I wanted to repost it so please take a moment to read this, as its VERY important.

—-

U.S. Mortgage Backer May Need Bailout
by David Streitfeld and Louise Story
Friday, October 9, 2009

A year after Fannie Mae and Freddie Mac teetered, industry executives and Washington policy makers are worrying that another government mortgage giant could be the next housing domino.

Problems at the Federal Housing Administration, which guarantees mortgages with low down payments, are becoming so acute that some experts warn the agency might need a federal bailout.

Running questions about the F.H.A.’s future — underscored by interviews with policy makers, analysts and home buyers — came to the fore on Thursday on Capitol Hill. In testimony before a House subcommittee, the F.H.A. commissioner, David H. Stevens, assured lawmakers that his agency would not need a bailout and that it was managing its risks.

But he acknowledged that some 20 percent of F.H.A. loans insured last year — and as many as 24 percent of those from 2007 — faced serious problems including foreclosure, offering a preview of a forthcoming audit of the agency’s finances.

“Let me simply state at the outset that based on current projections, absent any catastrophic home price decline, F.H.A. will not need to ask Congress and the American taxpayer for extraordinary assistance — we will not need a bailout,” Mr. Stevens said in his testimony.

But to its critics, the F.H.A. looks like another Fannie Mae. The hearings on Thursday came on the same day that the federal agency charged with overseeing Fannie Mae and Freddie Mac provided a somber assessment of those giants’ health. In the year since the government stepped in to rescue them, the companies have taken $96 billion from the Treasury, and may need more.

Since the bottom fell out of the mortgage market, the F.H.A. has assumed a crucial role in the nation’s housing market. Created in 1934 to help lower-income and first-time buyers purchase homes, the agency now insures roughly 5.4 million single-family home mortgages, with a combined value of $675 billion.

In addition, these loans are bundled into mortgage-backed securities and guaranteed through the Government National Mortgage Association, known as Ginnie Mae. That means the taxpayer is responsible for paying investors who own Ginnie Mae bonds when F.H.A.-backed mortgages hit trouble.

“It appears destined for a taxpayer bailout in the next 24 to 36 months,” Edward Pinto, a former Fannie Mae executive, said in testimony prepared for the hearing. Mr. Pinto, who was the chief credit officer from 1987 to 1989 for Fannie Mae, went further than most housing analysts and predicted that F.H.A. losses would more than wipe out the agency’s $30 billion of cash reserves.

The issue has polarized Congress. Republicans, who led efforts to rein in Fannie Mae and Freddie Mac before those companies ran into trouble, are now seeking to bridle the F.H.A. Many Democrats insist the F.H.A. is playing a vital role in the housing market, which is only just starting to stabilize.

“F.H.A. has stepped into the void left by the private market,” Representative Maxine Waters, Democrat from California, said at the hearing. “Let’s be clear; without F.H.A., there would be no mortgage market right now.”

That was the case for Bernadine Shimon. Like many Americans, Ms. Shimon has recently been through some rough times. She lost a house to foreclosure, declared bankruptcy, got divorced and is now a single mother, teaching high school English in a Denver suburb.

She wanted a house but no lender would touch her. The Federal Housing Administration was more obliging. With the F.H.A. insuring her mortgage, Ms. Shimon was able to buy a $134,000 fixer-upper in August.

“The government gave me another chance,” she said.

The government is giving as many people as it possibly can the chance to buy a house or, if they are in financial difficulty, refinance it. The F.H.A. is insuring about 6,000 loans a day, four times the amount in 2006. Its portfolio is growing so fast that even F.H.A. backers express amazement.

For decades it was an article of faith that helping people of limited means like Ms. Shimon get a house was good for the new owner, good for the neighborhood and good for American capitalism. Then came the housing bust, which demonstrated that when lenders allowed people to buy houses they ultimately could not afford, it hurt the parties — while putting the economy itself in a tailspin.

In the aftermath of the crash, there is wide divergence on how easy, or how hard, it should be to become a homeowner. Skittish lenders are asking for 20 percent down, which few prospective borrowers have to spare. As a result, private lending has dwindled.

The government has stepped into the breach, facilitating loans with down payments as low as 3.5 percent and offering other incentives to stabilize the market. Real estate agents in some hard-hit areas say every single one of their clients is using the F.H.A.

“They’re counting their pennies, scraping up that 3.5 percent,” Bonni Malone of Prudential Americana in Las Vegas said. “Mostly they’re buying foreclosed homes from banks, although I had one client who bought from a guy that was dying. It’s turning around the market.”

While the government’s actions have helped avert full-scale economic disaster, there is growing concern that it might have doled out its favors with too generous a hand.

