An Open Letter to All Referral Sources

Last weekend the Federal Government announced the takeover of Fannie Mae and Freddie Mac. This is the culmination of many months of stress and tremendous losses for these companies and many in the mortgage industry. Prior to this announcement, GMAC Mortgage announced it was closing over 200 retail mortgage offices, putting more loan officers and support people out of work. Many of the very talented people in the mortgage industry have left or are no longer working for companies that could provide them the programs and support that they need to be successful. Throughout all of this Cornerstone has continued to stay strong. In July of 2007 we had 17 loan officers. We now have 25 loan officers. We have added talent and with that talent we have added programs and tools to help you become a success or help your clients achieve their goals.

For the real estate community we are rolling out the Home Buyers Scouting Report. This is a tool to help you establish a relationship with buyers and incubate them until they are ready to purchase. For my professional partners we have one of the only second mortgage programs that goes to 95% combined loan to value. In addition to that we have the Equity Accelerator to help all of our clients save thousands of dollars in interest over the life of their loans.

I want to make sure that you know that I am here to help you and your clients achieve your goals. If you know anyone who has purchased or refinanced in last 3 years, please pass their information along to me so I can schedule a “Mortgage Fitness Checkup.” They may not need to do anything now, but it is beneficial to them that they begin to build a relationship with a trusted mortgage professional that can help them achieve their financial dreams!

Sincerely,



Christopher M. Scheer
Your Residential Lending Expert

FHA is the King!

As previously mentioned, the new economic stimulus package has allowed HUD to raise its maximum loan amounts for FHA loans depending upon the county of the property. For those in the St. Louis, Missouri area, that means we now can do an FHA loan for up to $281,250. The previous amount was $213,750, so that is a huge jump, almost a 33% increase.

So who can take advantage of this? You could spend days googling FHA loans to get all kinds of information about the FHA insured loan so I won’t waste you time covering everything. What I will do now is touch on the opportunities that I think will make the most amount of practical use for the clients that I see on a daily basis.

1) First time homebuyers: With the end of the conventional 100% financing (see previous post) now more than ever this will be the product of choice for first time homebuyers who have little or no money down. FHA requires a 3% down payment; however those funds can be gifted to the borrower from a relative. The gift does not have to come all from the same relative either. You can get part from one parent, part from another parent or their siblings such as an aunt or uncle and then you can get more from another relative. Thus on the $289,950 purchase price that the borrower needs $8,750 for a down payment, they can get that from various relatives or at least the part that they have not saved up on their own. They can also borrow the money for a down payment, as long as the loan is secured and has a repayment period of at least 5 years. That payment counts against their debt to income ratio, but makes borrowing against a car, a boat, a certificate of deposit or a 401K an option for coming up with all or some of the down payment.

2) Refinance to get out of an 80/20 loan. The second mortgages on these loans were priced higher than the rate on the first. Many people regretted getting them, but because of the change in Conventional guidelines, they were not able to refinance the loans since they owed over 95% of the appraised value. On an FHA loan, we can refinance them at 97% loan to value if we are paying off liens on the property. A great way to get those people out of 2 mortgage payments and into one at a FIXED rate.

3) Refinance for cash out. Both Fannie and Freddie have made it darn near impossible to get approved for conventional cash out loan over 80% loan to value. First your FICO score has to be over 720 and then good luck getting mortgage insurance on the loan. With FHA we can go to 95% loan to value and thus help get people out of the credit card debt or other challenges that are overwhelming them. It will also allow people to borrow money to improve their property, which in the near future will be a key to helping people hold their property values.

These are just a few of the ways the FHA loan can be used. For comments or questions, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.224.9824.

Downpayment Assistance Rule

For the past few years, FHA has allowed charitable non-interested parties to supply the down payment to a borrower on FHA loans. Unfortunately, this practice caused housing prices to be inflated as the seller would raise their price and then contribute the increase to the charity as a donation. The charity would then give a gift to the borrower and thus have the down payment for a home with an FHA mortgage. The challenge is that the borrower had no vested interest in the house and when times got tough it was easy for them to walk away since they would be losing nothing other than a home with an inflated price. Selling the home was difficult in a flat or declining real estate market. This practice is one of the logs on the bonfire of the mortgage industry that is burning across our nation. Here is the latest on this practice:

FHA will issue official guidance regarding implementation of the regulation regarding a mortgagor’s cash investment. In the interim, to address the questions raised by many industry partners, FHA is providing the following information:

1. Nehemiah Corporation of America, due to a previous Settlement Agreement and as discussed in the rule, is granted relief from the effective date of the rule until April 1, 2008.

2. HUD has agreed to grant the AmeriDream Downpayment Assistance Program relief from the effective date of the rule until February 29, 2008.

3. All other similar downpayment assistance providers have not been granted relief from the effective date of the rule, which is October 31, 2007.

Provided that the homebuyer has entered into a contract of sale (including any amendments to purchase price) on or before October 31, 2007, FHA will recognize the gift if made to the homebuyer and properly documented as an acceptable source of the downpayment.

To read the final rule in its entirety and for more information please visit: http://hudclips.org/sub_nonhud/cgi/pdf/4846a.pdf

For questions or comments please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

The Dark Side Part 2

So how do you avoid the “Dark Side?”

Let me first say that I believe that everyone should have the opportunity to make money. The Mortgage Industry is a great place to earn a living, provide for your family and help people make dreams come true. However, with every industry there are always people who are in it only for themselves. These people prey on others who are less educated, less intelligent and sometimes less qualified. When they do, they usually abuse the system, creating large incomes for themselves while staining the reputation of their entire industry. Not to mention that the people who are usually their prey are the people who need to have a lender who will treat them fairly as opposed to taking advantage of them.

