Where O where have the Jumbo loans gone?

This is a question the Obama administration, Barney Frank and Tim Geitner should be asking themselves, before the next shoe drops! In the past, it was as easy to get a Jumbo loan as it was to get a conforming loan. Now, there are fewer lenders doing these loans and the process is ten times as difficult. The pricing on these loans is so far out of whack that it is unfair to the consumer. This is the stuff that the big banks are selling.
It is amazing to me how the whole market is being controlled by these big banks and what they want to do. The market should be controlled by the people and the consumers. If we leave things status quo, which we have been doing, don’t call and complain when the values of your million dollar homes continue to fall. This is the reason the big banks are choking the Jumbo market and making it difficult for people to refinance or even buy.
Now, with the start of HVCC, the log jam and depreciation is on its way and faster in the higher end if we don’t do something now. What can be done you ask? Complain to your administration or congressman. Tell them that they need to get their eye back on the ball. This can be solved if we attack it head on. How can this be accomplished by freeing up money to be lent in this market place? There should be some kind of FHA program for the Jumbo market place. If this does not happen, mark my words, this could be the next shoe to drop.
Fortunately, for Samuel Scott we have searched out relationships in the Jumbo marketplace to continue to offer programs to our clients. The downside is that, with little competition, these lenders take their time and cherry pick the files they want. Back in the day, we could close these loans in a week. Now, it takes 30 days just to get an approval and clients become angry and frustrated because they are used to the past. Again, I suggest letting your administration know that you have a voice. We should get this changed.
The stock market also rebounded this week based on words from Ken Lewis. Bank of America and Citibank are both saying they are profitable. Mark my words, this is going to come back and haunt these two banks. They are very nervous about becoming nationalized and they have to say something to keep the wolves at bay. Go back in time and re-read the testimony from George Bush, Barney Frank and Bernie Madoff. These people have all mislead us to serve their own agenda. This is the same speech, different day. Again, speak up to make a change. Don’t go to these big banks for anything, not your mortgage, car loan or savings account. This will teach them to tell the truth and do the right thing.
Break the cycle and give Samuel Scott Financial Group a try. I am sure you will very happy. Mark and I are always available to you, your family and friends, 858 259-6070

Are the lenders and banks continuing the downward spiral of our credit collapse?

First, I can’t tell you how many phone calls I am getting about credit companies reducing people’s limits to where their balance is at. Second, trust deed lenders reducing or cancelling people’s lines of credit. There are the non-stop commercials on loan modifications, CNN running daily emergency town halls about the mounting recession, interviewing people at food banks telling their stories and companies constantly laying people off. The stock market continues to go down when everything our parents taught us about investing is going out the window.

We voted for a leader who has come out with a few big ideas and no real substance. We are having our Treasury Secretary go before the knuckleheads who created this mess to get confirmed. The Treasury Secretary, who everyone says is brilliant, can’t put a team together because nobody wants to go in front of our Congress to get confirmed. It is like, why would you want to get grilled by the same person who started this whole mess to begin with. We keep hoping for answers, we keep looking for the silver lining. My comment is, quit looking and start creating your own linings. We are in this mess but we cannot allow it to over power us. Remember everything that goes down always comes back up. It just may not be as quick as we all want or need. How long did it take you to gain that weight? Every year you say you are going to take off and when you try it takes forever to lose it.

Why can’t the economy take a little time to readjust? This does not mean be paralyzed in purchasing a home or be paralyzed in refinancing your home. This means, take the bull by the horns and take advantage of the market. Ask your grandparents, how many millionaires came out of the great depression. Ask any realtor, how much did it cost to buy a home in 1980 in the neighborhood you want to purchase in? Are values there? No. Of course not, because Homes and real estate goes up. It may never be like it was, but then, how many people made money trading in one day. Remember when you could buy Google on the IPO and get rich? Guess what, real estate has been a way to build wealth, not a get rich quick scam.

