The Real Estate Sage at The Real Estate Investment Institute - REII

I read the musings of a brilliant, but young mortgage man that was having trouble explaining pre-paid interest, which is line 901 on the Good Faith Estimate and HUD-1, closing statement. I discuss this in my book "Get The Money / A Consumers Guide To A Successful Mortgage Application" but let me try a different approach here.

If you ask the consumer if mortgage interest is paid in advance or in the arrears (after you've used the money) the majority would say in advance and point to the pre-paid interest charge on the Good Faith Estimate or HUD-1. If you asked the same question of a group of traditional bankers they'd be split about equally! The truth is that all mortgage interest is paid in the arrears!

Before, I address this lets look at a little history. When our parents and/or grandparents bought a house the first mortgage payment was due on the same day of the next month. This was convenient for the banks because over time they had a near equal number of payments due each day of the month. This made it easy for the bank, 50 full time bookkeepers in the basement could keep track of all the loans, had all of the loans been due on the first of the month then they would have needed 200 or more people, but for only the first week of each month.

Then came computers, suddenly there was a better way! In the late sixties banks started making all loans due on the first of the month. It was wonderful! Suddenly bankers knew exactly what each department and each account was doing everyday, even thought it was 3 days behind. This was much better than the old system where the bookkeepers reports told them where they were on one day last month.

The bank soon discovered a new problem, it took several weeks to get a new loan into the system! To allow the remaining bookkeepers and their new assistants, the keypunch operators time to get the new loans into the system the first payments were now made due on the first of the second month fallowing the loan closing.

Change is normally for the good and this one was, but change often brings new problems. The new problem was with loans due on the first of each month, loans closing and more importantly funding (interest accrues from the date of funding a loan) on everyday of the month, was that often there was not sufficient money to pay the accrued (earned) interest when the payment was made.

Lets look at the numbers. I'm going to use a $100,000.00 loan at 6.500% for 30 years, with a principal and interest payment of $632.07. The daily interest cost on the full $100,000.00 is $17.81.

If we divided the $632.07 by the daily cost of $17.81 we discover that it only pays for 35.5 days interest! So if the closing/funding is more that 35 days before the first payment the loan will not start amortizing (amortizing is the systematic repayment of a loan) even if the buyer makes all his payments on time he's still going to have a balance 360 months later! This problem gets worst as the days to the first payment go over 30, and they could go as high as 61 days.

The solution to this problem was for the lender to collect a one time pre-payment of interest at closing in an amount sufficient so that there is never more than 31 days interest due when the first payment is paid. This solved the problem when the buyer makes his 360 payment (adjusted for the pennies that had to be rounded off each month) his loan is paid in full!

Then along comes RESPA, The Real Estate Settlement And Procedures Act and with it the "Good Faith Estimate" and "Truth in Lending" forms. At the time this came out many lenders doing consumer loans were still writing "Prepaid Interest loans" these nasty loans added the interest to the principal and that was your balance. If you got $1,000.00 for 3 years at 21% the loan balance would be about $1,310.76 and each month you would pay $36.41 and the balance would be lowered by the full $36.41. (Please don't call me on these numbers, it's been since 1970 since I've seen one of these beasts.) So HUD included Pre-Paid Interest in the calculation of the APR, even though I've never seen a mortgage written this way. Because this is still in the APR many lenders will only show 1 days pre-paid interest on their original "Good Faith Estimate" this is legal but depictive.

Honest lenders will show 15 to 30 days pre-paid interest on their "Good Faith Estimates" because they can't possible be sure when the loan will be funded! Showing one days interest of $17.81 keeps the APR lower, but falsely shows the dollars need to close much lower than showing 30 days interest of $534.30! That $516.49 difference can really hurt and surprise the home buyer at closing! In my market with a more typical $350,000.00 loan that's could be as much as $1,807.72 in unanticipated closing cost. Non-conforming (sub-prime) buyers had best have an EMT standing by.

Personally I recommend disclosing 25 days pre-paid interest because if a loan is closing in the first week of the month we can now normally get a credit as opposed to a charge and have the payment come due on the first of the very next month. I don't want the buyer being shocked and needing extra money at closing.

Bill

William J Archambault Jr

The Real Estate Investment Institute

©REII

I've written about the danger of depending upon Home Equity Lines Of Credit, HELOC's, before. I was concerned about depending upon your HELOC for access to cash when making an offer, I'd suggested that even though you have the HELOC available you always make your offers contingent upon the loan, to avoid defaulting on an offer because of some unknown problem with the HELOC.

More recently I've warned about the fallacy, and the fales hope of the so called Money Merge accounts. Among the problem with these scrams was the potential danger of depending upon the HELOC for cash reserves, the danger of having to ask for money in a time of need, as compared to keeping reasonable money in a demand account.

