they thought would be an investment. Putting some work into the property would make it more sellable. Now, no one wants to put money into homes unless they are truly an investor, because there isn’t much disposable income after buying and regular maintenance.
Buying a home is a big step, and unless you have disposable income now on a monthly basis, don’t consider buying a home to put more money into. Right now with lack of job stability, savings is important. It doesn’t make sense to put money into something when you don’t really have it available. Right now, creating a safety net for yourself is more important. Setting aside money for emergencies is more important, and it is wise to take care of what you have now before moving onto something else.
-Mayer Dallal
Monday, February 7, 2011
Relationships Are Worth Their Weight in Gold
Relationships are an important part of any business, and in the field of finance they are extremely critical for a few reasons. For one, money is important to all Americans right now, in fact to many across the globe as there seems to be less and less of it. Secondly, relationships are critical to every aspect of life whether romantic, parent and child, or even friends. Relationships provide support, wise counsel and encouragement.
Client and mortgage banker relationships are important, and that is why I strive to create a healthy relationship with all those I encounter throughout my day. Gaining the trust of someone who is using their home as collateral isn’t always easy, and given the status of the mortgage industry consumers are on guard with their financial position. Hopefully they see that as the market changes, the government makes changes that are beneficial to all. Some of the programs were run roughshod, and were delivered carelessly, but overall they were delivered with good intentions.
Looking over the past five years I can’t say that relationships were important to all who were in the business with me. I see that commissioned employees were driven by fees rather than service, or helping a borrower define what was really in their best interest. Focusing on relationships moving forward is probably one of the best things we can do as a country, but each of us has to make that decision for ourselves. Going forward, I know that relationships will be the most important thing for me, because without them there isn’t any trust, and without trust there isn’t any business.
-Mayer Dallal
Client and mortgage banker relationships are important, and that is why I strive to create a healthy relationship with all those I encounter throughout my day. Gaining the trust of someone who is using their home as collateral isn’t always easy, and given the status of the mortgage industry consumers are on guard with their financial position. Hopefully they see that as the market changes, the government makes changes that are beneficial to all. Some of the programs were run roughshod, and were delivered carelessly, but overall they were delivered with good intentions.
Looking over the past five years I can’t say that relationships were important to all who were in the business with me. I see that commissioned employees were driven by fees rather than service, or helping a borrower define what was really in their best interest. Focusing on relationships moving forward is probably one of the best things we can do as a country, but each of us has to make that decision for ourselves. Going forward, I know that relationships will be the most important thing for me, because without them there isn’t any trust, and without trust there isn’t any business.
-Mayer Dallal
Saturday, February 5, 2011
Bank of America Stops Doing Reverse Mortgages
Bank of America has now made it public knowledge that they are no longer going to do reverse mortgage. The bank will continue to service its clients that do have these mortgages, but they have decided that they wish to focus on other areas of lending.
Reverse mortgages have been a mystery to many, mainly because the profile of the reverse mortgage borrower tends to be senior adults. Servicing for the seniors that currently have this loan need the proper servicing and I think they understand this. Just because a bank no longer offers a program doesn’t mean that they should ignore the customer they did business with. You have to finish what you start.
Many companies, like Bank of America have lost sight of what is important, and started delving into too many other things like insurance, and auto loans. My personal opinion is that if you are going to be a mortgage company, then be a mortgage company. That way you can focus your efforts in the right area, and be known for what you do well. Those who do auto loans, should focus on auto loans, and work on offering stellar products to their consumers.
This is sort of like the Starbucks issue, where instead of great coffee, they decided to have coffee, then sell mugs and cds. Granted, I don’t drink coffee, and mugs and coffee go together, but getting into too much retail took the focus away from what they were really trying to do. So, the CEO was wise, and decided to go back to the basics. Maybe our mortgage companies should all do the same, and just focus on being better mortgage companies that take care of their clients.
-Mayer Dallal
Reverse mortgages have been a mystery to many, mainly because the profile of the reverse mortgage borrower tends to be senior adults. Servicing for the seniors that currently have this loan need the proper servicing and I think they understand this. Just because a bank no longer offers a program doesn’t mean that they should ignore the customer they did business with. You have to finish what you start.
Many companies, like Bank of America have lost sight of what is important, and started delving into too many other things like insurance, and auto loans. My personal opinion is that if you are going to be a mortgage company, then be a mortgage company. That way you can focus your efforts in the right area, and be known for what you do well. Those who do auto loans, should focus on auto loans, and work on offering stellar products to their consumers.
