North Phoenix Agent Blog

I’m noticing an uptick in the number of roadside cardboard signs that have something to do with real estate lately. You know the kind - here in Phoenix they’re usually hand-inked, on cardboard or oak tag, stuck in the ground with a stake.

Surely it’s a function of the bad economy, the looming recession, the credit crisis and the housing ‘bubble’.  Whatever, I figured it would make a good blog post or two. Here’s today’s Real Estate Road Sign:

I didn’t call to find out exactly what scam they’re peddling, but rest assured it isn’t as good as it sounds. No one is going to pay off your mortgage out of the goodness of their heart and not expect something for it. Either they’ll refinance you under their own (probably dubious) terms, or they’ll pay off the mortgage and let you stay in it, as a tenant.

There are some instances where it might be beneficial to let someone buy your home from you and then arrange to stay in it as a tenant. But contact a trusted Realtor or mortgage lender to do it. Placing your single largest financial asset into the hands of someone who advertises on roadsides with hand lettered cardboard signs is not in your best interests.

If this is a refinancing “plan” it probably involves people who look and sound a lot like the Sopranos and there are a lot of other, better options for refinancing if you’re facing foreclosure.

If it’s a plan to buy your home and rent it back to you, be very careful. There are a lot of scams out there now that start out this way, and then whack you with huge penalties if your rent is even an hour late. Worse, some of those rent back to owner schemes allow the company you’re dealing with the evict you from your home without notice if you pay late.

If you’re having financial troubles large enough to even think about calling the number on this sign, you’re probably better off contacting someone about a refinance or a short sale.

Related Posts

1. Real Estate Road Signs - Buy A House with $500 Down
2. Hire a Professional Lender, Not Your Buddy Who Does Mortgages Part Time
3. How Your FICO Score Determines Your Mortgage Interest Rate by the XBroker (not light reading but highly worth your time)
4. The AZ Mortgage Guru updates the status of the federal housing assistance bill
5. Try the federal Hope Now campaign designed to help you stay in your home

People lined up twice around the block this morning at the Pasadena, California headquarters of IndyMac Bank. Folks were there to close their accounts and take the money to other banks. It was a old-fashioned bank run like we haven’t seen since the Depression.

Have you got money in an IndyMac account? There’s no need to panic, and no need to withdraw your funds from the bank either.

Yes, IndyMac failed. But the FDIC insures all bank deposits up to $100,000. Your money was insured by the US government. You’ll get it all back. In fact, it never went anywhere. Previous press releases have said that the ATMs are operational, the bank windows reopened this morning and folks with Indymac accounts under $100,000 (or retirement accounts under $250,000) have full access to their money. The only difference is that now the FDIC is running the bank. Essentially, it was nothing more than a management change.

Read the the Los Angeles Times today, on the IndyMac situation: “Customers with $100,000 or less in deposits or with $250,000 or less in a retirement account would have full access to their funds, which are insured by the federal government. . . . . For all depositors, interest rates on most individual accounts would remain unchanged until the accounts mature, the FDIC said.”

Today it was announced that the FDIC (Federal Deposit Insurance Co) shut down IndyMac Bank after an old-fashioned ‘run on the bank’. IndyMac customers withdrew $1.3B from IndyMac branches since a June 26 letter written by Senator Schumer (D-NY) that said the bank posed “significant risks to taxpayers and borrowers” was leaked to the public.

What Happened to the Money?
There’ll be a name change, and a management change. For insured depositors (most average folk), their money isn’t going anywhere. They’ll still have have access to their money through the new name - IndyMac Federal Bank - and the new managment, courtesy of the FDIC.

From an InmanNews story: Insured depositors and borrowers will automatically become customers of IndyMac Federal, FSB and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards and writing checks.

Uninsured depositors will be contacted by the FDIC to meet with their claims people. The FDIC typically insures bank deposits up to $100,000.

The FDIC has established a toll-free number for customers of IndyMac Federal Bank, FSB. The toll-free number is 1-866-806-5919 and will operate today from 3 p.m. to 9 p.m. (PDT), and then daily from 8 a.m. to 8 p.m. thereafter, except Sunday, July 13, when the hours will be 8 a.m. to 6 p.m.

Or visit the FDIC website: http://www.fdic.gov/bank/individual/failed/IndyMac.html for further information.

Fannie Mae and Freddie Mac stock prices took a serious tumble today, as the market digested fears and rumors that the two mortgage giants are undercapitalized.

 photo credit, Duchessa at stock.xchng

Financial Times reports on Fannie & Freddie’s woes. Fed Chairman Ben Bernanke tried to calm everyone’s nerves by stating he feels that F & F are “well capitalized in a regulatory sense” but they should raise more capital. Which is it Bennie? Are F & F fine, or broke?

