THROUGH NO FAULT OF THEIR OWN, there have been a lot of hard working people finding themselves without a job, or an income. Altogether too often a family has to decide how they are going to feed their kids, or for that matter, the dog.
I have volunteered to let my office be used as a drop off spot for those wishing to donate food so that the Cape Coral Caring Center (http://capecoralcaringcenter.org/ ) can have some food on hand so that, in an emergency, they can help out a family who has no food for the kids. They render only emergency help, and work with over a dozen other local agencies in trying to help the growing number of people who suddenly find themselves in need of a helping hand.
If you would like to help me help them, please drop off your donations of non-perishable items M-F 9:00 AM to 5:00 PM, to:
Tomasso Mortgage
4410 SE 16th Place, Suite #1
Cape Coral, FL 33904
239-945-4348
Directions: From the corner of Cape Coral Parkway and Del Prado Blvd travel North on Del Prado to the second traffic signal. That is 46th Street. (Jimbo’s and Trebing Tile).
At 46th Turn Right. Travel one block and turn Left on 16th Street. Tomasso Mortgage is the fifth building on the Left.
I hope to see you soon,
Bob Tomasso
Tuesday, February 3, 2009
Saturday, January 24, 2009
Do you know?
Can you tell me?
Do you know how much money the banks have tied up in "bad" mortgages?
Do you think that anyone knows?
Wednesday, December 17, 2008
Tell me what you think
Tell me what you think.
Lenders kept making loans into an inflationary spiral. They knew that eventually that bubble had to pop. They didn’t care as long as the prices kept going up. If a loan went bad, they could get out whole, maybe even MAKE money. They knew that they were financing homes at multiples of the cost to construct. They were allowing the price of land to be financed at increasingly growing prices. I know that a piece of land is worth what someone is willing to pay for it, but at some point the rate of escalation of prices had to be addressed.
Well, finally the bubble burst. Values collapsed. Home owners were facing loans that far exceeded the devalued price of their homes. Loans were defaulting at an alarming rate. The banks came to the Government to ask for help with the huge inventory of loans that had questionable value. The Senate isn’t the most astute of financial gurus. They knew that something needed to be done, but I don’t think that they knew, or still know what to do. Huge gobs of money were thrown to the Banks with little guidance or restriction. Banks have been using that money to acquire other banks, but money still doesn’t seem to be being lent. And the homeowner is still asking what can be done for them!
I was thinking. What if the Government looked at each homeowner with an upside down loan? What if they calculated the cost to construct that home and added 35% for the value of the land. In my estimation there are very few pieces of dirt that are worth the astronomical prices that were being charged. A new loan could be made for 100% of the cost to construct that house plus 35% for the land. That loan would finance the new closing costs, so the borrower would not be asked to come up with any money. The lender that made that old, inflated loan would be instructed to accept as payment in full the net proceeds of the new loan and would be told to charge off the excess balance remaining on the old loan. They should have known better than to make these loans in a “feeding frenzy”. They were not looking at the long term health of their company, or the Country.
They should be given LOANS to supplement their needs for survival, but NOT be allowed to sell their portfolios of mortgage backed securities to the Government. They should have known better to make those loans!
Lenders kept making loans into an inflationary spiral. They knew that eventually that bubble had to pop. They didn’t care as long as the prices kept going up. If a loan went bad, they could get out whole, maybe even MAKE money. They knew that they were financing homes at multiples of the cost to construct. They were allowing the price of land to be financed at increasingly growing prices. I know that a piece of land is worth what someone is willing to pay for it, but at some point the rate of escalation of prices had to be addressed.
Well, finally the bubble burst. Values collapsed. Home owners were facing loans that far exceeded the devalued price of their homes. Loans were defaulting at an alarming rate. The banks came to the Government to ask for help with the huge inventory of loans that had questionable value. The Senate isn’t the most astute of financial gurus. They knew that something needed to be done, but I don’t think that they knew, or still know what to do. Huge gobs of money were thrown to the Banks with little guidance or restriction. Banks have been using that money to acquire other banks, but money still doesn’t seem to be being lent. And the homeowner is still asking what can be done for them!
