Where to Find More of My Articles

I still write a lot but ever since I have become the Mortgage Guru for the wonderful folks at credit.com the articles I write for them at at their website. For that reason, I have been publishing articles here only intermittently.

Most of my articles appear in the education section of the main website.

I also write a blog that has material that is a little more timely, and more pointed too. The most recent blogs are always on the current front page You can find all of the blogs I have written because they are indexed first by month and then by category. Check out "loans" here.

Of course, the articles below - something like 150 - are still filled with great advice that is intended to be as relevant now as when it was written.

Reality Check - new HUD-1 and Good Faith Estimate Forms New

Our wonderful government never seems to learn that one more form, one more procedure, one more set of rules that are never enforced will somehow clean up the mortgage industry. The latests is a stupid revision of the Good Faith Estimate and HUD-1 CLoins Statement forms. It's a joke, but you should know what is happening.

The Lone Ranger Rides Again

America's love affair with heros is still alive and well. I have creceived numerous compliments about this one. I can pretty well guarantee that you will like it too.

The Fed’s New Rules for Mortgage Lenders

“Government in action” is an oxymoron. Various agencies and Congress have been fiddling around with re-regulating the mortgage industry ever since the crisis became apparent late last summer. There is little progress to report. We finally get the Federal Reserve Board, which administers a small “slice” of the mortgage business, to do something. They announced some changes to Regulation Z, the so-called Truth in Lending regulation.

The Rules that Govern Appraisers

The appraisal industry has very strict rules that assure the quality of appraisals. FannieMae and FreddieMac do too. You can see their rules here.

What Really Went Wrong With Subprime

As America has watched from the sidelines for the last nine months, we have watched the subprime debacle mushroom from a couple of hedge funds imploding into a worldwide credit crisis. For an explanation, click on the button for a humorous Power Point cartoon.

The Future of Mortgage Rates and the Mortgage Industry

I was quoted in an article in the Orange County Register

Integrity

Integrity is not a word we see all that often these days, and when we read it in a newspaper article, we find almost invariably that the writer is talking about someone's lack of integrity. Unfortunately, I think the junk mortgage crisis is due almost completely to a lack of integrity.

Fox News

I was quoted in an article at Fox News.

Bloomberg News

I was quoted in an article at Bloomberg.

Risk - Part 1

This is the first part of a multi-part article in which I will talk about the crisis in the credit markets. I think that it is important for users of the mortgage system to have an understanding of the system that, ultimately, has a significant impart on their lives. Ultimately, these markets are driven by risk or, more to the point, the avoidance of risk.

Risk - Part 2

In the previous segment I talked about the risks in the sub-prime – read junk – mortgage market. As foreclosures mount, the inability to assess the future values of these loans as led to increased fear, fear that it could be worse than whatever the last risk assessment report was.

Risk - Part 3

As you learned from early segments, there are two types of risk in this world, real risk and perceived risk. Of course, most people never separate the two. In fact, they can be surrounded by real risk but seem oblivious to and then, when they perceive that the risk is real, they go bonkers.

Risk - Part 4

Earlier I talked about no one realizing risk until something bad happened. The fact is that risk is all around us. Sometimes, it makes the papers. Do you remember the Avian Flu crisis a few years ago? It did kill people who lived with infected chickens but the scenarios that spread from that were so bad that people were afraid to fly on airplanes. Many, many people cancelled travel plans and those who got on the planes all wore masks, as if those would stop an airborne virus.

Mortgage Brokers: Friend or Foe?

A recurring theme in my writing is for consumers to find trustworthy advocates. This article in The Wall Street Journal is an excellent discussion of the issues. More to follow on this critically important topic.

Bottom Line/Personal Article

Bottom Line Publications contain a wonderful array of information. I was invited to contribute material for an article in Bottom Line/Persona. You can read it here.

Like Consumer Reports, this is one of those publications to which every household ought to consider subscribing. You can find more information about their newsletters here.

I was on Internet Radio

I didn't know about Internet radio but it's great. Obviously it has the ability to serve and international audience, not just a local market. I was interviewed about the current mortgage market by the President of one of the nation's biggest credit unions. To hear my 15 minute segment, click here.

What is Fair Market Value?

In this day of gyrating housing values, it’s interesting to think about the concept of fair market value. It is easier to talk about in theory than to ascertain what it means in the real world.

Opting –out

If your mailbox is like mine, you get a lot of offers from credit card companies to open an account with them. We certainly get a lot more offers in the mail these days ever since the telemarketers were effectively put out of business. How can these companies find and solicit us if they can’t call us?

Soft Landing or Hard?

I am always amazed at what I will call “waves” of interest in all topics relating to human beings. For a long time, you saw advertisements for ED, but those have now been taken over by a huge number of ads for pills that ill alleviate insomnia, the current “disease de jour.” I already think that some ads for prescription medications ought to be outlawed, and some are surely distasteful and I wonder, “What’s next?”

Is Someone You Know Headed for a Train Wreck?

