Any opinon on the mortgage brokers

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Apr 3, 2006 5:53 pm

These guys really don't review or care about their customers... They just sell AMR's with nothing down and now these people are screwed..


This is the same as the 2001 dot.com... Years later the government is thinking about taking action. I don't get it... Ohh wait, maybe the government was scared to state the obvious... Or maybe the public did not want to hear the obvious.


Curious if there is any regulation or rules? Are these people liable for misleading and false claims...?

Apr 3, 2006 7:16 pm

You took out an ARM, didn't you? Sucks to be you.

Apr 3, 2006 7:44 pm

I added mortgage services to my business 2 years ago. It makes sense that as a financial adviser, you should be competent in all areas of finance, and a mortgage definitely is part of the equation.


Most lenders have underwriters that will deny loans to those seeking interest only arm's, pay option, etc., and I personally don't deal with clients who's finances are so fragile that they're in deep doodoo if rates go up a point. I only sell arms if it makes sense for the client- say a 5 year arm if they're moving in 5 years, etc. Pay option arms are a great cash flow tool, particularly for those with investment property. The press has picked up the ball on interest only loans being bad- Hello- Your house will most likely continue to appreciate, while what would have been principal payments can be invested for a higher return than their house is appreciating, along with liquidity.


What's bad about no money down on a mortgage? Using other peoples money is the fasttrack to wealth in this country.


Consider the leverage:


$5000 in an investment making 10% per year = $500 profit in 1 year.


$5000 down on a property worth $500,000  appreciating at 10% per year = $50,000 profit in one year.


Now consider it with no money down!!!


Plus, mortgages add about $8,000 a month net to my practice each month, averaging 2 loans per month.


It's all about perspective

Apr 3, 2006 7:49 pm

I'd also like to add that when you have something people want- MONEY- They chase you, not vice versa like in insurance and investments. Couple that with the fact when qualifying you have access to their taxes,investment statements, etc., giving you the opportunity for significant investment assets.I've uncovered about 10 million just from mortgages the past year.

Apr 3, 2006 8:12 pm

Unfortunately, some people pursue investing and home mortgages with the same attitude, unbridled optimism. And it's that attitude that ends up getting them in trouble, down the stretch.

Apr 3, 2006 8:27 pm

Care to elaborate?


Apr 3, 2006 10:37 pm

Lakers my partner kicked some butt with the mortgages and I am following his foot steps.. In my eyes the more services provided the better.


Dirk.... No... My life is awesome so I wish you the same. Also I was called Dirk Diggler for years with my 70's costume.. So you are following my foot steps with that name...

Apr 3, 2006 10:39 pm

Also nothing down is awesome for certain situations... If one can have a loan for 5% and is able to invest the interest for the past few years they are way ahead!


Most I suspect are doing this for the wrong reason.

Apr 3, 2006 10:43 pm
executivejock:

Lakers my partner kicked some butt with the mortgages and I am following his foot steps.. In my eyes the more services provided the better.


Dirk.... No... My life is awesome so I wish you the same. Also I was called Dirk Diggler for years with my 70's costume.. So you are following my foot steps with that name...



That's great. It's like getting into the stock market in February, 2000.

Apr 3, 2006 11:14 pm
executivejock:

Also nothing down is awesome for certain situations... If one can have a loan for 5% and is able to invest the interest for the past few years they are way ahead!


Most I suspect are doing this for the wrong reason.



Yes and what happens when real estate prices decline (and rates go up) and you have NEGATIVE EQUITY in the house and you can't afford the payment?

What then?

Apr 3, 2006 11:49 pm

BUY BUY BUY!!!! Friends in DC with new 650k homes made 100k in 3 months... Now 6 months later they have lost 110k in equity! Yippee skippeeee


Do the opposite of the majority...

Apr 4, 2006 8:31 pm

Lakers:

Care to elaborate?


-----------------------------------------


Sure.


An optimistic investor puts 100% of their money in equities.


An optimistic mortgage holder borrows the maximum amount his income will allow. Preferably, with an interest-only mortgage at that.


Both are optimistic about the future. However, neither can afford to be wrong for any length of time. 


As for me, I only have a portion of my money in equities and my mortgage is only half of what I was approved for. Oh, I'm optimistic about the future, I just know there will be "speed bumps" and "potholes" along the way. Being able to survive the inevitable setbacks is the key, in my opinion.

Apr 4, 2006 8:46 pm

"As for me, I only have a portion of my money in equities and my mortgage is only half of what I was approved for. Oh, I'm optimistic about the future, I just know there will be "speed bumps" and "potholes" along the way. Being able to survive the inevitable setbacks is the key, in my opinion."


Ahhhhh... prudence..... what most of us could all use (myself included).... A difficult aspect of our business is trying to communicate that to clients.....