I was thinking. What if the Government looked at each homeowner with an upside down loan? What if they calculated the cost to construct that home and added 35% for the value of the land. In my estimation there are very few pieces of dirt that are worth the astronomical prices that were being charged. A new loan could be made for 100% of the cost to construct that house plus 35% for the land. That loan would finance the new closing costs, so the borrower would not be asked to come up with any money. The lender that made that old, inflated loan would be instructed to accept as payment in full the net proceeds of the new loan and would be told to charge off the excess balance remaining on the old loan. They should have known better than to make these loans in a “feeding frenzy”. They were not looking at the long term health of their company, or the Country.
They should be given LOANS to supplement their needs for survival, but NOT be allowed to sell their portfolios of mortgage backed securities to the Government. They should have known better to make those loans!
Thursday, December 11, 2008
Cheap money doesn't always mean you will SAVE money!
All this talk of cheap money "on the horizon" is causing some dislocation in the activity in the current market.
If you are waiting and talking about how much better interest rates "are going to be" I have a suggestion. Think about what will happen to the price of homes when everyone is charging out to buy them with all this "cheap money". Think about what will be the end result in the TRUE cost of the home that you want to buy.
It has been a while since I received my degree in Economics, but I think that it should be obvious when one gives it a little consideration, that the cost of Real Estate will rise as the demand increases due to lower interest rates. There is no free lunch. A good deal is a good deal. Interest rates are currently VERY attractive. Don't wait too long and miss your opportunity to purchase a home at historically low prices.
If you are waiting and talking about how much better interest rates "are going to be" I have a suggestion. Think about what will happen to the price of homes when everyone is charging out to buy them with all this "cheap money". Think about what will be the end result in the TRUE cost of the home that you want to buy.
It has been a while since I received my degree in Economics, but I think that it should be obvious when one gives it a little consideration, that the cost of Real Estate will rise as the demand increases due to lower interest rates. There is no free lunch. A good deal is a good deal. Interest rates are currently VERY attractive. Don't wait too long and miss your opportunity to purchase a home at historically low prices.
Tuesday, November 11, 2008
Purchase a home with a Reverse Mortgage
A Purchase Program that uses a Reverse Mortgage
There are many Seniors that want to purchase a home, but do not have enough money to pay cash for the home. They may have a substantial down payment, but still cannot qualify for a loan. Their credit may not be good, or their pension may not qualify them for a re-payment program. The “Hope for Homeowners” legislation that was passed and signed into law by President Bush on July 30, 2008 made mention of a purchase program for Reverse Mortgages, and we have been waiting since then to see when we could start making these loans, and how they would be structured. When HUD released their Mortgagee Letter #2008-33 we now have some of the details of the program that will become available on January 1, 2009.
Beginning in 2009 Seniors (over 62) will be able to purchase a home with a Reverse Mortgage. Credit and income will not be a factor. A down payment, based on the age of the borrower, will enable the purchase of a home with a loan not requiring any repayment plan. The home will be theirs to own for the rest of their life as long as they live in it. They will own the home, and be able to pass any equity to their heirs. Upon the sale of the house should there be any shortfall between the value of the home and the amount owed (possible through decline in value) the FHA will pay that difference. At no time will the borrower ever be faced with a short sale scenario, or will the heirs ever worry about a shortfall attaching any other assets. The loan is a NON recourse loan. Only the house that has been encumbered by the mortgage can be looked to for repayment.
Down payment sources can even come from gifts or other FHA allowable funding sources. We may even see the return of the seller paid down payment programs at some time in the future, but currently these are not allowed on any FHA loan.
With the beginning of the new year Seniors can move closer to family, purchase homes with wider doorways, or even downsize to meet their current housing needs. For more information on this, or any other loan program, please give me a call at Tomasso Mortgage.
Bob Tomasso
Licensed Mortgage Broker, Principal Broker
Tomasso Mortgage
A Licensed Correspondent Mortgage Lender, since 1989
239-945-4348
bob@tomasso.com
www.tomasso.com
There are many Seniors that want to purchase a home, but do not have enough money to pay cash for the home. They may have a substantial down payment, but still cannot qualify for a loan. Their credit may not be good, or their pension may not qualify them for a re-payment program. The “Hope for Homeowners” legislation that was passed and signed into law by President Bush on July 30, 2008 made mention of a purchase program for Reverse Mortgages, and we have been waiting since then to see when we could start making these loans, and how they would be structured. When HUD released their Mortgagee Letter #2008-33 we now have some of the details of the program that will become available on January 1, 2009.