There is a potential train wreck on the financial horizon, one that’s not on many peoples’ radar. It’s the coming date when homeowners who have ARM’s, Adjustable Rate Mortgages of one kind or another, are going to face payment shock. Current estimates are that over one trillion dollars of Option ARMs and 3/1 or 5/1 ARMs done during period of low interest rates are going to adjust soon. They will go from the low initial rate to as high as 8%. That means a huge payment increases for those borrowers.

In Veritas, Vino

The old Latin saying is In Vino Veritas which means In Wine, Truth. It suggests that when people have had too much to drink, you’re more liable to hear the truth. I have a different take on the topic. I think that when you drink the right wine, it can create its own truth.

Jump$tart Update New!

A number of you who took the test wrote me. All of you had scored over 90%. Of course, I think about the type of people who might read these pages and that's what I would expect. So, how do we reach and start educating the people who WOULD HAVE scored 53% if they'd take it today?

Jump$tart

One of my clients is a now-retired High School math teacher. He bemoans the fact that when the students got to him in 11th grade, they simply were not prepared mathematically for the real world. They were barely able to balance a checkbook, a process using addition and subtraction skills that they should have mastered in about the 4th grade.

Mortgage Myths - Part 2

This is part two of mortgage myths, part of EVERYTHING YOU THINK YOU KNOW ABOUT MORTGAGES IS WRONG. Most people think that the objective of refinancing is to lower your payment. Not so. In fact, this mindset gets a lot of people into trouble, causing them to make wrong - and expensive - decisions.

Mortgage Myths - Part 1

EVERYTHING YOU THINK YOU KNOW ABOUT MORTGAGES IS WRONG. Most peoples’ belief structures about mortgages are based on truisms that may have been valid for your parents 20 or 30 years ago. Others beliefs are factoids, things that appear to be true but really are ideas planted by mortgage industry marketing propaganda. Let me give you some simple examples of popular folklore:

Los Angeles Times Special!

I got a nice mention in an article in my home town newspaper.

Disaggregation

This is a new term, one that is creeping into our language. It is an interesting concept because it is at the heart of a number of issues facing our world today. It certainly has application in the real estate finance business.

Shopping Revisited

If there is one maxim that potential homebuyers have heard over and over it is that they should shop for a mortgage. People grow up learning how to shop "the American way" which is to compare the prices of almost identical goods. The problem is that mortgage shopping is completely different than shopping for, say, a DVD player.

A Call to ARMs

There is an inescapable iceberg on the horizon, the coming date when millions of homeowners who have ARMs of one kind or another are going to face payment shock. 3/1 or 5/1 or 7/1 ARMs done during period of low interest rates are going to adjust from the current rate, say 4% or 5% to index plus margin. That means a big payment increase for all of them.

A Call to ARMs - Part 2

Last week we discussed the large number of 3/1, 5/1, and 7/1 ARMs that are about to adjust from the initial low rate to something in the 7% range. There is another large category of other adjustable that are already at or about to go to 7% too, and they are potentially more dangerous that the ones we discussed last week.

What Hath God Wrought?

As you know from reading my articles, I am interested in how people gather and process information. Inexorably intertwined with this is the means by which information is transmitted and received. In that regard, this past week we passed though a milestone of sorts, one that might interest you. Western Union discontinued commercial telegram service.

Go to the Right People

I recently heard an ad from a large mutual fund company that talked about need to go to the right people. Variously, they extolled the virtue of a personal trainer, a dog trainer, a neighborhood auto mechanic, a masseuse, a travel agent, and an accountant. I wish they'd said real estate agent and lender too.

Finance at Time of Purchase?

My new clients were in the process of buying a new condo. Their kids were successfully launched (Yeah!!!) so they were selling their large family home and buying a smaller home consistent with their new lifestyle. They had plenty of equity and were wondering about just paying cash for the home, leaving open the possibility of refinancing it at some later date. That choice turns out to have significant implications.

What is Really Important?

The most significant trend I have seen in my business career is that as companies have merged and businesses have gotten bigger, the less they care about people. They care less about their employees, less about their shareholders, and certainly less about their customers. I actually don't think that is good for the bottom line, and it sure makes life less fun.

Mortgage Fraud 1

I read an article a week in the daily newspapers and in industry publications describing how one more group of crooks have been caught perpetrating mortgage fraud and are going to jail. The stories demonstrate one thing, that mortgage fraud is alive and well. It’s growing too, up 500% in the past few years according to the FBI.

For articles on two examples of fraud, check out

and

FICO - Blessing or Curse?

As you probably know, FICO credit scores are well entrenched in the mortgage industry. The lower your score, the less likely you are to be approved, and the more likely you are to pay a higher interest rate. Understanding FICO scores is critically important to you.

Good Year-End News for Homebuyers

There is good news on the housing front for aspiring homebuyers in many markets across the country. This news is different from what has been making the headlines during the past couple of years, all those articles saying that no one can afford a home today.

End of Option ARMs?

Last week I found an ally. John C. Dugan is head of the Office of the Comptroller of the Currency, a government body that regulates much of the banking industry. His office has the ability to make a rule and make it stick. Hooray!

Bait and Switch

Unfortunately, the success of a large segment of my industry is based upon deception. Bait and switch tactics are common among this group. These companies teach their agents how to deceive, so I'll teach you how to protect yourself.

I'll Believe That When I See It

I'm sure that you remember this old saying from some skeptic. For most people seeing is a validation of an assertion. When they see it, they believe what their eyes tell them and the assertion becomes truth. Ah, if life were only that easy!

How to Protect Yourself

At my company we take great pains to tell our clients what is going to happen early in the process so there will be no surprises. I believe that a fundamental obligation of lenders is to give people truthful answers to their questions and accurate information they can rely upon to make decisions. Sadly, those can be hard to get.

Problems!

In spite of little bumps in the road that occur during the inspection, loan approval, and closing process, most real estate transactions end up closing. Sometimes, however, the problems are of such magnitude that deal should NOT close.

The Tooth Fairy

A study by FreddieMac, one of the quasi-governmental agencies that buy residential mortgages, shows that about one in five sub-prime borrowers would actually have qualified for a loan at A-paper rates had his lender tried to get one. This is pretty scary.

It's Going on Everywhere!

I have just returned from a vacation in England and Scotland . It was a great holiday. I've spent quite a bit of time in Britain , but this was our first trip to the Lake District and the Highlands of Scotland . The scenery was spectacular and the people warm and welcoming.

Addiction and The Current Substance of Choice

I was talking with a friend the other day and the topic of substance abuse came up. He responded how that has changed in our upwardly mobile society. In the old days the substance of choice was alcohol. As drugs became popular, it was marijuana, then cocaine, then who knows. We talked about addiction today and we concluded that the current substance of choice is raiding home equity.

The Katrina Aftermath - Part 2 - The Renaissance

After most natural disasters, 90 percent of the people move back home and start re-building. I made the case last week that it might be best for many of the displaced to keep on going. If that is to be so, what happens to New Orleans ? Who should come back?

The Katrina Aftermath - Part 1 - The Diaspora

I always loved New Orleans. I have made four trips there, including three Thanksgiving Week vacations. Along with the rest of America I weep for the victims who are alive, for the families who have lost members, and for future victims as this tragic tale unfolds.

Orange County Register New!

I got a nice mention in an article in my home town newspaper.

What Doth the Future Hold?

Last week I talked about the transformation of the American economy into one that is consumer based, meaning that much of the health and growth in the economy comes from consumer spending. We also discussed the fantastic expansion of the credit industry that allows people to gratify even the most whimsical desire.

What Do You Do With All the Stuff?

Early in my business career in the early 1960's the United States passed through a barrier, although it was scarcely noticed at the time. That barrier was one where supply and demand became imbalanced. There were a lot more things available than there were people to buy them. What were we to do with all this excess stuff?

What is Reasonable Compensation?

The Department of Housing and Urban Development's pronouncement on mortgage broker compensation is that it ought to be reasonably related to the work required to get the loan. That is a definition broad enough to drive a truck through, so it's not much use.

How Others Can Affect Your Preception of Reality

As you know, one of my favorite topics is decision-making, how people gather information, process it, and make decisions. One of the most interesting articles I have read recently appeared in the New York Times. It recalled research done 50 years ago by noted psychologist Solomon Asch whose studies showed that people's perception of reality can be influenced by pressure to conform socially.

Why Do I Have to Pay for This?

Americans love things that are free, or appear to be. Yet my experience in over 40 years in business is that companies never give things away. There's always a cost somewhere, sometime. The latest of these "free" gimmicks involves the mortgage industry. One lender's TV ad's say, "We don't think you should have to pay to borrow money."

Success Story from the Trenches

I hear a lot of tales of woe from readers so it is always a great pleasure to hear about someone's success. I got such a story from Eric who told me of his successful foray to the mortgage forest!

What Are Consumers Thinking?

You'd think that someone with an MBA in Marketing, with forty years of business experience, who had written a couple of books, who had dealt with over 4,000 clients would begin to understand what consumers are thinking. But many times I don't have a clue!

Cost/Benefit Analysis

Sometimes you have to wonder about how people make decisions. Mostly it's a matter of satisfying a "want." As in, "I want a new DVD player." "I want a new car." "I want to go to a bar and get drunk on Saturday night." "I want to buy a lottery ticket."

Betting the Farm

In past articles I have warned about the dangers awaiting consumers who got suckered into low payment mortgages. The signs have not gotten any better. In fact, they seem to have gotten even worse.

Manage Me!!!!!!

Last week I discussed the trait that we share with Nobel Prize winning economists - we don't manage our money all that well. Even if we have gotten good results due to a rising market, most people admit to me that they don't spend nearly enough time at managing their 401(k) or wherever their bulk of their funds are located.

How Well Do Nobel Prize Winners Do?

There is a lot of discussion going on about allowing people to divert a portion of their Social Security funds into privately managed accounts. As I have my doubts about the wisdom of this, I was intrigued to read an article in the Los Angeles Times that reported on the investment practices of winners of the Nobel Prize for Economics.

Forbes

I was quoted in a recent article in Forbes magazine. To see the full article, click here.

Shopping for Closing Costs - Part 1

As I read the national print media, I see that there is a lot more attention being paid to closing costs. Almost invariably closing costs are viewed as negative and, while they open the door for abuse, I think that a lot of the worry is misdirected.

Shopping for Closing Costs - Part 2

Last week we discussed some of the closing costs that are a part of virtually every lender's offerings. While many pundits think that these are horrible and recommend trying to negotiate to make them go away, I have never seen it happen, and I don't think that you'll be successful either.

Who Wins? Who Loses?

There has been a lot of news lately about the increases in housing prices in the last few years. In my area, the rate at which values are rising has slowed a bit, but they are still increasing at a good clip. So who wins and who loses in this game?

To see statistics about home values in your state, click here.

ADVisor or ADVersary?

These words are almost the same, but what a difference there is between them. In determining which people you want to work with in buying real estate business and in arranging financing, it is especially important to know which they are. Most want you to think of them as advisors, but their actions can be adverse to your interests.

Agency - Part 2

Last week I discussed agency as it applies to real estate agents. Now I'd like to talk about agency as it applies to the mortgage brokers.

Agency - Part 1

I was recently interviewed by a reporter for a major national magazine. She was writing an article about mortgage brokers and how a consumer should shop for one. As you know, this is one of my favorite topics so I was delighted to share a few thoughts with her.

Delayed Gratification

I really miss Gary Larson and his wonderfully irreverent cartoons. One of my favorite showed a lifeboat full of dogs, their ship sinking in the background. The dog in charge was asking, “We have enough food for 14 days. Who is in favor of rationing it out, and who is in favor of eating it all now?”

Oxytocin and You

I read an interesting story last week about the new field of neuroeconomics. Scientists are trying to understand what happens in people’s brains as they make economic decisions.

Cheapskate

Last week I had one of the more amazing conversations in my career. A prospect wanted to refinance a home that now belongs to his parents, and he wants to transfer it to his name and get a mortgage. There are some interesting issues here.

Be Careful! Be Very Careful!

I received a call last week from a friend who was looking for a home. She had fallen in love with a property she had seen at an open house and wanted to make an offer on it. I can and do act as a real estate agent for people from time to time so I went to get the details on the property. It turns out it wasn't listed on the local MLS, the Multiple Listing Service. The plot was thickening!

Mortgage Marketing Update

I was engaged in one of my all too frequent visits to my pharmacist when he asked me why he was getting so many mortgage flyers in the mail. I have noticed this too, so I did a little more research which I hope you find interesting.

Disclosure

If knowledge is power, ignorance is usually expensive. The real estate/mortgage process is confusing to most people, not because it’s all that complicated, it’s just that there are so many details that the average person is just not familiar with.

Doctor No

A common saying at mortgage lending companies is, “We don’t get paid unless we fund your loan.” That is supposed to make you feel good, but in fact, what they really are thinking is, “I’m not going to approve your loan if I think it means losing my job."

Things Aren’t Always What They Appear to Be

I'm sure many of you watched the Super Bowl and enjoyed Paul McCartney during halftime. That show was sponsored by Ameriquest Mortgage, a company specializing in loans to borrowers with less-than-perfect credit.

What Are You Afraid Of?

While I was on my morning walk with my wife today we passed an older lady who was carrying what looked like a baton like the ones the girls twirl at a football game. Jokingly, I asked her if she was taking baton twirling lessons, but she said, “No, this is for self-defense!”

Mortgage Shopping Traps

Dictionary.com defines shopping as “To go from store to store in search of merchandise or bargains.” These days no matter what you want to buy whether it’s a new digital camera or TV or laundry detergent, there are ten or twenty different makers selling competing products with characteristics that make them almost identical in features and price.

Ethics

A real estate agent got quite angry at my recent article about stonewalling. The direct quote was, “lying is not an ethical way to handle other problems. I am not going to waste my time with people who encourage people to lie to their agents.” This is a valid comment and, therefore, I feel that it deserves some further discussion.

Be Careful What You Wish For

The old adage goes: Be careful what you wish for, you may get it! This has some relevance to the housing market today and I’ll share my concern with you. I’ve been in the mortgage business for over twenty-five years and I have never seen money as easy to get as it is today.

Stonewall

No, I don’t mean Stonewall Jackson, although you should read a comment about him at the end of this article. I am referring to a negotiating strategy.

Whoa! Where are the Brakes?

For many years the mortgage industry has acted as a brake on the housing sales business. There are usually more buyers than properties and someone needed to weed out those who would not be able to make the payments. That was us.

Whoa! Where are the Brakes? - Part 2

Last week I talked about the lack of brakes on the housing industry that has normally been provided by the mortgage lending community. Let’s talk about the big picture first.

Watch Out!

I just received a note from a young man who has begun working for a mortgage company. I will quote directly from his letter to me, only changing the name of his company.

Title Traps

About ten years ago I did a loan for a retired teacher friend of mine. He wanted use the money to build a “Granny Unit” (Well, I guess this one was a Grandpa Unit!) over the garage. His son was moving back to town and was going to live in the main house with his wife. Actually, it’s nice to think of multi-generational houses in this day and age, but this story does not have as happy an ending as could have been the case.

Credit Issues

The mortgage industry has been telling people for years that they ought to do routine check-ups of their reports on a regular basis, like annually. Happily, I am finding a higher percentage of people who come to my office having done so, but certainly not all of them. Of course, of those who don’t check, many have problems.

Homebuyer Mistakes – Part 1

The biggest mistake that potential homebuyers make is to assume that they can’t buy a home, that there are barriers they cannot overcome. There are some for whom this is true, but there are many people for whom those barriers are imaginary.

Homebuyer Mistakes – Part 2

Last week I hoped to give some encouragement to those who might feel frozen out of the housing market. This week, I’d like to discuss a problem that affects people who are actively in the market for a home.

Homebuyer Mistakes – Part 3

In choosing a real estate agent it is important to understand who represents whom. Last week I talked about the importance of making sure that you work with a Buyer’s Agent, one who represents you in the transaction, rather than the seller. But there is another common kind of agent: one who works primarily for him or herself.

Mortgage Marketing

The mortgage business had two record volume years in a row. Low rates fueled record housing sales and on top of that, a record number of homeowners refinanced. At this point, however, mortgage originations are off between 30 percent and 40 percent and the industry is struggling.

One-Stop Shopping

Major forces in the industry keep trying to convince Congress that consumers want one-stop shopping for all real estate services when they buy a home. I’ve met thousands of those consumers and the ones I know are more interested in getting the best combination of service and price and don’t seem to give a hoot about one-stop shopping.

One-Stop Shopping - Part 2

If I didn’t scare you last week with my description of what goes on between related entities in the real estate business, I’ll have another run at it. We talked mostly about transactions in the re-sale market, the sale of previously owned homes. Today we’ll talk about homebuilders and their related mortgage entities.

One-Stop Shopping - Part 3

You will remember that last week I said that the reason the homebuilders are so eager to give you money is that they are not really giving away their money. They are probably giving you back your own money.

Here, piggy, piggy!

In mortgage industry parlance a piggyback transaction is when you get both a first Trust Deed (TD) or mortgage loan and a second loan at the same time to finance the purchase of a home. We do a lot of these because it is a mechanism whereby you can avoid paying Private Mortgage Insurance (PMI) on loans where you put down less than 20 percent.

Get the Best!

Did you ever wonder how people with medical problems always tell you that their doctor is the best one in the city (or the county or the state?) There may be 100 doctors specializing in their area of need. How could they have possibly found the best one out of those 100?

Refinance? Again?

You probably don’t remember The Man in the White Suit, a 1951 film. I remember only because I’m an Alec Guinness fan. In this film Sir Alec plays a scientist who invents a cloth that doesn’t wear out and doesn’t require cleaning. Sounds great, doesn’t it?

Getting to Yes!

Someone once said that negotiating is the art of “Getting to Yes.” It's also the single most important part of the mortgage business. “Yes, your loan is approved,” is about a light-year ahead of, “Your loan is denied.”

Goldilocks

We all know this story, perhaps better than any other fairy tale. When Goldilocks tasted the porridge, one was too hot, one was too cold, and one was just right. What Goldilocks was seeking was a comfort level. So should you.

Able Seaman

I am a big fan of Patrick O’Brian’s series of books about the British Navy set in the Napoleonic era. I read every single book of the 19 in the series and was delighted when the deservedly popular movie Master and Commander, based upon episodes from these books, was released last year. I saw it on the first day!

This actually has something to do with real estate! Read on.

It's Magic!

I love magic shows. Not only did I actually know the legendary Harry Blackstone, he even used me on stage for a trick once. I have seen David Copperfield’s show and on a trip to Las Vegas a few years ago I was able to see Siegfried and Roy. Absolutely enchanting!

Cycle

It seems to me that people have a tough time digesting the concept of cycles. I love this quote from Shakespeare’s Julius Caesar.

There is a tide in the affairs of men
Which taken at the flood, leads on to fortune.

Absolutely Revolutionary New Product!

I admit to being a gadget guy. I love to read magazines at the barber shop and see all the new things that companies have invented. I’m a fly-fisherman, too, and people even make fun of the vests we wear to hold all of our gadgets. None of these gadgets is revolutionary, just something that makes some task a little easier.

This new discovery I’m about to tell you about, however, has the potential, and I’m not kidding here, of revolutionizing the American economy.

Double, Double Toil and Trouble, Do We Really Have a Bubble?

With apologies to Shakespeare, this is a good question these days. A bubble has traditionally been defined as a situation where the price of an object rises because of an expectation that it will keep rising, not because the rise is based upon fundamental economic factors. The “tulip craze” was such a phenomenon in early 17th Century Holland .

Uncommon Work Yields Uncommon Results

As those of you who have read my books know, I really like aphorisms, those little sayings my dictionary defines as “A tersely phrased statement of a truth.” One of my favorites, attributed to many authors, is this one: “The harder I work, the luckier I get.”

Do You Have Enough Money

A little known study by the Federal Reserve Board is of interest to me and you. The Survey of Consumer Finances collects economic data on the financial situations of households like yours and mine. The 2004 survey is underway now the 2001 survey report has been published. It contains some interesting data.

A Philosophical Look at Mortgages

"A Mortgage Casts a Shadow on The Sunniest Field" is a quote attributed to Robert Green Ingersoll. That’s not a name that leaps out at you, but in the late 19 th century he was one of the foremost political orators of his day. Of course, he said this in a world where families typically homesteaded their land, carving farms out of the woods or prairie. Does this saying have relevance for us today?

Endorsements

I have to acknowledge that I have never understood celebrity or athlete endorsements of consumer products. Wheaties is almost as well-known by its second name, Breakfast of Champions, and has also always carried endorsements by well-known athletes, champions every one. That’s been true for as long as I can remember, and that goes back almost to WWII. Did I ever eat Wheaties? You bet, but not because I thought it was going to turn me into a Decathlon champion.

Courage

I was chatting with a fellow mortgage originator yesterday and the conversation turned to one of our favorite topics – borrower behavior. His question was, “What don’t people have the courage to ask important questions? Why do they only ask stupid questions?”

Choices, Choices, Choices

I recently read a very interesting article entitled “The Tyranny of Choice” by Barry Schwartz in the April 2004 issue of Scientific American . He says, “Logic suggests that having options allows people to select precisely what makes them happiest. But, as studies show, abundant choice often makes for misery.”

10 Mistakes Borrowers Make

I don’t think that the idea of the 10-best list started with Johnny Carson, but he might have perfected it.

Are Consumers Getting What They Deserve?

An old maxim says that people get what they deserve and I’m not going to argue with it. The mortgage business probably holds most of the records for consumer unfriendliness and I wonder if there is a correlation here. Do mortgage shoppers get what they deserve? Is that why they are unhappy?

Thanks, Alan! - Part 2!

Last week, we discussed Fed Chairman Alan Greenspan’s observation as to the gazillions of dollars that could have been saved by homeowners had they chosen ARMs in the last ten years instead of fixed rate loans. How do you figure out which choice is right for you?

Thanks, Alan!

Ever since they were introduced in the early1980’s I have been a big proponent of Adjustable Rate Mortgages. Fed Chairman Alan Greenspan has just come out and said that he agrees with me.

How Much is Too Much? – Part 2

Last week I started a discussion of qualifying for a mortgage. The qualifying process is basically one that draws a line between loans that will be approved and those that will be denied. These old rules were strict enough that they restricted the number of homebuyers coming into the system. You can't rely on this any more.

How Much is Too Much? – Part 1

For most of my career the rules for qualifying for a mortgage were pretty strict. People frequently seemed to want more house than our industry was prepared to finance, which is one of the main reasons why getting a mortgage was difficult. It wasn’t that they weren’t qualified; it’s just that they weren’t qualified for the more expensive home they wanted.

Hamburger Flippers

I recently visited with a fellow whose company develops mortgage origination software. Their contact at their client, a large bank, told them their objective was to create “a processing system that is so simple that hamburger flippers can originate loans.”

For Best Results

An old adage says, “When all else fails, read the instruction manual.” That’s certainly true. If you are trying to bake a cake, follow the recipe and you’ll get the best results. If you are trying to assemble a child’s toy, you’ll get the best results if you follow the assembly instructions. But you’d think that some things are so easy that you wouldn’t need instructions. Not so!

Victory!

I do not like paperwork. I know this sounds funny for a guy who buys about 8,000 sheets of copy paper every month, but I’m not in this business because I like that part of it. I’m in it because we always achieve victory at the end of the process, and I am into victory in a big way!

Where Have All the Sellers Gone?

There is an interesting anomaly in the real estate market. In spite of record sales last year, currently there are not many homes for sale in many areas of the country. Most of my direct experience is from California , of course, but I am getting similar reports from all over the country. Bottom line, buyers don’t have much to choose from.

Information, Please!

In the 1940’s a radio program called Information Please was quite popular. People would send in questions to be asked of an expert panel.

Do-it-Yourself

Fifty years ago almost no one did home improvements himself. They called a contractor. But in the 1950’s, suppliers to the housing industry started making things that a homeowner could install himself.

Financing a Remodel

This is the season when many people think about re-modeling their homes. Every home gets a year older every year. And just like you, a little cosmetic work is called for. But every once in a while more serious work is required.

Condos – Part 1 - Pluses

It is obvious to many that condos have filled a very important spot in the real estate landscape. With the cost of land in many urban and suburban areas accelerating at such a rapid pace for so many years, the cost of building a single family, detached home on its own lot has simply gotten beyond the reach of many potential homebuyers.

Condos - Part 2 - Minuses

Part of the value of a condo lies in the value of the common area beyond the physical space occupied by the owner. There are significant issues here because control of the total property is beyond the reach of the individual homeowner.

Condos – Part 3 - Financing

In the final part of this series, I want to discuss financing of condos. Remember my comment that a portion of the “value” you are buying consists of the value of the common area beyond the individual unit you will occupy.

Boot Camp

I get a kick out of an ad currently running on TV. It shows a bunch of people at Computer Purchasing Boot Camp. The Drill Instructor marches the people around, yelling at them, telling them that when they get through, they won’t get ripped off when buying a computer.

' Tis the Season to be Jolly, and More

It’s also the season to buy a home!

Warning Label

It seems as if many products that you pick up these days have warning labels on the package. Compared with the old days, this is a great thing as there are a lot of products that can be dangerous under certain circumstances. In the old days, you never saw these and people got hurt because they didn’t know what they were doing with the product.

Aren't They Smart Enough to . . . . . .

I wish I had a nickel for every time I’ve heard that one. Sometimes it’s after a lender has asked for more documentation. Other times it’s after they denied a loan for some idiotic reason. Whatever the reason, it is important to understand that getting a loan isn’t about a lender being smart or not being smart, it’s about rules.

Truth or Consequences

When I was growing up, in my family I learned that you didn’t tell a lie. I’m not sure what the consequences were; I didn’t even want to find out. It’s just that we were taught to tell the truth and we didn’t even consider the alternative.

Does That Make Sense?

I have long, involved conversations with people who are buying a home. After all, buying a home is a huge financial commitment and the difference between various choices can be significant. This puts a premium on making smart decisions.

Not Much To Cheer About – Part 2

In last week’s article I discussed the implications and problems associated with HUD’s new rules. I mentioned that the fees are not the issue, it’s the dishonest lenders and mortgage brokers who are the source of the problems.

Not Much To Cheer About – Part 1

Under the headline The Mortgage-Closing Nightmare a major newspaper wrote an editorial praising the revisions to the closing process contemplated by the Department of Housing and Urban Development (HUD) and suggested that consumers had something to cheer about. Not!

Feeling Frozen Out of the Market?

For the last two years housing has been one of the few bright spots in an economy that has had trouble finding good news. Housing activity continues at a hot pace.

Who is the Expert Anyhow?

I almost had a client the other day, a dentist. We had talked a few times but had not ever gotten down to the nitty-gritty, setting goals. It’s the most important thing I do, the same thing a financial planner does before you start buying investments.

Yield Spread Premiums - Part 1

Most salesmen know more about the products they are selling and their usefulness than the people they are selling to. Their job is to explain how a product or service might benefit a customer .

Yield Spread Premiums - Part 2

In the last article I discussed what Yield Spread Premiums are and how they are utilized to offset some or all of the costs of getting a mortgage.

Points – To Pay or Not to Pay: That is the Question - Part 2

In the last article, I showed that lenders offer many rate-versus-fee alternatives, not just the one you are likely to be quoted. Anyone who is going to be in the home for a long period of time – not all, but lots of people – paying points is a terrific opportunity to save money. In fact, I look at it as the only good thing about the process.

Points – To Pay or Not to Pay: That is the Question - Part 1

I can think of no single issue on which borrowers are more confused about than paying points.

Is the Party Over?

Regular readers of this column will recall that on a number of times I have called predicting interest rates a “most dangerous profession.” In the last six weeks we have been through the most dramatic increase in long-term interest rates in almost twenty years.

The Loan du Jour

Many restaurants have a Soup du Jour. Regular customers want to something new on the menu so it’s a nice way to pique their interest, even if they expect clam chowder on Friday. The mortgage industry seems to do the same thing, coming up with something different at regular intervals.

What Happens When the Fed Lowers Rates? – Part 3

In the last two articles we dispelled any notion that what the Fed has done recently or might do in the near future has an impact on mortgage rates. In this final article, we’ll discuss things that affect the bond market and thus affect the course of interest rates in the future.

What Happens When the Fed Lowers Rates? – Part 2

Last week I discussed the dangers of predicting mortgage rates. I labeled as a misconception the belief that many people hold, that the Alan Greenspan and the Federal Reserve control mortgage rates. In this article we’ll get a little more specific and review the interest rate data for the past few years to demonstrate that.

What Happens When the Fed Lowers Rates? – Part 1

In terms of success versus failure I can think of no more dangerous profession than predicting interest rates. Millions of professionals don’t seem to be able to do it successfully, yet it has always amazed me that homeowners with zero financial experience consider themselves endowed with the ability to predict interest rates.

Doing the Math - Part 1

To most people, the mathematics of mortgages is simply overwhelming. Lacking more sophisticated financial tools, they are frequently left with only the ability to compare monthly payments.

Doing the Math - Part 2

In this article I’ll show you how you can parlay a $20 investment into almost $50,000 by using a calculator to make more precise answers and make decision-making more efficient. Now, before you say, “No way,” let’s do the math.

Mortgage Triage

The medical folks use the world triage (pronounced tree-azh) to describe the process where medical workers separate accident victims into groups depending upon their needs.

Cut Out The Middleman

In addition to “I Can Get For You Wholesale,” and “Buy Factory Direct,” American shoppers love to hear about ways to “Cut Out The Middleman.”

Cost vs. Value – Part 1

I received an e-mail this week from a mortgage shopper, inquiring as to my fees and other costs of a loan. He was completely missing the point, but he was just doing what our economy has trained people to do.

Cost vs. Value – Part 2

We recently discussed the propensity of the American shopper to concentrate on initial costs instead of the total cost over a long period of time, perhaps the lifetime of the product.

Noise

Communication engineers refer to the Signal-to-Noise Ratio, shortened to S/N, when working with data transmission.

How Much is Your Thing?

The way I look at the mortgage market exactly 50 percent of mortgage shoppers get a deal that is worse than average.

Refinancing - Part 1 - Should I Refinance Now?

Most people have a tough time coming up with the answer to this question. Even those for whom the facts are compelling in favor of doing so often have trouble figuring out whether it's worth it.

Refinancing – Part 2 – The Refinance Trap

When they refinance, most people concentrate on dropping their monthly payment. But they pass up the opportunity to save tens of thousands of dollars

Refinancing - Part 3 – Cash out and Debt Consolidation

Americans are tapping the equity in their homes in record numbers these days. This is a result, in part, of the high equity that has built up in the highly heated residential real estate market.

Is There a Housing Bubble?

“What is going to happen to the value of my home?” That is the question on the minds of homeowners these days

Why FICO Scores are Important

A few years ago the mortgage industry discovered a new tool - credit scoring. Fair, Isaac and Company, FICO for short, had developed credit models for the credit card industry.

How Your FICO Score Is Determined

Do you think that good credit will help you get a loan? WRONG! It’s actually the absence of bad credit that gets you the loan.

How to Improve Your FICO Score

You don't need to pay a service to improve your scores. In this article, we’ll talk about some immediate steps you can take to improve your score.

Why do they need to do an appraisal? – Part 1

This is a common question among homebuyers. They figure that they have been pretty shrewd in making their offer and negotiating a realistic price with the seller, so why is an appraisal necessary?

Why do they need to do an appraisal? – Part 2

We have discussed why it is necessary for a lender to obtain a formal appraisal of a property, and that this is being done for your benefit as well as the lender’s.

Whither Interest Rates?

It’s been a very interesting couple of years in the mortgage market! You can scarcely pick up the newspaper these days without reading articles about record refinance volume and near record home sales.

Where are the Customers’ Yachts?

A recent Wall Street Journal told the story of mega-mortgage producers who made well over $1,000,000 originating mortgages last year.

Automated Underwriting

How long did it take to get your last mortgage loan approved? 30 days? 45days? That has been typical performance in the mortgage business for years. Things have changed.

I Don’t Care Who I Get My Loan From

During a recent conversation with a prospective borrower, he told me, “I don’t care who I get my loan from. I just want the best deal I can get.”

Shopping for Closing Costs

One of the enduring myths about mortgage shopping is the idea that there is a large difference in closing costs between one lender and another.

Liability Management

If you ask 100 people what financial planning means, 99 of them will answer you with talk about the conservation and growth of their assets .

Capability Brown

In 18th Century England, if you wanted your estate landscaped imaginatively, you called upon Lancelot Brown, the leading landscape architect of the day.

Should You Have Lenders Bid for Your Loan?

I’m sure you’ve seen the TV ads where a bunch of mortgage loan officers are waiting to make their presentations to a couple of homeowners.

Taxes

The old adage is that nothing is certain except two things, and taxes are half of them.

HUD’s New Rules

The mortgage industry has been anxiously awaiting HUD’s closing cost reform package.

Getting the Right Loan

In my experience, people go through the following phases in their economic lives:

Ceteris Paribus

This nifty Latin saying means “other things being equal,” and leads me to want to talk about how some people make a fundamental mistake while shopping for a mortgage.

When is an Approval a Commitment?

The other day I received an e-mail from a lady telling me her tale of woe. Her plight raised the question, “What is an approval and is it a commitment to lend?”

A New Slant on Predatory Lending

You have probably read about predatory lending, where unscrupulous lenders prey on disadvantaged borrowers.

Abusive Lending Practices

In a recent article I discussed one of the ways our industry finances upfront closing costs at an interest rate equivalent to 25%.

Down Payment Blues

A limiting factor for many homebuyers is the lack of an adequate down payment. Luckily, the mortgage industry is riding to the rescue.

Fire, Aim, Ready

This may sound funny to you, but Fire, Ready, Aim is an accurate way of describing the way that many people shop for a mortgage.

How Do I Know I Can Trust You?

Thousands of people talk with lenders every day, but I’d be surprised if even one person in 100 asked, “How Do I Know I Can Trust You?” Yet this is the most important question of all.

Closing Costs

A source of many horror stories in home buying are about borrowers who get to closing and find that the closing costs are substantially higher than they anticipated.

Libenter homines id quod volunt credunt

I am not a Latin scholar, but I love quotes and I found this jewel from Julius Caesar:

Men gladly believe that which they wish for.

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