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Will VA loans stand the test of time? VA loans and their ability to survive new regulations.

Wednesday, September 30th, 2009

If you would have asked me a year ago if VA loans would see massive amounts of overhaul and guideline changes, I would have laughed at you and said “NO WAY”! You see I have been in the mortgage industry since 1997; I have been doing VA mortgage loans the entire time also. As the housing market heated up and everyone was jumping on the sub prime and/or option arm band wagon, I stood my ground and built my business around good old fashioned VA home loans. It was a regular occurrence in my office to have representatives from banks, mortgage lenders, and all types coming into our office to try to convince me and my loan officers to start “pitching” or “selling” these unique new and “profitable” loans. I never once swayed. A good friend of mine named Garret had stopped doing VA loans and began building a very successful mortgage operation around the option arm loan. We had many opportunities to change our model from VA loans to something else, and frankly I may have made a lot more money in the short term. I however, was not purely motivated by money like many that were doing loans at that time. Was an option arm or a sub prime loan good for the homeowner? Those loans kind of came out of nowhere and what would happen if they disappeared one day? When I looked at VA loans I realized they were cut and dry, black and white and had stood the test of time and it didn’t matter if you were talking about a Georgia VA loan, North Carolina VA loan, or any other kind of VA loan. I enjoyed serving American soldiers both active and retired and had confidence in knowing I was offering these people a solid loan that I could count on never going away or changing.

Lets now fast forward to 2009 and the soon to be 2010. Option arm loans are non existent, sub prime loans are shunned and gone.  VA loans are more popular than ever and are being utilized like never before.  Do you think my ideas and thoughts on VA loans have been unscathed or unchanged in light of the mortgage meltdown or real estate implosion? They have changed quite a bit! I still think the VA loan is the best loan by a long shot. If you are an eligible veteran, then you should always use your VA entitlement and get a home with the help of a VA loan. However, I sometimes feel at this point that the never changing, black and white, old fashioned VA loan will change and could essentially fall from grace if the big wig government law makers keep trying to get involved in mortgage regulations.

Here is a short list of POSITIVE attributes of the VA loan program as it was/is and a list of what possible changes may be coming/already have come

Positive Attributes of the VA Loan Program

Current Status

Comments

100% no money down purchase option

Still available

FHA canceled the no money down option and some think VA may follow suit.  Let’s hope not.

No minimum fico score required

all major banks and lenders require a 620 score.  VA does not take a stance but is allowing banks to add this requirement.

We feel this is a HUGE slap in a veteran’s face.  Suppose the VET got hurt in battle and has medical expenses that are hurting his/credit but all other accounts are to date and clean.  In the past banks took that into account and now they don’t.

Streamline refinancing with no appraisal or employment verification.

Most banks or lenders want an appraisal or other form of verification of property value.  Wells Fargo is a big proponent of this dumb rule.

You cannot name a single city in out country where the home has NOT lost value.  Why allow a veteran to buy a home with no money down, then force them into a high rate during low rate periods, by telling them, “sorry your home is not worth what it used to be!”  Give me a break.

1-2 30 day late payments are okay on your mortgage if you want to refinance.

NON EXISTENT.

Why are we seeing all this talk about bail out the home owner and make housing more affordable, yet America’s veterans can not get a break?  In the past banks were ok with a late or two if the veteran was current at the time of refinance.

NO employment verification on VA streamline refinance.

almost non existent, banks and lenders are all verifying employment.

On a streamline as long as the veteran is making payments on time they should be allowed to refi to a lower rate.  Un employment is at an all time high and we need to help those that are still making payments and trying to keep their houses.

So veterans if you are reading this, please don’t be bummed out but please be alarmed.  Your hard-earned VA benefits are being jeopardized by people in Washington and Big Banks that took bail out money.  I will fight this fight along with many others to protect your hard-earned benefits and I will keep doing loans for Veterans as long as the market allows and tells us loan officers that Veterans deserve special treatment!

Charity Golf Tournament Raises Over $5,000 For Military Families

Friday, September 18th, 2009

                                                                                               

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LowVARates.com hosted a charity golf tournament to raise money for military families with deployed spouses. The Layton City Mayor attended the event along with representatives from every branch of the military.

(LAYTON, Utah, Sep. 14, 2009) – Military Families in Utah and across the nation received a major boost through the charity golf tournament on September 14th at Valley View Golf Course.

The tournament host, LowVARates.com, donated nearly $5,500 to the nonprofit military organization, National Advocates for military families (NAMF). The tournament featured over 120 participants, all supporting military families with deployed spouses.

