Richard Maize: How To Find An Honest Mortgage Broker

Richard Maize: How To Find An Honest Mortgage Broker

Los Angeles --- May 22 ....When to refinance? And how to find an honest real estate mortgage broker? Those questions were easier to answer before the recent 2011 laws become in affect.    

The old answer to when to refinance is when the current rate was better than the rate you have on your existing mortgage without necessarily taking into account the costs to refinance because in some cases, the mortgage broker will absorb them using their discount points (rebate) to pay all out of pocket costs and still improve your rate and he (or she) will still make commission.  Well, that certainly seems like a “win win”.   

However, even back then, if the borrower wanted to pay for the costs and perhaps one percent origination fee, a much lower rate would have been available.   Not a common practice, as the fee driven rates were often enjoyed without the connected fees if one has patience and have a sharp mortgage broker working for you.   Also, the fees are not tax deductable unless it is a purchase money transaction (they are usually amortized over the course of the loan for tax purposes).  

That was yesterday. How about today?  

Today’s answer is not that much different; the calculation is just different. 
  
In most cases, the broker cannot make enough on each loan to cover the costs.   So, you have to look at the difference between the rates today verse the rate you currently have.  You have to also have an idea as a minimum how much longer you plan on staying in your existing home.   If you plan on staying in your home for at least 3 years and rate differential is ½% or more, go for it.   Even with the one point and costs (usually figured at about ½%) in three years, you break even.  Longer than 3 years, you save money.  With 0 points with same interest rate differential, has a break even period of about 1 year.

Who is the right mortgage broker?  
An honest one who doesn't charge bogus fees i.e. - email / Internet access, doc prep, document review and funding.

Should I simply go to my bank for the best rate?  


A mortgage broker "buys" loans from a variety of mortgage lenders at a wholesale cost, and sells the loan to another mortgage banker, receiving a commission on the sale.


A banker, gets a loan from your local bank. A banker usually, but not always, has their own money to lend out and makes a profit by collecting loan fees and the interest the customer pays on the loan, called servicing fees. However, most banks package up loans in packets of $1,000,000 dollars or more and sells them to the secondary market, making a commission on the sale. Why? What are interest rates right now, 7 or 8%? The stock market and mututal funds are averaging 15% returns or more. Why have millions of dollars tied up in low return investments?  

The right answer is not whether to go directly with a lender or broker.

One advantage for going to lender is that a broker typically will have a vast variety of lenders who on occasion will have a special program to attract borrowers.  A broker can shop for you for the best rate.  Also, in rare occasion, there are still modified “e-z qualifying loans” at some remote lenders.   Having said all that, one should call the big time brokers in the area and ask for the absolute best rate with 0 points and 1 point.  Simply compare with your bank.  That is a good starting point.   

If you are satisfied after shopping for that rate, one or the other is what you would be happy with have them lock in your rate (not to be confused with “don’t forget the lyrics”).   Once you get your rate locked, hustle and get all the paperwork you need to them right away so that you don’t lose your lock.  

No matter who you go to, right out of the gate, make sure once you show them your paperwork and financial information, have them run it by the underwriter to confirm your qualification.  They will have an 80% idea (subject to the appraised value of the house of course). The underwriter can easily look at your credit score and calculate your average income for the last couple of years.   


We are now required to have certain pieces of information before we can issue a true good faith estimate, because there are zero-tolerance on changes on some parts of it. We cannot issue a GFE without a credit pull. We need a full application prior giving a GFE these days.


Because of the change to a Good Faith Estimate as of Jan 1, 2010, it is most likely you will no longer see doc prep, email, etc. Those specific fees are typically title companies fees which are out of the control of whomever provided you with this estimate you are speaking of. But again, because of the new regulation changes, most title companies no longer charge for this or that. Instead they have one that includes everything. And I'm not sure how your state works but in Oregon, all title companies must charge the same with very little tolerance.

You will probably find that you will no longer be given a Good Faith Estimate without an application because what is not listed on it is paid for by the person who gave the estimate in the first place. And how are we to know your specific situation without seeing the whole picture? Is your goal for an estimate to get a general idea or to have something in writing to hold the mortgage company to? There is always a solution and I'm sure your goal is to see who you feel would best fit your needs. I would suggest going over costs verbally to achieve this goal. Also test the knowledge of your loan officer so you feel good in working with someone who knows the guidelines just as well as the agencies putting them out.

