More than one-quarter (27%) of American homeowners say that the current economic environment is causing them to put their plans to buy a new or existing home on hold, according to (pdf) a new Ipsos Public Affairs poll conducted on behalf of Realogy.

Among those who are most likely to say they are putting off a home purchse because of the financial crisis:

• Non-white homeowners (46%)
• Homeowners under age 35 (38%)
• Parents with children under 18 (33%)
• Those with a household income of less than $50,000 (33%)

Are you one of these folks? Just curious.

Mike is THE MAN Shailesh and I have gone to for mortgage advice, input, information, help and coaching in the last 4 years. He is amazing. Not only does have a TON of experience and knowledge (over 20 years in the industry), but he is actually a great guy. Someone you’d want to hang out with after work and have a beer with.

So, without further ado… I interviewed my new partner, Mike Moshofsky for this blog to better introduce him to the online community.

Question: What makes you different from other lenders?

Answer: I am different from other lenders because of my knowledge, experience, integrity and work ethic. I personally have over 25 years of mortgage experience and a thorough knowledge of mortgage lending including FHA, VA, USDA Rural housing and conventional financing.  This experience and knowledge helps me identify potential problems early in the process and avoid these problems or solve them so we don’t have last minute surprises.  I believe in sprinting to the finish line and waiting for everyone else. Stress is eliminated when my documents are delivered to title well in advance of the close of escrow.  This makes happy buyers, and brings repeat clients and multiple referrals.

What characterizes you?

Integrity and honesty are my strongest characteristics.  The agents I have worked with for years know  they can count on me every time.  When I say something will happen they can rest assured it will.  My goal is to provide my agents and clients a quick approval that they can count on.  However, I believe a fast “no” is better than a slow “no”.  If a transaction has no chance, everyone would prefer  to know on day one, and not on day 31.

What about your work ethic and loyalty?

I work long hours Monday through Friday and am typically in my office working for my agents and clients from morning till night.  I am not the loan guy that spends all his time getting new agents and clients only to mess up the transaction so they have to go find other referral sources.  I want to take care of the referral sources I have.    That is my idea of a marketing plan.

What are some of your motto’s in this business?

A fast No is better than a slow No.

Under promise and over deliver.

If you think it is expensive to work with a professional, wait until you find the cost of working with someone that is not.

You have to know what you don’t know.  If you are not positive on an answer, get clarification.  Guessing is very expensive.

Never, Never, Never miss a close of escrow.

What advice would you give potential home-buyers and their agents when they are hunting for a mortgage professional?

There are many excellent loan officers out there.  The problem is there are also many unqualified loan officers and it is often hard to tell the difference.  Many sound great, but do not deliver.  My advice is to ask your Realtor for a referral of someone they have had positive results from in the past.  The Real Estate Agent wants you to work with a professional that consistently delivers quality service at a competitive price.

What do you love about this business?

I love figuring out ways to close mortgages that other said were impossible.  I love dealing with first time homebuyers and their energy and excitement when they get the keys to their first home.

What do you hate about this business?

I hate the fact that there are so many non-professionals in the industry.  I believe we need to have licensing, required training and be held to a higher standard.

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I look forward to working with Mike during this time of change for me and my family. I plan on working until the day I give birth and then afterward will take some time off. I will be accessible through eMail a few weeks following the birth, but will not be back in full time action until 2 months. I really appreciate Mike stepping in and helping out during this time.

What do these loans look like? Well, let’s say you are a Canadian from Toronto.  The bank will need a minimum of 20% down, a clean Canadian credit report (with nice high scores, of course!), and your tax returns for the past 2 years. It is a full documentation loan, which means the bank checks your income and assets to make sure all is still current. Your debt ratio cannot exceed 41%. In other words, all of your debt, including your home in Canada, credit cards, note loans and new Arizona home cannot add up to more than 41% of your total income. Finally, you will have to have your down payment in a US bank account.  The rates on these loans are surprisingly low…right on par with the 30 year fixed conventional rate.

I am delighted that there are banks still financing Foreign National loans. Though they may seem risky on the one hand, these mortgages contain borrowers with top credit scores, excellent assets and residual income. These are the folks banks want to lend on. Thankfully, they still are!

And…kudos to the Phoenix Real Estate Guy, Jay Thompson, who was a big factor in us uncovering one of these sources and realizing we had not exhausted our options!

Question: Well, we just received a notice that IndyMac, who we have a second mortgage with, closed it’s doors. They kindly sent us a notice that they are working with Wells Fargo to offer help refinancing our loan. My concern is this, if we have to go through a “regular” refinance, there is no way we would qualify with our credit being in the dumps. It’s obvious they aren’t transferring our loan to Wells Fargo, but just offering help to refinance. So I’m concerned. I don’t see how they can do that. When calling the Wells Fargo number they provided, I couldn’t get through to anyone. I’ll try again tomorrow. I would appreciate any advice.

Thanks,

Jen

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Dear Jen,

Sorry to hear of the difficult situation you’re facing. Hang in there. Each bank has different rules to an extent on how they are dealing with the current troubles so I can’t comment on exactly what you’re facing. However,  here is what I know:

1. A bank can not force you to refinance in the sense that they can not call back a loan unless you’ve violated some very serious terms. Even then it would have to be pretty bad. This is a rule dating back to the aftermath of the Great Depression. If banks could call back mortgages - in today’s climate - 50-60% of folks would lose their homes - since the vast majority are not in a position to pay back their home loans on short notice without selling the house.

