Mortgage Blog

One of the partners at FreeHomeRefi.com recently sent a letter to the President-elect Barack Obama.

A Letter to the President Elect

This is part of our ongoing commitment to rejuvenate the housing market in the United States and find reasonable solutions for all homeowners.  We will continue to be hard at work finding solutions to the current mortgage situation.  Feel free to comment or post ideas and we will keep you updated on our talks with President-elect Obama.  You can also send your thoughts to the President-elect’s website.

The Letter sent to President Elect Barack Obama:

I’ve been in mortgage banking for almost 20 years and there is a fairly simple solution to much of the economic problem. You MUST immediately create a streamlined home refinance program through Fannie/Freddie so that credit qualified consumers can refinance their existing home loans to lower the rate & term without an appraisal/LTV requirement (much like the FHA program). There is enormous demand for this product but many can not qualify due to the drop in home values. People will stay in their homes, even if they are upside down, without a wholesale reduction in principle as has been proposed by many economists which only further depletes the value of trillions of dollars in mortgage securities.

This program would stimulate reductions in mortgage payments giving more disposable income for consumers to spend/save to stimulate the economy. It will also convert problematic mortgage assets (Option ARMs, high margin ARMs, etc.) to more stable, fixed rate loan programs adding/shoring up enormous value to the trouble MBS market, stimulate job growth in the mortgage banking sector and stabilize housing and home values.

The pricing for this program should be tiered based on credit score (as pricing is now) and allow even those that have had credit issues to qualify (i.e. allow low FICOs, mortgage lates, etc.). All prepayment penalties should be waived. This will provide REAL relief. The majority of the Loan Modifications that have occurred (that I’ve seen) are poorly structured and have actually taken further advantage of naive consumers resulting in little or no tangible benefit which is why we are now seeing staggering statistical default rates (50+%) on those modifications. This streamlined home loan refinance program would create a necessary structure to create real relief without the immediate necessity for reduction of principle balances.

It should be structured such that mortgage lenders/brokers compensation is capped so that consumers can not be taken advantage of but the mortgage industry is able to make a fair compensation for their work (i.e. can not charge/finance more than 1% origination, no discount points unless actually paid to buydown the rate, cap maximum rebates, limit other fees, etc.).

We have a site (www.FreeHomeRefi.com) which advocates transparency in mortgage lending by forcing lenders to always offer consumers a No Cost option so consumers can not get confused with all of the fee games that are typically played by unscrupulous lenders/brokers. It is impossible for lenders/brokers to bury hidden fees when there are no fees. No way to bait & switch.

This loan program should be rolled out immediately along with other, simple mortgage incentive programs to stimulate home buying. (I’m happy to offer guidance on this additional concept.)

I am available to offer my expertise  in any way I can. I’d love to get to work helping America get back on its feet and put my industry (along with other related industries) back to work in a positive, stimulating way.

Sincerely,

Preston Kenney

Is there anyone paying attention to what is going on in our world, especially here in your back yard?  From talks of government bailouts, to the crisis which is oil  our country is spiraling towards a nowhere land of overbought houses, empty pocket books and over inflated goods.  I’m not sure if anyone really remembers the definition of socialism but for this blog’s sake I find it necessary to reiterate the meaning.  Wikipedia list’s socialism as: “Socialism” a broad set of economic theories of social organization advocating state or collective ownership and administration of the means of production and distribution of goods.  Wow does that sound like anything that is going on right now in the USA?

Is there anyone home?

Okay maybe I should break this down into layman’s terms for those who are blinded by their local and national politician’s flow of garbage which comes from their mouth.  Our current leaders are trying to put together a $700 billion dollar plan to insure mortgage backed securities and stop the defaults which are happening nationally.  For the sake of this article I think it should be known that I am one of the individuals who would probably receive some of the government’s (our) wealth as I have lost my previous job due to this turmoil and am facing an inevitable foreclosure at some point with no possibility of a home refinance.  That being said I’m against any bailout, I lost my job(nothing I personally did), I bought the house which I now can’t afford so I will pay the consequences.  I’m not asking for help, I’m dealing with it as everyone should be.

Now back to the sweat of things, the government wants a stake in most all of the company’s that they are bailing out.  The government will insure and buy bad paper (mortgage backed securities) in order to help with the liquidity problem we are having as no one is buying mortgage backed securities right now.  There is no trading of paper and there is no one lending money; which is the life blood of our economy.

Has anyone wondered how it is possible to spend $700 billion in 1 week?  Does that seem a little strange that the details of the plan are very vague?  Has anyone else recognized that the auto and airline industry have asked for bailouts as well?  Have you ever made a major economic decision in your own life in a week or less?  So to bring this all home the government could potentially own the banking industry, the auto industry, and the airline industry.  It will be like when you were in high school you had to ask mommy and daddy to borrow the car, and have $20 dollars for the night out.  I don’t know about any of you but I like freedom, freedom of choice, speech, freedom to make my own choices; and that may be taken away or at least limited.

Wake UP and do something, I don’t have the answers but I’m willing to try.  Voice your opinion.  Call your congressman and senator.  At least post a comment of your views on this blog.  We need to speak up.  The voice of the American people must not be silenced.  We here at FHR are starting a movement, “The Americans for Freedom Coalition”.  I will bring details in further blogs but essentially the AFC is all about protecting the rights of Americans and the values our country was founded on.  Does anyone realize that this problem was started by government intervention (GSE’s Fannie Mae and Freddie Mac), and now we are supposed to believe that government intervention will solve everything?  I can only do my part and hope that I am wrong about the possible implications of this deal for my kids and their kids.