Many of the loans the F.H.A. insured in 2007 and last year are now turning delinquent, agency officials acknowledge. The loans made in those two years are performing “far worse” than newer loans, dragging down the whole portfolio, Mr. Stevens of the F.H.A. said in an interview.

The number of F.H.A. mortgage holders in default is 410,916, up 76 percent from a year ago, when 232,864 were in default, according to agency data.

Despite the agency’s attempt to outrun its fate by insuring ever-larger amounts of new loans to such borrowers as Ms. Shimon — the current rate is over a billion dollars a day — 7.77 percent of the portfolio is in default, up from 5.6 percent a year ago.

Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, said in an interview that the defaults were, in essence, worth it.

“I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”

The troubled loans are nevertheless weighing on the agency’s capital reserve fund, which has fallen to below its Congressionally mandated minimum of 2 percent, from over 6 percent two years ago.

The optimism expressed by Mr. Stevens, the F.H.A. commissioner, places him at odds not only with some outside experts but with Kenneth Donohue, the inspector general of the Housing and Urban Development Department, who is also F.H.A.’s watchdog. Mr. Donohue said the drop in reserves was “a flashing red light” that the agency was not taking seriously enough.

“It might be we’ll get ourselves out of this and that everything will be fine, but I don’t paint that rosy a picture,” Mr. Donohue said. “They’re banking on the fact that the economy will continue to improve, that the housing market will begin to sustain itself.”

He noted that if private lenders had raised their down payment requirements in the last two years, it raised the question, “what does the F.H.A. think it is doing by asking only 3.5 percent?”

Any more than that and Ms. Shimon, 45, would still be a renter. As it was, she cashed in her retirement savings account to come up with the necessary funds. She did not have enough to spare for closing costs, so her mortgage broker arranged a deal where the charges were wrapped into the loan at the cost of a higher interest rate. She cried when the deal was done.

The house was empty and trashed. Slowly, she is trying to bring it back to life. She spent the first few weeks picking up garbage in the backyard.

Is Ms. Shimon a good bet? Even she has no easy answer. Her mortgage payment, $1,100, is half of what she takes home every month. It is not easy to make ends meet. Teachers can get laid off like everyone else.

“The government,” she said, “is doing what it needed to do — taking a risk on people.”

Chaz Fullenkamp, an automotive technician in Columbus, Ohio, got an F.H.A. loan even though he was living on the financial edge. “If I got unemployed, I’d be wiped out in a month or two,” he says. Thanks to the F.H.A., however, he is better off than he used to be.

Mr. Fullenkamp used F.H.A. insurance to buy a house this spring for $179,000. The eager seller paid the closing costs and also gave Mr. Fullenkamp $2,500 in cash. He immediately applied for the $8,000 tax rebate. Even taking his down payment into account, he came out ahead.

“I knew in my heart I could not really afford the house, but they gave it to me anyway,” said Mr. Fullenkamp, 22. “I thought, ‘Wow, I’m surprised I pulled that off.’ ”

As the number of loans has soared, random quality control checks have decreased sharply, F.H.A. staff members say. Mr. Donohue, the inspector general, cited numerous examples of organized fraud in testimony to Congress earlier this year.

“They need to stop taking bad loans in the door,” he said in an interview. “They’re taking on all this volume, they have to have very active underwriting standards.”

Jack Healy contributed reporting from New York.

The IRS has an urgent message for would-be home purchasers: Make the most of the $8,000 first-time-buyer tax credit before it disappears Dec. 1 — if you qualify.

But if you don’t truly qualify, don’t try to play games with the credit. The IRS already has 24 criminal investigations of suspected fraud underway around the country. It has executed seven search warrants, and last month a tax preparer in Florida entered a guilty plea on federal charges of fraud in connection with the first-time-buyer credit. He’s awaiting sentencing and faces up to three years in prison, a $250,000 fine or both.

Congress’s two versions of the first-time-buyer credit — a repayable $7,500 credit in 2008, and this year’s more generous $8,000 credit that does not have to be repaid — have stimulated home sales nationwide. But they’ve also become irresistible temptations for dishonest taxpayers to cash in and claim bogus refunds.

Claiming the credit looks so easy: You just fill out IRS form 5405, list the address of the house you bought, mail it in and wait a month or two for your money. Who’s going to check on whether you really qualify under the definition of first-time buyer — someone who hasn’t owned a principal residence in the previous three years — and that you’re eligible on income and other factors?

With thousands of people buying houses and claiming tax credits, who’s going to be able to check all those filings? The answer from the IRS: We are. The agency said it uses “sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time homebuyer credit.”

The IRS won’t discuss the nature of its screening, but it’s clear from the number of ongoing investigations that claims for the credit are getting special scrutiny.

