The bad business of 'Friends of Angelo'

By Marcie Geffner - Inman News

Quick quiz: Which mortgage company chieftain took home $140 million in compensation last year while the company he founded lost $704 million?

If you said Angelo R. Mozilo, CEO of Countrywide Financial Corp., take a bow. And add a couple of gold stars if you knew Mozilo's pay was comprised of more than $120 million from exercised stock options and more than $22 million in other compensation, according to a Reuters' report based on the mortgage company's year-end filing with the Securities and Exchange Commission.

Set aside the stock options, and the astonishing disconnect between Mozilo's star-quality compensation and the company's horrific performance could nonetheless suggest why Mozilo decided it was OK to arrange some special insider deals on home mortgages for an assortment of people dubbed "Friends of Angelo." Yet while this disconnect may serve as an ego-booster and explanation, it's by no means an acceptable excuse for Mozilo's sorry moral judgment and misuse of his own position within the company.

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Mortgage approval made easy

By Marcie Geffner •

Whether you're buying a home or refinancing an existing home loan, you'll soon find out that lenders today are a picky and demanding bunch when it comes to loan approvals. Even well-qualified borrowers are expected to jump through some pretty high hoops to qualify for financing.

But fear not: These tips and suggestions can help you make the best possible impression on the lender of your choice.

Just as job-hunters may wonder what top employers want to see on a resume, prospective borrowers may be curious about what lenders look for on a loan application.

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What to ask before you list your home

By Marcie Geffner - Cyberhomes Contributor

Real estate agents aren’t all alike. Here’s help to figure out which one you should hire.

Home sellers are understandably concerned about the asking price at which they’ll list their home for sale and the commission they’ll have to pay the real estate agent when the sale closes. But selecting an agent just because he or she promised you a high price or low commission may be “the single biggest mistake a seller makes,” warns Jean Bourne-Pirovic, an assistant manager at Long & Foster Real Estate in Silver Springs, Md.

With that in mind, here are some questions you should ask before you sign a listing agreement with a real estate agent:

Ask: What is your marketing plan for my home? Which websites will my home be displayed on? Which newspapers will my home be advertised in and how frequently? How many open houses will you hold for other brokers and the public? Will my house be included on your office tour of new listings? If I haven’t received any offers for my home after 30 days, what else will you do?

Why? Many agents cut back on advertising in slow markets, and some won’t do much beyond placing your home in the local multiple-listing service (MLS). That’s why you should “try to negotiate for a higher level of marketing commitment,” suggests Bruce Hahn, president of the American Homeowners Foundation, a nonprofit organization in Arlington, Va., that educates consumers about residential real estate. “Get the marketing plan in writing and incorporate it by reference into the listing agreement. That way, there won’t be misunderstandings as to whether the Realtor has been meeting [your] marketing expectations,” Hahn says.

Ask: How long have you been in the business? Which professional certifications or designations have you earned? What sets you and your company apart from the other agents and brokers in the area? What is your negotiating style?

Why? Good agents continue their education throughout their careers and negotiate with their colleagues in a professional manner. “The last thing a seller needs in this market is a rookie with a GED who got lucky and passed the real estate exam on the third try,” Hahn says.

Ask: What are your business hours? Are you accessible at other times? How will you keep me informed?

Why? Successful agents want to build long-term business relationships. Consequently, they understand that “it’s critical for [you] to feel comfortable throughout the process,” Bourne-Pirovic explains. An agent who is accessible and prepared to stay in touch with you may make all the difference in how happy you’ll be with his or her services, especially if your home isn’t easily sold right away.

Ask: How many homes have you listed in this neighborhood and nearby neighborhoods this year? How many of those did you sell? How many were comparable in size and condition to mine?

Why? Successful agents don’t just list homes, they sell homes. An agent who is active in your local market should be knowledgeable about the market and help you find ready, willing and able buyers who want to purchase a home such as yours.

Copyright 2008 Marcie Geffner. All rights reserved. This article may not be reprinted or used in any way without permission of the copyright holder.

A dozen ways to get a down payment

By Marcie Geffner -

Not long ago, no-down payment loans were the height of fashion for homebuyers. But now that lenders have tightened their standards, borrowers once again are expected to "put some skin in the game," to use the industry's favorite catchphrase. That "skin" refers to the borrower's own cash, and it means down payments are definitely back in style.

