Sunstreet Mortgage, LLC opens Phoenix/Mesa Office:

There is a new player in town! Today Sunstreet Mortgage, LLC has officially a new branch office to service the Greater Phoenix Metropolitan Area. Yes, while other mortgage companies are folding Sunstreet Mortgage, LLC is carefully and strategically expanding into the Phoenix Market.

Just in case if you are not familiar with the company I work for,  Sunstreet Mortgage, LLC is a Tucson, Arizona based mortgage banking firm founded by John E. Capp, Sarah J. Roads and Patrick W. Sniezek with branch offices in Nogales, Arizona and Albuquerque, New Mexico.

The three principal partners have over 56 years of originating loans and over 20 years of experience in managing all aspects of running a mortgage banking operation and are personally involved in the day-to-day operations. Gary Miljour will be managing the branch together with Kim Chartier.

Not to make this a a sales pitch,  however the most unique aspect of this company and a reason why I chose to work for Sunstreet Mortgage, LLC is that there is one layer of management and decisions are  made fast and locally.

Stay tuned, we will have a grand opening party after we have settled into the new space, but feel free to swing by anytime and come see us. You will find us at the Stapley Corporate Center , 1910 S Stapley Dr., Suite 202, Mesa, Arizona 85204

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photo credit: db*photography

Do you really need proof of a competing offer?

I spent way too much time on the internet yesterday and came across Jay Thompson’s blog post answering a Trulia Question on PhoenixRealEstateGuy.com. The same questions certainly provoked my thoughts and I felt compelled to write a slightly more elaborate answer response.I spent way too much time on the internet yesterday and came across Jay Thompson’s blog post answering a Trulia Question on PhoenixRealEstateGuy.com. The same questions certainly provoked my thoughts and I felt compelled to write a slightlymore elaborate answer response.

The question was:

I had an offer of $205,000 that was being considered by the bank on a property listed for $225000. Suddenly, at the last moment, the listing agent told my agent that there was another offer of $220000 that the bank was considering. We matched that price and got the property. But now I am wondering what proof is there that this offer really existed and that the listing agent was just not jacking the price up.

I just could have left it with a very short answer of: No there is NO proof and NO, you’ll never find out if the listing agent was just jacking up the purchase price!

Blaaahhh how boring! – at least, that is what came to my mind at first – but, as I was thinking a little bit more about this question (and reading some of the answers) I asked myself why Gregory S had asked the question on Trulia in the first place? Perhaps, it was because the conclusion is that his buyer’s agent did not do a good job educating him about the market and current values, or was George not really ready to buy a home – or just simply naive? Think about it – If you made an offer and everything seems to be groovy and at the last minute you get presented with the idea that the acceptance of your offer is in jeopardy because somebody is willing to offer more, you would probably raise an eyebrow? Wouldn’t you? I am not a poker player (I am left handed and cannot hold playing cards for the life of me and I barely understand how to play Farkle) but, wouldn’t you agree that if somebody raised your bet then wouldn’t you start thinking about whether you can afford to call their bluff, or to fold? Please, don’t tell me that you depend on the fiduciary duty of your agent to understand that concept.

Also, George’s questions did not reveal whether his purchase was cash or if he got a mortgage for the home, but in case you haven’t noticed, the appraisers, lately, seem to be on the ultra-conservative side… so if you financed your home recently, the likelihood of overpaying for it is slim to none – unless you put a silly amount of cash down.

photo credit: QteaThe price one ultimately should pay for a home, or anything else for that matter, is what one is willing to pay for. That is why you don’t need the proof of a competing offer!

Assuming the buyer’s agent did his research and shared the fact-findings with the client then there should have been a clear expectation of market value. Everybody’s definition of a “good deal” is different”, however the property in question must have had “some” value to George because he was worried about loosing it to another buyer.

So, when you go out buying a property you should have set your priorities straight. Do you want to go after the deal of a century and “steal” a property; or are you looking for a home which fits your needs, wants, desires and budget at market price? George, I am sorry but, as the saying goes, you cannot have the cake and eat it, too.

I know the importance of getting a “good deal” and I, myself want an even “better deal” and really, who want’s a bad deal? – Trust me, I understand the concept, but what disconcerts me the most about this Trulia-Question is that most people automatically conclude or imply that unethical behavior of REALTORS® was a factor. How can we possibly know and why do we draw conclusions? Did the listing agent intentionally scare the buyer of loosing an opportunity by fabricating a “phantom offer” in order to make a commission? Was the listing agent not a good negotiator and fell for the bluff of the listing agent? Did the listing agent and buyers agent conspire to get a deal done? Yes, Yes and Yes that all could very well be. No doubt there are some bad REALTORS® out there who would do anything for a commission.

