Randy Mitchelson, of Estero, Florida, is a licensed mortgage professional with 15 years experience in financial services.

Mortgage by Randy

monthly update to our clients, colleagues, family & friends

By: Randy Mitchelson, May 2009

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In Issue 14 We Touch On:

Politicians Write Bad Mortgage Legislation

Americans Put Away Credit Cards

Buying Credit Scores

April ended with another seminar and more homeowners getting educated with the latest news about the property insurance, real estate, self-directed IRA, mortgage and credit markets.  Feedback from the Estero, Florida audience was favorable and many thanks to fellow presenters Jerry Elliot (Oswald Trippe Insurance), Dina Cecere (Dina Cecere Realty), Paul Cecere (Centennial Lending Solutions) and Austin Hardy (Entrust).    On to the news….

The current newsletter and all prior newsletters are archived at the MortgageByRandy blog space. 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: Politicians Endangering Consumers & Mortgage Professionals

Mortgage rates have bounced in a tight range since March and there is not anything on the horizon to make them deviate one way or the other in the short-term.  This steadiness of low rates helps make new home purchases more affordable and homeowners with adequate equity can refinance into a lower rate.  The damage caused by loose underwriting rules, overly optimistic home buyers and some shady mortgage originators is not forgotten.  New legislation continues to be debated which has the good intention of better regulating the industry.  However, there are components of several pieces of legislation which, if passed into law, will hurt consumers, small businesses and appraisers.

One example is Senate Bill 896.  This bill contains an amendment which outlaws the consumer's ability to finance, including through rate or principal, any origination fees or costs permitted.  This means that consumers will no longer be able to obtain a no point loan or no point/no closing cost loan and will be forced to bring money to the closing table!  The major ramifications of this amendment are:

1. Significantly increase consumers’ costs

If mortgage brokers can no longer occupy a competitive place in the market, consumers will be forced to other competitors, which will cause upward pressure on pricing because these entities will find themselves in a position to charge consumers even more.

2. Legislatively pick winners and losers

Consumers who are unable or unwilling to come to the table with a 20% down payment and all of their closing costs and origination fees will be forced to turn to other financial institutions that may not be local or easily accessible, or will be denied access to mortgage credit altogether.

3. Destroy small business

Mortgage brokers are small business professionals who rely on yield spread premium (YSP) as a tool to provide consumers with the no-cost mortgage loans they typically demand.

Just as the pendulum of greed and spending dominated consumer behavior a few years ago, now the pendulum swings too far in the opposite direction.  Elected officials are trying to put their own personal stamp on legislation which on the surface demonstrates to voters that they are doing something about the mortgage crisis.  Unfortunately, too many of these politicians lack the knowledge to understand the repercussions of their actions. 

Personal Credit: Take Steps to Check Credit History with All Three Credit Bureaus

Reviewing your credit history regularly is just as important as changing the batteries in your smoke detectors every six months and getting the car oil changed every 5,000 miles.  If you neglect to do these things you increase your risk for bigger problems later on.  Remember to check your credit with each of the three major credit bureaus.

"Looking at one is a useless endeavor; you need to look at all three," says Howard Dvorkin, president of Consolidated Credit Counseling Services in Fort Lauderdale, Florida. "People tend to pull one and think everything is the same on all of them. That's not normally the case."

The reports will have different information because it's a voluntary system, and creditors subscribe to whichever agency they want -- if any at all.  If you have not checked your credit history at all, then get all three reports to ensure accuracy.  Otherwise, consider looking at one of the three every four months to monitor changes.

Economy & Financial Insights: Notice Your Mailbox is Lighter These Days?

A recent study by Mintel Comperemedia revealed two significant findings.  First, Americans are using their credit cards less.   Instead, 43% of Americans are using their debit cards more often.  The second finding is that banks have reduced the number of credit card offers sent to our mailboxes.  In the first quarter of 2009, lenders cut solicitations in half (compared to 4Q 2008) in response to rising delinquencies and chargeoffs.  While the lenders save a few trees, consumers are continuing to improve spending discipline.  Although spending is a key driver of our economic growth, these behavioral changes by banks and consumers are a necessary building block to better financial health.

Question of the Month: Is it Possible to Obtain Your Score on AnnualCreditReport.com for a Fee?