I don't know what Countrywide or any other lender is up to, the suggestion is that they are reassesing falling real estate values, that's reasonable.

My concern is with people making offers they can't fund and those who've foolishly replaced their security with a dependance on HELOC's!

Bill

William J Archambault Jr

The Real Estate Investment Institutes

More news see:  HELOC lock downs become more extensive

Everyone is a salesman, some are just better than others. I write about real estate investment, but salesmanship is a lesson in life! The only reason most people make, for not investing in real estate, is they don't think they can make the sales necessary to buy and then sell an investment property, they don't think they're salesmen.

Everyone is a salesman, new born babies cry and Mom sticks a warm nipple in their mouth, they ask for what they want and they get it, that's sales! Pre-schooler ask for ice cream and then say please, please, please until Dad gives in, that's sales. Some time before high school polite kids learn to ask once and then wait quietly staring until Dad gives in, that's sales. During high school some revert to the demanding style of the new born, some to the begging of the pre-schooler, that's sales. Yes, some become timid, afraid to even ask for the white milk they want instead of chocolate. We're all salesmen.

We envy those among us who further develop their skills to ask a question and then shut-up, and wait for what they want! Life is a sale. Unless you regularly let someone else pick your milk, you're a salesman.

As a kid growing up in the fifties I learned to ask once and stare. I perfected this with a pouty look that usually worked on Dad, occasionally on Mom, and almost always on my Grandparents. My great grandparents unfortunately were immune. Somewhere between birth and puberty the pouty look no longer helped, but ask and stare got better. I wasn't taught salesmanship I was taught to be polite, but to ask for what I wanted and then quietly wait for an answer. I didn't grow up rich, but I was extremely privileged. I was taught to be polite and to ask for what I wanted. I could not have explained this simple technique in high school but I used it and I had a wonderful experience, it helped in collage. In Marine boot camp it let a lowly recruit get a little of his own back from the DI's. Out of the service and into banking, I used this simple method a hundred times a day, everyday. It wasn't until after I left the bank to sell real estate that anyone explained this simple sales method to me. In my first sales class the instructor ask "what do you do after you ask for the order?" Some poor girl started to answer and the instructor shouted: "Shut-Up!" The girl was reduced to tears. The instructor then explained, ask for the order, then shut-up... the next one who speaks loses.

You're not going to get a yes every time, but if you don't give the person time to answer you'll never know what it takes to make the sale. Even people who don't like your offer want to say yes just to be polite. If you can keep your mouth shut they will either accept your offer or tell you why they won't. It works every time, in real estate or life.

How long should you shut-up? In my book "One House At A Time / Finding And Buying Single Family Rentals" I tell the true story of an offer one of my students and I presented one night, at 10 PM I asked the closing question no one spoke until 5 AM when the wife shouted at her husband to sign the offer!

Once you've made the sale, stop selling and get it on paper.

Now that we covered the most important sales technique

I want to add just two more things.

If the sellers don't accept your offer pick the least explainable thing he says and repeat it as a question. IE:

"No we can't take $100,000.00!" You respond "You can't use $100,000.00?" Try it tonight. Don't have a house to buy, well ask your spouse, "let's go to bed early?" "Not tonight I've got a headache!" Now repeat "headache?" and shut-up (this is a good time to revive the pouty stare), enjoy.(There is nothing new here, I stole it from Art Fetig, who stole it. Art has a web site and great motivational books!)

Now there is only one reason not to make your next sale, purchase, or kid, fear. I've been in lending and real estate sales for 36 years I've been teaching, real estate, real estate investment, sales, and lending since 1973, and I still get scared with every presentation. Why should you be different from the rest of us? I write about fear in "One House At A Time / Finding And Buying Single Family Rentals" but I can't cure fear. To control fear remember that you'll probably never see the sellers again if they don't accept your offer, so who cares what they think. If you know you wrote an offer in which both you and the sellers win it's there loss not yours, they should be afraid of losing you.

William J Archambault Jr

The Real Estate Investment Institute

©REII

Kick backs, hidden cost, back points, HUD (Housing and Urban Development) calls it "Yield Spread Premium" (YSP), money paid by the a lender to mortgage brokers outside of closing. Money paid by the lender to the broker because you got a higher mortgage interest rate. Mortgage brokers are suppose to show this on line 801 of their "Good Faith Estimate" and escrow will show it on the estimated and final closing statements (HUD- I) when closing a loan for a mortgage broker. You'll never see these "points" on a loan from a bank, mortgage banker. Savings and loan, thrift, or credit union! Several Congressman and Senators have expressed concern over YSP's in recent years citing undo enrichment of mortgage brokers and their agents. The news media often mentions "kick backs" to mortgage brokers, and yet this practice continues!

