America One Mortgage

Sherman Oaks Home Equity Line of Credit

2007-09-01T03:16:00.000-07:00

Do you live in Sherman Oaks? Do you need some money in your pocket? America One Mortgage is having a special for all residents of Sherman Oaks on Home Equity Line of Credit or HELOCs. Just go to our website to get more information regarding the pricing. www.rapidfunder.com

Renters Have Much to Gain by Pursuing Home Ownership

2007-08-28T20:06:00.000-07:00

Renters Have Much to Gain by Pursuing Home Ownership

Renters Have Much to Gain by Pursuing Home Ownership
A Qualified Mortgage Consultant Can Outline Your Options

HAYDEN GERSON
BRANCH MANAGER
AMERICA ONE MORTGAGE

LOS ANGELES, CA – Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.

In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.

Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.

Copywrite 2007 Hayden Gerson

http://www.rapidfunder.com

Protecting your credit during divorce

2007-08-28T20:04:00.000-07:00

Protecting your credit during divorce

Hayden Gerson

Branch Manager

America One Mortgage

Los Angeles, CA – When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn’t have to change is the credit status you’ve worked so hard to achieve.

Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.

The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.

The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)

Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).

Now that you have this information at your fingertips, it’s time to make a plan.

There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.

When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.

In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.

When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.

If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.

Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.

Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.

To sign up for amazing credit repair with a money back guarantee go to htdimortgage.com/hayden

Do you want to make money while sending your clients to a company that guarantees results? Go to http://htdimortgagesys.com/hayden

Copywrite 2007 Hayden Gerson

Understanding Credit Scoring & Credit Repair

2007-08-28T20:02:00.000-07:00

Understanding Credit Scoring & Credit Repair

Understanding Credit Scoring &
Credit Repair

Hayden Gerson

Branch Manager

America One Mortgage

Los Angeles, CA– Credit remediation is a subject consumers often face with fear and trepidation, and for good reason. With the exception of recognizing that the best score wins, the average home shopper knows very little about the whole credit scoring process. Sub-prime borrowers who are eager to move into A-Paper territory often find themselves at a loss when trying to find ways to upgrade their credit history. The good news is there are ways to improve less-than-perfect credit scores and obtain a loan for the home you really want.

The first step in the process is making sure that you have a current copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to www.annualcreditreport.com)

It's also important to know just what a good credit score is. Most A-Paper scores generally begin around 680, although this number may differ slightly among lenders. Don't despair if you come up shy, there is always room for improvement. Increasing your score just 5 points can save a significant amount of money. For example, if your score is 698 and you increase it to 703, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate.

While credit repair is necessary for some, it's not the only way to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:

· Evenly distribute your credit card debt to change the ratio of debt to available credit. Let's say you have a credit score of 665. If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer, and possibly into, that ideal bracket.

· Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of a long-term credit history and increase their ratio of debt-to-available credit. The bottom line is don't close those old accounts!

· Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you're only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame.

Remember, credit scores don't change overnight. Improving them requires time and diligent effort on your part, so it's a good idea to get the ball rolling at least three to six months prior to submitting your application for home financing.

If credit repair is what you need, you can either begin the process yourself or seek out a repair service. If you decide to make your own improvements, visit as many websites as possible to get information regarding credit laws and consumer rights. Diligently search through them and educate yourself to ensure that you don’t sustain any self-inflicted wounds. A good place to start would be the Federal Trade Commission's website, which contains a wealth of helpful literature.

If you’re facing severe or complicated credit issues, then you’ll probably want to enlist the assistance of a professional credit repair company. Before you do, be sure to familiarize yourself with the FTC's regulations on credit repair. With over 1100 credit repair companies to choose from, it's important to be certain you are dealing with a reputable firm. Examine the FTC's information on fraudulent practices to avoid falling prey to credit repair scams.

Addressing credit issues can be uncomfortable to say the least. But by taking these steps now, you’ll be that much closer to obtaining the home of your dreams.

Additional Resources:

To sign up for amazing credit repair with a money back guarantee go to htdimortgage.com/hayden

Do you want to make money while sending your clients to a company that guarantees results? Go to http://htdimortgagesys.com/hayden

To order your free credit report, go to:

www.annualcreditreport.com

To read the Fair Credit Reporting Act, go to:

www.ftc.gov/os/statutes/frca.htm

For the Federal Trade Commission's information on consumer credit, go to:

www.ftc.gov/bcp/conline/edcams/credit/index.html

Copywrite 2007 Hayden Gerson

http://www.rapidfunder.com

The Truth About the Mortgage Market

2007-08-28T20:00:00.000-07:00

The Truth About the Mortgage Market

The Truth About the Mortgage Market

Hayden Gerson
Branch Manager
America One Mortgage

Los Angeles CA – Subprime mortgages have now been credited for bankrupting well over 110 lenders and seriously damaging operations at many major mortgage firms. They've reportedly wiped out 5 hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren't enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year.