According to a summary of the facts agreed to by Price as part of his plea agreement, he admitted that in February he met with a client who told Price that she didn’t want to buy a house. But Price insisted that she qualified for the credit because “she had two jobs.” He then wrote in a house address on the form 5405, claiming the client closed on the purchase Jan. 5. When she received her $7,500 credit, Price took $1,000 of it for himself.

In the plea agreement, Price admitted following a similar pattern in 14 other tax returns.

IRS spokesman Terry Lemons declined to discuss the ongoing criminal investigations of taxpayers claiming the home-buyer credit. He said the investigations involve individuals as well as tax-return preparers.

The IRS doesn’t “want to discourage people from taking advantage of the credit,” Lemons said, but it wants them to be certain that they’ve read through the eligibility rules so they don’t end up with audits, back taxes and late penalties. On the list of things that can disqualify buyers:

– Purchasing your house from a “related person.” That’s a broad category of people and entities, ranging from immediate family members — a spouse, parents, children, grandparents, grandchildren — to a corporation or partnership in which you have more than a 50 percent ownership stake.

– Buying a home with a spouse who is ineligible, even if you are eligible individually.

– Acquiring a house through an inheritance or gift.

– Financing the house through a tax-exempt mortgage bond program.

– Making too much money — in excess of $95,000 of modified adjusted gross income for singles, $170,000 or more for married joint filers.

What are the downsides if you claim the credit erroneously and do not intentionally defraud the government? If you are audited, the IRS most likely will ask for the full credit amount back, plus interest and a late-payment penalty.

Bottom line: Don’t let this year’s tax credit pass you by if you meet the criteria. And if you don’t, beware of slick-talking professional tax preparers who tell you that you do.

Sonny: Get this over with, Mush.

Mush: Come on, dice. Baby needs a new pair of shoes. Come on, seven!

Mush: Come on! Come on, dice!

Sonny: I don’t even have to look.

(Spectator) And seven!

Mush: Craps! I’m out!

Sonny: Get him out of here! Man never hit a number in his life!

As we all have been following lately, rates have been pretty damn good. I mean REALLY DAMN GOOD. That was…until a week or so ago.

I was working with one of my clients and highly advised him to lock in his rate at 4.875% on a 30 Year Fixed, however he decided to float instead of paying a “little” bit more for an extra 15 days. Why? Only he knows.

He is now at a 5.75%. (crickets chirping)

Ladies and Gentlemen- DO NOT END UP LIKE EDDIE MUSH (featured above) and crap out in this market!!! I cannot stress to you enough how important it is to secure a good rate in when you see it. I am coming across several people daily that REALISTICALLY expected rates to go down to the high 3’s because the media puts their dirty little paws on it, and in the end, they lose out on something great.

Would you listen to Al Roker talking to you about mortgage rates or me about weather? I really hope not.

The loan officers that are still here (you can tell who the seasoned ones are) are here for a reason. We have flourished through the good, withstood the bad, study the market, subscribe to various sources of mortgage news, and have a pretty good grasp on what’s going on.

Many feel that when the loan officer says “Mrs. Jones, you need to lock in,” it is mostly viewed as a sales pitch to get your commitment rather than advice, and many clients back off.

I mean this is normal. I can understand it and would probably do the same.

Do this. Next time your loan officer does this, ask them “Why should I secure this rate Mr. Mortgage? And don’t tell me rates are going to go up. Explain WHY” and see what they say. If studdering occurs, move on to the next mortgage professional. If they can advise you with detailed information, they’re a keeper!

In the end, it is only YOU that will win…or lose.

Tommy’s 2 cents

DON’T BE GREEDY.

GREAT DECISION, especially now since rates are super low and you can walk into plenty properties with some decent equity.

Ok, step 1 complete.

Next step, picking the right lender.

I’ve written several articles on this previously, but I will summarize countless hours of explanation into ONE sentence:

YOU WILL CHOOSE WHOEVER YOU FEEL MOST COMFORTABLE WITH.

It’s not rocket science. To some consumers,  rates and fees are absolutely everything, and that is OK.

To others, discussing their loan parameters and figuring out WHY they should go on a 15 year mortgage vs. a 30 year makes more sense- a financial plan if you will. Ask most people why they went on the loan program that they did, and see what their response is.

Everyone is different. Remember, you are the one hiring the loan officer to do your loan. The questions that you need to ask yourself are:

1. “Why am I hiring this person?”
2. “What has he/she done for me so far?”
3. “What do you expect from him/her, and vice versa?”
4. “Has the loan officer asked what’s important to ME during the loan?”

Tommy’s 2 Cents:

Would you pay a CPA double what another CPA would charge if they saved you an additional $5,000 off your taxes?

