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Forbearance An Option For Active Duty Service Members

Fannie Mae announced its Wounded Warriors Forbearance Program:

At an event today at the Pentagon, Fannie Mae (FNMA/OTC) and the U.S. Army announced new initiatives to help service members who are struggling with their mortgage payments avoid foreclosure. The effort includes a mortgage payment forbearance of up to six months where the death or injury of a service member on active duty causes a hardship for impacted military families with a mortgage obligation.

One positive feature is that Fannie Mae will suspend credit reporting during the forbearance period:

Service members or surviving spouses who may be eligible for the special forbearance are to contact their mortgage company. The mortgage company may grant forbearance of up to six months under Fannie Mae's "Unique Hardships" guidelines with Fannie Mae's approval. Under forbearance, the mortgage company may reduce or suspend the borrower's monthly payments for the specified period. Credit bureau reporting will be suspended during the forbearance to minimize any derogatory impact.

It is important to note that the program is NOT sponsored by the Veterans Administration.  The VA offers similar options for wounded service members through its partner lenders.  The VA encourages wounded veterans or surviving spouses to contact the lender if they are unable to make payments as well as notify the regional VA lending center.  While the lenders often offer forbearance agreements, they usually report the delinquencies to the credit bureaus.

Veterans facing financial difficulty might think these programs are complimentary when in fact, they are exclusive.  The first step is to always contact the loan servicer (the company to whom you make payments).  Always ask the loan servicer which entitiy "owns" the loan (investor or guarantor).

 

 

 

Buy American? How About Build American First?

Lorena Gonzalez encourages San Diegans to become "economic patriots" and redirect their spending towards domestic products only.  She demonizes the financial sector yet fails to see the problem:

The last year has proved to us that the revered financial sector and our undying allegiance to Wall Street have failed our country

The protectionist meddling into the financial services sector has rendered Wall Street and banking a ward of the State.  Winners and losers are picked by political processes rather than economic viability.  Any reasonable person knows that banks aren't doing what they should be doing; lending money.  Banks won't lend money as long as the economic incentive is protectionism and subsidies.

Mrs. Gonzalez' argument for protectionist purchases is a classic  tu quoque fallacy.  Rather than to support a failed system, we should focus first on the principle of serving customers best.  Unions, or organized labor, are exactly like the cabal on Wall Street.  Rather than restrict access to capital for economic gain, organized labor restricts access to employment for political gain.  Both systems are dysfunctional and symptomatic of the disease that afflicts our economy; protectionism.

Free markets are the best way to prosperity.  When bad banks are bailed out, or favorable labor contracts are granted unions, those restrictions of capital and labor distort the market and lead to higher prices.  You, as a consumer, might "feel better" by keeping your money in an American bank, or buying products made by Americans, but in reality, you are enabling a dysfunctional system (besides penalizing your family).

American labor and American capital needs to get competitive in this global economy.  Fortunately, this country has a lot of both.  Entrepreneurship has always been a byproduct of a free people and creates economic opportunities for all members of our society.  Economic prosperity always starts with the question "Can I make it better, cheaper or faster?"

If you really want to be an "economic patriot" this Labor Day, find a way to compete with those foreign producers.  "Build American" by starting a business to compete with them.  Your solution will most likely include free workers rather than organized ones.  Mrs Gonzalez won't like that because it erodes her political power but...

..it's the RIGHT thing to do.

Look For A Mortgage Consultant; Not A Mortgage

Okay, the last secret I told you about was how to compile a credit and income package for a lender so you could get accurate quotes and pre-approvals.  Now, I'm going to tell you how to shop for the right loan originator. 

I have always stated that you should be shopping mortgage consultants not loan programs but this double-barreled article will help you do both.  Understand this first.  You are NEVER going to get the absolute best rate offered on a home loan; it's impossible to determine what "best is:

READ:  You'll Never Get The Best Rate

Instead, you should be shopping loan originators.  You should spend some time online and on the phone getting to know the originator before you give her a copy of your "credit" package to receive a quote.

READ:  Borrow Money Like You Would Buy A Cell Phone

You should get a list of 5-6 loan professionals and spend 10-15 minutes on the phone with them.  Where do you find these people?  Here are some sources for "leads' on good loan originators:

1-  Call Brian Brady immediately 858-777-9751!  Okay, I'm sort of  kidding but I can be a source for you because you have enough interest to read my article this far. My point is that you've already met one originator online.

2- Ask your Realtor for a loan originator whom she trusts.  If you don't have a Realtor, yet, use that as leverage in your hiring process.  Explain to the 2-3 Realtors you're interviewing that you consider their recommendation of a loan source to be an integral part of their service offering; you'll get a great response.

3- Go into your local bank and tell the teller that you are thinking of buying property.  That teller gets paid $25 to refer their in-house mortgage salesperson so he'll be all worked up.

4- Call your CPA or tax preparer and announce that you need a home loan.  If the CPA offers to help you with it, get a new CPA.  There is a growing trend among tax professionals to provide financial services like mortgages and investments. I can't speak too intelligently about the investments side but there are two problems with CPAs offering home loans:  (a) they offer horrible advice.   (b)  their inexperience usually ends up costing more.

5- Stockbrokers and financial planners are usually good sources.  These guys understand investments and leverage so they know a few of us who can integrate your mortgage into your financial plan.  I have found that when I work with a stockbroker, the client gets great advice and a loan that makes sense.  if you don't have a stockbroker, ask the richest person you know for a name (I'm not kidding about this). Some stockbrokers offer mortgages; again, stay away from that for the same reasons as CPAs.

6- Ask someone who owns more than one property who their mortgage gal is.

7- Ask a small businessperson (with whom you're friendly) who their mortgage source is.

8- Ask your brother or sister (or cousin or parents). 

Cool!  Now you have a list of 6-8 mortgage originators.  Should you print off your package and send it to them?  Should you e-mail each of them and ask for a quote?  Hold on, amigos !  Remember I said to shop for loan originators and not loan programs?  The loan terms shopping comes after you've isolated 2-3 originators with whom you want to do business.

My next article will tell you how to interview an originator in 15 minutes or less and be certain that you have the right people.