Florida’s #1 Mortgage Planner discusses Mortgage Planning Strategies, News, Tips and more

Many of you may not have known I cut back dramatically on originations at my business, a move most would not agree with.  It wasn’t for cost cutting measures like most companies might think as well as my expenses kept coming in. 

Instead, it allowed me to offer free and unbiased advice, being an advocate for Florida homeowners, even helping them get good deals on mortgages throughout Florida.  The time spent also allowed me to focus on educating as many as I could on various mortgage strategies, development new seminars and presentations and get most of the work done on my upcoming book that shows real estate professionals how to analyze and forecast mortgage rates.

Many of you have joined my discussions, especially those on Money Merge Accounts and other mortgage acceleration programs, which I welcome even if you disagree with my philosophies.  The bottom line regarding mortgage acceleration programs is they can be very harmful to the users finances and while being completely debt free, including the mortgage, these are not the fastest ways to achieve those goals.

So, now that things are settling a bit in my business, I am looking to start originating more than referral based mortgages.  With that in mind, I am looking to build a solid team.  Below is a list of people I am looking to have join my team, which will not be easy as I am very peculiar about whom I bring into the mix.

I already have a good Title Company and one of the best appraisers out there, but I need to add the following relationships:

• Real Estate Agents
• Processors
• Insurance Agents
• CPAs
• Financial Advisors
• Churches
• more

As I said, I am looking to EXPAND, not just ramp up my business, which means I am expecting to add to that list, including adding mortgage planners.  I am even thinking of changing business types from just a mortgage brokerage to a full fledged lender in the future, so feel free to offer your opinions on whether or not I should do that.

If you, or anyone you know, may be interested in teaming up with Solid Rock Mortgage Corporation, please contact me.  There will be a lot of changes for the better coming, including more value added services for those on the team, so don’t miss the boat.

Ron Paul speaks out on the ramifications of the housing market rescue bill which was combined with the Fannie Mae and Freddie Mac rescue plan.  He describes just what the government is doing with great insight and talks about how this government intervention is going to cost everyone.

The current state of our economy is taking its toll on every American.  Many are driving less, eating out less, cutting back on trips to the movies, etc.  Some good does come out of a bad economy though as more of the “pleasure centers” feel the pinch as well.

Joe Redner, the owner of the well-known Mons Venus club, says his business is down 25 percent. (Source:  WPTV - Tampa, FL)

The national executive director of the Association of Club Executives, Angelina Spencer, says she fields calls from strip club owners around the country every day as they feel the impact of a bad economy.

Redner did highlight one growing problem, stating that the economy is bringing out more women willing to give pole dancing a try. 

(I left out pictures for obvious reasons)

The following two cartoons can be found at their respective locations by clicking on their pictures.  They are very indicative of what is to come for American taxpayers.

As expected, the House gave the go ahead for the passage of their bailout package now that President Bush rescinded his veto threat.  Now, all we need to complete the insanity is the approval of the Senate, which shouldn’t be much longer down the road.  The vote was 272-152.

The bill includes such provisions as allowing the government to insure up to $300 billion in refinanced mortgages, establishing a tax break of as much as $7,500 for first-time homebuyers and creating a new regulator to oversee government-sponsored enterprises Fannie and Freddie. (source:  MarketWatch)

Major elements of housing bill…

• A backstop plan for Fannie Mae and Freddie Mac that extends an unlimited line of credit and gives the government the authority to buy the companies’ stock.
My Comment:  They just gave the two FMs an unlimited grab into your wallet.  Just in case that isn’t enough, the government can use your money to buy up their stock.  

• Funds to insure up to $300 billion in refinanced mortgages.
My Comment:  Good, it will cost us all more if more people default as expected.

• A tax break of up to $7,500 for first-time homebuyers.
My Comment:  And this is expected to provide a rush of new homebuyers to spark the housing market?  These people cannot even afford to pay for gas to get to work or to put food on their tables anymore.  That’s omitting the fact that lender guidelines have had their sphincters so tight that they probably couldn’t get a loan anyway.