2. Banks can sell the servicing rights - in which case the terms of the loans remain unchanged but only the loan is transferred to a different lender. This doesn’t require you to refinance.

So, with that - I am not sure what exactly Indy is trying to do. I would try to reach someone there and ask them exactly what they are talking about.

I don’t know what else to say really.

Hope that helps. Good luck Jen!

Hat tip: WhatDoesThisSongMeanToMe blog

I am very sad to have to announce that as of about 90 days ago, we no longer offer mortgage financing for Canadian Nationals, or any foreign national, for that matter.  We have waited a while before announcing, hoping that perhaps some programs would pop up in the meantime. Sadly, they haven’t. Once we could offer 2nd home and investment property financing to non-Americans who live abroad. As long as you had a good, solid 30-40% down and could prove you had income in your country, we were good to go.

Now…well, things have definitely changed. As so many of our veteran mortgage professionals quip…it is back to lending in the 80s. The basics.  If you are a foreign national, here is what you will need to buy a home here.

• A valid US Social Security Number
• A valid, long-term visa
• Established US credit
• US income

Essentially, you need to be immigrating.

On a quick side-note. What does established US credit mean? Once you have lived here for at least 6 and ideally, a total of 12 months, and for the entire duration have used 3 credit lines on a consistent, monthly basis…then you will be be good to go. In other words, the agencies will begin reporting a score and your credit is established.  Of course, be sure to make on-time payments and keep those credit card balances to less than 50%, or ideally…less than 30% of the maximum credit limit. This will ensure a top score. Oh…and some examples of credit lines: car loan, credit card, store credit card, note loan, student loan, etc. Remember, power bills, gas, electric and rent DO NOT report to the credit agencies.

To get back to our Foreign National financing, however. If anyone out there does know of ANY lender offering financing to Foreign Nationals, please let us know. We have so enjoyed servicing our Canadian Nationals and would love to do so again in the future! Until then…it is back to the basics.

The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults — the very misfortune that touched off the credit crisis last year.

The result of homeowners being “under water” is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.

And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home’s value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.

A brief snapshot of the state of home prices in major metro areas. Our own Phoenix has seen a 28.9% drop in home value since the peak (June 2005):

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You have pre-paid interest as part of your closing costs at the close of escrow. This is essentially your daily interest rated times the number of days remaining in the month. So, if you close in the 16th of the month (in a month with 30 days), you would have 15 days of interest due at the end of that month. Instead of asking you to make a payment that month, lenders will just ask you to pay upfront at close. This results in your first mortgage payment being due the 1st of the following month. So, if you closed on September 16th, your first payment would be due November 1st.

However, there is a feature called interest credit - where if you close within the first seven days (varies from lender to lender), instead of charging pre-paid interest the lender will give you an interest credit back for the number of days in the month. So, if you closed on the 4th - you would get four days of interest credit back at close. This of course results in you having to make your first mortgage payment at the end of the month. So, if you closed on September 4th and you received four days interest credit, your first payment would be due October 1st. A whole month earlier than in the prior example.

Be aware that you do have a choice on whether or not to accept an interest credit - but you need to mention this to the bank. Either way you’re paying - whether it is at close or in the form of a mortgage payment, but you need to be prepared. Purchasing a home entails lots of charges, so its easy to run into a cash flow problem if you are closing at the beginning of the month and your first payment is in a few weeks. The first payment is not one you want to miss - not that you want to miss any payment at all.

photo credit: Santhosh Janardhanan

Greetings Blog World. Aimee G. here, taking over for Shailesh.

I have some big shoes to fill, but alas… having techno-savvy Shailesh quite accessible, I imagine he will surely continue to be a part of the evolution of the AZMortgageGuru Blog.

I look forward to journeying with you into the depths of the mortgage universe and hope to offer practical tips, sound advice and solid education to those of you just itching to know more. Thanks for your support!!

I will let you know that even when I was the main writer for this blog, Aimee was the one who provided me with many of the ideas. So, this world is not entirely new to her. Also, since she has always been on the front lines - dealing directly with borrowers and their needs, she has a great feel for the type of issues being faced in today’s mortgage market. I have a sneaky suspicion this blog will be more than a hundred times better than its ever been! Which is to be expected from such a high caliber professional like Aimee.

Since the changes at CTX, Aimee has moved on to PrimeLending in Mesa, AZ. You can learn more about her at the “Meet Aimee” page on her website.

Please join me in welcoming Aimee to the blogosphere (or blogiverse, which ever you prefer to call it). I’ve told her many times that she’s going to meet some amazing folks by blogging and I hope you’ll show her that I wasn’t exaggerating.

So, take it away Aimee. It’s all yours!

Eighteen months ago, U.S. Treasury Secretary Henry Paulson told an audience at the Shanghai Futures Exchange that China risked trillions of dollars in lost economic potential unless it freed up its capital markets.

“An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention,” Paulson said.

Promise to the American people:

“We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself,” - Republican Party Platform, 2008.

Today’s Reality:

Ad on New York Times, paid for by Bill Perkins