The golf tournament was represented by all four branches of the military and highlighted many soldiers dressed in fatigues. The post tournament festivities include a check ceremony, (presented to soldier Bryce Anderson), an auction and raffle. The Utah Jazz, BYU, Utah and many other organizations donated items for the auction to help raise money.

The Layton Mayor, Steve Curtis, attended the event to help support the cause and raise awareness for the nonprofit organization, National Advocates for Military Families.

“I wanted to support this event to express solidarity between the city of Layton and the military,” Curtis said. “They do so much to preserve the quality of life we all enjoy.”

National Advocates for Military Families is dedicated to providing alarm systems to military families with deployed spouses. The organization helps military families receive peace of mind while spouses are away.

NAMF has already helped hundreds of families receive their no-cost alarm system. Military wife, Kindall I., just received her no-cost alarm system and understands life can be challenging with a deployed husband.

“There are so many things that I worry about while my husband is gone, so it is nice to feel extra safe with the security alarm installed,” Kindall I. said. “I am so thankful for everything NAMF has done for my family.”

Kindall’s husband was deployed on June 2, 2009 to Afghanistan and will serve there for one year. The money from the tournament will help thousands of people nationwide just like Kindall I. and her family.

According to Pentagon data, since September 11, 2001, well over 1 million soldiers nationwide have been deployed. The soldiers leave to serve our country and their loved ones are left with no protection. NAMF’s ultimate goal is to provide protection to every military family with a deployed spouse.

The tournament host and owner of LowVARates.com, Eric Kandell, is a major supporter of National Advocates for military families and hopes the charity golf tournament will give the nonprofit organization a boost.

“We want the charity golf tournament to provide awareness for the amazing things NAMF can do,” Kandell said. “All of the money raised in the tournament goes straight to helping military families with deployed spouses.”

Support the Troops Charity Golf Tournament

Tuesday, August 11th, 2009

Click on the flyer below to learn more about our Charity Golf Tournament

To Sign Up for the Tournament, click here

To Sponsor the Tournament, click here

Michael Jackson vs. Military

Thursday, July 23rd, 2009

Michael Jackson, musical icon and self-proclaimed “King of Pop”, died on June 25th after suffering from sudden cardiac arrest at his home in Brentwood, CA. As millions of fans across the globe banded together to grieve the entertainer’s passing, media outlets began launching around the clock coverage of the tragedy, including celebrity reaction interviews, tributes and retrospectives.

I’m a fan of Michael’s music. It’s sort of hard not to be. But while news of his death shocked me, the ubiquitous media frenzy that followed quickly left me numb. There was a dark irony in the coverage of Michael Jackson’s death, one that spoke to the nature of celebrity, and by default, society itself. In life, Michael was as universally celebrated for his talent as he was ridiculed for his eccentricity. The coverage of his death represents the grand finale in a schizophrenic circus; a sort of real life Cirque Du Soleil with a bizarre, morally ambiguous character performing transcendent music and dance in an artificial dream world. There is an argument to be made that the celebrity that was thrust upon him as a child distorted his world view so profoundly that it ultimately led to his ruin. As tragic as his death was, I don’t pity Michael Jackson. Furthermore, I don’t think any of the unique pressures he faced as a result of his celebrity, however extraordinary; excuse the aberrant aspects of his personality. Michael Jackson, for all his fame and riches, was a deeply flawed individual whose lifestyle (because of his fame and riches) was so insular that he lived largely without regard for common sense or personal accountability. It’s been said by many who knew him best that the most endearing , most frustrating aspect of his personality was his childlike nature.

I expected the media coverage would be intense. But I guess I failed to see the broader context of all this until yesterday. While browsing the web I came across a blog post from a disabled veteran who was sounding off on Michael Jackson. He seemed upset that MJ’s life was being celebrated and deified while US soldiers returning from service were coming home unceremoniously. He admitted that MJ was an influential entertainer but argued that his fame (or infamy) made him a poor rallying point for empathy. The veteran decried the inordinate amount of attention being paid to an entertainer whose last years were marked by scandal, bizarre behavior, and ghoulish self-mutilation.

At first I agreed completely with the veteran. Having grown weary of the post MJ death spectacle, I felt entirely too much time was being wasted on another celebrity ‘tragedy’. As cold as it may seem, the veteran’s blog post forced me to compare the self-destruction of yet another “poor” privileged celebrity to the great tragedy of those who have lost their lives in service of a cause larger than themselves. Working with veterans on a daily basis has made me more aware of the sacrifices made by the men and women of our armed forces. As great of an entertainer as he was, Michael Jackson’s fame, wealth and phenomenal career were made possible because of these sacrifices. While military service is an exercise rooted in service and selflessness, celebrity, by contrast, is a concept rooted in (at least some form of) self indulgence, or at worst, narcissism. I found it difficult to sustain even a casual empathy for someone so blessed by talent, resources and opportunity. I felt that, if we are to lionize an individual, it should be based on merit, social awareness and advocacy, not albums sales or net worth. Compared to celebrities like MJ, the sacrifice made by veterans is largely complete and selfless.