First we need to understand mortgage pricing. The traditional bank offered one mortgage interest rate that fluctuated occasionally, after WW 11 loans often included an "Origination" fee (normally 1 point, 1% of the loan amount) more recently we have seen many additional bank and third party fees. Until about 1973 mortgage banks and mortgage brokers as we know them dealt mostly in "government" loans (FHA and VA) the rates were set by the FHA and VA respectively if these rates were below the current market these lenders added "discount points" to increase the "Yield" sufficiently to make money available. We soon saw wide spread use of these "discount points" to buy-down interest rates on all types of mortgage loans. After 1974 when mortgage brokers began their dominance of the mortgage origination market (current estimates have mortgage brokers originating 75 to 90+% of all mortgage loans) your bank normally had I rate and it included I origination point, mortgage bankers normally have "the rate" and one "buy down" rate. Strangely, mortgage brokers have many rates in 1/8% increments of rate, spanning 2 or more % interest. This is strange because most money offered by mortgage brokers comes from mortgage bankers, the same banks that offer only, the afore mentioned, two, higher cost, rates to their retail clients. About half the rates available to mortgage brokers were the traditional "Buy-down" rates costing up to 2 points more than the so called "par rate" (no discount cost to the broker) the other half were "buy-up" rates paying the broker up to 4The payments, kick backs, hidden cost, back points, etc... were finally named "yield spread premium" by HUD about a decade ago. It's not uncommon for a mortgage broker to have available a 6 point spread (4 points YSP to 2 discount points) available on any given loan program. That 6 points on a $300,000 loan means up to $18,000 difference in closing cost, regardless of all the other closing cost. Yet, all that extra cost only means about 2% difference in the interest rate. Most consumers don't have the luxury of choice, they seldom have an extra $18,000.00. Unless they need the lower rate to qualify for the loan the lowest rates seldom make sense.

A quick glance at the rates and discount points might make you think that you'd always save money after 3 years ( 6 discount points divided by 2% interest reduction) but that's not true. The idiosyncrasies of loan amortization mean that the break-even point is normally closer to 5 years, not counting the time value of money. In today's society it's rare in deed that a mortgage loan actually exists for five years, either the house is sold or it's refinanced long before the break-even point.

Yet HUD and certain congressman keep holding hearings about the evil YSP and the abuses by mortgage brokers of this "hidden" cost. Selected witnesses offer tales of over charges and hidden cost they are bone chilling. Claims of over charging abound. The problem is they can't explain why mortgage brokers originate almost all residential mortgage loans, and why it's almost always less expensive and more successful to finance with a mortgage broker.

There have been abuses, many of them, you're more likely to be abused by a broker and or his agent than other lenders, because: there are more of them, remember up-to 9 out of 10 mortgages come from brokers.. These abuses and promises of reform make great head lines. "Reformed" is always an interesting term, it implies you're better than the un-reformed. The argument is that only mortgage brokers charge YSP, but is it a charge? Yield is the return on investment or the product of an investment. Spread is the difference between cost and return, or gross profit. Premium is something extra above the cost.

In it's simplest form, if a $100,000.00 loan is at 6.000% it will yield $6,000.00. If the cost of funds is 2.000% then the spread is 4.000% or $4,000.00. If administrate and overhead cost the lender 0.5% then the premium is $3,500.00. YSP is a relatively new term coined by HUD. When most of us went to school if you subtracted cost from yield you determined gross profits! The payments by banks to brokers, the so called kick backs, hidden cost, back points, etc... were finally named "yield spread premium" by HUD about a decade ago. It's not uncommon for a mortgage broker to have available a 6 point spread (4 points YSP to 2 discount points) available on any given loan program. That 6 points on a $300,000 loan means up to $18,000 difference in closing cost, regardless of all the other closing cost. Yet, all that extra cost only means about 2% difference in the interest rate. Most consumers don't have the luxury of choice, they seldom have an extra $18,000.00. Unless they need the lower rate to qualify for the loan the lowest rates seldom make sense.

In it's simplest form, if a $100,000.00 loan is at 6.000% it will yield $6,000.00. If the cost of funds is 2.000% then the spread is 4.000% or $4,000.00. If administrate and overhead cost the lender 0.5% then the premium is $3,500.00. YSP is a relatively new term coined by HUD. Again, when most of us went to school if you subtracted cost from yield you determined profit!

