Friday, August 7, 2009

A little Friday humor... Thanks Rick!

Since it is Friday, I am going to close with the customary attempt at some modest humor. So get your best rap on to the tune of Phil Collins, just another day in paradise, or maybe Day Trader Paradise and enjoy your weekend singing the tune.

As I see no more rallies for the MBSI
take a look at my pipeAnd realize there's nothing left.
'Cause I've been floating with positions so long
That even my momma thinks that old locks are blown.
But I ain't never floated deals, that didn't deserve it.
Massive Sell-Off overnight?, you know that's unheard of!
You betta watch how ya tradin'
What stock rallies you fadin
Or your MBS gurus won't have room to talk.
I really hate the spread but I gotta lock,
As they buy stocks, I see myself in line for docs.
Fool, I'm the kinda LO all you fellows wanna be like,
Hedged my pipe in the nightSaying thanks to that MBS site!

We've been spending most July living in a trader's paradise...

We've been spending most our time living in day trader's paradise...
Look at the situation, this disconnected tradin'
I can't put out a decent quote, they keep raising the rates!
So I gotta be down with AQ and MG,
Too much CNBC watchin', got me chasing dreams.
I'm an educated LO with rebate on my mind
But even three eighths in my hand makes a gleam in my eye.
My pipe's all locked up bankers! I'm out of danger!
And my junior LO's got lock sheets so don't arouse my anger.
Fool, emails from Provi ain't but a day trade away,
Instead of living life do or die, I'll live to lock another day!
I'm at five point five now, will I live to see five point fo?
The way traders tradin' I don't know.

Tell me why do we
chase more Y - S - P.
When the ones who winAll trade on Wall Street?

Wednesday, August 5, 2009

What are the options if I owe more on my mortgage than the value of my home?

Navigating the Turbulent Mortgage Marketplace

Option 1
Continue making your payments on time and ride out the storm

Your lender cannot take your home away as long as you make your payments on time. Therefore, if you want to keep your home and you can afford your payments, you should do whatever it takes to continue making your payments on time. Although it is a hard pill to swallow, this is likely to be your best option because it is the most responsible thing to do and it protects your credit rating.

Even if you are experiencing other financial difficulties and you are faced with declaring bankruptcy, you are not required to include your home in the bankruptcy. For more information, check with an attorney who is familiar with the laws of your state.

Option 2
Stop making your payments and go into foreclosure

This is probably the worst decision you could make, but depending on your circumstances, you may have no other choice. Foreclosure laws vary from state to state, but here are a few things to keep in mind:

Foreclosures reflect very negatively on your credit rating and could preclude you from borrowing money through credit cards and car loans. In fact, if you become delinquent on your mortgage, this will likely have an immediate negative impact on the interest rates and terms of all your credit cards. Credit card companies typically have the right to increase your interest rates, close your accounts and/or reduce your credit limit as soon as you default on any other debt (including your mortgage).

Fannie Mae, which is very influential in setting the mortgage guidelines, has recently updated their lending rules to state that individuals who have gone through foreclosure need to wait anywhere from 3-5 years before qualifying for a new mortgage. This means that it will be very difficult, if not impossible, for you to buy a home and qualify for a new mortgage for at least 3-5 years.

Option 3
Try to modify the terms of your mortgage

Nearly everything in life is negotiable — this includes the current status of your mortgage. You could either hire an attorney or try to call your lender yourself and renegotiate the terms of your loan. Keep in mind that your chances of success are always better if you get an attorney involved. In that case, make sure to get references from the law firm of clients they worked with resulting in successful modifications. Remember, lenders would rather not have you go all the way through foreclosure if it can be avoided. In fact, after regulators took over the failed IndyMac Bank, Sheila Bair who is the Chairman of the Federal Deposit Insurance Corporation (FDIC) said, "We will very aggressively pursue loan-modification strategies for unaffordable loans to make them affordable on a long-term, sustainable basis."