Ironically it was a politician who spoke most truthfully about the 2 F’s today. Republican Presidential candidate Senator John McCain spoke on the campaign trail, saying the two companies “are vital… they will not fail… we cannot allow them to fail.”

• Inman News’ take on the story
• Bloomberg Explains How F & F Affect Credit Default Swaps (for financiers only!)
• Senate Majority Leader Harry Reid, “Final Vote Today” on Stalled Housing Rescue Legislation

Related Posts at the NorthPhoenixAgent

Housing Bill Not Yet Signed

On Monday, Alt-A loan giant IndyMac Bancorp said that it will stop making most types of mortgage home loans, and layoff about 1/2 of its workforce. IndyMac says they’ll fund the loans already in the pipeline. Company execs also said they’ll continue offering their reverse mortgage product, and will continue operating their loan servicing division.

See the conservative take on the story from the Wall Street Journal, or try the perspective from the left at the Washington Post.

Consumer Tips
Have you got a loan approval from IndyMac? If you’re in escrow on a property already, talk to your Realtor and loan processer to make sure the approval is still good. It would probably be wise to get a backup loan approval from another source, just in case IndyMac pulls their approval of your particular loan package during your escrow period.  Still shopping and haven’t settled on a home yet? Get your loan pre-approval from somebody other than IndyMac.

Does IndyMac service your current mortgage? All the press releases & media stories I saw said IndyMac intended to continue doing loan servicing, meaning they’ll continue to take and apply your monthly mortgage payments on existing home loans they’d been servicing before this announcement. It wouldn’t hurt to call them and make sure they’ve got your mailing address. Why? If they do sell the servicing of your loan to another company, they must notify you by mail. IndyMac’s website lists their Home Mortgage Customer Care line as 1-800-781-7399.

I’m noticing an uptick in the number of roadside cardboard signs that have something to do with real estate lately. You know the kind - here in Phoenix they’re usually hand-inked, on cardboard or oak tag, stuck in the ground with a stake.

Surely it’s a function of the bad economy, the looming recession, the credit crisis and the housing ‘bubble’.  Whatever, I figured it would make a good blog post. Here’s today’s Real Estate Road Sign:

Here’s the thing. A ton of people would qualify to buy a home - any home - with $500 down. The amount of the down payment is a function of 2 things - 1) the contract you negotiate with the seller, and 2) what sort of loan program you qualify for.

You don’t need to call somebody who advertises on the roadside to get a $500 down house. In fact, I submit that it’s probably not a good idea to get a home mortgage from somebody who advertises on the roadside with a cardboard sign. To buy a home with $500 down, you just need to speak with a reputable lender, and see if you qualify for a loan program that allows a low down payment.

Veteran? Done. You can buy a house with $500 down - use the VA loan program. eHow tells you how to figure out if you qualify, but I take no responsibility for their sponsored lender links.

First time homebuyer?  Done and done, and then some. You can buy a house with only $500 down - use a standard FHA loan. Or use an AmeriDream loan. Or use Nehemiah Corporation to buy your slice of the American Dream. Go through Maricopa County’s Home In Five program and get your downpaymnet as a gift. Try the Down Payment Guy website, which advertises homes for sale on the regular MLS that are owned by seller who agree up-front to partcipate in a program like these. But note that the DownPaymentGuy steers buyers to their approved stable of lenders, and you can use any lender you choose.

Not a first timer, but still cash-strapped? There are FHA programs you qualify for too. My favorite blogging lender Shailesh Ghimire explains FHA loans.

When you see a road sign like this one, remember 2 things: 1) You can work with any lender you want and still potentially qualify for a $500 Down home purchase.  2) Doing business with a “lender” who advertises on the roadside is probably not a great idea. Buying a “new in plastic, pillow top” mattress off a road sign might be OK. But selecting the single most expensive financial asset you’ll ever own in your life off a road sign is potentially a recipe for disaster.

Related Posts at NorthPhoenixAgent

• How Much Do I Need for a Downpayment
• Earnest Money Defined
• Buyer Beware - Backing Out Can Be Expensive
• Why Your Lender Shouldn’t Be Your Friend
• No Money For a Down Payment?

Related Posts By Other Excellent Bloggers

• FHA Mortgage Insurance Rates Now Higher If Your Credit is Bad (AZ Mortgage Guru)
• How Your FICO Score Determines Your Mortgage Rate (by the XBroker ; not light reading but well worth your time)

You can read and hear the story of the latest Congressional foul up over the housing bill here, on National Public Radio’s show Marketplace or over at Reuters.