Would you have a fresh-out-of-med school perform heart surgery on you to save a few thousand on the costs?

Would you hire ME or Johnny Cochran to represent you in a criminal trial?

Get the point?

In any profession, what you ultimately pay more for is knowledge.

What can CNN, FOX News, or even your local news tell us that we haven’t seen, or better yet, experienced first hand in this wild real estate market the past year or so?

Absolutely nothing!

If I wanted negativity, I would ask my Uncle Frank how his prostate is holding up.

All we hear is Foreclosure this, Subprime and Predatory Lending that, and geez if I hear the word “Recession” one more time, I’m going to stop what I’m doing, catch the first canoe out, and start a fruitful career as a monk in the West Indies.

Who’s to blame? A LOT of different people in different places.

The main point of this article is to show you why we didn’t even NEED Subprime loans to begin with, and how we could have altogether avoided  a good chunk of the mess we’re digging ourselves out of now by having more skilled, licensed, and knowledgeable mortgage professionals well versed with an FHA loan.

Read closely. I write “skilled, licensed, and knowledgeable.”

Millions of borrowers signed on the dotted line for a Subprime loan when in fact it wasn’t even necessary to qualify in the first place.

Here’s why.

Subprime loans were designed to qualify buyers who didn’t “traditionally” meet the standard criteria to qualify for a mortgage. Usually the ideal candidate had credit that was dinged, late pays on accounts, not a lot of money in the bank, etc.

The main one, in my opinion, was credit score. Believe it or not, I remember you could get a house if you had a 500 score, and the kicker was, you didn’t even need to PROVE income! How ridiculous is that?

So the best way to understand this is put yourself in the shoes of a Realtor, a Loan Officer, the Broker, the Banker, the Appraiser, the Title Company, Wall Street, Investors, Surveyors, Inspectors, so forth and so on.

As you can see, it’s not just a few people that were profiting from these types of loan. Why would somebody mess up a good thing? Everyone was making money!

So my next question is:

If I told you that I had $100 in one hand, but I can hand you $75 right now, what would you tell me?

“Buddy, I’m right here. Fork it over!”

Now if I told you I had $100 in the other hand, but I would agree to give you $10 a month for the next 10 months, what would you tell me then?

“Um, I’ll take option 1… and now please!”

Think about that one.

Anyone can argue that the supply/demand curve in that type of market would not sustain my 2 questions above. It’s just like poker. “Push all in when you have the best hand.”

But that is what got us in trouble.

This brings me to FHA Financing. (This isn’t NEW by the way)

We, as “mortgage professionals”, could of easily taken hand #2, slow and steady, giving our clients BETTER RATES, getting paid MORE COMMISSION, and not giving an Oak tree a $750,000 Stated Mortgage Loan.

Most took hand #1. Most of those folks are now broke, and working at a retail banking center making 20% of what they WERE making back then. Their bills are still the same.

The Federal Housing Administration (FHA) was created by Congress in 1934 when the housing industry was hurting- kind of like how it is now. The main purpose of it was to fuel the “American Dream” as back then, the US was mostly a nation of renters.

So why is it that all these mortgage brokers and bankers were originating Subprime loans this whole time when FHA was available? Was it greed or ignorance?

The answer is BOTH, but mostly IGNORANCE.

During the Subprime days, any Joe Shmoe could graduate from Jack in the Box University (nothing against Jack- I love him), easily get their loan officer’s license, get BEGGED by a mortgage company to start (if you could leave fog residue on a mirror by breathing on it, you were HIRED!), and begin originating loans with absolutely NO experience or training.

The problem was that most of these mortgage brokers weren’t any smarter either!

All the brokers knew was Subprime.

They were letting these people ADVISE CLIENTS ON THEIR BIGGEST DEBT OF THEIR LIFE!!!! Can you believe that?

They sold easy stated income loans that required less work and never did their homework on educating the clients. It was easy money and it was FAST money.

Now, I think if these guys were not ignorant to begin with, their greed would have actually BENEFITED the real estate industry.

How you ask?

Super simple.

Well during the dark age of Subprime lending, a typical Subprime loan would either be on a 30 year fixed or Adjustable Rate Mortgage (ARM) with interest rates ranging from 7.5% to 12%. Of course the higher the rate, the more commission the lender pays to the loan officer. On average, loan officers would make between 1%-2% in commission, but give rates that sucked! An FHA loan on the other hand can pay a mortgage broker/mortgage banker the same if not double what a Subprime loan would pay, except that the rate would be in the 5%-6.25% back then!

Lower payments, less foreclosures, DOCUMENTED income, etc. It wouldn’t SOLVE the crisis, but would have definitely cushioned the real estate fall.