Option 4
Try to sell the home on the open market as part of a "Short Sale"

A short sale is where a property owner sells property for less than what is owed on the mortgage. The mortgage lender is asked to approve the sale and forgive the difference between the sales price of the property and the remaining balance of the mortgage.

Consider this example:
$200,000 sales price
$250,000 mortgage balance
$50,000 difference that is forgiven by the mortgage lender

Understand the impact on your credit rating — a short sale has virtually the same negative impact on your credit rating as a foreclosure. Both short sales and foreclosures are treated as "settled accounts." In other words, the lender is settling with you and agreeing to be paid less than what they are legally entitled to receive. Therefore, you are developing a reputation for paying back to your lenders less than what you originally agreed to pay them, and this reflects negatively on your credit rating.

Understand the new Fannie Mae rules — depending on how your short sale is structured, beginning August 1, 2008, an individual who has sold a home as part of a short sale may not be able to qualify for a new mortgage for another 2 years!

Understand the tax impact — depending on the type of mortgage and property you have, you may be subject to income taxes on the portion of the mortgage that is being forgiven by the mortgage lender! If the forgiven mortgage debt is attached to your primary home and the mortgage balance itself was originally used to buy, build or improve your home, income taxes would not apply. However, unless you are deemed to be "insolvent," forgiven mortgage debt on second homes and investment property is taxed, as well as all forgiven debt on your primary home where cash-out loan proceeds were not used for home improvement.

Option 5
Consider a sale-leaseback or rent-to-own strategy

A sale-leaseback is where you sell your property to an investor (as part of either a short sale or traditional sale), and then you lease it back from the investor. This allows you to remain in your home without the trauma of having to move away and find new housing. The thing to be cautious of is that some variations of the sale-leaseback strategy are centerpieces in some of the so-called "foreclosure rescue" scams that prey on unsuspecting home owners. Before engaging in sale-leasebacks, consider the laws of your state, and make sure the transaction is properly and ethically structured to protect the interests of all the parties involved.

A rent-to-own strategy allows you to find a new home now and rent it from an investor with the option of buying the home at a pre-determined price at some point over the next two to three years. You would do the house shopping and find a home where you would like to live. The investor then buys the home, preferably getting a good deal by buying a home that is being sold short or through a foreclosure. You then sign two agreements with the investor:
Lease agreement that spells out the terms of the rent payments
Option agreement that spells out the predetermined price and terms under which you can buy the home from the investor at some point within two to three years

It is always advisable to consult with a Certified Mortgage Planning SpecialistTM (CMPS®) when navigating today's turbulent mortgage and real estate marketplace. As a CMPS® professional, I am committed, qualified and equipped to help you evaluate your options!

Jorge Merlos, CMPS®Integrity Home Finance10601 Civic Center Dr. Ste. 140Rancho Cucamonga, CA 91730(909)945-8621 direct(909) 945-8778 faxJMerlos@IHFinance.com
Standardizing the mortgage planning process through participation with the CMPS community of experts.

Wednesday, July 29, 2009

Can gift funds come from the seller, lender or other interested party?

Answer: The gift donor may not be a person with an interest in the sale of the property (seller, real estate agent/broker, builder, or any entity associated with them.) The exceptions to this rule are when parents are the sellers,or when the real estate agent is a relative.

Tuesday, July 21, 2009

Homebuyer Protection Alert!

Recent Federal legislation can impact your closing date. When completing your Purchase Agreement, even if you are prepared to move forward and close quickly, a more conservative timeframe of at least 30-45 days from the time of the contract acceptance would be a more realistic expectation at this time.

Listed below is information on two pieces of legislation that stand to impact your closing date, and a few bullet points that explain the reasoning behind and effects of each measure.

