monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, January 2011
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In Issue 34 We Touch On:
One Of My Favorite Moments Each Month
Is Your Mortgage Professional Licensed?
2011 = More Of The Same
I couldn’t believe I witnessed the Dow Jones Industrial Average break 12,000 this month amidst all the turmoil in our economy (record deficits, anemic job creation, ongoing housing slump, etc). This big bounce back from the 9000s goes to show how the stock market moves independently of what’s happening in the economy. In general, people who still have jobs are more confident that they will keep them and these folks are paying down debt and spending more freely these days. On the other hand, most of those people without jobs continue to despair which has resulted in our government extending unemployment benefits to unprecedented lengths. The good news for mortgage shoppers is that rates have trickled even lower as investors have triggered a flood of money migrating from bonds to stocks. If there was ever a time to purchase a home, now is it. We are experiencing a perfect storm of low housing prices and low interest rates. The party may go on for several more months, but when we least expect it, the party will be over – with no last call warning.
The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family. You can make your own comments and feedback as well. Time for the news…
Mortgage Market: Press The Reset Button – How To Know If Your Mortgage Pro Is Licensed
Before selecting a mortgage professional to work with to purchase or refinance a home, you should check on the status of their national mortgage license. The entire mortgage industry had the reset button pressed by the Obama Administration and as of December 31, 2010, all mortgage professionals had their license expire, no matter if they have been in business for three years or thirty years. Licensing used to be solely managed by the states, but now there is a national Mortgage Licensing System and Registry (NMLS).
What is Involved in Registering and Earning a New Federal Mortgage License?
Loan originators must provide fingerprints and other identifying information in order to comply with a full background check with the FBI. Also, a 100 question federal mortgage test must be passed. For mortgage professionals in states where testing was not previously in place, a state level test may also have to be taken.
Upon creating an account with the NMLS, a unique identifier will be assigned to each loan origination officer. Most mortgage professionals will be paying $500 – $700 or more out of pocket to get their new federal and/or state licenses in good standing.
How to Determine if Your Mortgage Professional is Licensed
A lot of people want to take advantage of the extremely low interest rates available for mortgages. Before rushing into a relationship, simply ask your loan officer for their unique mortgage identification number. They are required by law to provide the number to you upon request. Once the full database is implemented the identification numbers will allow consumers to go online, pull up an individual and review prior rulings, violations and other issues.
For example, although I acquired a state mortgage license in 2005, the new laws require that I acquire a federal license, despite already having completed similar requirements for the State of Florida in 2005. My personal identification number for National Mortgage Licensing is 377413. Within the next 60 days once I complete the final testing phase of this new mortgage licensing process, my record in the NMLS will be active.
How Do I Access the Registry?
You can search for a mortgage license status at http://www.nmlsconsumeraccess.org. The registry does not yet show people (like yours truly) who are in process of acquiring their new license. However, the registry should be fully populated by March 31, 2011. If you can’t locate the mortgage person that you are working with in the National Registry, do not hesitate to ask them to provide you with their license number. Remember, it’s the law.
Personal Credit: One Of My Favorite Moments Each Month
If you have ever had a credit card lost or stolen then you know the emotions that run high until the matter is settled. This has happened to me twice in the past two years. Someone, a criminal, reported my credit card lost to Bank of America in an attempt to get a replacement card issued to their own (the criminal’s) mailing address. Did I receive an alert from Bank of America? Heck no and shame on them, but fortunately the wife and I have a back-up plan…
Checkout Line Walk Of Shame
Most people have to learn the hard way about identity theft crimes. Imagine you are shopping and swipe your credit card at checkout and it gets declined. The embarrassment of having this happen with the cashier looking at you suspiciously and the shoppers in line behind you annoyed that you are holding them up is memorable for the wrong reasons. Worse, if you do not have enough cash or a back-up card to use, then you get to do the walk of shame out of the store without your purchases.
A Faster Way To Learn About Credit/Debit Card Problems
I first learned about the two crimes against me via text message alerts. As a subscriber to a credit monitoring service, the instant anything important changes on my credit report, I receive both a text message and an email alert. If I am not near my computer, my mobile phone will display the text message. I’m covered wherever I go.
There are several different credit monitoring services. Shop around and compare pricing and features. Some major banks offer it or you can set it up through the credit bureaus. Shop around for the best price but expect to pay $5.00 to $25.00 per month depending upon what bells and whistles are included. Make sure to choose a service that monitors all three major credit bureaus and also can send text message alerts in addition to email alerts.
