Ditech : 37 Mortgage Insiders Shopper Tips - The Run, Don't Walk Checklist

Many folks believe getting a handful of Good Faith Estimates and picking the company with the lowest cost estimate is the right way to shop for a mortgage.

After 15 years in the mortgage industry, I can unequivocally say…boy, is that wrong!

Once folks learn the frivolity of using estimates, the most asked question I hear is, “If estimates are out, how do I pick one mortgage company over another?”. To answer that question, I put together the “Run, Don’t Walk” Checklist for mortgage shoppers. To use the checklist, remember, if the company/loan officer you’re evaluating, possess, says, or demonstrates any item on list….Run, Don’t Walk!

Well, here we go: The Checklist

1. It’s a bank….you know Countrywide, Wells Fargo, Washington Mutual etc, Banks are not the low cost providers of mortgage money …big surprise, right! And they don’t have to disclose their overage (ie. YSP or SRP).

2. They don’t have you sign anything…no application, good faith estimate etc. (self-explanatory)

3. They have you sign blank documents. Signing blank documents is worse than no documents.

4. They are a friend or family member...once you learn the truth, so long friend.

5. They verbally lock loans…no lender lock confirmation. If they won’t send you a lender lock confirmation, they are hiding the YSP.

6. They play stupid or get irritated when you mention YSP (yield spread premium).

7. They promote loans with a pre-payment penalty. They make more YSP with a pre-payment penalty unless the lock confirmation shows otherwise.

8. They are uncomfortable or irritated discussing their compensation. If they can’t discuss and explain their total compensation without equivocation, run!

9. They push Adjustable rate mortgages (adjustable rate mortgage) when your hold period is 5 plus years or when the market has obviously changed to an increasing rate market.

10. They push an interest only loan when your hold period is 5 plus years or when the market has obviously changed to an increasing rate market. Interest only loans typically are used to obfuscate the underlying adjustable rate.

11. They push an FHA and/or VA loans when they haven’t attempted a conventional approval first. Conventional lending now provide 100% and bruised credit programs which formerly were the main reason for the FHA and VA programs. They are now obsolete.

12. They push a sub-prime or bruised credit loan without attempting an "A" credit loan first.

13. They do not get immediate computer approval.

14. They insist on a personal meeting for application designed to pressure you into signing.

15. They promote a “fixed fee” or “No-Cost” loan….there is no such thing! Yield spread premium rate hiking will cost you thousands over the life of the loan.

16. They won’t disclose their exact total compensation. This includes all revenue generated by origination fees, mortgage broker fees, processing fees, and all “back-end” compensation also known as yield spread premiums (for brokers ) or service release premiums (for banks ).

17. They push an interest only loan and tells you to pay extra principal payments.

18. They promote Adjustable rate mortgages in an increasing interest market.

19. They can’t explain how the ADJUSTABLE RATE MORTGAGE index and margin come together to make an ADJUSTABLE RATE MORTGAGE rate.

20. They can’t explain what the initial, periodic, and lifetime caps on an ADJUSTABLE RATE MORTGAGE are.

21. They don’t know the difference between a convertible and a non-convertible ADJUSTABLE RATE MORTGAGE.

22. They push negative amortizing loans like the “pick-a-payment” or “option” Adjustable rate mortgages so predominant in radio and TV advertising these days.

23. They don’t know the difference between payment caps and rate caps on Adjustable rate mortgages.

24. They work part-time in the mortgage business.

25. They are new to the business and therefore lacking in experience.

26. They were referred by a Website lead portal like LendingTree and others. These lending sites increase the cost of the loan. In the case of LendingTree, the increase cost is over $700!

27. They were referred by a real estate agent. They will probably be related to the loan officer or have some financial arrangement that will increase the cost of the loan for you.

28. They work for the builder mortgage company. See 27 above.

29. They work for the real estate mortgage company. See 27 above

30. They are also your insurance agent or financial planner. See 27 above.

31. They claim or allow you to assume, you can get the lowest rate simultaneously with a No-Cost or Flat Fee loan. An example is when you see a low rate on a Ditech commercial flashed right next to a flat fee offer of $395…they don’t go together, but you’ll only discover that after you call.

32. They use massive TV or Radio Ad campaigns. The cost of those ads gets re-couped by increased cost to you. Yield spread premium to the rescue!

33. They collect a huge deposit. As in the case of LendingTree, where they collect a NON-refundable $600!

34. They quote you a rate without first gathering important, rate-changing, information like, type of loan, credit score, loan-to-value, and income qualifying vs. stated income, etc.