My buddy, back in Philly has a system on what he buys a property for and how much he should get in rent for it to make sense. Maybe, now is the time to start thinking like that. I can’t tell you how many of my wealthy clients see this as a buying opportunity, why aren’t you? I can tell you why, because you are used to buy it three months later you have made 30 percent. Smart money knows it does not work like that. So stop thinking it does. You buy, hold, pay off the debt and then buy some more. Think about this for a minute. You have a job, you get paid for your job if you are still employed everyday, you go to work, get a paycheck, maybe a year goes by and you get a raise. Buying real estate is the same way.  Years go by, you pay down the note and either you move up and buy another home or you sell it and buy more rental property. Remember, your house is not like a credit card. You should not keep pulling money out of it to pay bills. It is a means to an end. Quit watching late night infomercials, those guys got you into that way of thinking and now those same guys are telling you how to get rich in a down market. If those guys are so smart, why are the selling you something and not getting rich on their own idea?

Next problem, those of you who think you are still going to get something for nothing. You know who you are. You want a 0 point 0 fee refinance. Guess what, those days are long gone. That’s why were in this mess. Don you remember when your grandparents would say,” if is to too good to be true, it probably is.” So ask yourselves, why are we in this mess? It’s okay to pay points and fees. Do you think that people were not making money on you doing that type of program? Of course they were. But now they’re on TV selling you loan modifications or working at one of the big banks that us tax payers own. So when you call your big bank and get a quote from a person who is selling you what they are told to sell and they offer you a no point no fee deal, remember, this is why we will continue to stay in this mess.

This is not what we do at Samuel Scott Financial Group. No Tarp money, completely independent. Mark and I want to be your lender for life. We guarantee the person you called at your big bank, you will never talk to again. They will probably be working for another branch of the government next time you need a loan. The question is real simple, am I putting out. 

So the challenge I’m putting out to you is the next time you or a friend needs a loan, how about referring Mark and I. We are both available 7 days a week until 11 o’clock every night. I bet your big bank guy isn’t. Call us or have your family member of a friend refer us. 858-259-6070.

4.5% thirty year fixed, reality?

It sure seems that way. Most clients right now, up to 417k, are being locked into rates between 4.5% and 5.0% on a 30 year fixed mortgage. Some clients are waiting on the side lines because they think that rates are going to drop. Perhaps they might. I don’t have a crystal ball, but often times those who get greedy and think they can time the market are the ones kicking themselves after the fact. How many times on the show Deal or No Deal does the offer come out really high early on and the contestant keeps playing? This is what we do as Americans, we get greedy. My comment would be, haven’t we learned over the last 2 years of excessive greed from Wall Street and all around us. Let’s take what we can get and when we can get it. I spoke with a client last week that was going to save over $600 a month on his mortgage payment and did not want to lock because he felt rates were going to come down. If the rates dropped another .25% he was only going to save an additional $50.

Remember, as quickly as rates fall, they can go up just as fast. The crazy thing is if rates were to drop to 4% and you had a 4.75% loan you would refinance again, wouldn’t you? Of course you would, but if rates today are at 4.75% and next week they jump to 5.25% which is still low you would get upset with yourself for not locking when you had the chance.

Another crazy thing happened this week. Bank of America is going back to their investment bankers and asking for more money to close their acquisition of Countrywide and Merrill Lynch. Guess who their investment bankers are, the government, us, the tax payer. Did you get a letter letting you know the TARP funds we originally gave them were going to be used to buy other companies in there market place? It’s crazy that this is happening. I find it as a slap in the face to us. We keep doing business with these banks and on top of that, allow it to happen. What are we supposed to do now that this has happened? Let’s start to hold them accountable. Clean house, put new management in place to steer these big goliaths the right way. Isn’t that what we just did? We the white house, we the people did not like the way our country was going so we voted in a new President. Why are we allowing the same people to stay in these banks? All they are going to do is make the same mistakes over and over again. Remember, the mortgage meltdown that got us in this mess to begin with. Didn’t these big banks blame me the mortgage broker/banker for the mess we are in? Yes they did but on CNBC today they are not using that excuse anymore. They are coming to the reality of the situation that it was the leaders of these banks and their bad decisions that have gotten them into this mess. Do you think that Citi sold off Smith Barney because of the subprime mortgage mess? No, they did it because Citi does household finance. That is what they know, not where to invest your assets.

That is why at Samuel Scott we only do residential mortgages. We don’t do commercial loans, modifications and array of other stuff because we are the best at what we do. We put the client first, not our paychecks. I am sure the heads of these big banks are not paying themselves because of the mistakes they made.