One Of My Favorite Moments Each Month
If there are no important changes to my credit report, the credit monitoring service still sends a text message and email to confirm that everything is ok that month. When that message hits my inbox, it is definitely one of the best moments I have each month – knowing that I have my identity and my financial information under control. If you would like to enjoy that moment of peace each month, make a New Year’s Resolution right now to spend a few bucks per month for credit monitoring.
Economy & Financial Insights: 2011 = More Of The Same
A lot of experts have been looking into their crystal ball making predictions about our 2011 economy. Here is my two cents based upon research and commentary from my trusted sources…
Jobs: Although the official recession has ended and things are unlikely to get worse, job growth is still slow. Recent job gains hyped by the President are only a slight improvement, are not yet adjusted and maybe inflated by seasonal hiring for the holidays. We have a huge mountain to climb to get jobs growing.
Housing: The rate of new foreclosures is lessening, but there are huge backlogs for courts to work through. There were 1.8 million foreclosures in 2010 with close to that number expected in 2011. According to a report, there is a 1.6 million surplus of housing inventory. There are currently 4.1 million homes on the market, compared to the 2.5 million that is considered the normal working level. New home construction is at a trickle and prices of existing homes are falling. Buyers coming in after these sweet deals will gradually eat up inventory – one of the best home buying environments of our lifetime.
Spending: The last sixty days have seen bumps as those who have jobs feel more confident at retaining them (reinforcement of the worst is over). You may have noticed the lack of gloom and doom news reports during the holiday shopping season. Retailers in general, enjoyed a “green” Christmas.
Stocks: We are amidst a run-up in stock prices partly because there is less uncertainty in the marketplace. For example, major banks are settling lawsuits regarding their mortgage practices and lots of major firms are sitting on huge stockpiles of cash. We hear that buy and hold is a dead investing strategy in this volatile hi-tech trading age. We must learn to actively manage through volatility.
Question of the Month: How Can I Buy A Property Without Documenting All My Income?
It is a challenge to avoid documenting the income required to make monthly mortgage payments (incl. taxes, insurance, homeowners association fees, etc). For example, documenting $40,000 is not going to cut it if your price range you are looking at is $300k. Keep in mind that the lender will pull your tax returns directly from the IRS using Form 4506 so be prepared for full disclosure.
If the income thing is an absolute deal breaker for you, there is another loan option but it is very expensive. There are specialty lenders that will loan 50% – 70% of the value of a dwelling with virtually no documentation. Sounds great? The downside is that the loans are double digit interest rates and can cost as many as 8 points or more (a “point” equals one percent of the loan amount) up front, so like I said they aren’t cheap, but serve a purpose. Each specialty lender has their own lending guidelines so shopping around will pay benefits. These are meant to be short term loans (1-2 years) while you get your affairs in order to qualify for a conventional mortgage.
Giving Back: Michelle’s Angels 2nd Angel Artist’s Appreciation and Celebration Concert
As in July 2009, the Michelle’s Angels Foundation’s Board of Directors has approved its staging of an event to honor all of the Angel Artists who support the Foundation as it attempts to provide Love, Hope and Assistance among those who quietly suffer. The event is appropriately named the Michelle’s Angels Foundation’s 2nd Angel Artist’s Appreciation and Celebration Concert. This year’s event will be held on Thursday, February 10th at the famous Bluebird Cafe in Nashville between the hours of 6PM and 8PM. Angel Artists performing at this year’s event include Marcia Ramirez, Suzanne Hicks, A. J. Masters and MAF’s Music Director, Ken Harrell. You can listen to some of their music for free at through the Michelle’s Angels Jukebox. Limited concert tickets are available, but even if you are unable to be present, please consider a tax deductible donation in support of the event. Recurring or one-time online contributions can be safely made through the Foundation’s Facebook Causes Page.
Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
I’m looking forward to the next Michelle’s Angels Concert at the famous Bluebird Café in Nashville on February 10. The end of the football season means that spring training is almost here and as usual I have my share of tickets. In my opinion there is no better time of year.
Randy
Mortgage by Randy newsletter, Copyright 2008-2011 Randy Mitchelson. All Rights Reserved.
Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
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You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson, of Estero, Florida, is a business professional, entrepreneur and author with over 15 years experience in financial services. Mitchelson has served in leadership roles for Global & Fortune 500 firms like Bank of America, KeyBank and CIBC.
As a member of National Association of Mortgage Brokers, Randy has earned the Lending Integrity Seal of Approval. He educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy as well as the Daily Dollar newsletter. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.
He is owner of Estero, Florida based National Web Leads, LLC, an internet lead generation service matching consumers with lenders for auto, cash advance and other financial products. Through its network of partners, National Web Leads delivers innovative Web 2.0 performance marketing solutions to advertisers and affiliate marketers.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member and Finance Chairman of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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