Just a Broker's 2 cents

[kingston]

As predicted rates will continue to be on the up swing. I have been educating my borrowers and even encouraging renters to own homes by using different loan products. Its amazing to see how so many people do the traditional fixed rate conventional loan. Of course everyone has different needs but I have been selling various types of arms specifically those that are tied to the cosi index and of similar sorts. Many people don't realize that you can actually increase your cash flow and so that way you give your self options whether that be investment or whatever else you spend it on. As brokers we know rates are going up and if you don't know your other products they will be out of the mix it is survival of the fittest. Ideally you have to know what loan programs are out and available for the borrowers. Bottom line if your broker/lender doesn't understand your financial objectives your money won't work for you which is how it always should be. Make sure you know your financing options don't just go conventional find out whats available to you and see if it meets your financial objectives. This goes for potential homeowners and investors.

Just curious to know what type of loans do you have right now on your personal residence and investment properties?

[Dan Auito]

As predicted rates will continue to be on the up swing. I have been educating my borrowers and even encouraging renters to own homes by using different loan products. Its amazing to see how so many people do the traditional fixed rate conventional loan. Of course everyone has different needs but I have been selling various types of arms specifically those that are tied to the cosi index and of similar sorts. Many people don't realize that you can actually increase your cash flow and so that way you give your self options whether that be investment or whatever else you spend it on. As brokers we know rates are going up and if you don't know your other products they will be out of the mix it is survival of the fittest. Ideally you have to know what loan programs are out and available for the borrowers. Bottom line if your broker/lender doesn't understand your financial objectives your money won't work for you which is how it always should be. Make sure you know your financing options don't just go conventional find out whats available to you and see if it meets your financial objectives. This goes for potential homeowners and investors.

Just curious to know what type of loans do you have right now on your personal residence and investment properties?

Again, great insights Kingston as this is something that many don't often pay attention to. If people would take the time to ask qualified lenders more questions regarding this subject, I think they could indeed structure their loans in more favorable ways.

Well folks what types of loans do you have working for you at present? Dan

[Aldo]

The mortgage 'programs/incentives' being offered today are costing me several thousand dollars per month in lost rent due to unqualified folks getting mortgages. Allow me to cite two provable examples:

1) A large local bank advertised their offer of $5000 to first-time buyers to be applied to their downpayment and closing costs.

2) A local mortgage broker/personal friend found a mortgage lender for the following: Single white male, early 20's, unemployed but just started his own business with two collections and a judgement on his credit report.

I wouldn't rent to this guy and he got a mortgage! How can any worthy landlord compete with that?

Are similar programs/incentives offered to investors? I don't think so.

Please understand that this is not a personal attack. I just have a problem with the industry as a whole.

[kingston]

I appreciate the comments

First I like the incentives for first time homebuyers that assist with downpayment and closing cost for several reasons without these programs I would not be able to qualify some of my borrowers. Homeownership is a great indicator of the economy and its sets the value of homes because if homes aren't selling I guarantee the value of property including investment properties can depreciate. You and your neighbors won't be a happy camper. Also you don't want listings on the market for the better part of the year before it sold, how long would it take to get a buyer in the door.

If you pay your rent timely over the past 12-36 months the likelihood of that continuing is pretty good, it allows them tax benefits and other pros for owing a home, owning a home allows does wonders for the community because there is a sense of pride in homeownership many studies have been done that shows some of the non monetary benefits of having more homeowners in the community as opposed to renters. As landlords how many times do you hear the concern about whether the property will be kept up and maintained. Someone has to give these guys a break so I am a believer in these programs and with the rising expenses this is a small investment.

The second scenario let me offer another perspective perhaps that gentleman had medical expenses as a result of not having health insurance which caused him to loose his job, understand Im just saying we come across these individuals all the time. Many people are aware of the value of an appreciating asset they therefore get underneath the house using effective loan programs to keep the payment at a minimum to then sell it off to recover and abolish the existing debt they have. ONe of the brokers in my office used this approach when he was about 29 years old because he was suffering financially. People use this industry as a strategy and it works if you have self control. I would rather them attempt to get a loan than file for bankruptcy and and hinder future opportunities for credit as well as tell their creditors I have no intention of paying you and I won't be required to pay you. I think he is trying to be proactive and really take control of his finances.