• A new regulator for Fannie and Freddie.  An affordable housing trust fund financed by Fannie Mae and Freddie Mac.
My Comment:  Like a new regulator is going to be able to fix things or even prevent them.  The current regulations haven’t even been enforced yet.

• $4 billion in emergency assistance to communities to buy and rehabilitate foreclosed homes.
My Comment:  Uncle Sam’s cousins (aka state and local governments) just became the new landlords and property flippers.  Watch out real estate investors, your local government just became your competition and they are spending your money to compete.

The good news is that we still have some sane politicians on the hill.  Take House minority leader John Boehner who called the bill for what it is…a bail out of “scam artists and speculative lenders” at the expense of taxpayers.

Of course, Barack Obama had to make his own ludicrous statements known, praising Bush for dropping his veto threat and pushing his own plan for action on the housing front.

“We cannot wait for a million more foreclosures before taking additional action to help struggling families and strengthen our economy,” Obama said in a statement.  (My Comment:  Like this or any of your actions are going to prevent the millions of foreclosures coming?  You just have to love politics, right?)

“That’s why I’ve also proposed a second stimulus of at least $50 billion with energy rebates for families struggling with high gas prices, relief for states facing budget cuts, and additional measures to protect homeowners from foreclosure,” Obama said.  (My Comment:  Why exactly is Obama thinking this way, very anti-Democratic.  maybe because he has seen the effects of the recent stimulus checks?  Two-faced?  You decide.)

I haven’t seen the final version of the bill the House passed, but I am guessing it had most, if not all, of the harmful provisions in it that I mentioned in this post.  Some things I failed to mention in my earlier post were the elimination of Down Payment Assistance Programs (DAPs), another good program abused by many to its detriment, and the second lien amendment, which is the $300 billion dollar provision above. 

The second lien amendment is where first mortgages are insured, but must be written down to 90% of the current appraised value of the home before being refinanced.  That means second lien holders get wiped out.  Any wonder why so many lenders have dropped second mortgages, frozen HELOC withdrawals, unilaterally reduced HELOC amounts, etc.?

So, now we have in place the Housing and Economic Recovery Act of 2008, HR 3221.  All that is left to complete the debacle is the Senate’s approval and that is slated for later this week.

Now that President Bush has decided to drop his veto threat against the impending “housing rescue” bill, every taxpayer and homeowner should be scared.  This bill is a lot worse than you may be led to believe.

For starters, the bill has now become not just the “housing rescue bill”, but also the “Fannie Mae/Freddie Mac rescue” bill.  Bush’s opposition to the $3.9 billion “wasteful spending”, sections that just can’t be omitted by Congress, has now been dropped, so taxpayers will be feeling the pain soon.

Some things not heavily reported on are likely to stay as provisions and are an invasion of everyone’s privacy.  The first is that nearly every credit card transaction will be tracked and reported to the IRS.  The other ominous provision is that which only applies to those in the mortgage and real estate industry, which will require them to submit to a mandatory fingerprint registry.

The biggest phase of “Big Brother’s” plan regarding credit card (and debit card) transactions is spelled out best by former Congressman Dick Armey , Chairman at Freedomworks…

“This is a provision with astonishing reach, and it was slipped into the bill just this week. Not only does it affect nearly every credit card transaction in America, such as Visa, MasterCard, Discover, and American Express, but the bill specifically targets payment systems like eBay’s PayPal, Amazon, and Google Checkout that are used by many small online businesses. The privacy implications for America’s small businesses are breathtaking.”

This is the latest amendment and what is currently being voted upon if you want to see the breakdown of the bill…House Amendments to the Senate Amendment to H.R. 3221 – Foreclosure Prevention Act of 2008 (dated June 18, 2008). 

Another problematic provision that I have not heard discussed is that regarding the Capital Gains Exclusion for the sale of principal residences.  There is a provision that reduces the exemption, rather prorates it, for any time period the residence was not used as a primary residence. 

So, those who have been living in a home for two years, then renting it, and still claiming the full exemption of $500,000 ($250,000 if single) had better sell your property before the end of the year or you could see that exemption diminished.  This provision applies for a second home, so anytime you did not have it as a principal residence is excluded from the exemption.  Sadly, this will cost many taxpayers an estimated $1.4 billion over the next ten years.