Apr 4, 2006 9:57 pm

I wanted to weigh in with a few of my own thoughts about the mortgage industry as it operates today.  For starters, it totally reminds me of this business in about late '97 or early '98--all these jackoffs leaving other careers, and playing "mortgage broker" to family, friends, and their natural market.  When the sh*t hits the fan, you'll find out who the true professionals are, and who's just a pretender out to make a quick buck.  This industry is absolutely ripe to have the holy living crap sued out of it!  Why, oh why, I ask were so many loans done for 3, 5, or 7 years at a time when the 30-year mortgage was at an all-time low?  Ol' Sooth is soothing again, but that question will come back to haunt the industry through class action lawsuits in years to come.  Write it down, you can take it to the bank. 


Next thought:  Where's the disclosure as to conflicts of interest that are rampant throughout this ever more incestuous business.  Builders starting their "one stop" mortgage shops, developers in bed with realtors, realtors in bed with builders, builders in bed with local banks who hold the same builders' business and commercial loans.  It is an absolute f-ing cesspool.  Plenty of proprietary products, too.  Remember what that did to our business?  And finally, how much did the broker make on the front and the back of the loan.  Did they offer the loan that was best for the client, or best for them.  Why do you suppose that mortgage brokers hate the plain old 30-year vanilla mortgage so much?  Because it is very low margin, and easy for the consumer to shop.  If they show you something more exotic, a buyer is more likely to fall in love with some idea, and forget about how bad he's being screwed. 


Another thought:  Remember all of the products that our industry manufactured to play into people's greed in the late 90s?  Technology Funds, Telecommunications Funds, or the (can you believe it's still alive?) Goldman Sachs Internet Tollkeeper Fund.  Isn't that the exact same sh*t that just haunted brokers when things went south?  I remember my first year and a half in the business, and sitting next to a "top-producing, sage veteran" and listening to him pitch the Putnam New Century fund at the IPO.  "This fund is going to be small and nimble like New Opportunites was before they closed it....."  He received over $4 million of commitments that day alone for the fund.  He asked me how much I had sold, and I simply told him, "I'm not interested in offering that to my clients."  I had spent the day trying to sell 8%, 15-year, AA credit non-callable bonds.  I had received three orders that day totalling $35K.  The veteran "retired" in 2002, but not before I had picked off a handful of his clients.  Every single one had a position of the New Century Fund, which would later merge into the Voyager II fund to shed its pitiful performance.  (My 8% bonds were up 16%+ over the same time period.)  The mortgage industry has produced their own pile of junk to play into the real estate boom that will not be judged kindly in hindsight.  Oh, there I go soothing again.


For the record, I am currently short Accredited Home Lenders (LEND), New Century Financial (NEW), IndyMac Bank (NDE), and H&R Block (HRB) in my own account.  Up on 2, down on 2 but still confident of the long term result. 

Apr 4, 2006 11:01 pm

In 2000 I told everyone that would listen something was up with the market and everyone involved. All parties thought I was confused.


The real estate boom is more of an issue. People have put loans on top of their estates. Banks know they are going to take a hit, but how much is the question.


Today I talked to someone with 300k equity in home. Thinking about selling. He stated he bought for 170 in 88 then in 89 it was 120k, but still thinks New England is immune to a change... I stated rates were above 6 and party stated they were still near 5.


Also over the years I knew a bunch of people who became a real estate broker. Most did not have a degree or anything else. One company in NJ would just get 20 year olds to push and sell.


Crazy is the margins. One guy driving a 100k car and acting like a big shot, wanted me to work for him. This guy was stating he can make like 20k on 100k loan.

Every sign on the earth points to a big wake up with real estate.


Raw materials and oil are on the rise. Rates will and are going up. If there is an odd lot theory for real estate... We have passed that point... One in five are 30 days behind in 6 states. Wonder if that is going to go up? APR's going into 7% zone.. 35% of the country have them... Wonder if this would effect the market? YESSS!

Apr 4, 2006 11:03 pm
Apr 5, 2006 12:27 am
executivejock:

BUY BUY BUY!!!! Friends in DC with new 650k homes made 100k in 3 months... Now 6 months later they have lost 110k in equity! Yippee skippeeee


Do the opposite of the majority...



Maybe in a year or two when prices have fallen a bit further I shall consider doing so......the real estate market is slow moving, and once a trend(downward) starts, it tends to continue for a while.  Just my opinion.

Apr 5, 2006 11:09 am

In about 12 months when I have enough dough to put 20% down on my beachfront townhouse, prices around here will have declined from about 750K for a 3BR/2BA ocean view to about 500K....


PERFECT for me............

Apr 5, 2006 2:11 pm

When you buy can I rent it for a week.. Cheers

Apr 5, 2006 3:03 pm

Absolutely... You should see it... About 50 yards from the surf, views of Crystal Pier to the South and the start of Windensea to the north. I am developing a relationship with a real estate agent and she showed it to me 3 weeks ago during sunset... the view from the back porch area......RIDICULOUS......