Please remember us when considering refinancing or purchasing your next home we do those loans and we do them well with your best interest first. Give us a call and ask for Todd or Mark 858- 259-6070

Welcome to 2009! Will things change for the better for all of us?

That’s a great question.  The big answer is what the new administration will do. Obama has a lot of work cut out for him and a huge mess to clean up.

The big concern is, can we Americans actually give him time to set things right. We, as people, are all about instant gratification. We are going to want to see things change quickly or we may give up to soon. There are some great ideas floating around about how to fix the mortgage mess.  Did you know that half of the modifications that were made last year are back into default? I wonder why? Did you read my blog about modifications? Who made money off those modifications if half went bad? Are we going after the modification companies for their fee? Obviously, they did not do a good enough job or how would they have approved them for the modification in the first place.

The new modification plan being talked about would actually cut principal and lower the interest. This would be great! The down side is the person being modified would give up 50% of any appreciation they get. This will probably get tweaked before it goes into effect but I think they are on the right track. Also, on a side note, they are going to limit the amount of money that modification companies can charge, well around $1000. How many of these mod companies are going to stick around for that? Did you know that one of the big firms that got our TARP money is using it to pay out their bonuses? I ask you guys again, why are you continuing to do business with these big banks when they are only looking out for themselves?! So let’s follow the money as my professor used to say.

The big banks took big gambles with your money that you deposited into their institutions and lost, so they stopped lending you, the consumer, money. They threatened bankruptcy and some failed, such as WAMU and Indy Mac Bank. The government had to step in and bail them out with our money, again. Some banks took our money, bought other banks and blamed those failed institutions for the bad loans to not make them look bad. Others took the TARP money and bonuses out there. Now we, as consumers, are still going to those institutions for loans and going to start the cycle all over again. I ask you this if you voted for change why are you continuing the same old cycle.

You should be getting your home loan whether it is a refinance or purchase through a small company like Samuel Scott. This is going to be the only way to create in 2009 and not repeat the same mistakes. Do you really think what these big institutions are doing is okay? I ask because that is what everyone’s actions are saying.

Let’s really make a change in 2009 and not make the same mistakes of the past. Make companies like Samuel Scott your first and only phone call. I look forward to hearing from you all. Let’s have a great 2009 and remember Mark and I are here for all your residential lending needs in 2009.
Samuel Scott Financial Group Todd Pianin (858) 259-6070

4.5% Fixed Rates

This is what the government is talking about doing. How would they do that? Great question. How would it affect California is a better question.

The 4.5% fixed rates would only affect conforming loans. How many loans in California are under the conforming loan limit? Not enough to spur another housing boom. It will be great for Middle America but not so great for us in Southern California. Before you call me and ask for a 4.5%, 30 year fixed for your $1,500,000 loan right, now, it does not exist. What does exist right now, are a few lenders doing short term ARM’s with a 5 in front of it. If you are waiting to see what happens and have a short term fixed rate that is going to adjust in a year or two, I would say,” Don’t wait, now is the time to act.” Programs are disappearing. For example, Jumbo conforming loan limits that used to go to $729k in Los Angeles and $697500 in San Diego will be cut to $625,500 in Los Angeles County and $546,250 in San Diego County. 5% down programs are around for conventional loans but they need mortgage insurance and there are no mortgage insurance companies doing them.

Stated income loans have become harder and harder to find and at Samuel Scott, we have two lenders that are doing stated income loans. I suggest that before guidelines change again, you get ahead of the curve and we get working on your loan. I warned a few of you about the conforming loan amount changes. I warned a few of you about the stated income changes. Why didn’t you listen to me? So now listen! If you have a loan that is going to adjust within the next three years, you need to call our office and we need to start working on your loan now.

Things are changing rapidly. For example, pretty soon here I will not be able to order your appraisal. It will need to be ordered through either the lender we are going to or a nationwide company. This is a silent but concerning change coming down the pipe. Not many people are talking about this next shoe to drop. One good note in the whole scheme of things is that we still impress our clients. If you read what they are saying about us, why would you not be referring us out to your friends and family? We have not received any bailout money, so why do you reward the banks that are? You keep paying your taxes and then do your loans with these banks that received bailout money. 