Yes, the possibility is always there, but let’s not forget about the consumers too!! I cannot tell you how many times in my career I had to talk family, friends and customers out of buying something because they “had to have” something and stopped thinking rationally.

Just act like my five year old – ASK QUESTIONS!

“Do I really need this? Do I really want this? Can I afford this? Am I paying the same everybody else is? Is it too good to be true?” Ultimately it is YOUR signature on the bottom line… and I hope your agent is not holding a gun to your head when you are signing.

It is human nature to second guess your decisions shortly after you made one; especially after a big decision like buying a home, but, if you can answer all the above mentioned questions with yes – then you probably got a good deal.

You probably all know what a HUD Home is and the existence of one very special HUD Home Buying Program, the infamous “100 Down Financing” Program.

There are so many how-to guides and “special reports” floating around on the internet that I will spare you with all the details on the how, who what and where of buying a HUD home, I rather point you to the source: The website of the US Department of Housing and Urban Development (for general info) and Michaelson, Connor and Boul who is a primary contractor to the Dept. of Housing and Urban Development providing marketing and management services of HUD owned residential 1 to 4 unit properties in Phoenix and all over Arizona

Right now, in this turbulent market most rules have changed and what used to be possible is no longer. Forget about “all the experience” you have. Right now is the time to check guidelines and to keep tabs on what is changing – and if you are a REALTOR selling HUD homes helping your clients taking advantage of HUD’s special programs, please read the fine print.

photo credit: Joseph Robertson

We had recently a situation where a real estate transaction almost fell apart due to an oversight. And no this is not a post to bash real estate agents, this post is merely to make you aware that now is the time to watch every deal like a hawk.

A client was pre-approved for the $100 down deal and the contract was written for a HUD home. The client over-bid the price in order to secure the home.

The REALTOR actually was giving good advice based on the competitive price-point of the property. You know a $58,000 house with these low rates look pretty attractive and to contrary beliefs, there are still some cash-buyers on the loose, even in this market.

The detail where this deal almost went sour was when the agent presented us last-minute with the fact that the HUD home was overbid. We found out through many HUD updates (they are not communicated very well) that Hud will actually not extend out this $100.00 down program if the property is over-bid. What was a $100.00 down payment instantly became a 3.5% down payment. What a costly mistake, this minor oversight of the agent might have cost the buyer a chance owning a nice home.

Let’s do ourselves a favor and keep reading the fine print.

April’s weather can fool many of us into thinking that winter is hanging on. We probably think the same way about current interest rates staying low forever, so don’t be fooled!

The feds are officially ending the support for the mortgage market on March 31st and have already slowed down the purchase of mortgage backed securities. The massive buying of mortgage backed securities by the feds overall lowered the rates by about 1%, but we already can see that the fed is already slowing their buying and, rates are starting to tick up. We will probably see rates go back to around 6% by the beginning of April.

photo credit: Muffet

So who is going to buy mortgage backed securities after the Federal Reserve completes their intervention? The answer is private investors. However the big question remains how attractive will mortgage backed securities be to the private investors once the government-induced demand disappears? If the Dollar remains fairly strong and the unemployment rate keeps declining we might see an environment where rates might make a move . In other words if the whole economy keeps improving (a strong dollar, adding jobs) private investors might be willing to accept higher risks and money might start flowing to the capital markets to the detriment of the bond market. In sum, positive signs on the stock market are negative for Mortgage bonds.

April 5th the new, higher one time MIP on FHA loans goes into effect and the upfront mortgage insurance premium goes up to 2.25%. The First Time Home Buyer Tax Credit is also set to expire in April (you must be under contract by April 30th 2010). So we have a bunch of uncertainties ahead of us which could influence the Housing Market and Mortgage Climate.

I wished I had a the “Old Mortgage Guy’s Almanac” to predict the mortage and real-estate-market, but I dont. So I just can give you my most educated guess. Regardless on how well the overall economic climate improves, rates will likely go up because the feds will stop their intervention.

So regardless if, as you’re reading this, there are still low interest rates in the air, make no mistake, higher interest rates are on its way!

I’d like to share some very exciting news with you. As you know, I have spent the last five years of my life in the Real Estate Industry.

Over the last couple of months I realized that I needed to make a change. Now, I find myself changing direction and following a new, and by the same token old, career path.