The debate of whether FHA or conventional is best for you is really going to depend on your specific scenario. If it ends up being FHA, I would act fast as the FHA fees (e.g. up front MIP) increases April 5, 2010 as well as seller contributions toward closings costs decrease significantly. If your credit score is 700 right now (remember credit scores change each month), conventional may be difficult as pmi (private mortgage insurance companies) have minimum score requirements aside from the actual home loan program. You may find that you qualify for the program but not for pmi. There is also USDA, a zero down home program which has no pmi and allows for lower credit scores. There are income and area restrictions to this program but most do qualify.

Everybody has an origination fee. And everyone has a different way of presenting rates and fees. This is because everyone is different. For example, you may want to see the best interest rate with normal closing costs. Maybe you wish to have a low or no fee loan option. In this case you would be presented with a higher interest rate in exchange for less closing costs. And there are some whom wish to pay extra to buy down their interest rate. 

My further suggestion is to go to the local bankers association .  In California, you can look up the California Association of Mortgage Brokers ("CAMB").   They can also direct you.  

As far as institutions such as Bank of America, Wells Fargo, Citigroup, JPMorgan Chase Bank, Wachovia, Golden West Financial Corporation and all other major banks, they are scrutinizing you and your property's qualifications (as they should).


Unless there is a major exception, the banks need to make sure that you are qualified by way of your income tax returns and you have enough equity in your home that fits their underwriting criteria.

The question is, what happens if you originally got qualified without proving income?  Or, if your income went down in this economic times?   Or, the property dropped in value while the lender's loan to value criteria is more stringent?   AND you have to refinance as your loan is either due or your rate is much higher than what is offered?


In responding to the new mortgage laws that US bank regulators recently unveiled  to overhaul the market for securities backed by mortgages and other assets, one must remember that the proposed rules wouldn't apply to the vast majority of loans made today.


For example, loans backed by Fannie Mae (FNMA), Freddie Mac (FMCC) and the Federal Housing Administration, which currently back about 90% of new loans, are exempt as long as the companies remain under federal control, a state they have been in since September 2008.

The last thing you want, is to have all the paperwork turned in and wait 4 weeks and then your agent calling you and letting you know that you don’t qualify.  

You are back to square one with possibly higher rates to deal with which is even more difficult to qualify.  

Richard Maize, a respected leader in the mortgage banking real estate industry, and a mentor to young entrepreneurs, has generously supported organizations and causes including the American Cancer Society, Vista Del Mar Child and Family Services, Hurricane Katrina, Los Angeles Police Foundation, USO, Haiti earthquake relief efforts, Israel Flying Aid, Maccabiah Jewish Olympic Games and the Cedars Sinai Board of Governors.

Richard Maize and his wife, Rochelle Maize, are longtime benefactors of many other non-profit organizations and Richard Maize has been recognized for his efforts on behalf of more than a dozen charitable groups and community projects.

The Rochelle and Richard Maize Foundation supports an extraordinary number of foundations, organizations, and non-profit groups.

Richard Maize: Foundation To Provide Financial Aid To The Forgotten Unemployed – Senior Citizens

Richard Maize: Foundation To Provide Financial Aid To The Forgotten Unemployed – Senior Citizens

Los Angeles --- May 13, 2011 ….. “One of the hardest hit groups of people with the least potential of securing work even if and when the US economy improves are the 60 year old plus citizens,” said Richard Maize. 

As such, I have decided to provide free financial assistance to some of those who are over 60-years-old, unemployed, have no source of income but are ready to get a business off the ground.”

Richard Maize is the director of the Rochelle and Richard Maize Foundation. The Rochelle and Richard Maize Foundation is a philanthropic organization that supports and contributes volunteer and financial resources to causes locally in the community and worldwide by supporting meaningful programs focusing on art, culture, family services and health care that work to help people live more fulfilling lives. 

“We will select those who are the neediest and most motivated to establish a realistic business which is most suitable for them and the market that they will be trying to reach,” says Maize. “The monies will be large enough to provide for some legal and Internet marketing to get the business off the ground.”  

Maize has stated that he has witnessed two types of scenarios where those over 60 are struggling to survive.

“Let’s call him Steve. A 60 year-old who is comfortable living paycheck to paycheck.  His or her kids are all grown and dealing with their own lives.  Presently the 60 year old is living with partner and dog.  Modest living yet depending on that weekly paycheck.   Company downsizes or goes out of business completely.  He is let go with really no severance package.   What does he do?   He really can’t find work.  A bit young to start social security and not prepared for this drastic reduction of income.  Should he take any job even ones that are designed for young adults or even teenagers?  His wife is still working, but her modest check alone will not be nearly enough to pay the day to day expenses.”  