This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 6-12 months ago.

How did this happen?
The recent real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or "exotic" mortgages.

These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street.

Then, in 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today's tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we're now experiencing.

Unfortunately, it's going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe.

What does this mean to you and your mortgage?

Sellers: If you're planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.

Buyers: Get pre-approved by your mortgage professional. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it's taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don't do anything that could negatively affect your credit, and make sure you get all your documentation in on time.

ARMs Borrowers: If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment with a mortgage professional right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don't let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be.

Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals.

Finally, there's an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we're experiencing now – while it seems harsh and could get much worse – is, in a sense, "natural" and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.

Copywrite 2007 Hayden Gerson

http://www.rapidfunder.com

Our Specialty: Pay off your mortgage in as litle as FIVE YEARS years or less with no change to current spending.

2007-08-28T19:59:00.000-07:00

Our Specialty: Pay off your mortgage in as litle as FIVE YEARS years or less with no change to current spending.

Discover how the power of your own cash flow could significantly accelerate your home loan's pay down, saving you thousands in interest and getting you free-and-clear of mortgage payments years ahead of schedule, without demanding any change in your current spending habits. If you are visiting our site, you are one of the growing number of Americans that realize that it is time to stop hitting the 'reset button' on a thirty-year mortgage every time you chase a new interest rate or payment. Choose the one loan that gives you complete flexibility to leverage your cash flow to support any financial goal.

This is my core product, the last two clients I got into this particular financing vehicle will have their homes paid off in less then 2 years. If you can save at least 10% of your income each month, have at least 10% equity in your home and a fico score above 660 you could qualify. E-mail me for more information. If you would like to view our 4 minute video or play with the interactive calculator let me know. My e-mail address is hayden@rapidfunder.com.

http://www.rapidfunder.com

See what Cramer has to say about the market!

2007-08-10T00:47:00.000-07:00

Scary Math: More Homes, Fewer Buyers

2007-04-08T21:20:00.000-07:00

Subprime lenders are already getting crushed - but the impact rising mortgage delinquencies will have on home prices overall is still an open question.

At a minimum, it means financing is drying up for those with less-than-perfect credit and that spells fewer home buyers.

And foreclosed properties will add supply to a housing market that already has too much.

"It's going to be a really big deal," says Dean Baker, co-director of the Center for Economic and Policy Research.
"[National] inventory is 20 percent higher than last year, vacancy rates have soared and prices are down about 3 percent," he says. "Now, with the tightening of credit, I don't see how prices don't fall another 5, 6 or 7 percent."

The tightening of credit could take as many as one million buyers out of the market, says Baker, citing Bear Stearns research. "Even if you cut that in half, say to 400,000 or 500,000, that's huge."

Mark Zandi, chief economist for Moody's Economy.com, is also concerned. "I think the subprime problems will take housing activity to a whole other level," he says.

Zandi is projecting a doubling of subprime defaults this year to 800,000. "Those homes will go on the market at a discount and will weigh on the market," he says. He also believes that 500,000 fewer Americans will be able to obtain financing because of the tighter standards.

All that has led Zandi to alter his projection of a 3 percent decline in housing prices this year to a mid-single digit decline. The hardest hit areas, which he thinks will be Arizona, Nevada, parts of California and Florida, which will absorb high single digit or even double-digit punches.

Not everyone paints as bleak a picture. "We don't know how many subprime mortgage holders will actually default," says Christopher Mayer, an economist at Columbia University. "Banks are working with borrowers [so they can keep their homes]. Plus, there's plenty of liquidity around for people looking for mortgage loans."

That's not to say he sees everything as hunkey-dorey - Mayer thinks values in speculative markets had gotten way ahead of fundamentals and that weak local economies in the Midwest will depress values there.

The extent of the subprime delinquency problem is disputed. According to a report from the Center for Responsible Lending (CRL), about one in five of the subprime loans written in the past two years will go into default, costing 1.1 million their homes and unleashing a flood of foreclosed homes on the market.

But Doug Duncan, chief economist of the Mortgage Bankers Association, thinks CRL is overly pessimistic, noting that defaults for subprime mortgages have never exceeded 10 percent in any given year.

And he argues that most of the loans written before mid-2005 are unlikely to fail because they are already out of the danger zone - they've either reset with their borrowers continuing to pay them off or the increased housing values that accompanied the boom have boosted home equity enough so that owners have comfortable cushions.

More significant than defaults may be the impact of credit tightening.

"Banks have become much more cautious. Lenders are tightening, not just subprimes, but Alt-As (not quite prime) loans and primes as well," says Ellen Bitton, founder of the Park Avenue Mortgage Group.