• See Bloomberg’s take on the story
• And see the New York Times article yesterday for background on the bill, which has a 3-pronged plan to:

1. Help homeowners facing foreclosure by assisting them with a refinance, or getting banks to write down some loan balances,
2. Offer incentives to first time home buyers who want to buy currently vacant homes (many foreclosure properties sit vacant and risk becoming blight in the community), and
3. Implement some new regulatons on Fannie Mae and Freddie Mac, the government regulated lending behemoths

Apparently, our US Senators have not signed this bill today as originally thought and intended. Instead, they spent the day haggling over whether to add energy tax breaks to the bill. Democratic Senate Majority Leader Harry Reid wanted the bill passed today (and most sources say it would have), but Republican Senator John Ensign wouldn’t let the bill go to a vote without the addition of his pet project, $7 billion in renewable energy tax cuts.

Encouraging the use of renewable energy sources is a laudable, noble goal. But what has it to do with the foreclosure crisis? Nothing. Senator Ensign is trying to tack his tax credit bill onto the foreclosure assistance bill simply because he knows foreclosure assistance will pass, and his tax credits plan likely wouldn’t, unless it is attached to a popular, will-pass measure.

American homeowners are hurting, and badly in many places. I don’t often like to sound like I’m commenting on politics here. It isn’t the place. But this is just truly depressing news. It seems our elected officials still don’t get it. Some of them would still rather wrangle and scrap over pet projects with little chance of success than get behind a much-needed bill that was sure to pass anyway and will help tens of thousands of truly hurting Americans. 

By the time the Senate returns from the Independence Day holiday to deal with this bill again, tens of thousands more Americans will have received a foreclosure notice on their home. The bill will almost certainly pass, even with Ensign’s tack-on tax credits. For shame, Senators. I wonder which of Ensign’s ‘close friends’ and business associates stand to benefit from the $7 billion he’s going to hand out for renewable energy sources?

Related Posts on The North Phoenix Agent Blog

1. Definitions of REO, Foreclosure, Short Sale and Bank Owned
2. Mosquito Eating Fish for Green Pools?
3. Countrywide Offers Assistance to Struggling Homeowners
4. I Got a Notice of Trustee’s Sale. What Now?

My mortgage lender friend Shailesh Ghimire posted a great little article recently that includes a chart showing how much extra you’ll pay for a home mortgage at varying credit scores. Having a FICO score below 620 will cost you about $5,500 extra in lender fees. Yikes! The same is true for car loans, credit cards and other consumer debt.

View the entire article on his website the AZ Mortgage Guru.

Updated - As of July 14, 2008, FHA loans have risk-based pricing on their mortgage insurance. Again, it’s more expensive to get a loan if your credit isn’t so good. Click to read the AZ Mortgage Guru’s explanation of risk-based PMI on FHA loans.

Related Posts from Other Bloggers

• The XBroker Explains (once and for all) How Your Credit Score is Calculated, and How it Impacts How Much Your Loans Cost You

HUD’s at it again, trying to ban down payment assistance programs. You can see the history of HUD’s efforts to squelch homebuyers’ efforts to catch hold of the American Dream in my previous blog entries and you can see AmeriDream’s reaction on their website or Nehemiah’s reaction in a Conde Nast online publication called Portfolio.com.

HUD’s contention is that down payment assistance artificially inflates the price of homes. They also point to the higher default rates of homeowners who used down payment assistance to buy their home. I have a lot more to say on this subject but have to run out momentarily - to show a home to a first time homebuyer, by the way, who’s struggling to save a down payment.

I say to HUD, why now? Congress is working it’s way through legislation to add further regulations to the down payment assistance programs. Why not let those efforts play out? If you’ve got a system with a few bugs, fix the bugs. Don’t scrap the system.

Today’s mortgage rates are brought to you by my neighbor and all around great guy, Larry Cappalletti of Capp Mortgage.

• 5.625% - 30 Year Fixed, with 1.50 points
• 5.750% - 30 Year Fixed, with 0.875 points
• 5.875% - 30 Year Fixed, with 0.25 points
• 6.000% - 30 Year Fixed, with 0 points
• 6.125% - 30 Year Fixed, No Fee

• 5.750% - 5/1 Jumbo ARM, No Fee
• 6.000% - 7/1 Jumbo ARM, No Fee

Capp Mortgage offers a couple of great features & guarantees, including the “7 Day Promise” which guarantees that the title company will have your final loan documents 7 days before your scheduled close of escrow.

Well, my beloved Kristi Collins has changed employers. She’s now with Maricopa Mortgage, after having been hammered lately by Coldwell Banker Home Loan’s inability to do jumbo mortgages, among other things.  CBHL just never got into ‘creative’ financing and so in today’s marketplace where anything other than a standard 10%-20% cash down, full documentation loan is a little (or a lot) of trouble to obtain, Kristi felt she could better serve her client base by moving to a lender who’s a bit quicker to adapt to a changing marketplace.

