Archive for September, 2008

more junk mail

September 30, 2008

Owning your own home is a wonderful thing, but it does have its drawbacks. For instance, when renting an apartment, there are things that you don’t have to worry about such as normal upkeep on the home, maintaining a yard, etc.  Now that you own a home, you get to “enjoy” those aspects to their fullest potential.

An additional frustration is junk mail.  It doesn’t matter how you answer the privacy policy questions with your lender, you will still receive more junk mail. Here are some reasons why:

#1 – When you take out a mortgage to buy a home, the mortgage information is placed in public records and is recorded at the county courthouse.  The transfer of title is recorded in the form of a Warranty Deed and the fact that you have collateralized the property with a mortgage is recorded in the form of a Security Deed. Since this information is in public records, anyone (and I mean anyone) can access it. Companies and solicitors have access to your name, your property address, your lender/investor, whether or not your loan has Private Mortgage Insurance, or PMI, and your original loan amount.

Junk mailers and solicitors gather the information from the courthouse (or purchase it from a directory-consumer list company) and use it to send you everything from coupons, to flyers, to notices about refinancing.  Some of the refinance and second mortgage solicitations are the worst and most misleading going so far as using phrases like, “Please call immediately concerning your Hillside Lending mortgage . . .

#2 – A lot of loan services offer ancillary services as part of their affiliate companies.  The most popular (and in my opinion, the most annoying) seems to be the mortgage-life-insurance product sold TO the consumer as a way “to protect their loved ones”.

Please don’t misunderstand me. I DO think that it is a good idea to have enough life insurance to cover your mortgage balance, but there are better options than mortgage-life-insurance. Mortgage-life-insurance is usually a declining value life insurance premium that decreases at the same pace as your mortgage balance. In the event of your death, the policy is used to pay off the mortgage and nothing more.  A better investment of your time and money would be looking into getting term life insurance that never declines in value.

#3 – Depending on how a privacy policy statement is worded, the lender may still be able to share some of your information.  This is a particularly frustrating point to consumers who do their best to protect their information.

In summary, congratulations on buying your new home, but get ready for junk mail. Some of these offers are scams, and the “legit” ones are typically not a great deal for you to use.  So, be careful.  Hide the women and children.  They are coming…


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an easy prediction

September 29, 2008

I predicted on Friday that today (Monday) would be an interesting day.  I’ll admit, that was a safe prediction and it definitely has been interesting. Here are a few of the events taking place today.

First, the housing bill did NOT pass.  Lawmakers are scrambling to try to save the bailout plan, but it does not look good at the moment.  Ironically, the Bush administration’s proposed bailout plan was supported by about 60% of the House Democrats versus less than a third of the House Republicans voted for the bill.

This was not good news for Wall Street.  Investors were counting on the bailout plan to pass, and yet stocks were still down around 400 points on the day.  When news broke that the plan might not pass, stocks  instantly plummeted — down as much as 700+ on the day.  There has been a slight rebound, but stocks are still off more than 500 points.

Mortgage backed security bonds have also endured an eventful day.  The trading range on the day has been at 128 points with bonds being as much as 113 points up on the day and 15 points down on the day.  As of this post, they are sitting around 40 points up.

Also, Wachovia is no more.  The nation’s fourth largest bank now belongs to Citi. I wonder if Wachovia’s collapse had anything to do with their MTA loans?  Wachovia should have listened to my colleague who writes The Mortgage Blog.

Again, what a day.  There is absolutely no telling where things will go from here.

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.

will it ever stop?

September 26, 2008

The end of the week is here, and it arrived with even more headlines.  Sometimes it seems as if this will never end:

::deep breath… OK::

– The unofficial deadline for completing the bailout plan appears to be Sunday.  It makes sense to want to complete the bill before trading starts again on Monday.  Investors will know what to expect from the start.

– There are growing rumors of another emergency rate cut to the Federal Funding Rate.

– Wachovia and Citi are “talking.”  Interesting…

– Have we completely forgotten about gas in the news? Well, it’s back.  I’ve seen several stories saying the gas shortages are only going to get worse.

A resolution to the bailout plan… emergency rate cut… bank mergers… gas shortages… Monday promises to be interesting!

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.

on-again, off-again

September 26, 2008

A bailout is not needed… a bailout is needed… a bailout plan is close to being completed… the bailout plan is dead… wow, sounds like those on-again-off-again relationships from high school. You know what I am talking about… a couple is dating, now breaking up, and then making up all in the same day.  For those in need of an example, how about a show from the always accurate and never sensational TV network FOX — Beverly Hills 90210.

Can 90210 provide insight into reactions on Wall Street and in D.C.? Sure, why not? Lately it seems anything is possible!

It is interesting to see people reacting with such strong emotions. There is a lot of uncertainty out there, and some of these emotions are not only justified, but should also be expected. However, things get worse when unfounded emotions and over-dramatic reactions happen with EVERY new development.  Regardless of how you see it, there are tons of emotions involved. Just like on 90210, over-reactions are typically not a good thing.