Lawrence Yun, an economist with the National Association of Realtors, which tends to have an optimistic view of home markets, is projecting the number of potential homebuyers unable to obtain financing because of the subprime crisis will average about 20,000 a quarter.

Defaults, he believes, will come to perhaps one-half of one percent of mortgage holders, perhaps 200,000 homeowners. NAR's position is that the impact on prices will be only slight.

"Unlike the last housing crisis in the early 1990s, the economy is very sound; people are getting jobs, not losing jobs," says Yun.

Baker, perhaps the most pessimistic of the prognosticators (he is someone who sold his Washington, D.C. home a couple of years ago in anticipation of it falling in value), saves most of his concern for the markets that had the most speculation - Las Vegas, Arizona and parts of Florida. Meanwhile New York, Boston, and coastal California, and even D.C. should hold up okay, he says.

30-year mortgage rates increase slightly to 6.17%

2007-04-06T16:46:00.000-07:00

April 6, 2007

Mortgage company Freddie Mac said 30-year fixed-rate mortgages averaged 6.17% this week, up from 6.16% last week.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, rose to 5.87%, up a notch from last week's 5.86%. Five-year adjustable-rate mortgages averaged 5.92%, compared with 5.88% last week. One-year adjustable mortgages edged up to 5.44% from 5.43% last week.

The mortgage rates do not include add-on fees known as points. Thirty-year mortgages carried a nationwide average fee of 0.4 of a point and 15-year mortgages had an average fee of 0.5 of a point. Five-year and one-year adjustable mortgages each carried a fee of 0.6 of a point.

Even if you think you have the best mortgage, it's now obsolete.

2007-03-12T20:46:00.000-07:00

Even if you think you have the best mortgage, it's now obsolete.

This innovative and powerful loan uses the power of your income to slash thousands off the total interest you pay and chop years off the time it takes to pay off. All without changing your spending habits, or your access to the cash you earn.Here is what others are saying....

"....harnesses the money sitting in a checking account for the borrower's benefit instead of the bank's." -- San Francisco Business Times,6/10/05

"....designed to help borrowers accelerate their principal payments as painlessly as possible." -- San Francisco Chronicle,5/26/05

"....a one-of-a-kind tonic for people who want to keep their balance sheets healthy in a time of skyrocketing house prices...." -- Contra Costa Times,6/10/05

"....could revolutionize the way Americans pay for their homes...." -- East Bay Business Times,6/10/05 How it works.
Bank your money in your mortgage. With the Home Ownership Accelerator, you direct-deposit your entire paycheck into your mortgage, instead of your checking account. This immediately reduces your principal balance. Since interest is based on your daily balance, you start saving interest immediately compared to traditional loans!

Access your funds just like you used to. You pay all of your expenses out of your mortgage, just like you would with a traditional bank account -- using the unlimited checks, free ATM/Debit card, and free online bill-pay that comes with the account. Until you need the money, though, it's in your mortgage in the form of a lower principal balance, saving you 5-6% in mortgage interest, instead of earning 1% in a bank account. Less interest means that more of your take-home pay goes towards principal, and you pay off sooner. With no change to spending habits!

If you haven't already, play The Movie: How it Works to find out why this loan is so powerful. ( Need Flash player? )

How effective is it?
If you're an average borrower with good cash flow, you could pay off an average sized loan in as little as half the time – with no changes to spending habits.

Let's look at an example:

Imagine you have net pay of $100,000 annually, saving 15% of your net income after expenses, and you have a $400,000 30-year fixed-rate mortgage at 5.5%. And, let's even assume that mortgage interest rates are climbing on a "reverse course" that mirrors their recent decline (APR 8.19%)! A 'worst case' rate scenario!"

Saves interest, pays off sooner.

In this example, refinancing to the Home Ownership Accelerator roughly doubles your mortgage efficiency. You could pay off in as little as 17.3 years and save nearly $89,000 (21%) in interest, compared to the 30-year fixed rate loan at 5.5%. In fact, to save that much interest, you'd have to find a 30-year mortgage at 4.4%, which is very unlikely.

But what if rates go up even more?

In this example, the adjustable rate on the Home Ownership Accelerator would have to average 9.6% over the entire 17.3 years for the interest payments to equal that of the 30-year fixed rate mortgage at 5.5%. That's not likely to happen either.