HVCC: Home Valuation Code of Conduct
HVCC was designed to ensure that appraisals are conducted objectively and without pressure from parties with an interest in the transaction. Under HVCC:

The appraisal and selection of the appraiser will be ordered by someone not directly involved in the origination of the mortgage. This could be either someone else within the mortgage company or a third-party appraisal management company.

A copy of the appraisal must be provided to the homebuyer/borrower no less than three days before closing.

The minimum time expectations for receipt of the appraisal should be a few weeks and not days. (While receipt of the appraisal may be received in shorter timeframes, conservative expectations are warranted.)

Communication between the appraiser and the originating mortgage professional is prohibited. It is imperative that the agents involved in the transaction be prepared at the time of inspection to offer supporting value information if warranted.

HERA: Housing and Economic Recovery Act
HERA was designed to ensure that the borrower(s) involved in the transaction are given accurate disclosure information (Truth in Lending Statement pertaining to Annual Percentage Rate or APR) regarding the loan they are applying for and adequate time to re-evaluate their decision to proceed in the event of any changes that would impact their costs to finance. Under HERA:

No fees may be collected for the transaction other than those for running a credit report at the initial time of application. Additional fees may be collected only after four business days.

Should the APR change by more than .125% on a fixed rate loan or .250% on an adjustable rate loan, the lender must disclose the new APR and the borrower must have a minimum of three business days to review the information before the transaction may proceed.

Items that can trigger re-disclosure requirements include a change(s) in the loan amount, closing date, loan program, any fees that impact the APR or interest rate from the rate indicated on the original loan application.

In cases where documents are sent by mail to the borrower related to re-disclosure of APR and/or providing a copy of the appraisal, anticipate six business days (three to allow for mailing and three to allow adequate time to review them) before a closing can occur.


Jorge Merlos
(909) 945-8621

Thursday, July 16, 2009

What is the Value of my Home?

Over the past few months many clients have struggled with the question of,
“What is the value of my home?”

This answer is as good as any in this market considering all of the foreclosures, short sales and
such going on. However; before you settle on a value number for your home, make sure you ask yourself WHY you are asking this question.
There are many ways to look at the so called value of your property!
Let me explain!
  • Are you considering selling your home? If you are, remember that your home will typically sell for an amount that a buyer is willing to pay you for it. No matter how much we all jump up and down, no buyer in their right mind – in this market - is going to pay us what we think our home may be worth.
  • If you are considering listing your home for sale, your best bet is to seek the advice of a
    professional “Realtor” ® before doing so. They can provide you with valuable information that you MUST have before deciding on the final listing price.

Are you considering refinancing? If you are, an appraisal will most likely be initiated with the transaction. The appraiser will give the lender, in the appraisal report, an opinion of what they consider to be the current market value of your home as of the date the property was

Couple of things about the appraisal:
1. You’ll most likely NOT agree with the appraiser’s value assessment. But, if the number
they come up with works, and you are able to proceed with a more favorable rate and
financing term, don’t get too bent out of shape with the value. It’s just an opinion.
2. You’ll most likely NOT agree with the comparables that the appraiser chooses. They
have strict guidelines that must be followed before a comparable can be chosen. One of
the most important being “recent sales in your most immediate area”. With all of the
short sales and foreclosures going on in most subdivisions, this guideline can be a real
value killer.

3. Once again, if the number they come up with works, and you are able to proceed with a
more favorable rate and financing term, don’t get too bent out of shape with the value.
It’s just an opinion; it’s NOT what you may be able to sell your property for at some time
in the near future.
Are you trying to dispute your property’s tax assessor’s value? Typically, the county “Tax Assessor’s Office” assigns an “Appraised Value” to your property.This value or number is used to calculate your annual property tax. It’s not a number that should be used to list your home for sale. Nor is it a number that a lender is going to use to consider lending you money on the property.
If you’re looking at the tax assessor’s property valuation and thinking, “Man, there is no way my home will sell for this amount”, then you may want to consider filing a dispute valuation with the taxing authority. Be prepared to fill out the necessary paperwork and provide them with evidence to support your claim. Be prepared to stand in line along with all of the other
thousands of property owners that are currently disputing their property value.