Once a “B” always a “B”. When the sub prime lending market was in its beginning, there were borrowers who would not qualify for the “A” paper loans. On more that one occasion I would hear an account rep say that “B” borrowers don’t change their habits and they don’t learn their lesson. That may be true about some people, but I believe that people can learn to manage their credit and they can learn to manage their finances. All they have to do is have an honest chance!

So what is an honest chance? Well it is putting someone into a loan program so that they can develop a budget off of. It is creating a mortgage solution that will not penalize the client in a short period of time. It is not gouging them in fees when they do come back to you eating all of their equity up with refinance fees. It is treating people the way that you would want to be treated.

As we see mortgage delinquencies rise and foreclosures happening at an alarming rate, there is a change that must take place. But it is going to have to be consumer driven. Legislation is not the key. Education of both the consumer and of the mortgage sales people will be the basis of this revolution. The consumer must learn not to fall into the trap of working with people who spend tremendous amounts of money on advertising. Mortgage originators need to learn that if you are going to stay in this business for a career, relationships are a necessity. To nurture those relationships you must take care of people so that they want to come back and refer other clients to you.

Thank you to Tracy Nolan for referring Andy Revelle.

Thank you to Andy Revelle for referring Joshua McDowell.

Thank you to Klaus Bank for the referral of Sarah Stroup and Pete Wilkens.

Thank you to Libby Emmer for referring Rob Steinkuehler.

Mortgage Fitness Checkup

When was the last time you had a “Mortgage Fitness Checkup?”

For most people, their house is the single largest investment that they will ever make. In most cases it is also the single largest amount of money they will ever borrow. In addition to that, each and every day they are bombarded with advertising from companies trying to get them to refinance their first mortgage, second mortgage and in some cases even a third mortgage. Why is it that the majority of these people don’t invest the time to visit with their professional mortgage banker or broker to review their mortgage. If life happens, and it does for most of us, don’t our plans, goals and family situations change on a regular basis? All of a sudden the spouse wants a pool in the backyard. They want the basement finished. They want to go back to school to get a better job. Their company is planning on moving its headquarters and that may mean a career change. No longer are we dealing with people getting a 30 year fixed rate loan and paying all 360 payments to pay the loan off.

Most people are keeping their mortgage for an average of 3-5 years, even after the last refinance boom that ended in 2003, over 65% of the people who refinanced or purchases during 2002-2003 have refinanced or will refinance all or part of their mortgage in the past 12 or the next 12 months. Why is that you ask? Two reasons: the first being that many of those people took advantage of the historical low interest rates and financed into adjustable rate mortgages which are now coming up on their first adjustment period. The rest are people that I have previously mentioned, life happened to them and they decided to act. It is that simple. So what are the benefits of a “Mortgage Fitness Checkup?”

Benefits of Mortgage Fitness Checkup

• Determine clients’ current financial goals pertaining to mortgage payment.
• Review interest rate with current market.
• Discuss new programs that have been introduced in last 12 months. Educates borrower to help them from falling prey to the “Dark Side.”
• Prepares potential buyers for upcoming opportunity to purchase.
• Prepares potential investors for the opportunity to build wealth through real estate.
• Prepares current homeowners for possible moves, including assisting in developing strategies to maximize equity in current home.
• Provides credit theft screening.

How long does it take to complete? Depending upon the clients’ questions, a Mortgage Fitness Checkup can take as little at 10 minutes or up to 1 hour if the client wants to spend time strategizing ways to create wealth by using their mortgage as tool. For more information on the Mortgage Fitness Checkup, contact Chris Scheer at 314.223.9824 or chrisscheer@firstintegrity.com.

Special thanks to Bill Cooper of XO Communications for the referral of Sonya Kennedy. Also thank you to Amy O'Brien of Agape Construction for the referral of Juhn Mendin.

Why a Blog?

Why a blog? After having tried many things to market myself and my services over the years, the single most successful way that I have found is word of mouth. I have built a business on referrals and taking care of the people who have placed their trust in me and my ability to help them achieve their financial goals. I have toyed with the idea of creating a Myspace.com web page for a while; however I never took the time to pursue that marketing concept. Recently I had the chance to see Ben McConnell speak on “Citizen Marketers.” http://www.creatingcustomerevangelists.com I was overwhelmed by the power of the web and how one person speaking out can create either a positive or negative image of a brand or company. With that type of power at my fingertips, I knew that I had to take action and do something. Since I tend to have random thoughts that flow through my mind, creating a blog seemed like a good way to help me put those thoughts down on paper. Giving me an opportunity to toss out the bad thoughts and build on the good ones. So here it is, coming to you at the speed of the internet. The rambling thoughts of a professional mortgage banker who is looking to create a positive buzz about the service he provides.

Personal Mission Statement

My mission is to touch the lives of all I meet in a positive way.

As your Mortgage Banker I will:

• Help you find the right loan for you at this time for your financial goals.
• Return your phone calls and e-mails in a timely manner.
• Attend or have someone from my team attend your closing to ensure a smooth transaction.
• Provide an annual review (Mortgage Fitness Checkup) of your mortgage with you to help you stay on track to achieve your dreams.

I am not promising the world, only promising to do the things that each and every one of us would like to have done for us. It seems to me that my parents beat that “Golden Rule” thing into my head as a child.

A special thanks goes out to Jack Ortbal of Concord Bank for the referral today.

By the way, if you know of anyone who can benefit from this type of service, I am never too busy for a referral from you!