First, always use AnnualCreditReport.com to access your free reports.  This is the only site where you can get the free reports guaranteed to you by law.  Television and other ads for “free” credit reports all have a catch of some sort that require you to pay money.  The law does not entitle you to free credit scores.

When you visit AnnualCreditReport.com and progress through the screens to order your free report, there will be an attempt to upsell you to purchase scores.  Typically it’s about $10 per bureau.  If you are committed to spend about $30 to acquire all 3 scores, you might want to consider getting a monthly subscription for credit monitoring which includes the scores and also provides the additional peace of mind of being notified of any changes.

Giving Back: Supporting Our Communities – Mitchelson Scholarship Foundation 

High school graduation season is upon us.  Once again, the Larry Mitchelson Scholarship Foundation will be selecting an aspiring art student to receive a cash award to help them pursue higher education.  Previous winners are profiled on the foundation web site.  As the students progress in their career they can post updates and pictures of their art work.  Your generous donations can be conveniently made securely on the foundation Facebook  page or use the mailing address on the web site.

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 5^th day of each month and we will do our best to include your information in the next issue.

Nashville in July!  If you love great live music, celebrating with fun people and a contributing to a great cause, join us the weekend of July 17 for a one of a kind concert at The Listening Room in downtown Nashville.  Only 200 seats are available so contact me now to reserve!

Randy

Mortgage by Randy newsletter, Copyright 2009 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.

_________________________________________________________________________________________________________________________________________

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 consumer finance lenders with customers.   Through its network of partners, National Web Leads delivers innovative Web 2.0 software solutions such as lead generation platforms and real time desktop widget and mobile reporting tools for lenders and internet 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.

Mortgage by Randy

monthly update to our clients, colleagues, family & friends

By: Randy Mitchelson, February 2009

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  In This Issue We Touch On:

Loan Modification Nightmares

Tips to Handle a Collection Agency

Benefit of Pre-Approval Letters

Is that a stimulus package in your pocket or are you just happy to see me? Just how many spouses of our elected officials used that line recently is the real $800 billion question! Now is a good time to buy stock in companies that manufacture printing machines. The government will be requiring a lot more printing presses to create all the money committed in this law. A necessary evil? Only time will tell, but no doubt our government has less than a stellar track record of positively impacting our economy with spending legislation. On to the news….

The current newsletter and all prior newsletters are archived at our blog space mortgagebyrandy.spaces.live.com. Bookmark it and share with your friends and family. You can enter your own comments and feedback as well. Time for the news…

Mortgage Market: Another Potential Homeowner Nightmare: Loan Modifications

In the right circumstances, a mortgage loan modification can be an effective strategy for a homeowner who is behind on their payments due to job loss or other catastrophic life events. However, with the massive amount of delinquent homeowners combined with the rash of media attention the housing and mortgage market is receiving, unscrupulous people have started cold calling homeowners to offer loan modification services and making thousands of dollars in fees, much of which is unearned.

The scam goes like this…..you, the homeowner, regardless of whether you are behind on your loan, receives a phone call or email from a loan modification “specialist” offering a service which will allow you to skip making mortgage payments and eventually reduce your mortgage balance and future payments. The “expert” informs you that it will take several months before the bank gets serious about collecting on your loan so you can pocket all those unpaid mortgage payments. Then, when the bank finally comes after you, the loan modification company promises to represent you to renegotiate your loan balance and payments to get you a lower balance and payment. Sound too good to be true? It is.

First, if you are not behind on your mortgage, why in the world would you let someone convince you to stop making your payments to the bank? This will ruin your credit rating for years. One thing is true: banks, due to their huge backlog of bad loans, will take several months to begin aggressively coming after you. So what? By then, your credit is tarnished, you are wearing the scarlet letter of being a delinquent borrower, and your family name is duly recorded in the county public records as being sued for foreclosure. Heck of a triple crown there. Oh, and by the way, your fate is in the hands of that loan modification company that you already paid $2500 or more to. If you receive an offer like this, run away.

For anyone that is legitimately in trouble with their mortgage, there are a number of FREE services available to try first. Previous editions of this newsletter have addressed some so visit our blog site to read the back issues. As a last resort, retaining a competent real estate attorney to represent you in a loan modification effort is ok and many lawyers are achieving success getting folks a revised loan. If you are ever in doubt as to what to do, just get in touch with me for advice. Note: for my Florida friends please note that Florida State law BANS the collection of any upfront fees for loan modification services.