There are also plenty more provisions to attack small businesses within the bill.  Besides the whole credit card transaction crap, failure to file penalties will be climbing on S Corps, Partnerships, and every individual’s tax returns.  

This bill will harm every taxpayer, but will especially harm small businesses.  Unfortunately, the bill will do more harm than good for the housing market as well.  Good luck, we’re going to need it to get through this one if it passes, which is now highly likely.

Funny, yes.  It certainly would be funnier if it wasn’t reality.  Richard Bitner, previously a subprime lender, tells all to Jon Stewart on the Daily Show.

I love how the media and even fellow mortgage bloggers are all over the recent Congressional Budget Office’s release of the estimated cost of the Fannie Mae and Freddie Mac bailout.  The problem is they are all focused on the $25 billion number, which the CBO puts at a 50% chance, but also indicates that that figure is likely a low ball.

The CBO report, when you look in depth at the attachment, shows their estimated costs to be only for 2009 - 2010.  They also indicate that the future costs related to the bailout could be higher.  While they currently placed their $100+ billion figure at only 5%, this figure will likely be considerably closer to the real amount over the full duration of the bailout.

What does this mean to you?  As a taxpayer, you are privileged enough to get the bill, whether you are a homeowner or not.  Lucky you.  As for homeowners, you can expect higher rates on any future home purchases or refinances, so I hope you took full advantage of the low rates already.  If not, there may still be time, so Florida homeowners should contact me today to see their options before its too late.

As this will almost guarantee higher taxes in the future, especially with the Democrats likely taking full control, mortgage planning and the strategic use of home equity will prove even more beneficial, even for those of you that just barely beat the “standard deduction”.  It is time to start strategically planning for increased tax deductions, because you are going to need them. 

That’s right, the Congressional Budget Office released the first “official” bill that taxpayers will likely have to pay for to bail out both Fannie Mae and Freddie Mac.  The obscurity of the press release is typical as the government tries to cover up the costs of their screw ups, but the bill could be as high as $100 billion, maybe even more.

“Conditions in the housing and financial markets could deteriorate more than already reflected on the GSEs’ balance sheets, and such continuing problems would increase the probability that this new authority would have to be used.”

That’s comforting, isn’t it.  I have said all along that taxpayers would suffer as a result of the government’s interventions and we are finally getting a glimpse at how much we will all have to cough up.  I hope you haven’t been paying off that mortgage as you are going to need every deduction you can get hold of, not just your mortgage deductions.

It also means that as taxes increase, the ability to make money through strategic equity management will be even easier in the future.

Wachovia is the latest lender to discontinue their wholesale lending division, placing mortgage brokers using their services in more turmoil, scrambling to find other lenders.

Virtually every bank that has found themselves in financial trouble, if not on the edge of oblivion themselves, has decided to cut their wholesale division to reduce costs and drive fees up.  Cutting out mortgage brokers not only allows them to cut staffing, but it also allows them to drive loan costs up to those consumers buying their products, increasing profitability.

Countrywide, Bank of American, IndyMac Bancorp, Wachovia, and others have found themselves struggling to stay afloat, if not going under.  While shrinking to profitability has never proven to be the best course of action, these companies are doing just that by eliminating their wholesale divisions.  What’s worse is they are breaking relationships with what may very well be their best sources of new business, mortgage brokers.

Mortgage brokers have come under attack from all sides lately, even being blamed almost exclusively for the entire mortgage meltdown even though cannot even underwrite a single loan.  Simply put, they are an easy target and since they are small businesses, cannot readily fight back.  However, studies have shown that mortgage brokers help keep costs down for consumers.  Even the Federal Reserve backed away from their yield spread premium (YSP) restrictions to keep mortgage brokers in the arena, providing increased competition, thus lower costs to consumers.

Sure, many mortgage brokers did do unfair practices, but they were the minority.  So, Wachovia’s move may prove more costly in the long run as mortgage brokers will seek more reliable funding sources and may never return to Wachovia (or the others) even if they do reopen their wholesale division.  As for consumers, watch out, loan costs will be rising at Wachovia.