The chief advantage of a down payment today is simply the ability to qualify for a loan, since only a handful of so-called "zero-down" loan programs still exist. Yet down payments have other benefits, too.

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Fed holds interest rates steady

By Marcie Geffner –

The Federal Reserve decided last week to keep its key interest rate unchanged at 2 percent. That’s good news for home buyers and homeowners who feared an increase in the benchmark federal-funds rate might trigger higher interest rates on home loans.

The Fed held steady because it is trying to balance the different pressures on the U.S. economy. On the one hand, the Fed suggested in its statement, the economy has been strong enough to continue growing and withstand the current risks. But on the other hand, the Fed statement noted, "the upside risks to inflation and inflation expectations have increased" and "uncertainty about the inflation outlook remains high." Inflation, which refers to higher prices, is one of the Fed’s chief concerns.

The Fed doesn’t directly set the interest rates that borrowers pay on home mortgages, auto loans or credit cards. But the Fed’s actions indirectly affect the rates that lenders charge on those loan products. Nonetheless, interest rates that you’ll pay on your loans could change even though the Fed decided to hold to its current course and neither raise nor lower its key rate.

Homeowners who have an adjustable-rate mortgage (ARM) should be especially diligent about the outlook for higher interest rates. Find out when your ARM will reset and how much your monthly payments might increase at that time. If you’re concerned about the risk of even higher payments in the future, you might want to refinance your ARM with a fixed-rate mortgage.

If you’re shopping for a home or want to refinance your current mortgage, be sure to discuss the interest rate outlook with your loan officer.

The bottom line for borrowers is that higher interest rates on home loans may still be on the horizon despite the Fed’s inaction this week.

© 1998 - 2008 LendingTree, LLC. All rights reserved. This story, "Fed holds interest rates steady," is reprinted by the author with written permission of LendingTree, LLC.

FHASecure program expanded

By Marcie Geffner - Lending

The Federal Housing Administration (FHA) has announced an expansion of its FHASecure loan program, which is designed to help homeowners who can't afford the monthly payments on their existing subprime adjustable-rate mortgage (ARM).

The FHASecure program allows borrowers to use an FHA loan to refinance a subprime ARM if the original lender agrees to reduce the amount the homeowner owes as an alternative to foreclosure. The lender may require a separate loan for repayment of the "gap" between the amount owed and the reduced amount. Homeowners who have used the FHASecure program were able to cut their mortgage payments by $400 a month on average, according to the FHA.

The expanded program is scheduled to take effect in July 2008 and will be open to:

● Borrowers who were late on three monthly mortgage payments, either consecutively or three times in the previous 12 months. A loan-to-value (LTV) ratio of 90 percent is required. (The LTV ratio is applied to the refinance and based on a new appraisal prepared by an FHA-approved appraiser.)

● Borrowers who were late on only two monthly mortgage payments, either consecutively or twice in the previous 12 months. An LTV ratio of 97 percent is required.

Like all FHA-insured loans, the FHASecure program requires mortgage insurance, which is paid for by the borrower and protects the lender in case the borrower defaults on the loan. The expanded FHASecure program will give borrowers who are more creditworthy a price break on their mortgage insurance.

Homeowners who want to refinance a subprime ARM or other type of loan, but don't meet the FHASecure guidelines may be able to utilize another FHA loan program or obtain a non-FHA loan.

The FHA is a federal government agency within the U.S. Department of Housing and Urban Development. The agency has helped 220,000 borrowers refinance their mortgages since September 2007 and plans to stretch that figure to 500,000 borrowers by the end of 2008.

© 1998 - 2008 LendingTree, LLC. All rights reserved. This story, "FHASecure program expanded," is reprinted by the author with the permission of Lending Tree.

Is your real estate blog a lawsuit magnet?

By Marcie Geffner - Inman News

Real estate blogging is long overdue for a few good lawsuits.

While free speech and fair use are legitimate and important legal concepts, what goes on in the blogosphere is all too often well beyond what's permissible. Bloggers may be guilty of libel, defamation, copyright infringement, invasion of privacy and a number of other crimes. Whether individual cases have merit is a matter for the courts to decide, but the risks of liability present a clear warning for real estate bloggers who operate in ignorance or disregard of the laws that govern free speech and fair use.

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