Are you trying to determine if you have enough homeowners insurance? If this is your goal, you really need to call your insurance agent and let them help you with this. At a minimum, you want to always make sure that your home is insured for at least 100% of
it’s estimated replacement cost. Replacement cost is not:

1. The market value of your home.
2. The home’s purchase price or the cost of the land.
3. The outstanding amount of your mortgage.

Make sure your insurance agent explains to you the difference between market value and
replacement cost for insurance purposes. You don’t want to find out the difference between the
two when it is necessary to file a claim with your insurer.

Are you considering buying a home or making an offer on a property? Make sure you talk to your realtor before deciding on this number. They can tell you what similar homes are selling for in the neighborhood, how long houses are staying on the market, and tons of other important information that MUST be considered.

Are you looking for general home sale statistics? I’ve listed below a couple of the most quoted sources in the media for home sale statistics. There is a bounty of information at both of these, so be prepared to be overwhelmed.

The National Association of Realtors -
Case-Shiller Home Price Indices -,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html

Are you looking for a value estimate for your property as determined by modern automated valuation techniques? If you are, then the websites below may help you in your search for the perfect “valuation” number. Just make sure you’re sitting down before you plug in your property address and review the results you receive.

HomeValueBot - - -

In conclusion, let me say that there will always be many opinions on what your home is truly worth. Before you can really begin your quest for your specific valuation number, it’s important that you first ask yourself – WHY you’re asking this question – and then seek the advice of trusted professionals in the real estate industry.

I’m here for you! As a Certified Mortgage Planning Specialist™, my role is to help you make sense of all the chaos and confusion in the market, so that you can make informed mortgage and home buying choices. I am committed, qualified and equipped to help you evaluate your mortgage and real estate options.

Please call or send me an email if I can assist you.

P.S. Thanks for the Article Johnathan! Great content for a message that needs to be conveyed.

Wednesday, July 15, 2009

Government Regulation Clogs the Pipes

It's no secret that many facets of lending and real estate have changed as a result of the credit crisis. In addition to tightened lending practices that resulted from rising mortgage delinquencies, Washington has been heavily involved in altering the way lenders do business today.

Two individual pieces of legislation impacting our business need to be taken into account when determining closing dates for purchase transactions.

Home Valuation Code of Conduct
The Home Valuation Code of Conduct (HVCC) went into effect May 1, 2009. Intended to shield appraisers from undue influence from loan officers and lenders, this legislation installed a "firewall" between those individuals directly involved in the origination of the loan from the selection of and contact with appraisers.

HVCC also requires that borrowers receive a copy of the appraisal a minimum of three days in advance of closing. Part of the kicker here is that "received" is considered, in effect, three business days after the appraisal has been mailed to the borrower.As HVCC requires a firewall between the originator and the appraiser, the time to receive an appraisal has increased, in some cases by as much as two weeks or more. While this may not always be the case, it is important to take into consideration when considering closing dates. Today, conservative closing dates are mandatory to properly manage expectations of all parties.

Housing and Economic Recovery Act
The Housing and Economic Recovery Act (HERA) amends and impacts several aspects of obtaining a mortgage, the disclosures required for borrowers, and the timing of their delivery. This impacts the minimum time required to close, and should any changes be made to a loan application that could impact the Annual Percentage Rate (APR), this could impact the closing date.

Other than paying for a credit report, lenders may not accept any additional fees from a borrower until four business days after disclosures have been provided to or mailed to a borrower. This has the potential to delay several aspects of the application process.

Finally, upon making application, a borrower is provided a Truth in Lending (TIL) statement, detailing the total expected costs that could be incurred over the life of the loan. Should anything change in the loan application that could change the APR by more than .125%, a new TIL must be reissued to the borrower a minimum of 3 business days before closing. Items impacting the APR could include a borrower accepting a higher interest rate than initially qualified by floating their rate at application, a change to the loan amount, a change in product, a change in closing date, and any changes to fees.