Remember, we can help you with FHA, VA, Refinances and Purchases.   Samuel Scott Financial Group is here to answer all and any residential mortgage questions that you may have. You can call us anytime, we are here for you.  (858.259.6070).

Where to start?

What a wild week!  I believe this is becoming part and parcel for our economy. We have become a nation of over reactors.  

Let’s start at the beginning of the week.  The three chairmen of the car companies fly out to Washington D.C from Detroit asking for a 25 billion dollar bailout of the auto industry.  First, they all live in Detroit.  Did you know they each flew out in their own private planes? Second, if they can afford private planes, why do they need a bail out? They must think the American people don’t care about stuff like that. Third question, do they really need a bail out? We bailed out AIG and they went to the St Regis in Laguna Beach and spent $400k. Who runs these guys public relations?  If I did, I would tell them all to fly coach. We have families out of work, the highest unemployment that we have seen in a long time, and they are flying private jets? So to save the public persona, they get the leaders of the unions that work for them to go on TV the next day and demand a bridge loan for the auto makers.  Now, I am really confused.  Isn’t this one of the reasons why Detroit needs this bailout?  Because of these unions? This is what they said before they needed them to demand a bridge loan.  The ramification of these two days equates to two horrible days in the stock market.

It is happening again, fear and panic.  I believe is what the old guard wants us to live by.  I mean by the old guard, which are the people in Wall Street, Detroit and the White House. As the market began to tumble, the 10 year yield which used to be tied to the mortgage market started falling rapidly. This got us all here at Samuel Scott excited thinking we were going to be able to deliver lower rates to our clients. We found out that because nobody has any faith in anything in the financial markets, mortgage backed securities broke away from the 10 year yield and rates went the other direction, up. Bottom line, we need someone or something to bring calm to this market which right now has become so reactionary.  

The good news is we are still funding loans and the real people seem to still be buying them.  Something else to point out that happened this week, Fannie Mae and Freddie Mac stopped all foreclosures. What does this mean?  This means the beginning of the end of values going down.  If foreclosures stop and people can stay in their homes because they get modified, provided they have jobs, of course, then supply will start to drop.  When that happens, things start changing.

Values will not increase anytime soon, but values will begin to stabilize. I have been saying all along spring 2009 things will start to look better. Remember, look around, don’t get distracted by CNBC and Wall Street’s nonsense. What they want you to be is afraid. Like we spoke about last week, are you better off after the bail out of Wall Street? Will you be better off with a bail out for the auto industry? Answer seems quite clear to this blogger.

Remember Samuel Scott is here for all your residential mortgage needs.  Call us anytime with any questions. We do FHA, VA, Refinances and Purchases.          858- 259-6070.

Something to think about over the weekend!

I have been thinking about what our government has been doing to help everyones situation.  Please ask yourself, are you better off now or before the bailouts began?

My answer would be, before.  I was spending money, going out to dinner and buying things for my home.  Today, my wife and I are scared to purchase soap.  We look at each other and say, “Do we really need it right now?”  The second point I’d like to make is that it seems like everyone wants the bailout.  Those of you who are parents, do you bail your children out every time they get into trouble.  If you do, how will your children learn from their mistakes? 

The auto industry now wants a bailout.  Explain to me why a company, where the CO Chairman has two helicopters, one for himself, one for his wife and who own several homes, need a bailout.  Oh yeah, I know the reason.  He wants to become like Toyota, Honda and that little car company in Silicon Valley and make more economical, less gas guzzling cars.  Question, shouldn’t he have thought about that a couple years ago, perhaps before he bought that second helicopter?

We live in America where companies fail and new companies emerge.  Nobody gave Steve Jobs a bailout when Bill Gates stole his operating system.  What did he do?  Like most Americans, he dusted himself off and recreated himself. 

Today, I was listening to a program on NPR that was talking about a school district in Wisconsin.  This school district borrowed money to participate in these credit insurance programs to make 1%.  Why would you borrow money to make money as a school district?  Now they are about to lose 37 million dollars that they borrowed!  I’m sure they want a bailout because some people who voted thought it was a good idea.

I remember, my first mentor told me that you take 10% of what you make off the top to pay yourself and save it.  He didn’t say take 10% of what you make and borrow 10 times that and invest it in something you don’t understand. 