30-year mortgage rates fall to 6.14%

2007-03-12T00:55:00.000-07:00

Rates on 30-year mortgages fell to the lowest level since mid-December as investors scrambled to the safety of bonds following last week's stock market turmoil.
Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.14 percent this week, down from 6.18 percent last week.
The decline pushed 30-year rates down to the lowest point since they averaged 6.13 percent the week of Dec. 21. Other rates dropped as well.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, fell to 5.86 percent, down from 5.92 percent last week. Five-year adjustable rate mortgages edged down to 5.90 percent, compared to 5.93 percent last week. - The Associated Press

Options for Subprime Borrowers: Better then FHA

2007-03-12T00:41:00.000-07:00

If you can't do FHA, this could be another option to avoid the high interest rates of subprime. This is a little about how My Community Mortgage Works.

My Community Mortgage is available to help you buy or refinance a single-family home or condo, or a two- to four family
home that you will live in as your primary residence. It is not credit score driven. Flexibility on credit histories and nontraditional credit accepted.

Income that can qualify you for mortgage approval includes many sources besides wages, such as boarder income
from relatives or nonrelatives.

Proof that you handle credit responsibly can include rent payments; payments for electricity, water, or other utilities; or other payments you make on a regular basis.

My Community Mortgage includes several options that can make it even easier to buy a home. For example,Community Solutions is an option for public service employees such as teachers, police officers, firefighters, and health care workers. Community Home Choice is for borrowers with a disability.

My Community Mortgage is available throughout the United States.

How to Make $125K Tax-Free in Addition to Rental Income

2007-03-08T00:12:00.000-08:00

If you are an avid real estate investor who likes to keep rental properties for a reasonable period before selling, then there is a way for you to make $125K tax-free over and above the rental income you receive. For this scenario, we will assume you are single simply because those that are married (even though you could double your tax-free income potential) would not want to do what is required.

If you are a real estate investor and single, then you could incorporate a strategy that allows an extra tax-free income, up to $125K annually, in addition to the rental income you receive already. This program takes time to set up, but you may already be in a position to get it started. The only drawback is it requires you to move every 2 years, which is why it is likely that married couples do not want to do this, especially if you have children.

How does it work?t is actually very simple. You acquire a reasonable number of properties, you must have at least one rental property to make this work, but the more you have, the easier it will be to implement. The IRS allows for a capital gains exclusion for up to $250,000 in gains on the sale of a property if you are single. The two main requirements are that you owned the property at least two out of the last five years (not a company), and that you personally lived in it at least two out of the last five years.

The plan requires you to move every two years in order to meet the IRS guidelines for claiming the deduction prior to selling the property. You may even be able to get started by purchasing a new home to live in while renting your current residence for the next 3 years. Remember that the IRS does not specify when the 2 years must be, so it could be the first 2 years of the last 5 and you could still claim the exclusion.

Now that you know how it can be tax-free, what are the limitations?

We discussed some of the limitations regarding the exclusion, but there are some others that need to be discussed as well. Remember that the gains are from the difference between the tax basis you kept record of and the proceeds from the sale of the property. If you are like many investors, and you depreciated the property to save on taxes already, you will most likely still be required to pay the depreciation recapture tax on the depreciated amount. Also, there are some other tax related issues for rental properties you will need to factor in, such as how repairs versus replacements work for taxes.

Can you sum this up for me?

Yes, here is the summary of what you can do to receive up to $125K annualized tax-free income while earning rental income as well. You purchase rental properties and earn the rental income while you own them. Remember to maximize your tax deductions using proper techniques during the ownership, but you will have to weigh the benefits of depreciating the property. While you earn this rental income, the property is likely appreciating in value (over time, not necessarily immediately), so in two years you could have a property that appreciated up to $250K and you would be able to sell it and potentially receive that gain tax-free. The main requirement is that you move into one of your properties every two years. Married couples can theoretically double this income following the same strategy, but the requirement to move every two years may be too hard on the family..

Make sure you understand your option arm

2007-03-07T23:06:00.000-08:00

With college costs looming for their four children, Bryan and Susan Andrews were looking for a way to cut their monthly expenses.

The sales pitch that came in the mail seemed perfect: A mortgage at 1.95 percent, fixed for five years.

Bryan and Susan Andrews of Cedarburg, Wis., sued Chevy Chase Bank, saying the lender misled them into taking a high-interest mortgage. (By Darren Hauck For The Washington Post)

"It sounded like a really good program," Susan Andrews recalled recently.

But after the deal closed, in 2004, the couple realized to their horror that the $191,000 loan they got from Bethesda-based Chevy Chase Bank was an adjustable-rate mortgage. The rate has climbed to 8.3 percent and, because of the way the mortgage is structured, the couple now owe more than they did when they signed for the loan

They went to court, saying they were deceived. A federal judge has sided with the couple and is allowing a class-action suit involving up to 7,000 borrowers against Chevy Chase.

The bank is appealing, and on Friday, an appeals court granted its motion for an expedited appeal. The bank says the terms were clearly stated in the contract and that if the family has a grievance, it should be taken to the mortgage broker who sent the original sales flier and acted as an intermediary between them and the bank.

