Mortgage C.A.F.E.- Credit And Finance Expert

So congress is in a hurry to pass this new legislation that's supposed to help the housing crisis in some format before they take off to the beaches for their vacation time in August.  President Bush has had an odd change of heart and will probably not veto it.  So here's my dilemma;

I'm trying to wrap my mind around the benefit to those that are either facing foreclosure or IN foreclosure by offering first time homebuyers an interest free loan of $7500 a piece.  Granted, I love the idea of my first time homebuyers having access to free money basically (free for them, costing tax payers money in long run) but the reality is it's apples to oranges to deal with the crisis.  Putting more money into bonds for city/state levels just adds an additional level of bureaucratic paperwork to having access to those funds for helping those that need it.

I think our government needs to start throwing more serious dollars to revamping our education system to teaching our kids and college grads about credit, finance, life in general. 

I was talking to some high school students at Katy High School about goal setting.  I asked them to stop and set a plan of achievement around a specific goal.  It was like asking them to freeze melted icecream with their pens.  They didn't know how to touch the pen to the paper. 

And they're supposed to walk away from high school knowing how to set financial goals and savings patterns and understand the importance of credit?

If knowing trigonometry is somehow going to magically make today's kids not follow in the footsteps of their parents who are overextended (in general) those footprints will be left in murky mud, and eventual quicksand.  Plugging the hole doesn't fix the problem.  Eventually that plug will break down and cause a flood of a problem.  You have to go to the source of the issue and educate the system to not have future issues and to learn from past mistakes. 

Our country's declaration of Independence was written and voiced by two people, John Adams and Thomas Jefferson, and in it contained the lessons learned from a monarchy gone wrong.  Our country was built and established as a system of correction for a system of corruption.  We are now a system of "let someone else do it" and our kids are the same.  If we don't start teaching proper responsibility across the board, whether it be investors, banks, consumers, or even people like me, Loan Officers, and accountability be mandate, we'll tailspin further into demise. 

Sorry for such a glum blog today, but really, are we going to take the bull by the horns or let the system take us for a ride?

So to quote the legislative mess:

• Any privately provided downpayment assistance (as opposed to DPA provided through government sources) will not be available on or after October 1. So DPA through Nehemiah and comparable companies will no longer exist and any loan with such assistance will not close after October 1. It would appear that loans with DPA through state or federal agencies will continue to be acceptable but we won’t know until an announcement is made. I do know that Nehemiah has begun a program for massive reform by asking customers to contact their congressmen, but I do not expect this to be effective nor can be make any decision based on proposed actions.
• The legislation, in effect, refers to increasing the downpayment requirement on FHA loans from 3.00% to 3.50%. It would appear that this is also subject to October 1 deadline, but it is uncertain. It is also unclear whether the change is to the minimum required investment including closing costs or just a change in downpayment.
• Other provisions include issues such as affordable housing through tax credits for first-time homebuyers. We will not know how or whether this will affect any loan until we get an announcement from HUD or Fannie, etc.

That's the important items affecting the mortgage industry.  Now someone explain to me how in the world this type of legislation:

1) helps the mortgage industry

2) helps buyers get into homes, especially the foreclosed ones in a streamlined process

3) helps HUD, FNMA, FHHLC get out their predicaments?

Apparently, limiting the purchasing power of Americans, taking away the 3% required down payment that has worked for about my whole career for FHA is a GOOD IDEA coming down from our government.  To boot, it costs so many dollars to implement this legislation that we're about to tap into a magical 11 digit deficit which we've never hit before.  Your kids calculators can't even do the math here.  My mortgage calculator which is BUILT for big numbers, can't fathom the number. 

Now for the GOOD NEWS for my buyers and realtors.  People need to get out and BUY while the getting is good.  IF they want down payment assistance, time is of the essence.  WE CAN'T DELAY. 

If you happen to pick up today's business section, although I get no kudos from my friend Nancy Sarnoff, I am the one that tipped her to today's headline about United and luckily she dug further (as the media tends to do) and got some more info for me. 

Why was is it so important to me.  I had a file that was supposed to close there on beginning of next week.  I had another one set for the end of next week, and their doors are shut, and I have no idea who has the earnest money for my buyers.  A little bit of a problem.

Title companies are like banks.  They're not only supposed to be solid, they are regulated to not ever go out of business.  Seriously.  Even when I was on the phone yesterday with Mr. Roger's, who's the deputy director of the title division of Texas Dept of Ins, he wasn't exactly in the know.  He actually acted like he'd just been steam rolled and didn't know what direction to go in afterwards.  He had obviously gotten many calls from people like myself wondering, WHAT'S GOING ON?

I've never seen a title company go out of business.  Not even a fee office with 2 workers.  In this case, it's like Ford Motors in the auto industry size.  This company's parent company, Mercury, is literally 1/2 the size of Stewart Title, which IS the largest mortgage company in the nation.  SO this company is quite frankly the "IndyMac" of the title business.  Does that mean futures on other title companies are in jeopardy.  Absolutely.  If FNMA/FHHLC is nearly bankrupt, FHA is nearly solvent (by Dec supposedly), and banks like WAMU and Wachovia are near "no pulse, Doctor, call time of death..." we need to have EXPERTS handling this crisis rather than dems/reps trying to figure it out with a WIJI board.

I'm now going to blog about the bailout (supposedly) that legislation just passed without obviously reading the fine print.  Who comes up with this stuff.  Read that Blog FIRST!

Be afraid.  Be very afraid. 

That's what the news is saying.  I actually agree this time.  If these two giants in the housing industry were to crash it would make the subprime typhoon look like a hosedown from my son's supersoaker.  Realize that the markets affected by the subprime crisis a year ago started a WAIVE of issues across the world.  When people were late on their credit cards, HSBC Bank, Citi, and other big credit card companies started doing writedowns in the billions of dollars.  HSBC is the largest bank in Europe.  Hence the issues in London, and the downturn of their economic times and housing market.  The largest bank in Canada, almost the same situation.  What do you think it did to their market?

If Fannie and Freddie were to fail as a SYSTEM of housing that has been balanced for many decades, it would throw our currently teetering recession into a downward tailspin.

I would highly suggest the gov't taking over the bodies it created a long time ago, and save the day, yes, with our tax dollars.  I don't see a choice.  Realize that at least our dollar is currently still OKAY.  What if these two giants tanked and the WORLD considered our dollar worth only 50 cents.  I'd rather pay a few extra dollars of taxes for everyone $100 earned, than to have $100 earned be worth $50 on the street, and inflation to sky rocket due to that trade issue. 

That's just my opinion....