So why didn’t mortgage brokers and bankers originate FHA loans?

1. Because they didn’t know about FHA or didn’t know how to originate them
2. Because most loan officers were self employed contract employees and FHA only allows for W2 employees, or
3. Because their mortgage broker or banker was not licensed to originate FHA loans.

Today’s FHA mortgages are yesterday’s Subprime mortgage. Or is it today’s FHA mortgages SHOULD have been yesterday’s FHA mortgage? With fewer options left these days, people are running in droves to FHA financing, but be careful. LEARN FROM PAST MISTAKES. The exact same can happen with FHA if not regulated properly.

The lesson learned (what I preach): Knowledge goes a long way in this industry.

For buyers reading this article, please make sure that your mortgage representative knows this business! Make sure they are not just another Joe Shmoe trying to make an extra quick buck without truly earning it.

What’s in it for them? They want foreclosure properties and long-listed homes to get into the hands of caring owners.

How do they help you?

They guarantee mortgages that cover not only the purchase price of a property – but the rehab costs as well.

Especially now, with housing prices low, mortgage lenders will only loan money on a house’s current value. If a property needs some money put into it, for rehabilitation, then you’re basically on your own for financing the improvements. In the not-so-recent past, such home buyers had to run up their credit card balances or sell their car to make a newly purchased house livable.

FHA 203K Rehab loans change all that by giving buyers the money they need in the first place – even including buyer’s living costs elsewhere for the period of renovation – up to six months.

Are there restrictions? Sure, because the Feds want to be careful with their money, but the strings attached all make good sense. You have to demonstrate that the finished property will be worth the rehab costs, you have to show the plans for improvement, and you have to show everyone that you’re making appropriate progress in your work. And you have just six months to finish it all up.

Can you use this loan guarantee program for condos and multi-unit properties? Yes, but be sure to check out the specific rules on my follow up post to this.

How do you start? Once you’ve identified a property, identify a helpful FHA lender, and begin to tackle the paperwork. The mortgage provider will be delighted to work with you – you’ll be rebuilding your community with the complete support of the FHA!

Visit my website today for more information or for more information call 832-212-6969.

Source WhatisYourRate.com

Well let’s have a look.

Just the other day, I was having coffee with a potential client that was looking to buy a home, and she pulled out 4 different GFE’s (Good Faith Estimates) for me to have a look at.

Wow, talk about diversity! While I won’t name the companies (and believe me, I would LOVE to), here were just 3 things I noticed just right off the bat:

1.    Escrows reflected LESS than what the property’s tax rate really was
2.    APR was very misleading, and the most important was
3.    All 3rd party fees on each GFE were different

Now if you’re a seasoned home buyer or a First Time Home Buyer, things like this will definitely matter and will end up costing you a lot of wasted time, money, and effort if you aren’t careful.

My goal in this article is, in plain English and simply explained, is to:

1.    Break down the GFE
2.    When you should receive a GFE
3.    What to compare when comparing and how
4.    How to get the BEST deal

Breaking Down the GFE
So let’s begin by breaking down this thing, and trust me, this’ll be super easy.

The 800 section of the GFE is where you will see the lender, broker, and appraisal fees, respectively. No matter what the FEE is called (underwriting, application, administrative, etc), it’s being charged on the bottom line. If someone says, “We don’t have application fees!” making their offer seem more appealing, they can easily turn around and add a “Weekend Fun” fee. The rule is as long as it’s disclosed, it can be charged.

The rest of the sections (900-1300) are all 3rd party fees and cannot be controlled by the loan officer. Some of these fees are:

1.    Taxes and Insurance
2.    Title fees
3.    Escrow Impounds

This is why asking for a GFE before you take an application and talking about your financial parameters is just plain shooting yourself in the foot guys! I’ve had people ask me for an estimate before I could even say hello at times, in which I’ve respectively had to decline because I knew we were already headed into disaster.

When Should I Get a GFE?
By law, you should receive a Good Faith Estimate within 3 days of a written and complete application for a mortgage. Does everyone do it? (Chuckles) Nope.

What and How to Compare
So now it’s game time. You’re 18 days away from closing on your house and decision day is creeping up.

“Who do I choose?”

“Why are his fees different?”

“Is this rate too good to be true?”

Totally understandable questions- I understand you don’t want to be taken advantage of. Now let me show you how to compare and what to compare.