Bryan Andrews, 49, a carpenter, and Susan, 51, a nurse, previously had a 5.75 percent fixed-rate mortgage. The couple, who live in Cedarburg, Wis., say they didn't realize what they had done until they got their first payment coupon for the new loan in the mail. They considered refinancing into a different loan but couldn't do so without a $5,700 prepayment penalty. They sued two years ago.

Last month, U.S. District Court Judge Lynn Adelman, a federal judge in Milwaukee, ruled that Chevy Chase had violated the 1968 Truth in Lending Act, which requires lenders to clearly explain loan terms to borrowers. Chevy Chase's disclosures to consumers showed a "lack of forthrightness" and "would both confuse and mislead an ordinary consumer about the cost of the loan," the judge wrote.

Adelman ruled that while the borrowers were not eligible for damages, they could be permitted to turn back or "rescind" their mortgages. Recision would permit borrowers to be released from the loans, receive reimbursement of any interest they paid to Chevy Chase and get back their closing costs, too.

In other words, the ruling may give some borrowers a refund of everything they have paid to live in their houses for years.

The case worries the lending industry because of the potential for hefty losses if other borrowers are allowed to rescind mortgages they claim were misleading.

The Chevy Chase case underscores the rising uncertainty surrounding the kinds of loans that have emerged in the past five years, said Glenn Costello, managing director of Fitch Ratings Residential Mortgage Backed Securities Group. These loans include such variations as interest-only loans and what are known as option ARMs, which allow people the choice of paying less each month than the interest would be. In many of these loans, the amount owed is deferred to keep monthly payments down. The downside is that at some point payments can rise sharply. The amount owed can rise, too.
Banking regulators have only recently begun offering new information to borrowers about these loans and warning lenders to explain them more carefully. In the meantime, the loans have proliferated. In the Washington area, for example, nontraditional mortgages accounted for almost half of the purchase and refinance loans made last year.

"Some percentage of borrowers don't understand the terms of these loans, and it is to be expected that there would be some issues emerging," Costello said.

Bryan and Susan Andrews of Cedarburg, Wis., sued Chevy Chase Bank, saying the lender misled them into taking a high-interest mortgage. (By Darren Hauck For The Washington Post)

Chevy Chase says it has done nothing wrong. The bank complied with the truth-in-lending law, said Thomas H. McCormick, the bank's general counsel.

In its court filings, Chevy Chase lawyers said the Andrewses' loan was appropriate for them because it gave them more "flexibility" by letting them choose what level of payment they would make each month, and that if the family has a grievance, it should be taking it to the mortgage broker, First Mortgage, which arranged the loan.

"Simply put, to the extent that Plaintiffs have a legitimate grievance, they have sued the wrong party," Chevy Chase's lawyers wrote. First Mortgage, which was not sued, did not return calls seeking comment.

At the core of the dispute are some words that appeared on the top right corner of a document the lender must provide under the Truth in Lending Act. One line read: "WS Cashflow 5-year fixed," and the line under it said "Note Interest Rate: 1.950%."

The Andrewses said those words led them to believe the loan was a fixed-rate mortgage for five years, at 1.95 percent interest, and that they were reassured of its meaning by the broker at First Mortgage who handled the loan on behalf of Chevy Chase. In fact, the 1.95 percent offer was a teaser rate that lasted one month, and the interest charged on the loan started rising the next month. And the "fixed" feature had nothing to do with the interest rate. Rather, it meant the lowest possible payment stayed the same -- $701 a month -- over five years, although the interest rate rose, with the additional expense deferred to the end of the loan.

"This statement was confusing because although it is true that the payments on the loans were fixed for five years, the interest rate was not," the judge wrote.

Chevy Chase argued that there were many other places in the loan documents that signaled the loan was not a traditional fixed-rate product, noting that one section had a bold-faced title: ADJUSTABLE RATE NOTE and that another section was titled "Calculation of interest rate changes."

In addition, the same federal disclosure form cited by Bryan and Susan Andrews included another box, labeled ANNUAL PERCENTAGE RATE, which noted that the interest rate was 4.047 percent, and said below that the loan had variable-rate features.

According to Chevy Chase's McCormick, the WS Cashflow reference and the 1.95 percent notation were loan identifiers used by Chevy Chase "for internal purposes," to identify the kind of loan and that the full phrase that was supposed to be on the document was "WS Cashflow 5-year fixed pay," but that the last word sometimes got lopped off when the documents were being photocopied.

"The inadvertently truncated language was found by the court to create the possibility of confusion," McCormick said.

The Andrewses should have reviewed the documents more thoroughly, according to McCormick and other bank lawyers. The couple showed "consistent and stunning lack of interest in reading the documents they signed," Chevy Chase lawyers said. The bank also quoted Susan Andrews as saying in a deposition that she trusted the broker and did not think she needed to "read every tiny word."