100% financing is still out there! You can still buy with less than 10% down! FHA loans are booming and aren’t just for first time buyers! Call Kristi, she’ll set you straight. One thing among many that I love about Kristi is that she’ll talk straight with you — “Here’s what I can do. Send me a quote from somebody else and I’ll tell you if I can beat it. If I can’t beat it, I’ll tell you that.”  Sadly, our mortgage world is still overfull of slick salesmen types who’ll push you into a loan that’s good for them instead of being good for you. Kristi and my other preferred lenders take care of you first.

Contact Kristi by cell phone at 602-750-8594 and contact my other preferred lenders by clicking here.

I still love CBHL for clients who fit the scenario of 10% or 20% down on a loan under $417,000. CBHL guarantees they’ll close on time or you get a 1/4% rate discount for the life of the loan. Plus, they have one of the smallest loan packages I’ve ever seen. No junk forms to sign, no writer’s cramp, no 1 hour closings. In, Out, Done. No Fuss, No Muss, and you’re guaranteed to close on time.

I miss Kristi’s sunny personality and well wishes every day at the office. It’s not the same without her. But she’s happier, and her clients are happier. She reports the mortgage rates for the weekend, for any of you home shopping out there. And if you’re shopping, you need a stupendous Realtor at your side. Haven’t got one yet? Call or email me to see if we ‘click’. I’m happy to help out.

6.00% - Conforming loan (under $417,000), fixed 30-year rate
5.50% - conforming 5/1 ARM

From Inman News, here’s an excerpt from an article they ran today about a mortgage lender getting sued for shenanigans.

Leib Pinter, 64, is accused of fraud in connection with the alleged theft of $44 million in proceeds from refinance loans funded by Fannie Mae.

According to an indictment filed by the United States Attorney for the Eastern District of New York, Pinter’s company Olympia Mortgage Corp originated and serviced mortgage loans owned by Fannie Mae. Some of those loans were refinanced through Olympia, with Fannie Mae wiring money to an Olympia account.

Instead of paying off the underlying mortgage loan by remitting the outstanding balance to Fannie Mae, Pinter is accused of pocketing the proceeds. By the time the scheme was discovered, Fannie Mae held nearly $44 million in unpaid, but refinanced, mortgage loans from Olympia, prosecutors said.

Yikes! Maybe in addition to a terrorist watch list, we need a lender fraud watchlist. It might help solve the problem we seem to be having, where most folks want to help homeowners who got duped into a loan they couldn’t afford, but nobody wants to help guys like Pinter and homeowners who knowingly took out a mortgage they couldn’t afford.

Courtesy of Andrew Little, of the Little Team at Countrywide (yes, they’re still around, and Andrew is a fantastic loan officer)…. today’s mortgage rates. Like any published rates, these are the best rates available, and assume excellent credit and low amounts of other debt. I like Andrew’s mortgage rates because his company projects what they think the rates will be in 1 week and in 1 month. if you’re loan shopping and wondering when to lock your rate, this info will be handy. (Click the pic to enlarge).

You can reach Andrew Little of Countrywide at

Andrew Little
Sales Manager
The Little Team
Countrywide Bank, FSB

Thinking about buying a home? Have questions, need info, but aren’t ready to speak with a lender yet? Have a fear that a pushy salesperson will bug you till you sign?

See this awesome glossary of mortgage terms compiled by Jack M. Guttentag. Jack is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania, and founder of GHR Systems, Inc., a mortgage technology company. He contributes to InmanNews.com where I get my daily fix of real estate news. You can see excerpts of Inman headlines on my main website, the NorthPhoenixAgent.com.

Related Entries:

• PMI Defined
• What’s an 80/20 Loan?
• How Much Earnest Money is Enough?

The UK Bank released a statement today that says the worldwide credit crisis is being overstated, and the financial market will gain strength in coming months as investors realize the impact of the subprime mortgage crisis wasn’t as bad as we all thought it was.

I’m no expert on the worldwide financial markets, but being in sales does give you the chance to hone your people watching skills. The UK Bank’s statement seems logical. Pendulums swing, and then swing back, before settling into the new normal.

Overreaction in the residential mortgage market was bound to happen, given the easy lending standards that prevailed over the past couple five or six years. For a while there you could get a mortgage as long as you could fog a mirror. Lenders are waaaay more restrictive these days. That’s not to say you can’t get a mortgage. You can. Just be prepared to provide documentation in the form of tax returns, pay stubs, bank account statements and the like. If your income comes from anything other than W-2 wages, you could have a difficult time getting a home loan right now.

But I think the UK Bank is right, if only because they’re describing a typical human reaction: overreaction, followed by settling down.