As I stated I understand your position but there may be more to that story and that is where an underwriter has discretion especially because they can see the loan in 3D and they are in a better position to make an informed intelligent decision based on the facts presented. They have a full profile of the individual and the collateral and depending on what type of lender your dealing with the decision to lend money maybe more heavily weighted on the collateral to secure the loan and basically guarantee repayment.

As with commercial lending a lot of the people or companies who borrow money to make strip malls or build churches don't have the best credit but the guidelines relies on the collateral or the future expectation of profit. It is all a matter of marketing tactics to get lenders to see why they should give you money.

When it comes to investment loans for investors you would be surprised at how lax some of the guidelines have become making easier to obtain financing @ 100% without any documentation of assets, employment, or income of any sorts. Some would argue that is even more riskier than the 2 scenarios you listed above considering that an individual will allow investment properties to go into foreclosure versus their primary residence. You protect your home first before your investment property and look at the position of the lender on that one.

Excuse the lengthy reply I just had a lot to pack in there

[Aldo]

I read the first sentence in your reply and knew that I needed to go no further and I didn't.

While I understand that finding/providing mortgages puts bread on your table, I truly believe that lenders are doing a dis-service to first time buyers by offering incentives/programs that will qualify them for a mortgage they really cannot afford over the long haul. The lenders are actually doing investors a favor because the investors will be able to get great deals on those foreclosures. The original lender will be okay because they will blow the note off to another lender in short order. There is a progression from friendly lenders to fiercely unfriendly lenders with the latter being pre-prepared to eat the loss when they foreclose. Okay. That's life in the mortgage business. In the mean-time, there is the buyer that can't really afford a home that is, in reality, beyond their long term means. They sold their 4 year old car and bought a 12 year old rattle trap to get the cash needed to actually become a homeowner - a future former-homeowner who will be my new tenant while I'm making a bucket of bucks selling their former home to the next one in line.

I'm always open to correction; but, based on my earlier examples, I'm going to be very hard to convince.

[Nancy (MI)]

I very much agree with Aldo. You talk about home buyers taking care of their homes and being good for the community, well let me tell you that most home owners (maginal qualifiers for these so called give away programs -getting anyone who breaths a home with nothing done type gimmicks) don't and won't lift a finger to repair their house or make their homes appealing to the neighborhood. If you believe that I sell you some swamp land in Florida.

After a few months of living in lala land thinking it's a piece of cake to keep a home in good repair, plus pay their high property taxes and property insurances, the dream fades away and reality sets in.

Pretty soon the home falls into foreclosure, but in the mean time, they leave the home abandoned, druggies and vagrants start filtering in and then we've got big trouble on the block.

Trust me, I know all about all these things. My husband and I are Inner City Landlords in the City of Detroit. We've been trying to buy up all these abandoned homes left by these so called "wannabe home owners, but HUD has already purchased them or some other high falootin big shoot and they sit empty and drug infested.

I have found many California Investors owning them and try to get them to sell it to you. Tax write offs you know.

You can sweet talk the little innocents, my friend, but we are very savvy landlords on here.

You're talking to the wrong crowd! :thumbdown

[kingston]

Don't give these people mortgages eliminate some of these programs

Even if some of these properties fall into foreclosure as an investor wouldn't you be happy at some of the bargain properties you can pick up (money changing hands)

Why would it be disturbing to provide mortgages to people who may not qualify for traditional conventional lending even if there is a percentage of these properties that will slip into foreclosure it still allows the opportunity for someone else to be a homeowner/investor?

If lenders and underwriters actually thought this way and said you don't fit inside this box therefore we can't provide funding businesses would suffer as well in a lot of areas because for the most part they are only banking on collateral and future expectation of profit, it hurts the economy as a whole. This is just another form of money changing hands and it’s exactly the same if you have rental properties as well.

Would you rather have renters who have no interest in maintaining your property costing you thousands in repairs?