Ten years ago, working as a Loan Officer with Lund Mortgage, I had more hair, but only a little experience in the lending field.

Back then I had a tough going and most likely it had something to do that back at that time it was all about taking applications for refinances, and it was not too important to comprehend the needs of real estate agents and brokers. So I became one.

Over the years as a REALTOR; friends, family and acquaintances have asked for my mortgage-opinion advice regarding financing a home and as a REALTOR I have always loved working to help people achieve their goal of home ownership. I always seemed to find the time to help out when ever possible, but never really could be directly involved in the lending process.

To be honest, it drove me nuts not to have a hand in the lending aspect of the real estate transactions I helped facilitate.

Now, I am bald, have some more experience and certainly a better understanding of what agents (and consumers alike) need in a mortgage-partner.

Considering the mortgage industry and lender licensing in these turbulent times, the amount of lenders has significantly shrunk. This is my opportunity to get back to my old, now new again, path to help consumers achieve the goal of home-ownership.

Times are different from when I began my original quest. More regulations, procedures and paperwork are now in the mix, as well as the mortgage loan officer license. I view this as a new and exciting challenge and opportunity.

As of January 14th 2010 I am a loan officer originator with Sunstreet Mortgage, LLC – and trust me, I did not make that decision lightly. You probably haven’t heard about Sunstreet Mortgage, LLC in the Phoenix Metropolitan Market yet, but that will soon change with the new branch opening. I will tell you more about the branch and the company later…

Now that the cat is officially out of the bag this blog will transform and I will try to post more regularly.

Click here to view the embedded video.

This evening I was channel surfing and happened to come across the 60 Minutes segment “House of Cards: The Mortgage Mess“. Steve Kroft did the story, and I thought that it was a pretty good summary of the sub-prime mortgage meltdown in plain English even a layman can understand.

Even though the appraisers were not mentioned in the story, this is another sad example that ignorance of the law common sense excuses no one….except Charles and Stan – they are laughing all the way to the bank.

One can slice it and dice it any way they want – but everybody was party to this dance.

Is Mortgage Acceleration for Real? And For You?

If you could pay off your mortgage more quickly and save thousands in interest, would that get your attention? It got mine. It started when I sat in on what turned out to be a multi-level marketing presentation that promised these things could happen when you bought their $3,500 web-based software. That made me suspicious, because I know that mortgage acceleration relies on mathematical principles and financial discipline, not magic software.

Using what I learned from that infomar I did some research and found www.SpeedEquity.com founded by Mr. Harj Gill. He came up with the mathematical and banking principles to allow mortgage acceleration without having to refinance your 30 year mortgage, changing to bi-weekly payments, or even changing your spending habits. He developed the program in Australia based on principles that are sound but not generally known and understood. If the user has financial discipline, he or she can cut years off a mortgage and save thousands in interest. Harj answers most frequently asked questions here.

Gill is a consumer advocate crusading against the companies that are promoting $3,500 software and high cost consulting for what people can do on their own. His influence has spread from Australia to Great Britain, Europe, Canada, and lately the U.S.

After some research and exchanging emails with Harj Gill, I decided to go to his seminar in Las Vegas on July 6 where I joined what looked like 800 to 1,000 other people at the Luxor Hotel. It was astounding. The local TV station, KVBC, did a story about a company which sells a similar software for $3,500.00, and with the help of Nick DiArchangel (producer of “Saving you Money”) and reporter Jim Snyder, the spotlight was put on Harj and his program.

It is bewildering that this story has not spilled over to the Greater Phoenix Metropolitan Area and it is amazing that the local media has not picked up on this story yet. The only thing I could find about mortgage acceleration in the local media was this article in the Arizona Republic. Ironically this was published the day prior to Harj Gill’s event a the Luxor Hotel in Las Vegas.

The bottom line is that Harj Gill’s book explaining the system, Own Your Home Years Sooner!, will be out soon with a price tag of $24.99, and the web-based software has an equally low annual fee. That sure beats $3,500! Or, you could get a Ph.D. in mathematics and create your own spreadsheet.

Speed Equity® seems like something that could help a lot of people get out of debt sooner.

Mortgage acceleration can be part of a financial plan and is one of many strategies. There are other strategies which call to maximize all available home equity, extract it, and to re-invest it in other investment-vehicles. So naturally there are pros and cons of paying off your mortgage sooner, but ultimately it depends on each individuals goals

The concept of Arbitrage is not something new but before you jump on paying off your mortgage sooner or extracting every bit of equity you have to re-invest in another investment vehicle, you should consult with a financial planner, mortgage planner, investment consultant and/or a CPA to weigh out all your options.