A Good Faith Estimate shows the interest rate, term, loan amount, and all settlement costs on the mortgage you are applying for. All of the items on the GFE fall into 3 categories listed below:

1.    Interest Rate
2.    Lender Fees
3.    Everything Else (3rd Party)

The interest rate simply depends on market conditions at the moment of locking it. Throw CNN, FOX News, and all other morning radio shows out the window when they are “predicting” where rates are going to go. I’ve had people call me up expecting a 0% (honest truth) because they heard it on the radio. People, if it’s too good to be true, it is. If you want legitimate and unbiased advice, feel free to call or email me. Following MBS (Mortgage Backed Security) trends and weekly economic reports, I have my finger on the pulse of what’s going on and have saved people tens of thousands of dollars by recommending “lock” or “float” options derived from my sources.

In regards to lender fees, they will vary just like with any product you buy. A vase at Wal-Mart will differ from a vase at Crate and Barrel. Why? Well each company has its own business model that they have to follow. That’s it- it’s not hard.

Since we’re become pretty good friends now, I’ll let you in on another little secret as well.

For the most part, Mortgage Broker fees are variable, where as Mortgage Banker fees are fixed. Brokers have to send out their loans to wholesale lenders that will fund your loan, so each lender will have different fee structures. Broker “A” can quote you $1,500 in fees, find out that same lender just went out of business, and now you’re exposing yourself to a change in charges. Mortgage Bankers will have more simplified fee structure and you should expect it to stay more constant. I am not saying one way is better than the other because the same can happen to a Banker if he has to broker out your loan, however it is just a little less likely in my opinion.

The rest of all the 3rd party charges will be determined by what other parties are involved. While you, the consumer, have the right to choose the title company, I highly suggest having your mortgage professional recommend a few that he/she uses. For some reason, realtors believe that they choose this part of the transaction (and some do a good job), however most do not. Throughout the entire finance process, the lender and title company are in constant communication to get your loan funded in the most efficient and snag-free way possible.

So, How Do I Get the BEST Deal Out There?
The easy and SIMPLE answer is…YOU!

You will ultimately determine the best deal that you get. Timing, advice, recommendations, and being a team player is needed to get the best deal.

Timing is HUGE these days! One of my current clients is taking about 2 weeks to send me his W-2’s, while his rate lock is going to expire in less than a week- Yes, that’s his bad!

And when it comes to rates guys, time is money. Rates move daily.Don’t expect last week’s rate TODAY!

Also, if you want to know what “rates are doing today”, don’t waste your time applying on a million places online, having 100 people call you and have a brilliant start to the conversation by asking “What is your rate?” Go to the local newsstand and pick up a paper, but remember, what is advertised and what you QUALIFY for are 2 totally different things.

Here are my 5 TOP TIPS I can give you:

1.    NEVER SHOP ON JUST APR!
Whoever recommends this to you may actually live in a van down by the river. Each lender calculates this differently, so you won’t be comparing apples to apples. Sometimes the numbers aren’t worth the paper they are written on.

2.    HAVE YOUR FACTS READY
For comparison purposes, used fixed costs for taxes and insurance with each mortgage company so estimates can remain constant.

3.    BE THE BOSS
In essence, what you are doing is HIRING your loan officer to represent you. So, why don’t you go through your own little “hiring process” with them? Ask about experience, references and the big question “How Are You Different?” from others. This will be the best tool.

4.    DON’T SHOP YOURSELF OUT OF THE MARKET
Don’t get greedy by waiting for that magical 0% like my friend.

5.    OVER-SHOPPING
If every new phone call causes a “Send me a GFE and I’ll let you know” reply, then you have what is called “Mortgage-itis”. This is the first symptom letting you know to stop and work with what you have, OR if you want, put things on hold for a few days. It’s just like cramming for a big test. Take a break.

In the end, you will always get what you pay for. Those who are cheap will get cheap. Those who pay more for a little better service will get just that. I’m not suggesting getting slammed with pointless fees for the sake of commission, however most everyone these days wants everything for free. It’s better to pay a little more for a service or product you can rely on, rather than just getting a cheaper price for something that may cost you even more money down the line. In the mortgage industry, what you ultimately pay more for is knowledge.

Tommy Xintaris is a Senior Mortgage Banker for 360 Mortgage Group. He has over 9 years experience in finance. For a free opinion of your mortgage, you can email him at Tommy@FHALoanHouston.com .

By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) — Lured by low mortgage rates, many homeowners have been rushing to refinance. Interest is gaining for good reason: Eligible borrowers can lock in rates that haven’t been this attractive in decades.

“With interest rates hovering around 5% for conforming loan amounts, homeowners should begin to seriously consider refinancing into a new fixed-rate mortgage, especially if they currently have an adjustable-rate mortgage,” said Lisa Weaver, president of Columbia, Mo.-based Certitude Financial Group. And don’t drag your feet, either, she said.