Personal Credit: How to Deal with a Collection Agency

Collection agencies purchase delinquent accounts from creditors like Home Depot, Sears, Verizon, etc.

It takes 4-12 months before the creditor gives up trying to collect a bad debt and they sell the account for pennies on the dollar to a collection agency. At that point, it is usually too late for the debtor to deal with the original creditor. The first step in working with a collection agency is to validate the debt. This is done by written request. You can contact me for a template of the letter. The letter should be sent via certified mail so that you have proof of it being received.

The letter accomplishes several things to protect you. First, you will require the agency to send you written proof that the debt is indeed yours. Second, the letter will prevent you from receiving harassing phone calls at home or work. Third, it puts the collection agency on a 30 day deadline within which they must comply with your request. Finally, the letter is written in such a way to inform the collection agency that you know your rights as a consumer and will not hesitate to exercise those rights to the fullest extent of the law if the collection agency fails to meet your conditions.

Economy & Financial Insights: We Are In a Catch-22 Situation

Roughly two-thirds of our economy is driven by consumer spending. Since most of us are spending less these days, our economy continues to spiral downward. Does that mean we should spend again?

People are learning how to be more frugal. Consumer oriented websites like wisebread.com are educating people about how to save on food bills and other everyday expenses.

Debt is also an addiction that many Americans are dealing with (not to mention our government). Our collective savings rate was 0% during the “boom” years and now that our economy has gone “ka-boom”, our savings rate has already increased to 2.8% as of November, according to a Kansas City Star article. Today, people are more focused on paying down debt, but only a few years ago they were using their homes as ATM machines and their credit cards like water to buy new cars, new TVs, bigger houses, stainless steel appliances, front loading washers, game systems, iPods and anything else their heart desired. Good for the economy? Not in the short term, but over the long run, a reduction in our collective $52 trillion in debt is good for our financial standing in the world and our moral fabric.

Question of the Month: Do I Need a Pre-Approval Letter When Shopping for a Home?

Most licensed real estate and mortgage professionals will advise that you obtain a pre-approval letter from a bank or mortgage broker. There are several benefits of doing this. First, when you are house shopping, a seller will take you more seriously. When a seller has more than one party making an offer, a buyer that already has pre-approved financing will oftentimes be awarded the sale even if their bid was slightly lower than a competing party without a pre-approval. Second, it saves time down the road. Mortgages, on a good day, take a minimum of 2 weeks to get done and in these times of super scrutiny, 2 weeks can often turn into 4 weeks or more. To obtain a pre-approval you will need to provide preliminary documentation like a W-2 and paystub and in most cases a credit review. Therefore, a pre-approval gets the ball rolling earlier in the home buying process. Pre-approvals should not take more than 24-48 hours once the required documentation has been provided. They should be free of charge too (except for the cost of pulling your credit report)

Giving Back: Supporting Our Communities – CCCS: A Reliable Resource for Financial Counseling

Consumer Credit Counseling Service (CCCS) is a nonprofit organization dedicated to financial wellness. Whether you need help getting out of debt, or into a new home, CCCS has a team of nationally certified counselors that undergo continuous training and education so that they are always in the best position to help. There are other companies out there that offer debt consolidation services, etc but some of them are scam artists and are simply trying to profit from those that are in trouble already.

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 5^th day of each month and we will do our best to include your information in the next issue.

The boys of summer have arrived & spring training is underway….yet another perk of living in paradise.

Randy

Mortgage by Randy newsletter, Copyright 2009 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.

__________________________________________________________________________________________________________________________________________

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 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, accessible at mortgagebyrandy.spaces.live.com. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.

He is owner of Estero, Florida based National Web Leads, LLC (www.nationalwebleads.com), an Internet lead generation service matching consumer finance lenders with customers.   Through its network of partners, National Web Leads, LLC delivers innovative Web 2.0 software solutions such as lead generation platforms and real time desktop widget and mobile reporting tools for internet 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 (www.swfrtp.org) and Strategic Planning Director for the Michelle’s Angels Foundation (www.michellesangels.com).  He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.