Posted September 21, 2015

Better SAFE than Sorry

Earlier this month, the Community Home Lenders Association posted on their website a side-by-side comparison of consumer regulation required of non-bank mortgage lenders (like Priority Lending) versus banks. The details are chilling.

Every individual Loan Originator at a non-bank lender must:

•Be licensed

•Complete SAFE Act Mortgage Competency Test

•Complete 20 hours SAFE Act pre-licensing courses

•Pass an independent criminal background check

•Do 8 hours/year of SAFE Act continuing education

Banks are completely EXEMPT from ALL of the above. Further, all non-bank mortgage lenders are subject to CFPB exams covering:

•Compliance with RESPA

•Other statutory requirements

All banks with under $10 Billion in assets are exempt – that’s 99% of all banks. These facts do not imply that all banks play fast and loose with borrowers and their dreams of buying a home. However, they do lay out a solid and persuasive argument to encourage buyers to go with a non-bank mortgage lender, without a doubt!

Shiny Objects Can Be Pretty . . . Expensive

Back in May, Trulia determined that new homes cost roughly 20% more than similar existing homes. Here are some other things to share with buyers:

Disadvantages to Buying a New Home

•More expensive than buying used

•Location probably isn’t ideal

•Despite being new, workmanship might be questionable

•Could be subject to costly HOAs, even if it’s a house

•Neighborhood dynamic is unknown

•Property values might be more volatile

•Construction nearby (eyesore and noisy)

•More cookie-cutter, less unique

Advantages to Buying an Existing Home

•Possibly cheaper

•Better, more central location

•Can buy in an established school district

•Can own in a more reputable and recognized neighborhood

•Old house might have new upgrades

•You can always renovate if need be

•Older houses tend to have more character, custom design

•Could actually be built better than a new home

Comments

Financial Nearsightedness

Years ago when the Consumer Financial Protection Bureau was created, we had some wacko thought that part of the job of the folks filling its ranks would be to . . . protect the consumer. In some people’s view, this would mean that builders of new homes would no longer be able to dangle the carrot of “free” incentives if the buyer would finance the purchase through the builder’s in-house or preferred lender. To those same people, it just made sense that the CFPB was created to even the playing field and make it so that the consumer got the very best deal available. Well, we were wrong. Builders ARE allowed to offer incentives for using their in-house and preferred lenders despite the fact that sort of goes against the idea that the consumer is getting the very best deal available. And for most consumers, all they see is the incentive, and this computes to less money coming out of their pocket at closing – and they’re right (sort of). The purpose of today’s article is si

Topless Professionals - Nope

Fads come and go, certainly, but you can’t always tell the difference in the moment between a fad and a trend – because refusing to adapt to the trends can be limiting . . . if not disastrous. Let me share a couple of examples where failing to see where things were headed didn’t turn out well. An engineer presented the idea of a “filmless camera” to the executives at Kodak back in 1975, but they laughed him to scorn. In 2012, Kodak was forced to file for bankruptcy because they failed to adapt to the digital world. We all know Steve Jobs and Steve Wozniak, but how many of us recognize the name of Ron Wayne (and, no, that’s not Batman’s brother)? Ronny was the third founding member of Apple, and he sold his 10% stake in the company in 1976 for $1500. His shares would now be worth over $50 billion. WAY BACK in 2000, Reed Hastings approached Blockbuster and offered to sell Netflix for $50 million. Blockbuster turned Hastings down. Netflix is now wor

Sitting on the Fence Only Gives You Splinters

“I woke up this morning and couldn't find my socks, so I called information. She said they were behind the couch. She was right.” Reading the words of comedian Stephen Wright isn’t quite the same as actually hearing them with his deadpan delivery, but they’re still funny. The same can be said for timeless wisdom: whether you hear it coming directly from the lips of a wizened old sage or you read it in a little missive such as this, it’s still wisdom, right? They say a picture’s worth a thousand words, so you’re about to get 2,000 words’ worth right here: I’m going to show you two graphs that are going to speak volumes about buying power and interest rates – far more than I could convey if I tried to write over 2,000 words (and probably put you to sleep). Obviously, this first graph shows how even a slight change in interest rates can affect someone’s buying power in the real estate market. There’s a fairly big swing between what someone can a

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