I think it is a fact that people take care of their prized possessions they are more willing to do the maintenance on their own property versus someone else’s you see it all the time such as renting a car and owning a car. You tend to get a little more adventurous with a rental.

Check out the sites

http://www.texasrealtoronline.com/issues/0301/chairman/0301chairman.html

http://www.ameinfo.com/news/Detailed/40513.html

We will just have to agree to disagree

[Nancy (MI)]

It's a nice dream. NO I would not like to see UNQUALIFIED people buy homes. I must qualify to get whatever I have in this life and my Tenants must QUALIFY to rent my homes. I have a criteria that they must meet in order to rent my homes.

Yes, I'll make money from these poor folks who buy these homes and lose them, but I've far exceed the almight buck in my life. There is more to this life than getting rich over someone elses misfortunes.

Like I said, and it's very evident you have not spent much time in the inner city of any big city, to know what abandoned houses means to a neighborhood. All scums of the earth find it a good haven to crawl into and the residents are not only afraid but are definitely unsafe.

It has been my mission for many years to make a difference and it's very hard when Politics come into play, and money hungry mongrels see dollar signs in front of their eyes instead of seeing people as people.

No one should be able to buy a house unless they qualify and can afford it.

You offer them sweet dreams, but the taxes keep rising and so does insurances and you know darn well they "ain't going to keep em."

I don't agree with you, but I do agree with the right of free speech and the right to be successful, so I don't begrudge you your view point on this subject or you promoting it. Thank God for America!

But you truly are not someone who has been there and really don't have the people's well being in mind.

Sleep well!

[kingston]

If these programs don't work and simply put people in a position where they can't afford taxes and insurance the system would correct that accordingly

In other words we wouldn't see down payment assistance programs because no one would want to contribute funds due to the anticipated outcome

I can't see the answer in having people rent for the rest of their lives where exactly would they be don't we advertise how attainable the American dream is

There are guidelines in place to qualify borrowers are you suggesting those guidelines should be written in stone they are not black and white and it is for a reason

Where do you suppose people who don't have the opportunity to rent or buy home would be they would definitely be a menace to society anyway you slice

Give these people a chance it may actually motivate them to achieve bigger and better accomplishments
Maslow's Hierarchy

[Dan Auito]

O.K. Kids! I see we have a little heat being generated and from each of your viewpoints there is a basis. However not all things are cut and dried, so there is potential for both arguements to be right and wrong in the different situations and circumstances that arise.

Nancy (no biting) Kingston (more clarity for defense) otherwise I see valid points on both sides and work with what indeed does work or could work while dumping the rest.

Many variables can alter outcomes and being a Detroit land lord isn't easy folks, I was born and raised in it.

Otherwise great discussion and I appreciate everyones input and ability to look at the finer points with some leniency to eaches experiences and local conditions/viewpoints! :smiley5:

[Aldo]

Dan, 'politically correct' must be the order of the day. The only thing you didn't say is that everyone is right for their own reasons. It's hogwash, but it sure sounds neat.

Kingston, I admire your willingness to help folks who need help but, like anything else, it can be taken too far. I'm sure there are thousands of scenarios similar to the two I mentioned earlier. Those people, in most cases, clearly are not qualified to own a home and are being set up for disaster. It's simply not fair to them. Most first time buyers rarely look beyond the end of their noses, much less a few years down the road and are rarely, if ever, advised to do so. If a tenant falls on hard times (ie, medical bills, job loss, etc) they have the option of moving to lower priced housing. What are the options for the home buyer who used his/her last nickel to buy and is saddled with mortage payment stretched out to the next nickel?

[Dan Auito]

Yep! In this case you would be right Aldo! I don't disagree in the slightest!

[Nancy (MI)]

Well Dan, I'm a little disappointed in you. You chastise me for saying the same thing Aldo said, yet give him the thumbs up!

Dan you try to please everyone you speak to on this board (but me it seems).

You are trying too hard!

