Florida Mortgage Report

Just How Lacking is Your Mortgage Professional?

I don't like saying someone is lacking, although I will talk about how some think.  This email I received simply offers no other alternative and speaks volume about his incompetence (I added my comments on this within the email)...

I just wanted to send a quick e-mail to let you know that the Federal Reserve dropped the prime interest rate by .75% Basis Points yesterday.

This doesn''t (hit the right key or spell check maybe?) mean 30 year fixed rates have dropped that much (correct), but does mean 30 year fixed rates have gotten better by .375 to .50% today (WHAT?!?!?!?!?  The Fed cut does not have that kind of effect at all on mortgage rates!!!!). If your rate is over 5.75%, you have to call today!!! You may be able to save a few hundred dollars per month.

Opportunities like this don''t (same screw up as before) come up that often. Secure your rate today!!!

I''m (third time - wow) here to help you (yeah, and your knowledge and expertise demonstrated that, right?) and if you mention this e-mail, I will give you a closing cost credit for the price of your appraisal for going through me to help you with these great savings (that should get me to rush right over).

Thank you!

XXXXX X. XXXXX
Colli Mortgage LLC.
Waterside Office Park, 56 Main Street
Windsor Locks, CT 06096
P: 860-254-5824
F: 860-254-5835
C: 860-670-6131
mailto:xxxxxx@collimortgage.com

TO UNSUBSCRIBE:
You are receiving this subject matter because you requested updates from Colli Mortgage (I never signed up for something from you so where did you get my info?). You are subscribed with the E-mail address: rashby@solidrockmortgage.com (please note that you are sending this spam to a MORTGAGE PROFESSIONAL as the email address indicates). If you prefer not to receive information from Colli Mortgage please Click Here.  (what and miss this awesome display of advertising?)

YOU MAY ALSO CONTACT US AT:
Colli Mortgage
56 Main Street
Windsor Locks ,CT 06096
877.866.3390
leads@collimortgage.com (interesting email address, am I just another "lead")

I know I am ripping on this poor gentleman, apparently a mortgage business owner trying to survive in this market.  The point is not so much to rip on him, but rather to point out that there are many mortgage professionals out there still that are not worth working with.  They lack knowledge and expertise and show it in their communications, so prepare yourself by doing your research and attaining the knowledge to know when you are dealing with an expert.

Your mortgage professional should know what drives mortgage rates and it isn't the Fed or even the 10-year note.  Your mortgage professional should not be even marketing to you unless you asked for it (be careful where you ask as your name will get sold to everyone).  There are certainly more things your mortgage professional should know and do, but you get the idea. 

And if you are a mortgage professional, take this example as a way to learn from someone else's mistakes.  Also, don't use "leads" as an email address as it is indicative of lack of customer service.  Remember that any email or advertising is portraying your image, and that of your company.  Ask yourself if you would do business with you based on that email (be honest). 

(Update:  One scary thing that should help drive the point home is that this person claims to be a mortgage planner and able to integrate your mortgage into your overall financial plan.  If he doesn't even know what drives mortgage rates, how can he do that?  Be careful who you are working with.)

Money Merge Accounts: My Sincerest Apologies to Those With MMAs

I have some regret that I have to admit to about these programs.  I feel like I failed consumers by allowing them to be misled for far too long.  The truth of the matter is that I have done some more calculations, many of which I should have done back before I even posted my first blog about the subject way back in February 2007.  The bottom line is that I have now done those calculations and it is time to let the truth out.

Once again, I have simply taken the information from United First Financial's own presentation on their Money Merge Account™ program and run the numbers.  Then I ran them again because I couldn't fathom the results.  Being as skeptical as I am, I just couldn't believe the results, so I ran them more times and was absolutely astonished at the results.