So back to the original question, are you better off now with all the bailouts?  I would say Wells Fargo is.  Remember, when they said they were gong to buy Wachovia with only their money and it was way better for the tax payers unlike the Citi deal?  Guess what?  Now they want 10 billion dollars of your bailout money to buy Wachovia.  They are not lending out any more money, they just want to gobble up other banks, grow their business and wait it out until the economy comes back.  This seems like a great idea to help us all out. 

I have personally not let anybody go at Samuel Scott,  not with the governments help, but my own.  This has been a tough year and I have been supporting the company personally to keep everyone employed.  Perhaps I should call Paulson and ask for a bailout for my company.  A better idea I think, would be for all of you to continue to support us here at Samuel Scott and then let our government officials know that it is okay to let some companies fail for making bad decisions.  I know that there will be some pain but it can’t be any worse than the pain we are feeling now.  For example, consumer rates should be much lower now with all the lowering of rates and they are not.  For example, the banks should be easing up on credit and they are not.  How many people have had their credit lines cut or lowered their HELOC’s as well as credit cards?  This is in my opinion becoming another scam for the big companies to get richer and life to get much harder for the rest of us.  Please speak up here or in other places for your voice to be heard!  Pass this BLOG onto others so we can get the word out.  If you disagree with me please comment and say so.  If you agree with me, please comment and say so.  Please pass my BLOG on.  It is the only way we are going to be heard.  Remember for all your lending needs, Samuel Scott is here for you.

Thank you for reading.

The Fed lowered Rates by .5 bases points. Are mortgage rates lower?

There is some good news today.  Your credit card rates should drop dramatically. 

If you have a home equity loan, those rates should drop dramatically as well.  This will help those of you who need a break on the cost of carrying money.

The not so good news is that mortgage rates are trading upward.   Two weeks ago, for a day or two rates fell for a brief instance.  We called out to our clients and asked them to lock in their interest rates.  A majority of you did.  We should have another break in rates, my guess is in a week or two, but it will only be for a day, maybe two at the most.

I have been asked when we will have super low rates like Japan, 0%.  Based on what I’m seeing, I don’t suspect we will see that anytime soon in mortgage rates.  My prediction is the economy is going to get much worse before it gets better over the next couple of months.

I believe that retail numbers for the holidays are going to be very low.  People are just plain scared and I don’t blame them.  One shining light is the worst is over on home values in North County San Diego.  I have seen some stabilization.  I wouldn’t say this in the condo market or Los Angeles. 

One piece of unfortunate news is it seems like lenders are becoming tougher again.  Things that we did not have a problem getting through a few weeks ago have started to make transactions a little more challenging.  It feels like underwriters are scared for their jobs, for their companies, etc. 

Let’s put this into perspective. 

We, the tax payers, now own a part of your company that is making these loans so how about giving us a little break?  You really work for us!  I don’t think they have gotten the memo yet.

Trust me, it is coming.  Apparently members of the Bush Administration have been telling lenders to lend.  Cuomo from New York has said, “Lenders, I am watching you.” 

What does that mean?  It means that we have gone from one side of the pendulum to the other and I think the middle is coming. 

This would mean a lot to all of us a Samuel Scott.  It means our jobs will get easier.

For you realtors, it means not as many surprises during your escrow process.

You know the one that says the client is approved and you say, “I will believe it when loan documents are in escrow.” (FYI, during the craziness, we had clients that had signed loan documents and the lenders did not fund).  The best news at Samuel Scott Financial Group is we are still here and have survived, so we will be here for your refinances and your purchases.

Remember, the Jumbo Conforming loan limit is going away soon.  I suggest calling Mark and me

sooner rather than later.  I also suggest that if you are in a short term ARM 3, 5, 7, you should be filling out a package now to get locked into a 30 year fixed.  When your rate adjusts the world will be much different.   You may be looking at 8%, but today you are in the 6% range. 

We have taken low interest rates for granted for a long time just like the DOW remaining in the 12000’s.  Don’t be the person who I tell, “I told you so!” 

It’s better to pay a little more now than a lot more later. 

Please comment on my BlOG, I’d love to hear from my clients.  If there is a question post it.  I will answer it right away.