The goal for this post is to remove those emotions and simply review some of events taking place that are influencing the market. As of 4:00pm EDT, here is a quick look at some of the headlines:

Wa-Mu is gone and purchased by JPMorgan Chase. This is now the largest bank failure in U.S. history.

The bailout plan is NOT finalized. Both sides are blaming the other (typical), but both agree something should be done (also typical). No timetable set for its resolution.

Stocks finished up over 100 points on the day.  This is really surprising when you consider all the drama on Wall Street and the reports of the bailout plan being dead.

– Mortgage rates for a 30 year fixed continue to trade in the 5.625% to 5.875% range.

Not sure if McCain has un-suspended his campaign, but he reportedly WILL be in Mississippi for the debate tonight.

Talk about drama, some political analysts believe a tie in the Electoral College is more of a possibility than anyone thinks. Check out www.270towin.com and review the “in play” states. Let’s say McCain wins NV, MO, VA, FL, OH, NC, IN, and NH.  Then Obama wins CO, MN, MI, PA, and WI.  That is 269-269 in the electoral college.  Would it happen? Probably not, but the polls are close in those states, so who knows, but just imagine a tie. We thought Florida was a debacle in 2000?!?!

I could blog on-and-on about scenarios, what-ifs, etc., but there are too many events and variables to even begin to do this on a blog.  The biggest story is the potential bailout plan, and until it is finalized, I would prefer to defer to the experts for the what-if scenarios. There are plenty of negative stories out there on the bailout and are easy to find (google “bailout plan”). This article is an objective look at the U.S. financial situation from The Economist.  Also, a writer from the Wall Street Journal had a “glowing” review on the benefits of such a move.

Now back to the most common question on this blog — How will all of this impact rates? Not too sure right now. A lot of this depends on what becomes of the bailout plan. If it is indeed dead, that would be really bad for Wall Street, which is typically good for bonds (and great for rates). However, with the current emotions and conditions in the market, we could see both stocks and bonds bottom out, which is bad for everyone and also bad for mortgage rates.

In short, until the market has an idea of what to expect from the bailout, there is no telling what direction rates will go. The best news for rates is that they are still above the 200 day moving average, which is, for now, keeping rates for a 30 year fixed mortgage under 6%.

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit www.hillsidelending.com.

 

It’s a bird. It’s a plane. No, it’s… it’s…

September 19, 2008

Look up in the sky.  It’s a bird. No, it’s a plane.  No wait, it’s the Federal Reserve to the rescue!

(cue music)

A crazy two weeks are coming to an end with some astonishing announcements from the Federal Reserve and the SEC that will have enormous impact on the market. These three major announcements are not only having an impact here, but also on markets around the world.

The first announcement concerns the safety of money in savings for many Americans. Over the past year and a half, banks are going out of business or on the brink of collapse, bonds are losing value, and stocks prices are dropping at an alarming rate. All these events cause tremendous fear and anxiety for investors.

This fear resulted in a modern day “run on the bank” yesterday (Thursday).  Roughly a $180 billion was withdrawn from money market funds due to a lack of confidence.  This resulted in a “breaking of the buck”, which means that the Net Asset Value (NAV) of some money market funds dropped below $1.  Almost all investors consider money market funds to be safe to the extent that they do not expect any change in the principal value; meaning, a $1 invested will always result in a $1 balance. However, once the $1 valuation was broken, investors panicked and the withdrawals began.  This caused the Treasury to get involved.

This morning, Treasury Secretary Hank Paulson announced that the US government will guarantee money market funds with the exception of high yield, enhanced type, or riskier money market funds.  This has helped to settle the markets and push stock prices up around the world.

The second announcement helping to calm the global markets is the Fed’s decision to create a market place for illiquid mortgage debt.  As we know, the mortgage mess has buried many companies including ones with long histories like Lehman, Bear Stearns, Fannie & Freddie.  The big problem is that there are no buyers for this “bad” debt in the current marketplace.

The Fed stepped in to create an entity to buy this “bad” mortgage debt and provide a liquid marketplace.  This is a brilliant move which has been very well received and should provide long term benefits to help the housing and lending markets. Again, stocks around the world have responded positively to this.

Lastly, the SEC has stepped in and stopped the practice of short selling stocks for close to 800 financially related stocks.

Not this SEC, the other.

What is “short selling”? Short selling is the practice of selling a stock or bond that the short seller does not currently own in hopes of “repurchasing” them at a lower price. Short sellers are able to short a stock without the required step of first borrowing/owning it.  This causes more problems for financial stocks as their value declines… which causes their balance sheets to dwindle… which limits their ability to take on credit… This cycle has exacerbated the problems in the stock market.