None of this means however, that I wholly endorse one viewpoint over the other. To view our sense of empathy as a “zero-sum” concept implies that American society has a limited amount of emotional bandwidth to expend on its citizens. Yet, for all of the United States perceived deficiencies, one of the most fundamental aspects of our national character is our generosity of spirit and our limitless capacity to care. While more cynical minds may define us by our shortcomings, reasonable minds define our national character by our virtues. These include qualities like our dynamism and resiliency, and our universal commitment to progress and fair play.

But as I wax philosophical on this particular topic, I find myself focused on an especially relevant virtue, one that is truly part of the enduring legacy established by the Founding Fathers. I am reminded of those immortal lines of Emma Lazarus’ poem “The New Colossus”, that which is inscribed at the base of the Statue of Liberty and speaks to this very quality:

Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me. I lift my lamp beside the golden door.”

I believe these lines represent our nation’s character best of all. Throughout our history, our nation’s mission has been to “widen the circle of freedom, to deepen the meaning of freedom, and to strengthen the bonds of community.” Underpinning this mission is the idea that the United States has room for all those who dare to dream, regardless of race or creed, and commit themselves to work tirelessly in service of that dream.

When I view Michael Jackson through the prism of these ideals, a more complex character emerges. Michael Jackson’s early childhood was marked by crushing poverty, tough times, and crippling domestic abuse. He was shy and subdued, and yet he possessed wild, florid dreams of stardom. As a toddler, he would spend hours channeling the music and dance essence of James Brown and Jackie Wilson. At age 6, when his astonishing talent was revealed to his family, (tough critics with respectable musical chops of their own) it was clear that Michael would not only join the family band, but lead them. Michael was not only a tireless worker but became an incredible musical innovator, evolving pop music in new directions with critical acclaim. Within 3 years the Jackson’s were on the Ed Sullivan show, augmenting a fervor that rivaled Beatle mania. Within 15 years Michael Jackson was far and away the richest, most famous entertainer in human history, along the way racking up truckloads of Grammys, and a string of timeless hit records, including the #1 highest selling album of all time “Thriller” with an unbelievable 110 Million copies sold- more than 2 times the albums sales of the #2 record.

While we shouldn’t excuse Michael’s self-alienating behavior in later years, it would be wrong to dismiss his passing as unworthy of sustained empathy. I might say to the veteran who wrote the blog post, simply this. Michael Jackson’s story is the embodiment of the American Dream. We may disagree on the degree to which we should regard his life, but I’d hope we could agree on the fact that Michael Jackson made more of the opportunity that our veterans have fought and died for than most. He was an example of someone who made it. His story validates the promise of those words inscribed on Ellis Island. It is for these reasons that I hope history judges Michael Jackson’s as a man, deeply flawed, but unquestionably American.

Repeat clients and why they come back

Tuesday, June 16th, 2009

For me and I think many others the true measure of any good business – the place you buy tires, your favorite place to go out to eat, where you shop for groceries and so on, when you finish the transaction, when it is all said and done – you feel good about the experience.

I have done VA loans for nearly 7 years, and during that time have had many repeat clients and they are in fact some of my favorites.   When you have a relationship with a client they expect a great deal – and they should.  Not only do they expect professional, prompt service, but they also want to be treated fairly and feel that they matter – everyone no matter how small or big is important and it is nice to be treated as such.  After all, when you are out to eat and the server goes that extra bit to be sure your food was hot, your drinks filled and they gave you excellent advice about what to order you appreciate that.  On a larger scale, of course, in the refinancing process you want to feel valued and that the treatment and service you receive are the best that your money can buy.  We all pay for services everyday, and at the end of each transaction you either feel taken or satisfied.  Being upfront about any process is always the best policy.  I always try to explain the process, how long it takes, what to expect, how we are directly connected and communicate with the VA as an approved lender.  Understanding how the process works, being kept in the loop as the VA refinance progresses and being part of the whole process in general helps many people feel more comfortable with something they aren’t necessarily familiar with.