Maize continues: “How about the 60 year old who worked hard and built a very beautiful business?  Let’s call him John. With luck and breaks, John has made a very nice living and strong business for himself and family.   His two kids are working for him and the business survived 38 years of ups and downs -mostly ups.  He was living the American Dream.  He never saw a business that he thought would be passed down to his kids dry up to a standstill.   He was manufacturing products and had a facility overseas as well.  He was drawing a very big salary and draw and living up that income expecting his life style never to change.  Usually, and in his case it was no different, before he let the company close, he invested his savings to try to withstand the drop in business.   Finally, he had no choice but to close the doors while owing money to vendors and salaries.   He, unlike Steve, has a large ongoing mortgage and payments on his expensive cars.  And he has to face the disappointment of his own kids that are now without work or careers.  How does he bounce back?”

“Let’s go to unemployed Steve above. This person is way less more complicated than John because he used to living lean and his downsize is less dramatic.  He can also accept a lesser paying job without dramatically hurting his self-esteem and livelihood. The first thing to do is to apply for unemployment benefits. The second thing to do is to see if your wife can pick up the slack for a short time by perhaps working overtime to make up some of the lost wages that the unemployment benefits do not offer.  All this will take the pressure off the late middle aged guy to find a job that will not be out of fear.  It will avoid him from flipping burgers because of necessity to get some money into the household.  He can be more confident to get a job that will pay better and that he will feel more comfortable with. There are companies that are doing fine and that are hiring middle management positions.  Just continue to search.

Unemployed John is in a way in a more difficult position.  He has to deal with the huge downward slide by way living style, image (both self and outside), financial pressure that is foreign to him, self-esteem, family pressures (way more than Steve) and now credit issues meeting the once easy to pay bills;  now impossible.  Is this person qualified for other businesses other than his own previous career?   Can this person, even if he is qualified, capable of earning what he did when he was the owner of his company to keep up his lifestyle (and that a big “if”)?   Can this guy take another job working for a friend or other business as a “step down” in position and salary - frictional unemployment; which means taking a job that you are overqualified to the job you take?   What does this person do?     This person has much more pressure to prevail which sometimes turns in to desperate measures.”

Maize recommends for this person is to first get his mindset in order.   

“This is where I am today and remember where you have been and the great life you enjoyed,” says Maize.   “It is important to remember the success.   It is a statistical fact that those that once enjoyed success and lost it, have a much better chance to get it again than one who never had it.   You need to deal with today.  Take a job that has a huge upside and can take advantage of your experience and wisdom and at the same time, give youself an opportunity to get ahead. Don’t lose sight of who you are and what you have accomplished.   Stay confident, proud and strong.”

America's over 50s have been the hardest hit by a wave of pink slips as unemployment rises, analysts warned. According to the figures released last week by the Department of Labor, the economy added 244,000 jobs in March. Analysts used terms like “surprisingly strong,” “better than expected” and “somewhat positive” to describe the statistic. On the other hand, economist Robert Reich described the number as “chicken feed.”

“We’d need 300,000 a month, every month for the next five years, simply to get unemployment back under 6 percent,” says Reich . Economic Policy Institute economist, Heidi Shierholz, concurs: “At April’s job growth rate, it would take until the fall of 2016 to get back to the pre-recession unemployment rate.”

The US Labor Department also reported that from New York, Boston, Washington and Chicago to Los Angeles, Houston, Miami and Hartford the unemployment rate rose to 9.0 percent from 8.8 percent, after falling for four consecutive months. The number of unemployed persons stood at 13.7 million in April. The percent of working-age Americans actually working is stuck at 64.2 percent.

Those in their 50s and 60s have the most to lose, says Richard Maize.

"It is a bleak picture for those in their 50s and 60’s. Losing their job is the last thing they would need when they don't have much longer in the workforce and are saving for their retirement. They are also the group particularly reliant on the rise in house prices to see them through their retirement and so will be most affected by the drop in house prices," Richard Maize added.

Concern for the over 50s and 60s were raised as the the Department of Labor revealed that a record number of pensioners are postponing retirement to continue working as they struggle to meet the rising cost of living.

Economists blamed the slowdown in the economy and a low level of confidence among businesses for the increase in unemployment. The economic crisis has particularly hit pensioners who do not have sufficient savings to pay for the rising cost of energy, fuel and food.

Maize concludes: “I will help those who are ready to help themselves. Those who are confident in themselves and need just a few dollars to get back on track. If you did it once, you can do it again.”

To apply for financial assistance from the Rochelle and Richard Maize Foundation, you must provide proof of US citizenship, proof of unemployment, provide a resume, business references and a business plan. Those who qualify for this free aid will be notified by the Maize Foundation.