What Now?
While there is more we can discuss on the specifics of these legislative implications, I felt it important enough to let you know now that I would not recommend you write purchase contracts with short closing time frames.

I will be preparing additional information you can provide both your buyers and sellers to help explain the rationale behind not scheduling closing dates in advance of 30 days at a minimum and ideally not less than 45 days.

Thank you again for your business and if you have any questions, please pick up the phone and call me.

Thursday, June 11, 2009

$15,000 Homebuyer Tax Credit

What can be better than a $8,000 tax credit?

How about $15,000 tax credit. Senator Johnny Isakson a Georgia Republican, introduced a bill today that would increase the tax credit to $15,000 and remove income and other restrictions on who can qualify, according to his spokeswoman, Sheridan Watson.

Will be very interesting to see if this moves forward because it would be beneficial to more than first time buyers.

Monday, June 8, 2009

First-Time Homebuyer Tax Credit

First-Time Homebuyer Tax Credit

One of the most exciting provisions of the American Recovery and Reinvestment Act of 2009 is the $8,000 tax credit available for first-time home buyers. Combine this tax credit with the fact that home prices and interest rates are at historical lows, and it is indeed an ideal time for many first-time homebuyers to purchase a home!

Here are some things to keep in mind:

  • A first time home buyer is defined as someone who has not owned a home in the last three years
    The credit amounts to 10% of the purchase price of the home not to exceed $8,000
  • The tax credit does not need to be paid back if you continue living in the home as your primary residence for three years without selling it.

  • The home must be purchased before December 1, 2009
  • Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit
  • You cannot purchase the home from a related party like a spouse, direct ancestor, or direct lineal descendent (child or grandchild); however, you can still qualify for the credit if you purchase a property from siblings, nephews, nieces, and others
  • If you are married, both spouses must be first-time home buyers
  • If more than one unmarried individual is buying the property, the credit can be split up among all the individuals who qualify. However, the total credit taken cannot exceed $8,000
How does the tax credit work?

A tax credit is kind of like a gift certificate that you can use to pay your taxes - it reduces your income tax bill on a dollar for dollar basis. Imagine paying your bill at IRS Restaurant, and then later getting an IRS Restaurant gift certificate. Normally, you would need to go back to IRS Restaurant and buy more food in order to use your new gift certificate. But what if IRS Restaurant allowed you to just turn in your gift certificate for cash? That's how this tax credit works. One of the greatest benefits of the $8,000 credit is that you can claim it on your 2008 tax returns, even if you buy a home in 2009. All you need to do is file an amended tax return with the IRS after you buy your new home and they will send you a refund check for $8,000. Just like the example of IRS Restaurant that allows you to exchange your gift certificate for cash! Remember though, you'll receive the $8,000 from the IRS AFTER you purchase the home, so you cannot use the funds to help with your down payment.

On May 29, 2009, the Federal Housing Administration (FHA) started allowing buyers to borrow against the credit or sell it to their lender or another 3rd party in order to use the funds to help with the down payment. Contact me for more details on how this could work in your situation.

For more information about the first-time home buyer tax credit or other recent updates to the mortgage and real estate markets, just give me a call. I would be happy to assist you with your mortgage in the purchase of your new home!

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed in this communication. I recommend that you consult with properly licensed legal, tax and investment advisors for specific advice pertaining to your individual situation.

Tuesday, April 14, 2009


The first day of school our professor introduced himself and challenged us to get to know someone we didn't already know. I stood up to look around when a gentle hand touched my shoulder.

I turned around to find a wrinkled, little old lady beaming up at me with a smile that lit up her entire being. She said, 'Hi handsome. My name is Rose. I'm eighty-seven years old. Can I give you a hug?'