Over and over again, the results came back with a very clear message:

"MONEY MERGE ACCOUNTS ARE A COMPLETE WASTE OF MONEY AND WILL ACTUALLY COST YOU MORE MONEY NOT SAVINGS"

That's right, and I am sure those UFF agents will want to argue this left and right in trying to defend this product (after all, they want your money), even saying that it's benefits found in the "sophisticated algorithms" go above and beyond the benefits related to the primary mortgage payoff, including that of being able to see the true cost of a purchase (cost plus interest over time, or cost of not investing elsewhere).  Try as they may, their own presentation shows its real value, $0.00, actually it costs you.

Here are the calculations once again and how it proves the Money Merge Account (MMA) actually prolongs the payoff and costs you basically its full price tag:

Mortgage:                    $200,000
Interest Rate:                         6%
Loan Type:               30-Yr Fixed
Discretionary Income:      $1,000

Quick recap:  The United 1st Financial presentation's claim is that the MMA program will pay this mortgage scenario off in 10.4 years and the program costs $3,500.

OK, here is where my calculations changed.  All I did was add the $3,500 price tag to the 2nd mortgage payment as extra principal, then simply added $1,000 extra principal (all the discretionary income) each month from the 2nd month going forward until payoff and guess what.  Well, since numbers don't lie, here are the results...

	UFF Presentation	$3,500 Extra Payment
Mortgage Payoff	10.4 years	9.92 Years
Investments @ 6%	$973,000	$1,023,307
Investments @ 8%	$1,231,000	$1,306,090
Investments @ 10%	$1,575,000	$1,685,967

Run the numbers for yourself, but the truth of the matter is this...MONEY MERGE ACCOUNTS WILL ACTUALLY COST YOU TIME AND MONEY!!!

The arguments that the sophisticated software will payoff over time don't hold water.

The arguments that the software can do a better job than you can on your own doesn't hold water either.

In fact, since you are making your mortgage payment every month already, all you have to do is adjust the payment amount on that check and that's it.  If you have recurring payments automatically, you never have to think of anything again.  YOU CANNOT GET ANY SIMPLER THAN THAT AND YOU WILL BEAT THE MMA according to their own presentation and facts presented.

So, tell your friends, family, anyone you come in contact with to prevent them from wasting their money on this expensive software.  They can do better.  You can do better.  Of course, I can help you employ strategies that create even more wealth, but this information will help you beat the mortgage acceleration programs.

So, again, please accept my sincerest apologies for not running these calculations and exposing these facts to all of you earlier.  I may not have saved everyone from buying these programs, but I may have helped a few people from being ripped off.

(Update for clarification due to some apparent confusion...1) The "2nd mortgage payment is the second payment on the primary mortgage, not a real 2nd mortgage.  2) I do not advocate simply throwing all of your money into your home like the comparison suggests.  Of course, if you have been reading my posts for any length of time, you would already know that.)

WIN Loses in Florida

Undoubtedly you have come across those late night infomercials telling you how easy it is to make money in real estate investing, and as tired as you were you may even have called to buy a product or attend a seminar.  Well, Whitney Information Network is now settling with Florida consumers who attended seminars and complained about the material presented.  The amount...over $1 million.

According to the Sun-Sentinel Article, Whitney used infomercials titled "Star Trader", "Wealth Builder Workshop", and "Focus on Foreclosure" to draw in audiences.  State regulators reported that over 250 consumes complained about being charged for rudimentary information, misleading testimonials, and being asked to pay thousands more for "advanced classes".

So, the next time you are up late at night and find yourself flipping through infomercials, do yourself a favor, go back to sleep!  While some may be good, the vast majority are on at that time for a reason.

For more details, read the article as it includes a toll free number to the Attorney General's office if you think you may have a claim.

Money Merge Account/Mortgage Acceleration Warning

I am posting this warning inform readers that there are more and more "mortgage professionals" and "real estate professionals" grabbing on to these programs as they are the latest "fad". 