Finally, there are many VA lenders in this great country, no doubt.  But just as you make a decision to deal with your accountant, or your favorite mechanic, you choose Flagship Financial VA Pro Division for your VA refinancing needs because you know they know what they are doing.  It may finally boil down to opportunity cost -  the opportunity to do business and get a great rate in a timely manner, as opposed to dealing with someone who doesn’t know the intricacies of VA loans and how they work and then you are left high and dry with no refinance on your largest investment – your home.  We understand the ins-and-outs of VA loans, and we get them done, so time after time our clients return to us for the same service they have come to expect.

Veteran Home Owners – Why do Veterans Pay an Origination Fee?

Monday, May 18th, 2009

Why Veterans Pay An Origination Fee

I was on the phone the other day with a veteran borrower and they posed a great question, “Why do veterans have to pay an origination fee?”  I thought, hey that is a good question and I bet others have asked that very thing.  Veterans have access to the best mortgage financing available in America today, bar none.  The VA allows veterans to finance 100% of the home purchase price.  No where else can you find such a program.

With interest rates at 50 year record lows, many veteran families are taking advantage of the interet rate reduction loan offered by the VA.  Of course any time you refinance your loan there are going to be costs.  One of those costs is the origination fee.  It is almost universally 1% of the loan amount, or one point, as many call it.

Veterans pay this fee as part of the purchase or refinance and there are several reasons why.

1.  As a VA IRRL is processed it will be touched by nearly 20 people, from start to finish.  From processing, to the VA, to the current lender to the new servicer, the title company, the loan officer and many other in between.  There is work done by each of these parties and each party will receive compensation for the work done.

2. It is a fee for services completed– just like your taxes, or some other professional you trust, a lawyer or accountant.  You expect the refinance to be done correctly, quickly and completely,  as with any licensed professional.

3.There are a number of costs while processing a VA loan that the VA does not allow the veteran to pay for.  The largest of which is the underwriting fee charged by the new loan company.  It can be as much as $1000 and so any unallowable fee that is incurred as part of the refi must be paid out of that origination fee.

4.Finally there are some circumstances in which it is possible for the veteran not to incur an origination fee, or half of one etc.  Commonly when a veteran or other home owner who is looking to refinance wants to do a “low-cost” mortgage.  The lender will reduce their origination fee if the banks will pay for the refiance costs.  The banks do this by having a higher interest rate then what is available and will make up the difference on the loan.  This is not usually a great option because the rates on these “low-cost” loans can be up to 1.5% higher then the lowest rate that is being offered.  For example, 4.5% is a rate at which we have been refinances veterans for alomst 3 months.  You can do a “low-cost” loan at 6% but what good is that if you are already at a 5.5%.

Finally, you get what you pay for is what my Dad always said.  Over the years his words of wisdom have become more true to me.   See you around..

Veterans-Discount Points to Lower Your VA Rate

Thursday, May 14th, 2009

Veterans often hear the term “discount points” or buying down the rate and immediately think this is negative or bad.  I would like to explain how this works and to define these terms.  Veterans have the ability to get a better interest rate when buying a home or refinancing.  Interest rates change daily and are affected by what happens in the market.  Lenders offer these rates at certain pricing levels.  These levels either pay back money to them or cost them money.  The amount is determined by percentages, so for example if the rate is paying the lender 1.5 percent and the loan amount is $100,000 then amount being paid to the lender would be $1500.  This also goes the opposite way.  If the rate is costing 1.5 percent then the lender gets charged $1500 for offering that rate.

WHO PAYS FOR THE DISCOUNTED RATE?

Veterans pay for a rate that is discounted.  This is why its called discount points.  This is not a bad thing because it means lower monthly payments and more savings over the life of the loan.  In a  streamline refinance these points can be rolled into the loan and with a purchase the seller can pay up to 6% concessions and discount points can be included in that. 

VETERANS BE CAREFUL

There is some caution to be taken when paying discount points.  If a Veteran is refinancing a home and is paying discount points, he/she must realize their long term goals with the house and the length of time they plan on living there.  Veterans should be able to recoup the amount of money used to buy the rate down shorter than the length of time in the house.  In addition to this remember that the higher the rate the more the lender/broker is getting paid to do the loan.  This should be gauged on what other companies are offering and the nature of the market.  There was a time that the best rate being offered was over 12% and that was considered good.

SHOULD I PAY DISCOUNT POINTS?

Only you the Veteran can answer that question.  Like I stated before, paying discount point is not a bad thing.  Remember the old saying – “you get what you pay for”.  This absolutely applies to discount points.  Although it costs more up front, the only drawback is spending too much  up front and then selling right away and then you lose a little money but thats all.  By spending too little, you risk more because the cost of interest over time will be devastating compared to the cost of discount points.  Its an Economic truth that its seldom possible to get the most by spending the least.