Beginning in 2009 Seniors (over 62) will be able to purchase a home with a Reverse Mortgage. Credit and income will not be a factor. A down payment, based on the age of the borrower, will enable the purchase of a home with a loan not requiring any repayment plan. The home will be theirs to own for the rest of their life as long as they live in it. They will own the home, and be able to pass any equity to their heirs. Upon the sale of the house should there be any shortfall between the value of the home and the amount owed (possible through decline in value) the FHA will pay that difference. At no time will the borrower ever be faced with a short sale scenario, or will the heirs ever worry about a shortfall attaching any other assets. The loan is a NON recourse loan. Only the house that has been encumbered by the mortgage can be looked to for repayment.
Down payment sources can even come from gifts or other FHA allowable funding sources. We may even see the return of the seller paid down payment programs at some time in the future, but currently these are not allowed on any FHA loan.
With the beginning of the new year Seniors can move closer to family, purchase homes with wider doorways, or even downsize to meet their current housing needs. For more information on this, or any other loan program, please give me a call at Tomasso Mortgage.
Bob Tomasso
Licensed Mortgage Broker, Principal Broker
Tomasso Mortgage
A Licensed Correspondent Mortgage Lender, since 1989
239-945-4348
bob@tomasso.com
www.tomasso.com
Wednesday, October 15, 2008
The Right Doctor
If you go to a retina specialist when you are having trouble with your eyes, chances are that Doctor will tell you the problem is your retinas.
I was having trouble with my eyes. My vision was decreasing, and I was having crippling headaches. Light bothered me and I was wearing sunglasses. I went to a retina specialist and he told me that I had macular degeneration. For a year I was “treated” by him for this incurable disease. My vision continued to deteriorate, and my headaches and sensitivity to light became worse.
In desperation I went to another Doctor. He was a Neuro Ophthalmologist. One look by him and he diagnosed me with an entirely different condition. He told me that I had a Pituitary tumor that was pressing on my optic nerve. Surgery followed, and my condition was cured.
We are having an economic crisis. The government is asking us to treat our Economy. The “Economic Doctor” that we are going to is a previous employee of a large bank holding company that engages in investment banking. He has diagnosed our current economic crisis as being caused by a “Banking Disease”. He feels that if we direct our attention to the Banking sector that we can cure our problems. He is asking us to wear sunglasses to treat our macular degeneration. He is treating the symptom, not the disease.
We need to go to another Doctor. We need to go to a Neuro Ophthalmologist to diagnose our REAL disease. We need to stop treating the symptoms and treat the disease. That doesn’t mean that we should stop wearing our sunglasses until the light no longer hurts our eyes. But it does mean that we need to address the underlying problem that is causing the light to hurt our eyes.
JOBS!
The task of creating new jobs is one that will have to be handled by our next President. It will be up to him to create an atmosphere conducive to the creation of jobs to replace the jobs that have been lost to cheap labor in other countries. It will be his task to design programs and conditions that will create new industries that will surpass what foreign countries are doing. I wish the next President, whoever he will be, much success in that task, as the future of the country that we will pass on to our children and grand children is at stake.
Sunday, October 12, 2008
Gridlock
`The problem loans that are causing the "meltdown" are not loans made due to CRA motivation.
The loans that are going bad are suburban area loans. Not the type of loan that one would think of as being made under CRA. The loans that are currently causing the market to choke are loans that banks made in areas of rampant speculation. These loans were made for the purchase and re-finance of properties in areas that attracted "flip" type buyers. The "flip" buyer was looking to make a quick buck buying and then selling a house that he couldn't afford in the first place. The flip buyer was borrowing money with artificially low initial payment terms. At these low payment rates, if he was able to sell the house during that period of time, his profit would be maximized. (More rate of return if you lower the money invested).
The banks were motivated by the short term profit that would hit their bottom line by the recognition of yield spread premiums (Points) collected at time of closing and service release premiums collected when they sold the loans and the servicing of those loans. The long term effect of loading up the system with risky loans was not a consideration in their profit model. Corporate executives that were dictating lending policy were not concerned with the long term health of the Bank for whom they worked. Their compensation was based on bonuses they received based on quarterly profit numbers. As long as the bonus rewarded short term numbers the long term viability of the Bank was never given any consideration.