Struggling mortgage and real estate personnel are looking for all kinds of ways to survive and that is never good for the consumer as they will get sold on a product that may not truly be in their bests interests.  The question is whether or not we will be hearing about these agents being "unscrupulous" years from now, much like those selling the Option ARM are today.

Anytime a "professional" sells a product simply for financial gain without knowing and understanding ALL other options and which is truly best for the client, the client gets screwed.  I can see this happening, particularly with the way United First Financial's Money Merge Account is being sold and it makes me sick.

Now, not all of the agents are doing this, but I have yet to see any one of their agents show a side by side comparison of other equity management strategies, let alone demonstrate the full expertise needed to do so.  Everyone that approaches me, stating these products are much better than other strategies has demonstrated their lack of knowledge of how money works, especially as it relates to time value of money and liquidity.

Again, don't take my word for it, do your own research.  But keep in mind these presentations are designed to sell the product with "oohs and aahs".  In particular, the Money Merge Account is simply software and can do absolutely nothing if you don't use it or you do not have the other tools necessary, which will likely mean you have to obtain a new HELOC, even if you already have one.

Use caution when trying to decide if these products are the solution for you.  Mortgage acceleration programs can be beneficial, but he software is not what generates the savings, rather it is the use of discretionary income.  I continue to see a lot of deception as it relates to selling these products.  Even if the program you select seems like the best solution for you, remember that it may not be as there are a lot of other solutions out there.

As I stated at the beginning of this post, THIS IS A WARNING POST.  I am not trying to prevent you from getting this type of program, simply warn you to do plenty of research and be careful.  Without a side by side comparison as it relates specifically to your situation, you cannot be guaranteed you are getting the best solution!

Foreclosures Hit New Record...Well, Duh

"The rate of loans entering the foreclosure process during the third quarter, as well as the percent of loans in the foreclosure process during that time, were at the highest levels in the history of the Mortgage Bankers Association's quarterly delinquency survey, the group reported on Thursday."

That is how the article in MarketWatch started.  This comes as no surprise to most readers as I have mentioned that foreclosures were going to get worse.  I have also mentioned that it wouldn't be just a "subprime" thing.

Guess what.  It isn't.  The more interesting numbers hidden in the new release is that of the percentage of prime loans, you know those with credit not worth screwing up. 

"Adjustable-rate loans are performing "much, much worse than their fixed-rate counterparts," he said. Subprime ARMs accounted for 43.0% of all new foreclosures during the third quarter, even though they make up just 6.8% or all loans outstanding. Prime ARMs made up 18.7% of the foreclosures started, and make up 14.5% of all outstanding loans."

First off, if Subprime ARMs accounted for just 43% of all new foreclosures, what about the other 57%?  Since virtually all subprime loans are ARMs, that would leave the vast majority, if not all, as Prime loans!

Let's also look at the numbers and find another hidden gem.  Total ARMs, including Prime, represent a total of 61.7%.  That means that over 1/3 of all foreclosures, 38.3% in fact, are fixed rate mortgages!!!!

That is a far cry for the facts the media and the government have been portraying.  They are painting the picture of a homeowner being foreclosed on because they have bad credit and are in an adjustable rate mortgage that will reset beyond what they can afford.

As is typical, reality is different as we can clearly see, around half actually have (or had) good credit and nearly 40% are in fixed rate loans!!!

"MILF" Sale at Spirit Airlines

Brian Brady talked about how sex sells in all industries, but talks about how sex has been used to sell real estate.  Well, in what Spirit Airlines is calling an oversight, like we believe that, the obscene acronym was used in a marketing campaign. 

Spirit Airlines claims it was marketing its "Many Islands, Low Fares" campaign and didn't think about the negative connotations surrounding the acronym "MILF".  "MILF", as bloggers pointed out in the offensive advertising, is a term used across the Internet to describe an attractive older woman.  You can guess what it stands for.

Did Spirit Airlines stoop to new lows (and I don't mean fares) or did they really make an "honest" mistake.  You decide, but it did generate a lot of "free publicity".