35. They don’t mention mortgage insurance when the loan to value is over 80%.

36. They can’t get a loan done in less than 30 days.

37. They push “pay off your credit cards with a Home Equity Loan. These loans are by definition adjustable rate loans usually based on the Prime Rate which changes with each Fed change…not good.

This checklist should be used with a healthy dose of common sense. I always tell folks to trust their instincts as well. Knowing that your BS meter is going off at high volume should not be ignored. These points allow you to ask the loan officer the question, get the answer, and then listen for the alarm to sound. Of course, if you don’t listen for the alarm and act on it, no amount of advice will help you.

Good Luck!

Ditech : Poor Credit Second Mortgage Loans

When bills start to pile up too high, it can be difficult to keep up with payments. One option to solve the issue of having too many bills is to seek a second mortgage loan. However, if your credit is less than desirable to lenders for obtaining a loan, be assured that hope is not out of reach. By searching for different resources, you may find that you qualify for a poor credit second mortgage loan.

Poor credit second mortgage loans can be the saving grace to what could may currently feel like a financial disaster. By refinancing your home and cashing out on its value and its equity, you can receive funds to pay off high interest credit card bills, consolidate all other debt such as smaller loans, pay for a child's college education, finance a business, and more.

Most anyone with bad credit, no matter how severe, can receive a poor credit second mortgage. Even individuals or couples with a history of bankruptcy more than ten years ago can qualify for such a loan. Your credit rating and scores will play a vital role in qualifying for the poor credit second mortgage loan, and your interest rate will be configured with your scores. Generally speaking, according to Platinum Concepts, Inc. in Madison, Wisconsin (www.platinumconcepts.net), a loan is obtainable with a credit score of 550 or higher.

Pros of Obtaining a Poor Credit Second Mortgage Loan

1. Poor credit second mortgage loans offer people with low credit ratings and scores the opportunity to qualify for a loan and obtain funding when they would not otherwise qualify for a conventional loan.

2. A poor credit second mortgage can offer a way to consolidate debt and pay off outstanding bills, while at the same time, offer a lower, more affordable monthly payment. Considering the reasons why credit scores are low, extravagant purchases are not recommended on poor credit second mortgage loans. Using the money wisely will help you rebuild your credit.

3. Reducing debt and paying the monthly installment on time for a poor credit second mortgage loan can offer an individual the opportunity to improve credit ratings.

4. A poor credit second mortgage loan often offers flexibility in regards to interest rates, payment options, and the term of the mortgage.

5. The interest for most poor credit second mortgage loans is tax deductible.

Cons of Obtaining a Poor Credit Second Mortgage Loan

1. If the poor credit second mortgage loan is not paid or defaults, you are at risk of losing your home. Payments need to be made consistently and on time.

2. The interest rate is usually higher for a poor credit second mortgage loan than for a first mortgage or other conventional second mortgage loan.

3. You are at a much higher risk of worsening your credit situation if the monthly loan installments for the poor credit second mortgage are not paid on time or are missed.

Poor credit second mortgages can be obtained from lenders specializing in loans for individuals and couples with poor credit. Research lenders carefully, and before signing on a loan, read everything, including the fine print. Make sure you understand everything entirely, and that there are no hidden costs involved. If you're having problems finding a lender, a mortgage broker may be able to offer assistance in getting a poor credit second mortgage loan. Mortgage brokers, such as Platinum Concepts, Ditech, E-Loan, Lending Tree, and others, generally work with hundreds of different lenders. A broker will "shop around" on your behalf, and find a lender that offers the lowest possible interest rate based on your particular credit situation.

Mortgage brokers are available locally and nationally, and can be found in your local yellow pages, as well as on the world wide web. Choose a broker carefully, though. If you know of another individual who has used one, or know of one that you could meet with personally and check their references, this is a great precaution to consider. Examine a mortgage broker in the same way you would any other lender, and make sure that your loan needs will be met with the loan. Don't settle for something that just doesn't seem right.

After obtaining a poor credit second mortgage, use your money wisely. Consider the loan an extremely fortunate "fresh start" with your finances. Budget your income carefully so that loan payments can be made on time.

Falling behind on even one payment will drop your credit scores significantly, and this poor credit second mortgage loan is meant to do just the opposite, namely, offer you the opportunity to rebuild your credit and increase your credit scores. Make your payments on time, and don't miss any payments or your home ownership may be at risk.

To avoid this risk, change your financial future with the poor credit second mortgage. Don't overspend, and don't make any purchases unless the item is necessary.

