The original mortgage industry blog. Helping good loan originators become great loan originators since 2005.

More than a year ago, one of our congressmen made a prediction. He said that he wouldn’t be surprised to see the national debt rise in one year by three-quarters of a trillion dollars — a $750-billion-dollar prediction. Now the bailout is a reality. The prediction is made at the 1:49 mark of the clip at the end of this article. Around the 6:45 mark he says that the situation will end badly in a worldwide economic crisis.

Many of us feel that economics is too big a topic to wrap our minds around. The financial system is “too big” and “too complicated” to understand, so we just throw up our hands and move on to the next fire that needs to be put out in our own little world. Each of us has a part to play in the financial system, and it is time that we put some emphasis on the macro in addition to the micro. Most of us have been completely focused on the microeconomics of our own lives (our retirement plans, income this year versus last year, car payments and the like) versus allocating some of our focus to macroeconomics, which is looking at the overall economy. Americans are willing to put pencil to paper to figure out if it makes economic sense for a spouse to work or stay home with the kids, but few of us pay enough attention to the economy at the aggregate level.

This congressman’s prediction shows that it is possible to see what lies ahead, in a general sense. Some people in the private sector knew what was coming too. I saw a news report about a hedge fund guy who made hundreds of millions for his fund because he bet that there was going to be trouble in the mortgage market. Americans need to demand more of themselves. We cannot leave it to other people to be financial experts. If we leave it to others to mind the store, we should not be surprised to have the inventory not match the ledger book when we return.

As Americans, we need to be more and do more. News is great, but let me ask you this: how many 30-minute news broadcasts have you watched in your lifetime? I bet plenty. Now, how many times have you read the Constitution in your lifetime? Hmmm … probably not enough. Interestingly, it only takes 30 minutes to read the Constitution — the same amount of time it takes to watch the news. Reading the Constitution isn’t just for academics and Supreme Court justices.  Moreover, economics isn’t just for economists. It’s a job for you and me and every other adult American.

Watch the video

by Wade Young

One of the biggest reasons for changing the format/theme on lenderama this summer was to provide a more effective way to serve up advertising without filling the blog with a tower of banner ads. I’ve been using this space to advertise REBlogWorld, but with a year to go before the next event, I’m officially opening this space up to advertisers.

In addition CPM buys for the banner ad space, there’s an EXTREMELY affordable opportunity available in the form of a second text add like the one Leads360 serves up. I offer this add at a very low price because it’s easy to manage an annual billing.

For full details, check out the Advertise on Lenderama page.

The FHA Reverse Mortgage (Home Equity Conversion Mortgage or ‘HECM’) is now, just about, the only viable reverse mortgage program out there.

First, in April, it was Bank of America’s jumbo reverse mortgage to be suspended; then in June, Financial Freedom stopped funding their Cash Account program; in September Gold Reverse pulled their fixed rate jumbo program.

These developments leave only World Alliance Financial’s Equity Plus Advantage (EPA) as the last remaining jumbo program – albeit at a 5.0% margin on top of LIBOR and at dramatically reduced LTV’s in most high-cost areas. I’m trying to get one funded right now in Los Angeles, where they cut the appraisal by 45% (cutting the loan amount by the same). If you have heard of any other viable jumbo programs, please comment!

But, as any of these lender’s wholesale reps will be quick to tell you, the FHA reverse mortgage limit is being increased to $417,000, with a projected effective date of November 1st. This amount is up from $362,790 in high cost areas. The FHA limit, in the reverse mortgage world, is the amount of home value that the lender will recognize in calculating how much money is available to the borrower at closing. If the senior’s home is worth $450,000, the value above $417,000 is ignored. If senior’s home is worth $350,000, then the increase in the loan limit does not help them, because the old limit was high enough already.

While the increased limit is not panacea, it will help many seniors whose homes are worth between $400,000 and $600,000 who may have owed just a little too much on their home to qualify for a reverse mortgage. Run the numbers in a reverse mortgage calculator after November 1st  to see how it would work for a particular scenario.

Luke
Reverse Mortgage Pro

Dan Gilbert, Chaiman of Quicken Loans, the nation’s largest online loan originator, spoke out today on his opinions reguarding the financial bailout. I’m still of the mind to let it burn, but Dan’s ideas make more sense that what our government has come up with.