Rates on jumbo mortgages are still high, she said, but the national average rate on a 30-year fixed-rate conforming mortgage is the lowest in at least 37 years, according to Freddie Mac. The conforming loan limit in 2009 is $417,000 for most areas of the continental U.S., although in designated high-cost markets it will be up to $625,500.

Given the volatility in the mortgage market this year, Greg Gwizdz, national retail sales manager for Wells Fargo Home Mortgage, also advises homeowners to be proactive. It’s possible that rates will be low for a while, but in this turbulent economy, it’s not best to gamble that tomorrow will bring a better deal.

“Don’t sit back and say I’m going to wait for something to happen and for rates to go even lower,” he said. If you’re able to refinance into a mortgage that will be better for your finances, don’t pass up the opportunity, Gwizdz said.

Below are other points to consider:

1. Have an idea of home’s value
Prior to starting the refinancing process, call a real-estate agent or look online at sites including Zillow.com to get an estimate of what your home could be worth, said Scott Everett, founder and president of Dallas-based Supreme Lending. If you’re “drastically upside down” on your mortgage, meaning that you owe a lot more than your home is now worth, the possibility of refinancing might end right there.

“If you owe $250,000 and the house is worth $250,000, it [refinancing] is worth discussing,” he said. But if you owe $250,000 and “the house is worth $150,000 and you’re in Southern California, then you probably won’t be able to do it,” he said. Many Southern California markets have experienced a drop in home prices.

To get a better idea on a home’s value, borrowers might ask their mortgage firm if the appraiser it works with could give a ballpark estimate before starting the process, said David Adamo, CEO of Luxury Mortgage, in Stamford, Conn. But that’s still just an estimate until an appraiser comes out to your home, he pointed out.

2. Get ready for a thorough screening process
It’s not impossible to get a mortgage in today’s environment. But lending standards are likely a lot stricter than they were the last time you applied for a mortgage, so expect a thorough and frank discussion of your finances with a mortgage banker or broker before the application is even filled out.

Lenders are asking would-be borrowers to document income and assets thoroughly. In general, many also want FICO credit scores of 660 or 680 for conventional conforming mortgages; requirements are lower for loans backed by the Federal Housing Administration, Gwizdz said.

Those who might have a particularly tough time getting a mortgage today are self-employed homeowners who don’t have two years of income documentation — even if they have the income to support the mortgage, Adamo said. The availability of stated-income mortgages, which don’t require borrowers to fully document their income, is limited, he added.

3. Know what you’ll be saving
The old rule of thumb was that your rate should drop two percentage points for a refinance to be worth it, but that doesn’t always apply anymore, Adamo said. If you can recoup closing costs of the new mortgage in the first 12 months — and can save three-quarters of a percentage point on your interest rate every year thereafter — it’s probably economically justifiable to refinance, he said.

In any case, have a conversation about what rate would make refinancing worthwhile, and be prepared to take action. Borrowers also need to consider how long they want to stay in the property to determine which mortgage makes the most sense for their situation, Weaver said.

Sometimes you could be better off refinancing even if you don’t get a better rate, Gwizdz pointed out. If you have an adjustable-rate mortgage that resets in a year, but can get a fixed-rate mortgage at the same rate, it’s probably a good idea to refinance now if you plan on being in the home for years to come, he said.

He also cautions people about refinancing into mortgage terms that extend the life of the loan; doing so may bring monthly payments down, but will probably make the loan more expensive in the long term. “However, for homeowners that must have the lowest payment possible, it may be the right choice when combined with a lower fixed-rate product,” Ms. Weaver said.

4. Don’t count on cashing out
Tapping home equity through a cash-out refinance is much more difficult these days, due to stringent credit standards and loan-to-value requirements, Weaver said.

According to Freddie Mac, the share of refinances with a cash-out component was 63% over the first three quarters of 2008, the lowest level since 2004. Cash-out refinance mortgages have loan amounts at least 5% higher than the paid-off mortgage balances.

“The combination of declining home values and tighter underwriting standards have reduced the amount of equity that can be extracted by homeowners this year,” Frank Nothaft, Freddie Mac’s chief economist said in a news release.

Amy Hoak is a MarketWatch reporter based in Chicago.

Here are the conditions:

1. You must be back on the job for at least 6 months
2. You must be able to document a 2 year work history prior to leaving

An example of this is saying a person had to take off several years to raise his/her kids, and then returned working again.

Happy Holidays everyone!

*Reliant Energy is waiving late fees indefinitely and will be working with its customers on flexible payment terms and extensions to meet their needs, said communications director Pat Hammond.

Reliant, which has about 1.8 million customers in Texas, also has suspended its credit and collection activity and has stopped disconnecting customers for non-payment.

“We realize that Hurricane Ike has created a lot of difficult financial hardships for people, and we want to do what we can to work with our customers during this difficult time,” said Hammond.

