The Truth About the Mortgage Mess

The Truth About the Mortgage Mess

By Ricardo Cobos, Mortgage Banker
National City Mortgage Co

RALEIGH, NC – Subprime mortgages have now been credited for bankrupting well over 293lenders and seriously damaging operations at many major mortgage firms. They've reportedly wiped out at least two major banks including the Washington Mutual, the largest Savings &

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Loan in the US, IndyMac Bank, the largest Bank failure in two decades, 5 hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren't enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in theUS and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year.

This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 6-12 months ago.

How did this happen?
The recent real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or "exotic" mortgages.

These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street.

Then, in 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today's tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we're now experiencing.

Unfortunately, it's going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe.

What does this mean to you and your mortgage?

Sellers: If you're planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.

Buyers: Get pre-approved by your mortgage professional. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it's taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don't do anything that could negatively affect your credit, and make sure you get all your documentation in on time.

ARMs Borrowers: If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment with a mortgage professional right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don't let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be.

Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals.

Finally, there's an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we're experiencing now – while it seems harsh and could get much worse – is, in a sense, "natural" and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.

Ricardo Cobos is affiliated with National City Mortgage, a division of National City Bank. For a free consultation or more information about the mortgage market, contact Ricardo Cobos at (919) 559-3384.

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SUBMITTED BY:

RICARDO COBOS

PHONE (919) 559-3384

FAX (866) 605-0079

FREE REPORT:

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Testimonials

Sent: Friday, October 31, 2008 10:54 AM
To: Cobos, Ricardo
Subject: Thank You

Hello Ricardo,

I wanted to take this opportunity and thank you and your staff for the excellent job you did in transitioning and closing the sale of Sean Anderson. You and Denise were always so professional and efficient, which made all the difference in executing this loan to closing. We would like to thank you for all your hard work and dilligence. We look forward to working with your team in the near future on more sales. Take care.

Respectfully,

Sherinne Anderson, REALTOR
The Anderson Realty Group
Paradigm Real Estate

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"Ricardo has been able to consistanly deliver what he has promised. While providing great communication and serviced to my clients. Ricardo will get the job done no matter how long it takes. I highly recommend Ricardo as a Mortgage Lender."

Pamela Rudzki Realtor, Zip Realty Inc.

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"Ricardo was the most amazing mortgage consultant I have worked with! From beginning to end, he was the consummate professional, always trying to find a way to get my husband and myself into our home. He followed through with every promise that he made and did it in such a way that let us know that it was more than his job; it was his pleasure. He exuded integrity, reliability and respect. Our trust in him was, without a doubt, well placed and well earned. My husband and I would love the opprotunity to work with Ricardo again in the future- and that says a lot!"

June 2, 2008 Top qualities: Great Results, Personable, High Integrity Margie Boyd hired Ricardo in 2007.
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"Ricardo and I have worked together to refer business to one another. He is active in many organizations including the Cardinal Club Young Executives, a board we serve on together. Ricardo's experience in the business and professionalism really stand out in his industry."

February 3, 2008
David Forrest, Vice President / Commercial Banker, Fidelity Bank

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"I would like to take the time to let Ricardo and others know of what a great service Ricardo is to the community. Ricardo's years of experience and knowledge in the Mortgage Industry allows him to help every client of his, get the best service out there.

You can depend on Ricardo to be there for you. When Ricardo is not able to answer the phone, do not worry, he will call you back, normally in less than an hour. Ricardo is always on duty. Meaning you can get him not just on weekdays but weekends when you need him the most to get a client pre-qual and get that offer put in on a home your clients have just found and would like to own. Ricardo stands by his work. He is committed to helping everyone who calls him." 01/29/2008

Susan Trombley, Realtor, Re/Max Hometown

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"Ricardo is a pleasure to work with. He has trememndous knowledge of his business and does not hesitate to share to experiences with you to help you further your business. Great communication and response time!" 01/28/2008

Elisha Gutloff
Realtor, Kellwer Williams, Durham, NC

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"It has been a long time in the business world since I met anyone that made me really remember them and feel like I had just met a real person with a real heart and soul. And, that I smiled when I thought of them! You know why? People in our career world generally don't really care and sometimes don't even act as if they care about us as a real person with families and loved ones and heartaches and triumphs. Most of the time people ask to be polite, but never hear a word you say because they really don't care or they have too much other stuff on their minds at the same time to listen.".....01/22/2008

Judy Cairns, District Broker
Raleigh/Durham, NC
Zip Realty, Inc.

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"i worked with Ricardo when i bought my first home he was prompt accurate and honest throughout the process" July 20, 2007

Brian Bowen, Traverse City, MI

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Top qualities: Great Results, Expert, High Integrity

"I have known Ricardo for over a year now and have been highly impressed with his work ethics and integrity. Ricardo does not make false promises and is upfront and honest with all potential and existing clients. He has excellent knowlege in the Mortgage world is always striving to better himself for his clients well being." July 23, 2007

Renee Johnston(client)
Real Estate One, Traverse City, MI

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"Ricardo Cobos helped my husband and myself to get a loan for our home. He was professional and extremely helpful. He refused to giveup when things got difficult." July 18, 2007

Loretta Bain Sherman(client)

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"Ricardo is very knowledgable in his field. He makes getting a mortgage a very positive not overwhelming experience. He really treats each of his customers as if they were his only one. He has a great track record with many satisfied home owners." August 10, 2007

Hollie Rohloff(client)
Traverse City, MI

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"Ricardo found the best mortgage to suit our complex needs. He will do his best to find what is right for your situation." August 11, 2007

Jonna Stebleton(client)

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Hello Ricardo!

Thanks for the lead and the excellent job in this deal with Brian! I must say that I am very impressed.

Also, I realize that this was a team effort from Honor State Bank. Jenny in processing did an outstanding job. What I liked was the productive efficient work that was done on time. Please pass on my thanks and appreciation to Jenny and to your other teammates at Honor State Bank.

Let's do some more good business soon.

Don Valentino, Realtor
ColdwellBanker Schmidt Realtors
402 E. Front St., Traverse City, Mi. 49686

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In the future I would not hesitate to call you based on Sue Kelly's recommendation and your timely response.

Thanks again, jan

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I received a phone message this afternoon from Kay Wagner exploiting the positive experience she had with you. She said she just had to call me to let me know how helpful you were when they met with you regarding a mortgage.

Great job, thanks for providing WOW service! You can bet you will get a referral from her!

Ron

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Hi Ricardo,

I just wanted to take a minute to thank you. I don't know if this is how you treat all your clients, but you have been really good to meand beacuse of your help I was actually able to buy a house for me and my boys. The 3 of us really need some sort of stability right now and I strongly feel buying a huse is a good start.

Thank you so much for everything.

Katie

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thanks , Of all the lenders we deal with , your the sharpest , I appreciate your efforts! thanks Thank You, Steve Davis Eastwood Custom Homes