Mortgage News: From Linda Todd

With all of the recent fight in making lending more stable without as many risk factors involved as we can see from the past; is not much that has not changed regarding how all loans are made. That includes how banks make personal loans, commercial loans and secured loans; not just mortgage lending. Regulators have been working overtime to try and make sure solvency exist within all areas of finance. We have been informed by the government and we know from our own knowledge; that the process still isn’t finished and that we still has a long road ahead for securing a rise to stability for the economy at this point in time.

Mortgage News from Linda Todd

When the regulators changed the rules for disclosures; which included the Good Faith Estimate (GFE) and HUD1 (closing statement); it affected all lending institutions, the consumer loans/banks as well as mortgage finance and that included how loans are made, when and what specific disclosures are given and how they must be completed. No one is given special exclusion. At this point in Mortgage News the GFE and HUD1 are being examined again for change. This is to help make these documents more easily understood for the consumer by intertwining and making both documents as one document. With this articulation; changes are still in process to try and make it much easier for consumers to understand the full cost of the loan; but is receiving detestation by mortgage professional as making matters only worse.

That said; the new Risk Retention Law has received some criticism also from, not only mortgage professionals, but the FDIC’s Chairman, Sheila Bair who has been designated as front speaker for the regulators involved in clarifying the Risk Retention Law. This law entails the 5% retention by lenders for loan which have a loan to value greater than 80%. This means that more mortgage applicants would need a 20% down payment and a debt to income no higher than 28/36%, for the lender to be exempt from that retention. Ms Bair has indicated that since FHA, USDA, VA and Fannie Mae/Freddie Mac are exempt from this law at this time; it appears unfair for those consumers who do not have a 20% down payment or income ratios mentioned. This would create a variation in loan pricing by the agencies for those loans that did not meet the specific criteria and make those loans more expensive for those without sufficient funds or income within the required range.

Included in Mortgage News is that Real Estate Agents and Loan Officers are calling for more flexible method of examining loans for first time homebuyers. It is frightening to these professionals to think that all homebuyers must have a 5% investment when purchasing a home. FHA has tightened up their guidelines in many aspects concerning processing new loan applications. They are beginning the talks of making changes to the down payment structure of these loans to be more uniform with conventional lending at 5%, instead of 3.5%.

Since Congress is the beginning of all talks on regulations and mortgage changes and the effort of stabilizing of the housing market; we have to wait and see if these changes will become law and then generate more Mortgage News.
News crossed the wires yesterday that Fannie Mae’s Economist did not restore our faith that the economy is improving and actually indicated that mortgage applications are not getting better and in fact May had a fall with another expected in June; while pending home sales dropped another 12% in April. The terms used were; we are in a mortgage rut and the forecast is not good. This is not the best Mortgage News we would like to hear regarding stabilization of our economy. It is stated that unemployment is one of the main issues regarding stabilization of the economy and the housing markets. When people get back to work with stable income and a feeling of security; the economy will become more stable, but until then here we sit in limbo and hopefully our next mortgage news will find us in higher spirits.

Property Investment Golden Rules

Holding on to an investment property can be a truly traumatic experience. In a volatile, neurotic property market, it can be genuinely scary. In a falling market, it’s just grim. The truth about property investment is that it isn’t and never has been a "get rich quick" market. It’s a "get rich over time" market, and time is the key to holding investment properties.

                               
It's possible to make good money in a short time with good property investments. On average, however, the time factor tends to extend. Some investments are better than others, and some perform much better than others in their markets. There are quite a few factors which affect property investment, but the key factor is the ability to hold properties to get a good return on your investments.

Holding a property

To hold a property means that you are able to maintain ownership of the property. Several factors, usually financial, can sabotage holding. Mortgages and costs can conflict; meaning your hold on the asset can be compromised simply by cashflow issues. The simple fact is that if you’re holding a property, you’re holding a significant asset which may need to be brought into play to deal with financial issues when times get tougher.

The rule, therefore, is to hold a property that you are certain you can hold without financial impacts in order to realize the best returns on that property. That can be a period of years and can involve multiple market scenarios, so this is no minor issue.

Holding a property is very like a business textbook exercise- That’s because to all intents and purposes, it is one:

Holding a property involves:

• Being able to meet costs like bills and rates as they fall due
• Maintaining good control of the finances required to operate the asset
• Ability to service and maintain properties appropriately and in a timely way
• Full servicing of debt payment obligations

This may seem pretty straightforward. Consider, however, what would happen if you weren’t in a position to do these things. Bizarre as it may seem, the "forced sale" of investment properties is often triggered by not being able to meet these criteria.

The result, predictably enough, is usually a loss, and occasionally a catastrophic loss. The usual cause is that the investor has over-extended their borrowing, or miscalculated the costs of holding the property. The end product can be a train wreck.

How to make absolutely sure you can hold a property

Everyone knows how to use a calculator, but everyone can also still get the wrong answers using them. You really don’t want to be guessing about your ability to hold a property. The best, and definitely the safest, option for investors is to get some professional help in their investment acquisitions.

Professional property investment advisors factor in the holding costs of acquisitions of property investments. They can also provide information about cost offsets, tax benefits, and other legitimate cost management options.

Talk to a professional property investment advisor, and you’ll get the information you need about holding your property. You’ll also get a priceless lesson in property investment management.

Is a Ph.D. Worth the Investment?

Doctorate programs take years of study, and in the liberal arts field, may cost significant amount of money to complete. So is it really worth it? The Economist notes that 64,000 doctorates graduate in America per year. This means as a nation we must be getting smarter, the only problem is, there are not jobs enough for all of these graduates.

                             
People who have attended Ph.D. programs usually have been trained specifically for work in academia. After four years or more of intensive study in a narrow field, the skill set they have learned tends to be very specific. The corporate world, however, usually does not consider this a substitute for years of working in business. Thus, if a graduate plans to work outside of academia, their time and energy may be better spent climbing the ranks and growing earning potential, rather than living off a teaching stipend of $20,000 per year, only to graduate with uncertain prospects.

Similarly, academia has its own money problems. When it is cheaper to pay graduate students and postdocs to teach undergraduates and conduct cutting edge research for a salary of $20,000 to $40,000, it just makes fiscal sense to cut back on full time staff. Likewise, as tenured professors are dying off, the concept of tenure is dying with them. Thus, many doctoral candidates can see the writing on the wall. The dropout rate is high, debt is high and the earning power of such a degree in the liberal arts, unlike in medicine and law, is only marginally higher than a bachelor’s degree.

The government talks about everyone needing higher education, but flaws in the system prove it is just a pipe dream. Ph.D.s should be valued as proof of a person’s dedication, rigor and accomplishment in a field, but post-school careers rarely reflect this. Still some people need Ph.D.s to succeed in their fields, but it takes some number crunching and acceptance to a good institution before a student should commit to the pursuit.