If you have credit cards, destroy all but one, and use that one card only for emergencies, such as unexpected auto repairs, and pay off the card in full before using it again. Start saving money with each paycheck you receive, and don't touch the money that you deposit into the savings account. Even if it's just a few dollars a week, strive to build your savings and leave that money alone except in the event of an emergency.

Ditech : Saving Money Online with Digital Coupons, Freebies, and Comparison Shopping

The Internet is a great invention for many different reasons. But, did you know that it can be a great resource for saving you money when shopping? You no longer have to clip coupons out of the Sunday paper; you can find them right at the tip of your fingers just by knowing where to look!

Coupons

One of the easiest ways to save money on the Internet is by printing online coupons. All you have to do is type the search criteria "online coupon" in your favorite search engine and you are on your way to savings! Here are some examples of great online web sites that help you save money:

CouponSurfer CouponSurfer has almost 300 coupons from over 100 stores on their web site. Do you need new brake pads on your car? You can save up to 50% just by filling out the free registration form at CouponSurfer and printing their coupon. Other recent savings at CouponSurfer were a 40-cent coupon from Tropicana, a 50-cent off coupon from St. Joseph's aspirin, and coupons from Pampers.

Hot Coupons Hot Coupons lets you type in your zip code or city name to find discounts offered in your area. You can find savings for local restaurants, automotive centers, health centers, retail stores, and businesses including real estate, lawyers, hotels, and doctors.

Also, pay attention to television commercials. Many times, companies coming out with a new product will advertise on television and list a web page where you can print a money saving coupon. A recent commercial from Febreze listed their web page address. By going there, you can fill out a form and have Frebreze mail you $20 in coupons for many of their products, including their latest electronic air freshener, NOTICEables.

Coupon Codes

There are also web sites that offer a percentage off online purchases. Ultimate Coupons is a great example of this type of online savings site. Ultimate Coupons constantly updates their site with the latest in online savings. A recent search showed coupons for 10% off at Target.com, 15% off Pet Supplies at Petco, and $5 off $20 on Digital Photos & Gifts at Snapfish. Many times, if you search online, you can also find codes for free shipping to places like Macys, Sears, Amazon, and Old Navy.

Freebies

Many web sites have user forums where people can share online savings and free offers with each other. Big Big Forums is an excellent place to visit to find coupon codes, freebies, and reward programs. Members (there are over 31,000) post different offers they have seen on television or found online. There are folders for each particular type of offer, so it is very easy to find things here. Once you register for free, you too can post coupon codes and freebies. You may even be lucky enough to get in on a free subscription to a magazine such as TV Guide or link to a free Schick Quattro razor.

Comparison Shopping

A great feature of many Internet web sites is that they will give you price comparisons of items for which you are looking. Froogle is Google's shopping search engine. All you have to do is type in the name of what you are looking for and Froogle does the rest! It will find web pages selling the item you are looking for and lists the price. That way, you can find the best deal available. There are several other web sites that will help you to do comparison shopping such as MySimon and Bizrate. Letting these sites help you find the best price can make every online shopping experience enjoyable.

Other web sites can save you money online too. You can refinance your home loan and find the lowest interest rates by searching at Ditech or search for the cheapest car insurance at Geico. How do you learn about all the sites available? The best way is to pay attention to the media. Commercials, newspapers, and magazines are always listing web sites. Also, join a forum such as Big Big Forums. When people share ideas and resources, it can be great for your pocketbook. Remember that every coupon and savings opportunity adds up!

Ditech : No Closing Cost Mortgage Advertising Is A Lie!

No Closing Cost and Flat Fee mortgage advertising in a word is a rip-off. So much so that California regulators outlawed the use of the phase in all mortgage advertising in their state. All state mortgage regulators should immediately adopted the same restriction if they truely want to protect mortgage consumers.

Until then, the rest of the country is fair game. That means you! Read this carefully and learning to protect yourself. Not do so can cost you $20,000, $50,000 or even $100,000 over your mortgage paying lifetime.

Let's get started...

Living in Denver where this advertising is still legal, everytime I turn on the TV or the radio, I see or hear a mortgage ad touting a $395 Flat Fee loan or a No Cost loan. Of course we've all seen the Ditech cable TV commercials non-stop over the last 5 years stuffing the $395 Flat Fee loan down our throats. This is a prime example of a deceptive ad. But the one that really chaps my hide, is the Lenox Financial radio spots for No Cost loans that says,

"Come in with a $300,000 loan, and you can leave with a $300,000 loan. We make plenty of money. We don't need to charge you any fees. Don't be fooled by those predators who want to take your money. It's the biggest no-brainer in the history of Earth." or words to that effect.