Nancy Neville (MI)

[Dan Auito]

Not true Nancy. Aldo was right on the one specific that he noted, you also are right concerning many of the things you mentioned, chastising for everyone! Incuding myself, for not being more clear. And yes everyone should be happy on these boards :SM026: :SM027:

[kingston]

I feel the programs are great they are intended for certain consumers and I make sure they are available for some borrowers
I think homeownership fuels the economy and thats a good thing and helps out with consumer confidence.
Everyone makes decisions and I would like to think that the majority of homeowners have thought about the responsibility of owning a home

[OKRICHLAND]

I side with Kingston!
Nancy, you can't put everyone in the same box.
You say that your a Detroit landlord;
Well, that means nothing to me.
I was born and raised in the Detroit and surrounding areas.
I also consider myself to be a "savvy landlord".
I slept in some of those abandoned houses that your talking about;
addicted and irresponsible.
Have you ever had to sleep out in the open when it's 20 degrees below zero?
I'm just glad that someone gave me a chance.
Over 10 years of living on the streets of Detroit, Pontiac, Auburn Hills Michigan
and various other states I decided that it was time to grow up and grow a life.
No one gave me a chance accept for one broker.
I made the call with .39 cents in my pocket and the clothes on my back.
I wrote the underwriters a long letter explaining my terrible credit rating.
The house was in foreclosure and being sold by the same mortgage company that got screwed by the previous owners.
We closed on the deal and I had a roof over my head.
Within the same year I bought my second house.
I still didn't know what the term "property investor" really was.
All I knew is that I was given a chance by someone with a whole lot to loose.
Just by processing my application could have made the broker
" a laughing stock ".
That broker had very little to gain by making this deal.
Now, 10 years later I have many properties ( some of them paid off )
and many tenants.
Right down the street from a house that I just bought is a dope house.
My first house in that type of neighborhood and probably my last.
I sure wish that house was an owner occupied....

[Dan Auito]

David, don't be to hard on Nancy, she has her reasons. No lashing out required folks! The word Amicable= invaluable and if we are to coax value and support from one another we must respect each others opinions as I do all of yours.

The key is to take the good points and file them in the gray matter and use civility to address the rest, this is attacking the issues and not the people, everyone has a reason for thier position and often times it radiates from a point of pain, don't agravate the wounds just figure out why they are and go from there.

Does this make sense? I hope we can support each other as opposed to the attack and defend model. Thanks again for all the input, that's what it is all about! Dan :SM056: :SM082: :thumbsup:

[OKRICHLAND]

You have made a clear point Dan.
I guess that I did say some harsh things Nancy and I apologize.
I'll tone down my responses.
No excuses or explanations, I simply responded inappropriately.
Hope this will clear the air.

[Dan Auito]

You have made a clear point Dan.
I guess that I did say some harsh things Nancy and I apologize.
I'll tone down my responses.
No excuses or explanations, I simply responded inappropriately.
Hope this will clear the air and that we can become friends. :SM082:
It's all good Dave, sometimes and most often times I might add is that the most viscious of fights break out amongst family members the most, and then again, who do they always look at first in homicide cases! This is just life, the trick is to outwit evil and impulse to conquer animal instinct. It isn't easy and we always find ourselves apologizing after our higher senses are regained.

No apologies necessary from anyone here, just understanding! :SM083: Now where were we? Oh Aldo, you started this, it's all your fault. I'm just kidding. :SM007:

[Aldo]

Okrichland, you are clearly the exception to the rule. I admire your ambition and tenacity, without which you would probably be one of Nancy's tenants. The truth is that there aren't a lot of high-credit-risk folks out there who are willing to do what you did and then continue to live within their means. Yours is almost a story-book tale and one you should be proud of. But, since your achievements are out of the ordinary, I'd ask that you remember that before criticizing someone who may have never have known of someone who has matched your achievements.
Keep up the good work.

Just for the record, I feel that everyone has made their point and the thread is beginning to get a bit testy. To prevent problems and/or misunderstadings, I feel this thread should be closed,

[Aldo]

Drat! Should have studied more

[OKRICHLAND]

Drat! Should have studied more
That's OK Aldo,
Just because we as humans are known to fail some of the tests
that are set before us (as you all can see, I often do) doesn't mean that we are automatically condemned.

REMEMBER OUR ADVOCATE. :SM106: