Who knows what to think about anything these days? It is hard to wrap one’s head around anything when so much is happening and none of it seems to be good. And so, when I learned that Stanford Kurland, the former president of Countrywide, had started a new mortgage company, my first reaction was, ohhhhhhhh boy, here we go again. I mean, there are a boat load of lawsuits underway against Countrywide, and some of them are accusing Kurland of being one of the main guys responsible for the irresponsible lending practices that dished out billions of dollars in risky home loans, which inevitably led to Countrywide’s demise, and left thousands of people risking foreclosure.  But then I learned what his new company was doing, and my initial thoughts towards the man and his company changed.

The Private National Mortgage Acceptance Company, or simply PennyMac, buys up delinquent home mortgages that the government took over from failed banks for a fraction of what they are worth, and get a piece of what they can collect. As an example, PennyMac would buy a delinquent $500,000 mortgage for say, $180,000 (of course, in reality they are buying many mortgages at once). When they buy these mortgages for pennies on the dollar, they can afford to restructure the loan with the homeowners, slashing the interest rates, keeping the owners in their homes and making payments. And PennyMac gets to keep a share of the money coming in from these mortgage payments, which otherwise might not have been made. So this is not only helping homeowners, but it is helping the government get back some (as opposed to none) of the money from the bad mortgages they bought up.

According to Eric Lipton in an article for the New York Times, PennyMac struck a deal with the FDIC (Federal Deposit Insurance Corporation), where “it paid $43.2 million for $560 million worth of mostly delinquent residential loans left over after the failure last year of the First National Bank of Nevada.” Lipton goes on to say that, “Under the initial terms of the FDIC deal, Penny Mac is entitled to keep 20 cents on every dollar it can collect, with the government receiving the rest. Eventually that will rise to 40 cents”. They’re doing to be doing real well. And some whom they have helped are doing well as a result also.

Lipton describes the Laverdes family had fallen three months behind on their mortgage after their furniture store began feeling the pressure of the economic crisis. They were “fearful that they might need to move their four children, three dogs and giant saltwater aquarium into a cramped apartment, leaving behind their dream home. But a PennyMac representative instead offered to cut the interest rate on their $590,000 loan to 3 percent from 7.25 percent, cutting their monthly payments nearly in half.” Wow, go delinquent for a couple months and get rewarded with a 3% interest rate! Must be nice.

So perhaps our country needs more companies like PennyMac right now. Take some of the burden off government and banks and struggling homeowners, and turn a pretty profit while they do it. Is it too much to hope that companies like this can help stabilize the housing market? Probably, but like I said, I don’t know what to think at this point, so any beacon of light in this dismal economy and I’m going to cheer it on.

By Andrew Brentan

A Call to Agents

My superiors, the President and CEO of Axia Real Estate Group in San Diego, have asked me to write a blog announcing that we have now expanded our business into Riverside County and that we are looking for agents to work in both Riverside and San Diego.  I said to them, “Superiors, with all do respect, this is not something to discuss on a blog. This is something to announce on the home page of the website or take out an ad in the Reader or SignOn SanDiego.”  As you can tell by the fact that I am indeed writing a blog on our business expansion, I did not win this argument. And so, without further ado, let me introduce to you, Team Aguilar of Axia Real Estate Group:

Under the direction and leadership of Carlos Aguilar (President), and Howard Blum (CEO), Axia Real Estate Group, Inc. has been helping buyers and sellers in the San Diego region for over a decade. Carlos loves using the line that he has “been in real estate longer then he would care to remember” which was voted by me, to be his most over-used line of 2008. But he has been at it for a long time — originally licensed in California in 1972. The bottom line is, the man knows everything there is to know about real estate in California and he’s a pleasure to work for and with. And even if he wasn’t the one paying my salary, I’d say the same thing.

So, now that Team Aguilar has expanded into Riverside, we are looking for experienced real estate agents to join our group and work both Riverside AND San Diego regions. Agents should be experienced, knowledgeable, and willing to follow up on leads. If you are interested, or have any questions, call Toll Free Number at (888) 317-1496 or email info@teamaguilar.com.

I was sitting at the front reception desk last week where I sit down to write these blogs and a man came in wearing a slick suit and had a stack of business cards with him. Now if this had been 2006, I would have immediately assumed that this was a new sales rep. from one of the sub-prime lenders coming to introduce himself, pass out cards, and talk about all the incredible loan programs he’s offering. You know, the no money down, 1% interest rate for 5 years, no proof of employment, no proof of income as long as you had a 650 credit-score, you’re going to go into foreclosure in two years type of lender. But alas, this couldn’t be the same type of sales rep. It’s 2008.  The sub prime lenders no longer exist. No, this man represented a different type of lender: The FHA approved lender.

At the time I didn’t think much of it, but a couple days ago I saw an article in Business Week titled: “FHA-Backed Loans: The New Subprime” written by Chad Terhune and Robert Berner and in it they bring to light the fact that some of the same people who manipulated and weaseled their way into wealth via the subprime market and helped cause this global financial mess, are now getting approved to sell FHA loans. Now this guy probably worked for a totally legitimate company, but it got me thinking. And it should get you thinking too.

So what exactly is an FHA loan? Essentially, they are loans created by the Federal Housing Administration for lower income Americans who otherwise wouldn’t be able to afford a home. They offer small down payments, sometimes as little as 3%, and affordable rates. They can do this because the loans offered are federally insured by HUD (Housing and Urban Development), which gets a pool of funds from us tax payers. In other words, any institution that buys up the loan-backed security is more inclined to do so because if the borrower does default, the government will insure against any loss incurred.

All that being said, FHA loans are in high demand now and FHA can only do so much on its own. And with Bush and Paulson pushing for more FHA loans, more and more lenders and brokers are getting approved to sell FHA loans. And as Terhune and Berner point out in their article, it seems FHA has shown a few lapses in judgment with regards to whom they are giving the ability to sell FHA loans. They site quite a few examples of shady subprime lenders closing their doors and then reopening with a new name, and a new-found focus on FHA loans. “Jerry Cugno started Premier Mortgage Funding in Clearwater, on the Gulf Coast of Florida, in 2002. Over the next four years, it became one of the country’s largest subprime lenders, with 750 branches and 5,000 brokers across the U.S.” They go on to say, “…along the way, premier accumulated a dismal regulatory record. Five states-Florida, Georgia, North Carolina, Ohio, and Wisconsin-revoked its license for various abuses; four others disciplined the company for using unlicensed  brokers or similar violations. The crash of the subprime market and a barrage of lawsuits prompted Premier to file for U.S. bankruptcy court protection in Tampa in July 2007. Then, in March, a Premier unit in Cleveland and its manager pleaded guilty to felony charges related to fraudulent mortgage schemes.” It’s clear that Premier was a shady company, I get that. But what I don’t get is how Cugno and family were able to create a new company only weeks after filing for bankruptcy, and were granted a license by the FHA to issue government backed mortgages. The office for the new company, called Paramount, is one floor below Premier’s! It’s clear that the FHA did not put much time into investigating who they were approving to sell their loans. Is it too much to think that the government would be looking out for companies like Premier looking to get involved in the FHA loan business?

So now we know. There are some companies out there that have the potential to repeat some of the unethical business they were doing during the subprime era. Be alert and be informed as always. But also know that it is MUCH more difficult for any company to get away with fraudulent loans. For one, all FHA loans are underwritten by either an FHA approved underwriter, or an actual FHA employee depending on what type of approval the lender has.  In addition, all FHA approved lenders are audited once a year. So if you’re looking to get an FHA loan, definitely be aware, but don’t be paranoid.

There is a bigger concern. According to Inside Mortgage Finance, a research firm in Maryland, who “estimates that over the next five years fresh loans backed by FHA that go sour will cost taxpayers $100 billion or more. That’s on top of the $700 billion financial-system rescue Congress has already approved.” (Terhune, Berner). They go on to say, “Gary E. Lacefield, a former federal mortgage investigator who now runs Risk Mitigation Group, a consultancy in Arlington, Tex., predicts: “Within the next 12 to 18 months, there is going to be FHA-insurance Armageddon.”

I know history has a tendency to repeat itself, but can’t another mortgage disaster have waited a good 30 years or so. At least then we could claim that people just forgot, and got greedy again. Armageddon Gary? That’s strong terminology, but who am I to disagree. Maybe someday, when our new President takes office, a good hard look will be taken at FHA, and it will be apparent that they are severely understaffed for the amount of FHA loans being rolled out. And in their desperation to keep up with the influx of loans, they are allowing some lenders who shouldn’t be lending, the ability to provide these loans. And then maybe, we can start learning from past mistakes, and head into the future with a fresh start. Maybe.

Andrew Brentan

Manuel Muniz
Team Aguilar Contributor
Realtor & Mortgage Consultant
Cel: 619-370-7473
Fax: 619-489-2669
Email: mmuniz [at] axiasd.com
Web Page: www.axiasd.com

Evento relevante del 2008: La decisión tomada por el Gobierno Estadounidense de tomar control de dos principales Bancos Hipotecarios del país. Federal Housing Finance Agency – Agencia creada recientemente por el Congreso – será la autoridad responsable bajo la batuta de James Lockhart.

Se establecen tres objetivos: Asegurar la estabilidad del mercado, continuar la disponibilidad de préstamos hipotecarios, mantener un costo mínimo a contribuyentes (Tasas Bajas).

Para dimensionar el tamaño de Freddie Mac y Fannie Mae, basta decir que representan el 50% de las hipotecas de Estados Unidos. Su función fundamental es comprar hipotecas que se ajustan a los criterios establecidos por Freddie y Fannie, otorgados por otros bancos y voltearse al mercado secundario para vender los llamados Mortgage-Backed Securities a inversionistas privados.

Accionistas de Freddie y Fannie han visto desplomarse el valor de sus inversiones en mas de un 90%.

El Secretario del Tesoro Henry Paulson, indicó que en 2009 el nuevo Presidente y el Congreso determinarán el tamaño  y estructura de largo plazo de estas dos entidades financieras – Freddie y Fannie -

Lo anterior se traduce en oportunidades para quien busca tomar ventaja de las condiciones del mercado inmobiliario. Al ciudadano americano le será más difícil conseguir un préstamo bajo nuevos criterios de calificación, por tanto un extranjero con enganche suficiente y un préstamo adecuado, tiene fuerza para negociar.    

Recuerda que a ti como comprador no te cuesta tener una representación legal, ya que en Estados Unidos el vendedor es quien paga la comisión de tu agente.

Consúltame antes de tomar una acción. De mi parte no necesariamente escucharás lo que deseas escuchar, pero si puedes estar seguro que será un juicio profesional que te permita tomar una mejor decisión.

No te  aventures a comprar sin un guía profesional.

Manuel Muniz
619-370-7473
mmuniz [at] axiasd.com

On August 31, 2007, ACC Capital Holdings announced that it was closing Ameriquest (Argent Mortgage was the wholesale division) by no longer taking loans and selling its loan servicing unit to Citigroup.

Does this mean on September 1st 2009 all of the 2/28 (2 year fixed) loans will have been weeded out of various loan servicing portfolios?

If it does, we will have to wait until September 1st 2010 for the 3/27 (3 year fixed) loans!

The middle of 2007 was when we saw just about every mortgage wholesaler shut down their operations. Some went out of business and some shut down their mortgage wholesale division. If you consider that the majority of the current foreclosures being sold right now are the end result of some of these loans then it would be simple to say that once we pass this period of fixed loans we should see some improvements to the real estate market.

What is the difference with this market compared to markets of the past? When this market turns the availability of financing will never likely reach the levels we have recently experienced. Let’s say that we start to see considerable improvements in the early part of 2010 that would mean that we still have another 1.5 years of a rather gloomy real estate market from today.

My feeling is that the market will slowly start to improve once we work through this cycle of mortgage loans. Even when this happens it will take time and there is no telling what other negative economic factors will come into play such as inflation, the war and the overall condition of the economy. There are so many factors that will play into this real estate recovery.

I hope that you aren’t expecting a quick recovery to this real estate market. The reality is that it’s going to continue for another couple years.

Let’s walk away from the real estate market for a few moments and talk about Wall Street. What was the big news today on Wall Street? Wall Street experienced huge gains today in the markets. The Federal Reserve announced that they would provide $200 billion in Treasury securities for 28 days in return for mortgage back securities. What does this mean?

Mortgage Backed securities have not been very desirable with all of the uncertainty in the mortgage market. This will help increase the demand for mortgage backed securities and supply liquidity to help revive a market that appears to be really locked up by the fear of where mortgage back securities may be heading.

By no means does this mean we are coming out of the current housing crises but it could be considered a small step in the right direction. It’s very important to restore confidence to mortgage back securities and make investors feel comfortable investing in them again.

This will be a short term fix and be in effect for 28 days. We will see how things go and over time the real estate market will come back and be stronger then ever but it will also take time to get past this current run of loans that are experiencing default rates higher then investors hoped for.

What are you waiting for? There is not a better time then right now. Spending as much time out in the market as we do, you can quickly see that it has become a buyers market. Over the last few years the real estate market has been very strong and it has allowed homeowners to capitalize on their gain in value. It was not long ago when all you needed to do was put a for sale sign up in front of your home and you would have it sold in a few weeks if not sooner. This made many real estate agents think that it was easy to make money selling real estate.

With the real estate market in San Diego and most of the country taking a downward turn, it is now time for buyers to start calling the shots!!! Homes for sale may only receive 1 or 2 offers and sellers will be much more likely to accept your offer. With the market being much more attractive for buyers, you need to take advantage. The question you may ask is what do I purchase and where? Well, purchasing real estate can be fairly difficult and knowing what the best market to purchase in may be difficult.

Some of the markets in San Diego that are strong and will continue to remain strong are the Carmel Valley, Del Mar, Downtown areas of San Diego County. Many of the areas that have prices in the lower range which would be considered suitable for 1st time home buyers will also be very attractive and a strong area to purchase in.

What we will do here at Team Aguilar is look at what your needs are and find out what makes the most sense for you. If you are buying your fist home you will have different needs then if you were looking to purchase for investment.

Whatever your needs may be, the key is to get in the real estate game and purchase some real estate. This is the time and may be your best opportunity to do this.

Also, please consider some of the Bank Owned real estate that we have for sale in San Diego. We work with many different banks and have access to Bank Owned real estate for sale in many different markets. Please make sure you consider this option before purchasing anything.

Carlos Aguilar
Team Aguilar
Purchase Bank Owned Real Estate in San Diego

Fannie Mae and Freddie Mac should be allowed to play a greater role in easing the mortgage lending credit crunch, and alllow them to raise the conforming loan limit.

A bill passed by the House this spring overhauling oversight of the government-sponsored entities, or GSEs, should have gone farther in raising the conforming loan limit — the maximum-size loan Fannie and Freddie normally purchase or guarantee.

A bill the House sent to the Senate in May, HR 1427, would leave the conforming loan limit at $417,000, but allow Fannie and Freddie to securitize and sell loans up to 150 percent over the limit in areas where the median home price exceeds the limit.

We cannot afford a ‘wait and see’ approach when it comes to a credit crisis that threatens to derail our economy. The Bush administration continues to ignore one tell-tale sign after another that the subprime woes are threatening the broader mortgage markets. Fannie and Freddie are uniquely positioned to inject badly needed liquidity into the economy, but President Bush won’t let them do their job.

Bush, when asked about a larger role for Fannie and Freddie at an Aug. 9 press conference, said he would only consider such moves after Congress passes a GSE reform bill.

Alex has built a great database of Realtors and been able to bring value to these relationships by being much more then a typical loan officer. Alex has spent a lot of time going through coaching and 1 on 1 training for the mortgage business and as a result of what he has learned he spends a lot of his time using that information with his realtors. Real Estate training has been very easy for Alex Aguilar because the way you market yourself and build relationships in the mortgage business is very similar in real estate.

Real estate training is just another added benefit that Alex brings to his agents and he really enjoys meeting with his real estate agents on a monthly or quarterly basis to complete a 3 page quarterly review that has the agents define their goals for the next 90 days and gives them a breakdown of how they will accomplish these. The important thing to note is that Alex not only puts these goals and plans in writing with his Realtors but he gives them details, ideas and suggestions on how to accomplish these goals.

If you are a real estate agent that is really interested in taking their loan officer relationship to a whole new level please call Alex today because his Real Estate training could really help bring you the results you deserve.