Recent News

Foreign Nationals: Today’s Sign That Liquidity May Be Returning To The Market

I am working with a Dublin-based real estate developer, providing Irish real estate investors with mortgages for United States-based properties. A project on which we are currently working has been interesting in context of how the mortgage market is changing. When we started work on this Chicago-based condo building, the...

Interview with First Business: Will the Fed Cut Rates?

I interviewed with First Business anchor Anchor Beejal Patel this week. First Business produces news "shorts" that are syndicated nationwide. The story: "How would a Fed rate cut impact mortgage rates?" You all know my answer -- it's well-documented around these parts. I am a little embarrassed about having to...

What To Do If Your Home Is Losing Value And You Aren’t Planning To Sell

A few clients called me this week to share concerns about a declining housing market and how it would impact their long-term financial planning. "I need my home equity for retirement", one said. "What if foreclosures on my neighbors ruin my nest egg." Our ensuing conversation covers some basic facts...

How Sub-Prime and Alt-A Mortgage Markets Are Behaving Like NFL Draft Picks

Did you see the BNP Paribas press release last week that said it's halting withdrawals from some of its funds? My favorite part is how blunt the first sentence is below (bold added for emphasis): "The complete evaporation of liquidity in certain market segments of the US securitisation market has...

Once Again, Look Beyond The Headlines And Meredith Vieira’s Interviews For The Truth

I don't know what was stranger on The Today Show this morning: Meredith Vieira's back-to-back interviews with Jim Kramer and J.K. Rowling Jim Kramer looking like a fish out of water in front of a camera Watching Lester Holt and Matt Lauer (1) share the anchor desk and, (2) actually...

Unless You Watch CNBC During Your Lunch Break, You Missed A Must-Watch Video

Earlier this month, CNBC featured a segment on how sub-prime mortgages work. The shame of it, though, is that it aired at a time when the probable audience was already well-versed on the topic. This would be like holding a seminar on how to throw a baseball to the attendees...

Paying Down Your Mortgage Does Not Automatically Increase Your Net Worth

Mathematics is highly-relevant to financial planning. It helps us grasp concepts such as compounding interest, amortization schedules and return on investment. But, forget all of the complex equations. Basic math is all you need to get to the key point: (Net worth) = (Total value of assets) - (Total value...

Trying To Link Consumer Sentiment Surveys And Retail Sales Reports

As Retail Sales plunged 0.9% -- the steepest mark in two years -- and Consumer Sentiment surged by 8.3%, we have to (once again) question if the University of Michigan Consumer Sentiment survey is of any use at all. Assuming that there is a lag between a consumer's "improving feelings...

Who Would Have Thought That The Cubs Could Teach Us About Mortgage Bonds?

I just finished up a call with a client in which we discussed the current state of mortgage markets and why mortgage rates have risen so far, so quickly. 30-year fixed mortgage rates are up as much as 0.625% over 30 days. That's ridiculous given the relatively low volatility of...

How “Repair Credits” To The Buyer Can Sabotage Your Home Sale

When buyers and sellers look for common negotiating grounds, it's common for the buyer to request home improvements to be made prior to the sale. The request may be phrased in any number of ways: "The hardwood floors are warped and we think the seller should pay for it." "There...

How The IRS Gets Paid On Your Foreclosure Short Sale

In his weekly syndicated column, Kenneth Harney pulled back the curtain on a nasty piece of IRS tax code that can penalize homeowners with foreclosures and short sales. For those that don't know, a short sale is when a lender accepts a payoff amount that is less than the amount...

Mortgage Lenders : “We’re Not Using The VantageScore Credit Scoring System”

The much-hyped VantageScore credit scoring system seems to be getting a lot of press lately, so thank you to Holden Lewis at Bankrate.com for keeping it real. According to the VantageScore Web site, it is the "new standard in credit risk scoring". "Why did we create VantageScore? Simply put, the...

Fixed-Rate Mortgages Are As Risky As Adjustable-Rate Mortgages

In an article titled "Fixed-rate loans means no surprises", the Washington Post suggests that fixed rate mortgages are the safest mortgage choice for homeowners. This is not true. This article is another example of the mainstream media ignoring the finer points of mortgage planning and home equity management. The author...

Are Mortgage Rates Already Immune To Threats Of Terror?

In months past, terrorist threats and activity pushed mortgage rates lower as traders positioned for international instability. Today, that trend appears to be breaking. Mortgage rates are flat even as U.K.-U.S. flights are upgraded to "Red Alert" and U.S. domestic flights are upgraded to "Orange Alert". In what many analysts...

Downpayment Myths, As Told By The Mainstream Media

The Chicago Tribune Real Estate section tells us to think twice before choosing 100 percent financing. The headline is preying on fear and hides some obvious truths about no downpayment loans. Unfortunately, many people only read headlines. Without reading ahead, which of these two scenarios would you prefer: Crash your...

Two Simple Ways To Create Instant Liquid Reserves And Protect Against Foreclosure

According to Bankrate.com, while most people had money in a liquid account somewhere, only 39% had enough liquid money to last through three months of living expenses. If we know that 39% of Americans do have three months of savings, then we can reason that 61% of Americans don't. Now,...

How To Lock Your Mortgage Rate And Be Right 100% Of The Time

Mortgage interest rates -- just like stock prices -- change price daily and lately they've been trending higher. For the homebuyer that is "shopping" for a mortgage, or waiting for rates to fall, or just "hasn't gotten around to it", I implore you to make a decision one way or...

The Origin of the 20 Percent Downpayment Myth

A favorite mortgage myth of mine is some variation of: You can't buy a home without a 20 percent downpayment. Let's address why this is false, using history as a guide. It all started 50 years ago when real estate information didn't move as freely as it does today. There...

Negatively Amortizing Loans Are Only Evil If You ALLOW Them Be Evil

Negatively amortizing home loans get a lot of bad press. Some of it is deserved; most of it is not. If you've never heard of NegAm loans, maybe you know them by their more popular, "brand" names: Option ARM Pick-a-Payment ARM Deferred Interest Option Loan The basic concept of a...

Three Common Objections To Interest Only Mortgages, Rebutted Point-By-Point

MSN Money recently ran an article stating that interest only loans are bad choices for most borrowers. The headline ran as "Interest-only loans: not magic, usually not smart". Then, the next line: The last interest-only mortgage craze ended with a wave of foreclosures in the Great Depression. Today's interest-only ARMs...