“We ask customers to call us and work out a payment with us,” she said.

*Green Mountain Energy is waiving late fees for customers who call in and let the company know they were affected by Ike, according to a statement from the company.

Green Mountain also is extending its deferred payment plan.

*CenterPoint Energy’s natural gas customers affected by Ike will not receive late notices and late fees will be waived, said spokeswoman Leticia Lowe.

In addition, the utility will also waive security deposits for customers displaced by the storm, she said.
Banks

*Compass Bank has waived access fees to its network of ATMs in Houston and other cities in Texas where it figures Houstonians fleeing the storm may need quick cash, said Thomas Graham, executive vice president of communications in Houston.
The bank also is allowing its small business and consumer customers to defer their loan payments, such as car and recreational vehicle loans. The deferral is up to 60 days depending on the customer’s individual circumstances.

Customers who need early access to their certificates of deposit can have them without paying early withdrawal fees, he said.

And late payments will be forgiven, he said.

Graham stressed – as did other service providers – the importance of giving notice that a payment will be late.

*Capital One is working with its customers affected by Ike on a case-by-case basis, said spokeswoman Pam Girardo in McLean, Va.
The bank has a hardship policy and some examples of what it can do for its customers include waiving late fees, going-over-credit-limit fees and non-sufficient funds fees, she said.

Capital One will also consider reducing a customer’s minimum payments, deferring payments for a limited time, waiving finance charges and waiving accrued interest.

Customers need to call and discuss the options, said Girardo.

Capital One also waived the ATM fees for all its customers who use a non-Capital One machine and has suspended all of its collection activity in the area.

*Comerica has waived ATM fees for customers who use non-Comerica machines and has expedited its process to boost credit card limits, according to spokeswoman Pamela Cathion.

The bank is also offering to donate up to $100 to a charity or community relief organization designated by a new customer who opens a bank account with at least $2,500.

*Discover makes special payment considerations on a case-by-case basis to cardholders affected by a natural disaster, said spokesman Jon Drummond.
Those provisions include, but are not limited to, allowing them to delay payments, and waving minimum payments, late fees and other charges for specific amounts of time depending on a customer’s need.

*American Express spokeswoman Molly Faust said the company will handle each cardholder’s situation on an individual basis. If you need help, please call the toll-free number on the back of your card, or visit americanexpress.com and click on “Hurricane Response: Assistance for our Customers.”

*Chase is asking its customers facing financial difficulty to contact the bank as soon as possible and it will work with them on an individual basis, according to spokesman Greg Hassell.
Telecom companies

*T-Mobile is topping off pre-paid cell phones that were running low at no charge to make sure people don’t run out of service, and it has suspended collections calls in Houston and Galveston.

*Sprint is waiving roaming fees, call-forwarding, late fees and overage charges for customers who use more minutes or text messages than they’re allowed between Sept. 9 and Oct. 11, said spokeswoman Kristin Wallace. The company is also offering free call-forwarding service and Sprint has suspended collections calls and service disconnections.

*AT&T has suspended all disconnections and collection activities. The company is providing free local and long-distance calling in all of its retail stores, and is offering free Wi-Fi service to anyone at all area Barnes and Noble locations, said spokesman Dan Feldstein.

AT&T will work with customers on their billing on a case-by-case basis. AT&T also offers its customers rollover minutes, allowing them to absorb a month in which their usage is heavier than normal.

*Verizon Wireless is giving one month of free service in the 409 area code and has suspended collections calls in the Greater Houston area, said spokeswoman Gretchen LeJeune.

*Verizon, which provides landline phone service in several cities around Galveston Bay, has suspended collections calls and disconnections, said spokesman Lee Gierczynski.

*Comcast has suspended disconnections and collections, said spokesman Ray Purser.

*Time Warner Cable, which provides cable service for Beaumont and parts of Southeast Texas, has credited customers’ accounts back to Sept. 12 and will extend credits until service is restored, said spokesman Gary Underwood. The company also is not disconnecting customers or making collections calls.
Insurance

*Allstate is offering deferred billing options, according to spokeswoman Kristen Beaman. The company will send affected customers a letter, but those who have been relocated can call their agent or 800-547-8676.

*USAA will waive late fees if customers are a few days behind, according to spokesman Justin Schmitt. The company, which also has a bank and offers financial services, also will offer fixed-rate new vehicle auto loans as low as 5.39 percent for people who lost cars in floodwaters. In addition, it will waive insufficient funds fees on checking and savings accounts.

Some breaks on bills being offered
By L.M. SIXEL, BRAD HEM AND DAVID ELLISON  

Copyright 2008 Houston Chronicle