The short selling ban is in effect until October 2nd and the SEC can extend the ban in 30 day increments.  Other countries around the globe are also instituting similar bans.  While some people will complain, and this will hurt individuals who are legitimate short sellers, the SEC did the right thing here and hopefully this move will add another level of calm to the current financial crisis.

By no means are these steps the “cure all” for the woes in the financial market. A “cure all” instant solution does not exist in any industry. That said, the moves today are definitely a step in the right direction.

How does this affect mortgage rates? In the short term, this is actually bad for mortgage rates as money is flowing out of the bonds and into stocks. However, the long term health of our financial system and investor confidence is more important than the short term impact of these moves on mortgage rates. Remember that rates are still at historic lows and currently under 6.0%.

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.

Property Taxes

September 11, 2008

Typically, I hear the same questions over-and-over again from customers. It’s really no different from people in other industries… sports (how’ my team going to do this year?), investmenst (what’s the hot stock?), housing (is not a good time to buy?), etc.

Of course, you can probably already guess my most common question… wait for it… what is today’s rate?  However, in August and September, I get more questions about property taxes, escrow accounts, and anything tax related.

For a thorough explanation of property taxes, paying taxes, escrow accounts and more, see this post from a co-worker of mine who writes The Mortgage Blog.  I couldn’t have said this better myself, so today, I won’t and give credit where credit is due.  Great work “the Mortgage blog.”

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.

This is an All Points Bulletin

September 4, 2008

This is an All Points Bulletin from a blog pertaining to the acquisition of a mortgage to purchase a domicile regarding refinancing. Be on the lookout for anyone in need of refinancing their home. Details are as follows:Your mortgage broker, Clay Jeffreys, in cooperation with the myRateTrack.com website service, has developed the ideal system to keep you informed in the event of lower mortgage rates that would benefit you.

— The suspect can be anyone out there who currently owns a home. So be careful.

— If you were registered for your FREE account with myRateTrack.com, this APB would have been replaced by an automatic email delivered to your inbox notifying you that your TARGET REFINANCE RATE was available.

— This Target Refinance Rate email notification would have also been sent to your mortgage broker.  Hillside Lending, LLC serves the states of Georgia and Louisiana.

This blog post is certainly not the best way to communicate if mortgage rates go down to a point where it makes sense for you to lock-in and refinance.  For a much better way to monitor your mortgage and your personal refinance options, visit myRateTrack.com and sign up for an account for FREE using the promo code “HSL” (short for Hillside Lending).

Rates went down to 5.125% on January 15th of this year.  Most people missed out on the opportunity to refinance because they didn’t act quickly enough when rates dipped.

Don’t miss out again . . . ever.

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.

A theme for lower interest rates

September 4, 2008

Themes are everywhere.  For instance, an overweight, elderly man in a red suite is associated with Christmas.  An over sized-orange fruit is synonymous with Halloween.  An elephant represents Republicans while a Donkey represents Democrats.  A bull and bear go hand-in-hand with the stock market.

With that in mind, what would be a good theme for lower interest rates?  The previously mentioned bull and bear could be a natural fit, but are associated with stocks.  With interest rates being determined by  mortgage-backed security bonds, it really isn’t the same thing.  Maybe bonds could brand their own livestock and forest animal… a sheep and a wolverine, or maybe a goat and a fox… I digress.

Why am I trying to find a theme?  Interest rates are moving lower and the 200 day moving average may help rates stay lower.  Previous posts discuss the fact that mortgage rates trade in ranges.  The 200 day moving average is a major tipping point on rate trading ranges.  Take a look at the chart below.

The price of bonds moved below the 200 day moving average back in June. At that time, interest rates were in the 5’s and then increased into the 6’s.  Around mid July, bonds tried to move past the 200 day average again, but were soundly rejected and rates stayed in the 6’s.  Seven weeks later, bond prices are trying to move past the 200 day moving average yet again.

Will bonds succeed?  Probably.  The government took over Fannie and Freddie making buying their bonds much more attractive.  The economy is slow, jobless claims are up, and a poor Jobs Report is expected tomorrow (Friday).  Bad economic news means good news for bond prices, which great news for mortgage rates as they get lower.

Why is the 200 day moving average so important?  Staying above the average would signal a new trading range for mortgage rates.  Instead of rates ranging from the low to mid 6%, rates would be back into the 5’s for a 30 year fixed loan.  We’ll have to see if bond prices can hold that line, but the chances of it holding now are much better than they were in mid July.

Back to the improving rates theme… still haven’t come up with a great theme.  Maybe I can be lazy about it and just use some people dancing like idiots.  You see this all the time on the internet for lending companies advertising rates. Who knew a dancing fool would equate with lower interest rates.  Then again, who could have imagined a large rodent would signal the beginning of Spring or a continuation of Winter.

https://i1.wp.com/i106.photobucket.com/albums/m266/cutemyspacetags/dance/dancing-2.gif

alright, rates must be getting lower!

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.