Kevin Demet, the couple's lawyer, said Chevy Chase was trying to dodge responsibility. "Chevy Chase's attitude was to blame the broker," Demet said.

McCormick said the banking industry doesn't think the Andrews case will set a precedent. Last week the 1st Circuit Court of Appeals in Boston ruled in a similar case that a lower court "lacked the authority" to give these lending claims class-action status. In that case, according to the judges who issued the ruling in favor of the lender, First Horizon Home Loan, the bank's exposure could have been $200 million.

The ultimate cost to Chevy Chase if it loses its appeal is uncertain; so is the number of loans that could be affected. McCormick declined to say how many loans would be involved, except that it would be much fewer than the 7,000 the judge estimated.

Mortgage Defaults Start to Spread

2007-03-06T23:08:00.001-08:00

Mortgage Defaults Start to Spread
New Data Show That Nontraditional Loans Are Beginning
To Haunt Borrowers With Midlevel Credit; Prime Still Fine
By RUTH SIMON and JAMES R. HAGERTY
March 1, 2007; Page D1
The mortgage market has been roiled by a sharp increase in bad loans made to borrowers with weak credit. Now there are signs that the pain is spreading upward.
At issue are mortgages made to people who fall in the gray area between "prime" (borrowers considered the best credit risks) and "subprime" (borrowers considered the greatest credit risks). A record $400 billion of these midlevel loans -- which are known in the industry as "Alt-A" mortgages -- were originated last year, up from $85 billion in 2003, according to Inside Mortgage Finance, a trade publication. Alt-A loans accounted for roughly 16% of mortgage originations last year and subprime loans an additional 24%.

The catch-all Alt-A category includes many of the innovative products that helped fuel the housing boom, such as mortgages that carry little, if any, documentation of income or assets, and so-called option adjustable-rate mortgages, which give borrowers multiple payment choices but can lead to a rising loan balance. Loans taken by investors buying homes they don't plan to occupy themselves can also fall into the Alt-A category.

BORROWED TIME
Default rates are increasing on so-called Alt-A mortgages, which include the following:• Loans to borrowers with midlevel credit scores that fall between "prime" and "subprime."

• Many mortgages made to borrowers who provide little, if any, documentation of their income or assets.

• Option adjustable-rate mortgages, which give borrowers multiple payment choices but can lead to a rising loan balance.

Borrowers who take out Alt-A mortgages are considered less risky than subprime borrowers because of their higher credit scores. But as the housing market cooled and loan volume declined, some lenders lowered their standards for Alt-As. Now a rising number of borrowers who took out these loans are running into trouble.

Data from UBS AG show that the default rate for Alt-A mortgages has doubled in the past 14 months. "The credit deterioration has been almost parallel to what's been happening in the subprime market," says UBS mortgage analyst David Liu. The UBS report contrasts with testimony Federal Reserve Board Chairman Ben Bernanke gave to Congress yesterday. "Our assessment is that there's not much indication that subprime issues have spread into the broader mortgage market," Mr. Bernanke said.
To be sure, defaults have remained very low in the prime market -- and despite the uptick in bad loans, the problems in the Alt-A sector aren't as severe as those that have roiled the subprime market. Some 2.4% of Alt-A loans are at least 60 days past due, according to UBS, which looked at mortgages that were packaged into securities and sold to investors. That is well below the 10.5% delinquency rate for subprime mortgages. (During the housing boom, delinquencies were low for all types of loans because borrowers who wound up in trouble could refinance or sell.)

Some borrowers who took out Alt-A loans in recent years are starting to feel the strain. Johnny and Shirley Johnson, retirees in Cleveland, took out an option ARM when they refinanced their $92,700 mortgage in July 2005. The loan carried a 3.5% introductory rate that began moving upward a few months later. The couple, who live on a fixed income, are currently making the minimum payment on their loan. But they are afraid they won't be able to keep up with their loan and other debts once their monthly mortgage payment adjusts upward later this year.

"We don't want to lose our home," says Ms. Johnson. The couple is working with Acorn Housing Corp., a nonprofit group that provides housing counseling, in an effort to refinance into a 30-year fixed-rate mortgage. Though the monthly payment would be higher, the new loan would protect them against future increases.

Housing counselors and bankruptcy attorneys say they are seeing an increase in troubled borrowers who previously had good credit. "We have clients with 720-plus credit scores, and they are in awful products," says Jennifer Harris, executive director of the Home Loan Counseling Center in Sacramento, Calif. Some of these borrowers took out option ARMs with low introductory rates and are likely to fall behind when their monthly payment resets at a higher level, she says.