This is sort of like the Starbucks issue, where instead of great coffee, they decided to have coffee, then sell mugs and cds. Granted, I don’t drink coffee, and mugs and coffee go together, but getting into too much retail took the focus away from what they were really trying to do. So, the CEO was wise, and decided to go back to the basics. Maybe our mortgage companies should all do the same, and just focus on being better mortgage companies that take care of their clients.
-Mayer Dallal
Thursday, February 3, 2011
Loan Modifications That Worked
Cases with angry homeowners suing lenders over their foreclosures have been all the rage over the past few days, and I don’t expect it to slow down anytime soon. However, there are some organizations that managed to get homeowners the hope of a home loan modification they were searching for. The numbers were higher than many of us thought, but we often forget that things are different and possibly even better outside of where we live.
Hope Now published its final numbers showing that 1.76 million homeowners did in fact get the opportunity to apply for and receive a permanent loan modification. More than half a million of these were completed using the HAMP program (Home Affordable Modification Program), and the other portion was done by mortgage loan servicers. This sounds better than what we were hearing; the stories that servicers were telling homeowners they couldn’t help them were pretty sad, leaving families in a horrible financial position without hope.
The number was higher in 2010 than it was in 2009, and that’s great news! Because mortgage payments are the highest payments families have, maybe we should take a look at modifying everyone’s mortgage? By reducing this larger payment, we can help homeowners reduce their overall monthly payments, because they will be able to allocate more money to the rest of their debt. This could be the start of a healthy trend of debt reduction overall, don’t you think?
-Mayer Dallal
Hope Now published its final numbers showing that 1.76 million homeowners did in fact get the opportunity to apply for and receive a permanent loan modification. More than half a million of these were completed using the HAMP program (Home Affordable Modification Program), and the other portion was done by mortgage loan servicers. This sounds better than what we were hearing; the stories that servicers were telling homeowners they couldn’t help them were pretty sad, leaving families in a horrible financial position without hope.
The number was higher in 2010 than it was in 2009, and that’s great news! Because mortgage payments are the highest payments families have, maybe we should take a look at modifying everyone’s mortgage? By reducing this larger payment, we can help homeowners reduce their overall monthly payments, because they will be able to allocate more money to the rest of their debt. This could be the start of a healthy trend of debt reduction overall, don’t you think?
-Mayer Dallal
Wednesday, February 2, 2011
Homeowner is Suing for Foreclosure
There have been many questions raised over what should happen when someone is facing financial hardship with their mortgage. A homeowner in California had spoken with her bank, U.S. Bank about getting a modification on her home loan as a result of her financial position, and after agreeing to do so she claims that they reneged. Ms. Claudia Aceves wasn’t the only one who felt that way, and it makes for a real disaster.
It is important for all of you to understand that the court did see that Ms. Aceves didn’t have a strong case in getting her home back. This case brings about a lot of mixed feelings, but some angry homeowners who may also consider suing, and either causing attorneys to get busy, or regret taking on these types of cases.
Mortgage servicers are also going to struggle and have been for some time due to the argument before that came with servicers telling borrowers over the phone that they didn’t qualify for a modification. Naturally, not only did this leave borrowers angry, but it left them confused over why modifications were even put into place in the first place. Homeowners new very little about the modification program when it was first rolled out, and really neither did the banks. When the programs were rolled out they weren’t really well thought-out on how they were going to be done, timeframe and more. Borrowers didn’t even know how modifications were done, and that they had to qualify for them. So, why did anyone expect this to work until it was all hammered out? This should tell us something about the state of our finances.
-Mayer Dallal
It is important for all of you to understand that the court did see that Ms. Aceves didn’t have a strong case in getting her home back. This case brings about a lot of mixed feelings, but some angry homeowners who may also consider suing, and either causing attorneys to get busy, or regret taking on these types of cases.
Mortgage servicers are also going to struggle and have been for some time due to the argument before that came with servicers telling borrowers over the phone that they didn’t qualify for a modification. Naturally, not only did this leave borrowers angry, but it left them confused over why modifications were even put into place in the first place. Homeowners new very little about the modification program when it was first rolled out, and really neither did the banks. When the programs were rolled out they weren’t really well thought-out on how they were going to be done, timeframe and more. Borrowers didn’t even know how modifications were done, and that they had to qualify for them. So, why did anyone expect this to work until it was all hammered out? This should tell us something about the state of our finances.
-Mayer Dallal
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