Yes, that is right, trillions of dollars of these loans were made and sold to foreign investors through the creation of Mortgage Backed Securities (MBS) As long as these foreign investors were able to place a realistic value on their investment, money continued to flow. The placement of a true value on ANY asset is mandatory for commerce to continue. There was a problem. These investors relied on Bond Rating Companies to tell them the current value of the MBS. United States bond rating companies were hired to value the MBS's that were being created. These SAME Bond Rating Agencies were receiving a commission when the MBS's were sold! - CONFLICT - It was beneficial to them if they gave high ratings to the MBS's. Once it became evident that their investments were of questionable value they stopped buying them. They began to realize losses on the ones that they had already purchased. The Bond Rating Companies started to collapse. Banks stopped lending because they had no one to buy their loans.
In order to continue to lend money, even though they had their money tied up in the MBS's that they couldn't sell, the Banks looked to each other to borrow money. The Banks that were in a position to lend money were not willing to lend to the Banks that needed the money, because they were concerned about the troubled Bank's ability to repay the loan.
Gridlock
Recently a European solution was announced. It places the government in guaranty of new loans being made to the Banks. Voila! The banks now have money to lend. Money flows. I am not as confident that the "bailout" or "rescue" legislation that was recently passed is as simple or easily put into play to assist Banks in raising Capital. We will see.
There are other problems in the United States that complicate our economic woes.
JOBS!
For any Capitalistic society to survive we must have consumers and motivated business owners to sell to them. When jobs started to flow overseas in search of cheap labor the fundamental soundness of the Economy faltered. Answers to the Jobs problem must be dealt with as a separate issue in solving our Recession.
The loans that are going bad are suburban area loans. Not the type of loan that one would think of as being made under CRA. The loans that are currently causing the market to choke are loans that banks made in areas of rampant speculation. These loans were made for the purchase and re-finance of properties in areas that attracted "flip" type buyers. The "flip" buyer was looking to make a quick buck buying and then selling a house that he couldn't afford in the first place. The flip buyer was borrowing money with artificially low initial payment terms. At these low payment rates, if he was able to sell the house during that period of time, his profit would be maximized. (More rate of return if you lower the money invested).
The banks were motivated by the short term profit that would hit their bottom line by the recognition of yield spread premiums (Points) collected at time of closing and service release premiums collected when they sold the loans and the servicing of those loans. The long term effect of loading up the system with risky loans was not a consideration in their profit model. Corporate executives that were dictating lending policy were not concerned with the long term health of the Bank for whom they worked. Their compensation was based on bonuses they received based on quarterly profit numbers. As long as the bonus rewarded short term numbers the long term viability of the Bank was never given any consideration.
Yes, that is right, trillions of dollars of these loans were made and sold to foreign investors through the creation of Mortgage Backed Securities (MBS) As long as these foreign investors were able to place a realistic value on their investment, money continued to flow. The placement of a true value on ANY asset is mandatory for commerce to continue. There was a problem. These investors relied on Bond Rating Companies to tell them the current value of the MBS. United States bond rating companies were hired to value the MBS's that were being created. These SAME Bond Rating Agencies were receiving a commission when the MBS's were sold! - CONFLICT - It was beneficial to them if they gave high ratings to the MBS's. Once it became evident that their investments were of questionable value they stopped buying them. They began to realize losses on the ones that they had already purchased. The Bond Rating Companies started to collapse. Banks stopped lending because they had no one to buy their loans.
In order to continue to lend money, even though they had their money tied up in the MBS's that they couldn't sell, the Banks looked to each other to borrow money. The Banks that were in a position to lend money were not willing to lend to the Banks that needed the money, because they were concerned about the troubled Bank's ability to repay the loan.
Gridlock
Recently a European solution was announced. It places the government in guaranty of new loans being made to the Banks. Voila! The banks now have money to lend. Money flows. I am not as confident that the "bailout" or "rescue" legislation that was recently passed is as simple or easily put into play to assist Banks in raising Capital. We will see.
There are other problems in the United States that complicate our economic woes.
JOBS!
For any Capitalistic society to survive we must have consumers and motivated business owners to sell to them. When jobs started to flow overseas in search of cheap labor the fundamental soundness of the Economy faltered. Answers to the Jobs problem must be dealt with as a separate issue in solving our Recession.
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