I laughed and enthusiastically responded; 'Of course you may!' and she gave me a giant squeeze.
'Why are you in college at such a young, innocent age?' I asked.

She jokingly replied, 'I'm here to meet a rich husband, get married, and have a couple of kids...''No seriously,' I asked. I was curious what may have motivated her to be taking on this challenge at her age. 'I always dreamed of having a college education and now I'm getting one!' she told me.

After class, we walked to the student union building and shared a chocolate milkshake. We became instant friends. Every day for the next three months we would leave class together and talk nonstop. I was always mesmerized listening to this 'time machine' as she shared her wisdom and experience with me.

Over the course of the year, Rose became a campus icon and she easily made friends wherever she went. She loved to dress up and she reveled in the attention bestowed upon her from the other students. She was living it up.

At the end of the semester, we invited Rose to speak at our football banquet. I'll never forget what she taught us. She was introduced and stepped up to the podium. As she began to deliver her prepared speech, she dropped her three by five cards on the floor. Frustrated and a little embarrassed she leaned into the microphone and simply said, 'I'm sorry I'm so jittery. I gave up beer for Lent and this whiskey is killing me! I'll never get my speech back in order so let me just tell you what I know.'

As we laughed, she cleared her throat and began, ' We do not stop playing because we are old; we grow old because we stop playing. There are only four secrets to staying young, being happy and achieving success. You have to laugh and find humor every day. You've got to have a dream. When you lose your dreams, you die. We have so many people walking around who are dead and don't even know it! There is a huge difference between growing older and growing up. If you are nineteen years old, lie in bed for one full year, and don't do one productive thing, you will turn twenty years old. If I am eighty-seven years old, stay in bed for a year, and never do anything I will turn eighty-eight. Anybody can grow older. That doesn't take any talent or ability. The idea is to grow up by always finding opportunity in change. Have no regrets. The elderly usually don't have regrets for what we did, but rather for things we did not do. The only people who fear death are those with regrets.'

She concluded her speech by courageously singing 'The Rose.' She challenged each of us to study the lyrics and live them out in our daily lives. At the year's end, Rose finished the college degree she had begun all those years ago.

One week after graduation, Rose died peacefully in her sleep....

Over two thousand-college students attended her funeral in tribute to the wonderful woman who taught by example that it's never too late to be all you can possibly be.

These words have been passed along in loving memory of ROSE.

REMEMBER, GROWING OLDER IS MANDATORY, GROWING UP IS OPTIONAL. We make a Living by what we get, we make a Life by what we give.

God promises a safe landing, not a calm passage. If God brings you to it, He will bring you through it.

'Good friends are like stars.... You don't always see them, but you know they are there.’

Monday, March 9, 2009

Job Loss Insurance

Worried about possible job loss?
Integrity Home Finance is proud to offer you our Homeowner Education and
Loan Protection service(HELP).

There are many homeowners who during their first few years of home ownership encounter short-term financial difficulties. These challenges often lead to missed mortgage payments and maybe foreclosure. Suddenly the dream of homeownership is not as fulfilling as once thought.

This is where our HELP program comes in to play. This service is provided our Charitable Foundation and is a safety net for homeowners who need protection from the unexpected.

The Program offers the following benefits for participating homeowners:
  • Mortgage Protection Program - (Job Loss Insurance) Program covers up to 6 months of mortgage payments; up to $1800 per month (PITI) should the homeowner become involuntarily unemployed during the first 12 or 24 months of homeownership. (length of policy varies on eligibility of program)
  • Emergency Assistance Program - During the first year or so of homeownership,you may have available an emergency pool of funds to assist homebuyers in keeping current or making them current on their mortgage payments.
  • Post-closing Communication and Education - The program also includes 24months of financial and educational resources in an effort to assist in maintaining timely mortgage payments and tools to maintain financial wellness.

*Call us today to find out more details!