The majority of middle class Americans do not have much savings, not to mention a financial plan; and a 401K is just something what an employer offers and the fellow co-worker has. So it is time for everybody to wake up and educate themselves… At the end of the day it is always better to have a plan rather than having no plan at all.

I hate to see people lose their homes. These days it is happening too often as many folks are unable to keep up with mortgage payments for many reasons. Sometimes a home goes to foreclosure because of divorce, or illness in the family, or because someone loses their job.

Today, most buyers end up in foreclosure because they bought overpriced homes at the crest of the Phoenix Housing Market and abused the wrong loan product such as 100% financing, pay-option ARMS or stated income loans. These people find themselves “upside down” in their properties – owing more than the property is worth. They cannot afford to sell the house because it would mean finding cash to bring to the closing-table, and not having enough cash, income or a combination of both is most likely the cause they got in trouble to begin with. If they were already at the limit of their financial resources, any kind of little bump in the road could send them to foreclosure.

Welcome to the world of the Short Sale. This is where a knowledgeable real estate agent can help these people sell their home in what looks like an impossible situation. The secret is understanding how a short sale works to every-one’s advantage, and then acting as the deal-maker between all the parties.

The homeowners don’t want to lose their home to foreclosure – they need to get out but can’t afford the cost to settle. Most of the times, homeowners facing foreclosure are under such emotional stress that they don’t consider their near future. No doubt, a short-sale will still negatively impact the seller’s credit-score; however, it is not nearly as bad as having a foreclosure on the credit report for seven years.
With lending guidelines tightening up and the sub-prime mortgage market in trouble, it is most likely that borrowers with a foreclosure on their record will have a more difficult time to get a mortgage in the future when trying to get back on their feet.

Lenders don’t want to go to foreclosure – it costs time and money because of the cost associated with a trustee’s sale, trustee’s fees and legal fees. On top of that, all the foreclosed loans become non-performing on the books and may affect the lenders ability to sell their loans on the secondary market. Therefore many lenders may be able to be convinced to let the borrower sell their home for less than what is owed on the property.

So, at the start of the short sale process you have both sides wanting to turn a bad situation to one with a “happy ending”. Add to this a qualified buyer recognizing the opportunity to acquire a property at below market value. Now you have the ingredients for a successful resolution all around:

• The sellers avoid foreclosure

• The lender takes a discounted pay-off to avoid the foreclosure process and saves money

• The new buyer steps into the property with immediate equity

Most homeowners who could benefit from a short sale don’t even know the option exists. Too many real estate agents don’t know about short sales, either, and are missing opportunities for growing their business with a win-win solution.

Disclaimer:

There are a couple of things to consider! A short sale will affect the seller’s credit score. Sellers must understand the terms of the short sale and should obtain any agreements in writing (some of the forgiven debt may be required to be paid back as a personal obligation). Forgiven debt may be treated as income for tax purposes. Buyers be aware that short sales take a long time to close (they call them short sales for a different reason). The purchase contract always is contingent upon a short sale agreement acceptable to both , the seller and the lender. And finally, always consult with your attorney and tax professional.

Overall the loan process is very similar to that for Americans. First of all the borrower will need to complete a mortgage application. The two most important components in the application is the proper disclosure of employment, liquid asset and immigration status. The borrower will be required to furnish a letter of employment, relevant bank statements and a copy of the passport with an acceptable visa stamp. Once all the information has been verified the lender can then determine the most suitable program.

In my experience I have found that there are two distinct program options available. The first option works if the borrower has perfect Canadian credit. In this case the lender can go through a large credit depository like Chase and pull Canadian credit into their system. The lender can then use this in making a credit decision. There is no tolerance for bad credit in this option. Even one late payment on a small credit card account twelve months ago can kick the application out.

Armed with solid Canadian credit the borrower now has access to a wider choice of loan programs. They can qualify for fixed rate loan programs with limited pre-payment penalties and other features common to prime loans.

In the second program option the lender does not pull Canadian credit and only verifies employment, the liquid assets and the visa status of the applicant. In this case the loan programs are rather limited. These programs usually involve high down payment, variable interest rates, balloon payments and pre-payment penalties. Not all of these features may apply to the loan but will most certainly include a combination depending on the lender.

The two program options I describe above are only available for the purchase of a second home. Purchasing a primary residence is still available but will require a long-term US visa such as an H-1B. It also requires proof of continued employment in the US for up to three years. The process is then exactly the same as that for Americans.