Yea, no-brainer is right...you'd have to have no brain to believe this garbage.

I visited their website and lie continues,

"The way it works is simple. Our company has created such a high volume through our investors that they are willing to pay us more for your loan than any other brokerage firm. This is typically enough money that we can pay your closing costs and still have money left over for our company as well!"

This is the most egregious example of false, deceptive, and misleading advertising ever allowed to exist in our country. The impression conveyed by the outright false advertising, is that a "free" loan is possible due to "high volume". Nothing could be further from the truth.

The truth is mortgage companies don't "waive" or "cover" closing costs. They "offset" them with the kickback income they get from charging you a much higher rate than you qualify for. This is called Yield Spread Premium overcharging. The lender pays the mortgage company lots of money, that part of the ad is true. Of course, the reason why is where the deception comes in.

The ONLY WAY that company will pay your fees is if they charge a higher than market interest rate, getting a rebate or kickback from the lender for doing so. If they are a correspondent lender or a bank (like Lenox Financial and Ditech), you will never see the lender kickback money they are paid. But due to the higher interest rate they charge, YOU WILL PAY for all those closing costs AGAIN AND AGAIN over the life of the loan in the form of higher monthly payments. In the super-fast-talking legal statement at the end of their ad, it states that you can receive a lower Annual Percentage Rate by paying fees. Oh, really?

You tell me, with double-talk and half truths so flagrant as to make a politician blush, who is the REAL predator here?

So Flat Fee or a No Cost loan ads should signal you the rate you'll get is not just inflated, but "hyper" inflated. Since even on loans where the consumer pays the costs at closing, the rate is inflated for extra profit. This typical Yield Spread Premium overcharging amounts to .5% higher for you and thousands of extra dollars for the company. With the No Cost or Flat Fee companies, they plan on raising the rate not the typical .5% to insure their profit, but an additional amount to cover all the actual third party closing costs as well. This hyper rate inflation could add another .5% or more to the rate you could have reasonably expected.

Another ugly truth behind the hype about the No Cost or Flat Fee transaction is the mortgage company makes as much as 5 percent of the loan amount as a rebate from the lender, and in many cases, it is not disclosed to the borrower. On a $200,000.00 mortgage, they could conceivably earn $10,000.00 while giving the impression that they are doing the loan for nothing. Sure the company covers all the third party closing costs of say $4,000 and pockets $6,000 pure profit. And of course, you are stuck making a payment on a hyper-inflated rate...probably close to a full interest point above the rate you qualified for.

As a 15 year mortgage veteran who knows how money is made in the mortgage business, those advertisements are upsetting to me. Why? Because they give the impression that they are looking out for you, the consumer, and they are working for free when they are actually working against you making huge undisclosed profits. This kind of deceptive advertising used by virtually every bank and broker in America is, in my opinion, the reason consumers don't have any faith in mortgage industry professionals anymore. This is bad for all good mortgage professionals. We've seen our industry go the away of used car and aluminum siding sales. It's time to clean up our own backyard starting with these unethical companies.

Everyone who works on your loan is going to get paid by you at closing by one of three ways: 1) either by a one-time fee listed on your settlement statement, or 2) by the lender rebate created by charging you a higher interest rate, or 3) a combination of the two. Don't believe the hype. As in all things, if it sounds too good to be true it probably is. Beware of what you are signing. Read all the fine print (and there is a lot of it.) Ask questions of your loan originator. Ask point blank, "I know no one works for free. So tell me, how much lender rebate will you get at that rate? How much of that lender rebate will go toward my actual closings costs? How much lender rebate will you and your company get?"

Decide for yourself the most important consideration with your new mortgage. Is it keeping the payment affordable? If so, you'll want to pay the costs as one-time fees and maybe even pay discount points to buy down the interest rate. Is it getting the costs paid by lender rebate because you are planning to move in a couple of years and you can afford the higher payment? But YOU should be in the driver's seat and make those decisions from a position of knowledge. All mortgage brokers can provide a mortgage with either you paying the closing costs as one-time fees or the lender rebate paying the costs and you paying a higher monthly payment.

Remember this: You Always Pay the Costs for Every Mortgage...you and nobody else. The only thing to determine is how. The purpose of this article is to help you understand your options when it comes to paying those costs. Also, I hope this helps you separate the honest from the dishonest which is just as important in your search for the right mortgage company and the right home loan.

Good Luck!