Thomas Gorman, a bankruptcy attorney in Alexandria, Va., says he is seeing more financially strapped borrowers who "probably bought more house than they could afford and then took on more credit-card debt" to furnish the house and pay for the move. When the housing market cooled, they were "caught in the middle," unable to sell their home or refinance and make their debt load more manageable.

Lenders are also tightening their standards. At a meeting with investors last week, IndyMac Bancorp Inc., the nation's largest Alt-A lender, said it had raised the minimum credit score at which borrowers could finance 100% of a home's value and took a number of other steps to tighten lending guidelines.

This week Lehman Brothers Holdings Inc.'s Aurora Loan Services unit raised the minimum credit score and reduced the maximum amount homeowners could borrower without documenting their income and assets.

Impac Mortgage Holdings Inc., which specializes in Alt-A loans, said recently that it had tightened its lending standards 17 times last year. The company cut back on riskier loans and began relying more on analytical tools to verify a borrower's income and creditworthiness. Other lenders were quick to scoop up many of those loans, but now they are also pulling back, says Impac President Bill Ashmore.

Lou Barnes, a mortgage banker in Boulder, Colo., says a client with a good credit score was turned down this week for a mortgage to buy an investment property with a small down payment and no documentation. That same borrower was approved for a "nearly identical" loan in August and November, he says. Still, Mr. Barnes calls the tightening "modest." Alt-A lenders are "nibbling at the edges," he says.

The UBS study found that the problems are greatest for Alt-A borrowers who took out interest-only adjustable-rate mortgages, which allow borrowers to pay interest and no principal in the loan's early years, with 3.71% of interest-only ARMs originated in 2006 at least 60 days past due. As in the subprime sector, the riskiest loans are those made to home buyers who put little, if any, money down and don't document their income or assets.

As delinquencies rise, some investors who bought lower-rated securities backed by these mortgages are likely to face losses, according to Mr. Liu of UBS. While defaults are expected to be lower than in the subprime sector, so are the reserves set aside to cushion bond investors against such losses.

Defaults are much lower for option ARMs. But the problems with these loans could be "backloaded," says Mr. Liu, because borrowers with these loans are still making the minimum payment.

Glenn Costello, a managing director at Fitch Ratings Inc. in New York, expects the foreclosure rate for Alt-A loans to ultimately be only 10% to 20% of the rate for subprime borrowers.

Yet investor concerns about Alt-A loans are rising, according to Walter N. Schmidt, a mortgage investment strategist at FTN Financial Capital Markets in Chicago. A report from mortgage analysts at Barclays Capital in New York this week pointed to fraud as one reason for early defaults on Alt-A loans. The mortgage industry is battling a rash of cases in which borrowers, loan officers and appraisers collude in providing false information to induce lenders to advance more money than homes are worth.

Market Update

2007-02-25T19:15:00.001-08:00

This week brings us the release of eight pieces of economic data for the bond market to digest. Two of them are considered to be low importance, but we do have data being posted almost every day of the week. The only day with nothing of relevance scheduled is tomorrow. This makes it likely that we will see plenty of movement in mortgage rates the between Tuesday and Friday.

The first big report will be released early Tuesday morning when we will see January's Durable Goods Orders data. This data gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A larger drop than the 2.0% that is expected would be good news for the bond market and mortgage rates. This data is quite volatile from month to month, so large swings are fairly normal.

The next important news comes late Tuesday morning with the release of February's Consumer Confidence Index (CCI). This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. Since consumer spending makes up two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show a decline in confidence from 110.3 in January to 109.0 this month.

January's Existing Home Sales report will be posted late Tuesday morning. This is one of the lesser important reports of the week, along with Wednesday's New Home Sales report. They measure housing sector strength and mortgage credit demand, but usually do not have a significant impact on bond trading or mortgage rates.

The first of two revisions to the 4th Quarter GDP reading is scheduled for Wednesday morning. Analysts' forecasts currently call for a 2.3% reading, indicating that the economy was considerably weaker in the last quarter of the year than initially thought. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market.

The first of Thursday's two relevant reports is January's Personal Income ad Outlays data, which gives us an indication of consumer ability to spend and current spending habits. Current fore casts call for an increase in income of 0.3% while spending is expected to rise 0.4%. Larger increases would be bad news for the bond market and could drive mortgage rates higher. Smaller than expected increases should help push mortgage rates slightly lower Thursday.

The second report of the day is the Institute for Supply Management's (ISM) manufacturing index for February. This index measures manufacturer sentiment and can have a pretty large impact on the financial and mortgage markets if it varies from forecasts. It is expected to show an increase from January's 49.3 to 50.0 last month. Rising sentiment is considered to be a negative for bonds and could lead to higher mortgage rates.

The last piece of data scheduled for release this week is the University of Michigan's revision to their Index of Consumer Sentiment for February. Current forecasts show this index revising higher than previously thought. The preliminary reading was 93.3 and i s now expected to stand at 94.0, indicating that consumer sentiment was stronger than previously thought. This index is important because it helps us measure consumer confidence.

Overall, look for plenty of movement in bond prices and mortgage rates this week. I think we will see the most movement either Tuesday or Thursday, but several of the week's reports can cause movement in rates. This would be a good week to maintain contact with your mortgage professional.

Housing Bubble = Lending Bubble

2007-02-22T23:35:00.000-08:00

This shows why one should be smart about their mortgage planning. One really needs to take a look at how they can maximize their outside investments instead of “putting all
their eggs in one basket” I can not tell you how many times people came to me wanting to do 100% financing on investment properties, with no reserves. In amlater article I will discuss all the implications of buying more then you can afford.

...It is indeed the financial institutions that are most at risk in the real-estate market (which is not to say that consumers and speculators won't get hurt). The lenders will bear the brunt of the pain, because in many cases, they loaned the entire purchase prices of many homes. As I have said often, the housing bubble has been more a lending bubble. It will be the impairment of the financial institutions that will stop the flow of credit to the real-estate market. In turn, that will accelerate the collapse in house prices somewhere along the way.

The story closed with a description of how slow the market has recently become in Florida -- via the following comments in an e-mail by real-estate broker Mike Morgan: “We went three days this week with not a single showing. That's incredible. I have 35 listings. We usually get 2-6 showings a day. ... I received more desperate calls from sellers than ever. One lady broke down into tears. Her husband bought two investment properties, and they are now going to lose their 'life savings' if they sell the homes in today's market.”

Ladies and gentlemen, unfortunately, a lot of people aroundthe country are going to be badly hurt as this bubble unwinds. And, after they have taken their losses, the financial institutions that were the engine behind this folly will take their own hits. 'Easy Al' Greenspan at the Fed tried to bail out one bubble with another bubble. While it bought some time, it will end in far-worse pain"

What I do as a Mortgage Planner

2007-02-22T19:50:00.000-08:00

Why do should you work with a Mortgage Planner instead of a Mortgage Broker?

Mortgage planners have demonstrated financial knowledge and expertise regarding the tax and financial planning implications of various mortgage and real estate investment strategies. Therefore, A Mortgage Planner can better advise you when it comes to:
Your single largest debt - mortgage
Your single largest asset - real estate equity
Life Planning needs and goals - cash flow
A Mortgage Planner is trained to help you increase your cash flow
A Mortgage Planner is skilled in helping you become debt free sooner and achieve true financial freedom
A Mortgage Planner is equipped to help you profitably invest in real estate and protect you from mortgage and real estate investment scams
A Mortgage Planner is qualified to help you implement mortgage and real estate equity strategies to help you save money on income, capital gains and estate taxes
A Mortgage Planner is committed to help you improve your credit score and get the best deal on your financing
A Mortgage Planner is able to explain the benefits and drawbacks of paying off your mortgage before retirement, and help you to determine which strategy works best under your individual circumstances
A Mortgage Planner can guide you in implementing the best home equity and mortgage strategies for divorce situations
A Mortgage Planner can help you implement a financial strategy to finance your children's education
A Mortgage Planner is equipped to better enable you to financially care for your elderly parents
A Mortgage Planner is able to help you implement beneficial mortgage and real estate equity strategies before and during job or career changes
A Mortgage Planner can help empower you to start or sell your business by implementing viable mortgage and real estate equity strategies
A Mortgage Planner is able to recommend the proper financial strategies when you are ready to buy or build a vacation home
A Mortgage Planner is committed, qualified and equipped to help you implement mortgage, cash flow and home equity strategies to build and conserve wealth when buying a home or refinancing your mortgage

Now who would you rather work with? Your typical mortgage broker or a Mortgage Planner?

Welcome to America One Mortgage Blog

2007-02-22T19:37:00.000-08:00

Welcome to the Blog of Hayden Gerson, a Certified Mortgage Planner. I set this blog up to keep you up to date with the latest trends in the mortgage industry, as well as to answer questions anyone might have regarding the real estate, mortgage, finance, and investing fields. I am going to tell you a little story of how I switched from a typical mortgage broker, to a mortgage planner in my next post. If you have any questions or would like to contact me, my information is below.

Hayden Gerson
Branch Manager
America One Mortgage
15303 Ventura Blvd Suite 900
Sherman Oaks, CA 91403
Office (800) 505-7554
Fax: (866) 430-9004
Cell: (323) 333-5004
Apply online and check your loan status at www.rapidfunder.com

YOUR REFERRALS ARE THE LIFEBLOOD OF MY BUSINESS, DON'T KEEP ME A SECRET.