Why don't banks and mortgage bankers have to report their profits and why do we call it YSP? We don't require any business to report their profits to anyone except to stockholders and the IRS. We have to further define YSP, it is that portion of the anticipated profits the lender shares with the mortgage broker. In that 10% or so of mortgage loans originated by lenders they pay commissions and overhead to their own in-house sales department it is considered cost. It is only when the loan originates with an outside mortgage broker that the commission is called YSP.

Shouldn't the consumer go to direct lenders to save money? It sounds good but it doesn't work that way mortgage brokers do most mortgage loans for two very good reasons. Loans from mortgage brokers are almost always less expensive, because of competition! Thanks to mortgage brokers the mortgage origination business is possibly the most competitive business in the country! Secondly, success! Mortgage brokers are able to close more loans because they have more than one source for a loan. When the consumer doesn't qualify for a banks program he's turned down, that's the end of the application. The turned down consumer will never know that several other lenders would take his loan, mortgage brokers will get the loan approved.

Mortgage brokers have all those fees! Yes there are a lot of cost in closing a mortgage loan. Ads are always telling you, you can be finance for only $395 to $995, that's true. But they are not talking about third party cost! Direct lenders advertising these low closing cost are simply using some of the spread to absorb those costs, mortgage brokers do this all the time using the YSP to off set the consumers cost. Normally the direct lender can avoid showing you the real cost, where the broker will have to show all the cost and issue a credit, he'll also show the YSP adding to the consumer's confusion. When a consumer sees a long list of costs he may never notice the total at the bottom of the page may be less than the direct lenders short list. All other terms being equal, the only way to compare loans is to check the amount out of pocket and the monthly payment.

Lenders who paint them selves in to a corner advertising fixed fees (like $395) limit their ability to provide the best loan for the individual. Mortgage brokers have a lot more flexibility to aid the consumer and normally will have a lower rate for any given cost, or a lower cost for any given rate. You have to compare apples to apples!

If Congress and HUD are investigating the evils of YSP, won't we be better off? A few years ago the same people investigated "predatory lending" a couple of large direct lenders had preyed on a southern state. To cure the problem we now have new law "Section 32." The new law did nothing to help the people suffering form the "predatory" lenders. What the new law did was to drive more morally cognizant lenders out of the business of helping troubled lenders! If the lender now makes one of these high risk loans they must have the client sign a new form in escrow 3 days before closing that says if you don't make your payments you could lose your house! I've only been in lending since 1969 but I've never seen a mortgage or deed of trust, that didn't very clearly say if you don't make the payments you could lose the house. The only thing the new law accomplished was to reduce competition in this already expensive field driving up prices, and cause a few people to lose their home or worst because their loan was delayed.

The horror stories are true and all the same. The predatory victim explains: I agreed to pay $1,0001 month, I spent the money, I can't make the payment, they foreclosed on me! There's enough sin to go around, who's more immoral? The lady who spent the loan proceeds knowing she couldn't make the payments or the lender who should have known she'd never make the payments? The evil YSP story goes like this: I agreed to pay 6.5%, he told me I only had to pay I point origination, I found out this YSP thing was the lender paying him 2 points! Where's the problem, the bank would have given her the same loan for 6.5% at I point origination, it's what she agreed to pay. Consumers never ask the bank what there making The evils of YSP are imaginary but they make great sound bites! We can only hope HUD and/or Congress doesn't solve a non-existent problem.

Bill

William J Archambault Jr

The Real Estate Investment Institute

©REII

I was 21 and out of the Marines just ten days when I went to work for a small loan company, a week later I was making loan decisions affecting peoples lives. Just two weeks more and I was in the field making collection decisions that could literally destroy peoples lives. 14 months later, and not yet 23, I was now a bank loan officer with millions in authority! I sat in a large dark red leather chair, behind a dark cherry desk in an office paneled in rich cherry, with an impressively large 4 inches thick solid door!

Two large heavily padded leather side chairs sat across form my desk. Those chairs or rather how people reacted sitting them are what this is all about. When friends or colleagues stopped to talk they were comfortable and relaxed. I loved those chairs, switch the desk for an ottoman ad a good book and I'd have been in heaven!

When the chairman of the board brought people down and said "they need $23,000.00 would you please write it up" these people were relaxed. But, when our receptionist brought people in and they had to say "we need $5,000.00" you would have thought they were sitting on a bed of very sharp nails!

At first I couldn't believe it, these people were acting like my small loan clients had when sitting in little plastic chairs, talking about their desperation to a kid in an open room full of people. It didn't take long in this new setting to figure it out. I was a judge. These people felt like criminal defendants standing before the bar. That beautiful huge desk and the large chair behind it were as intimidating as the large raised "Bar" at the county court house. If the intimidating setting weren't enough, there sat a banker! Bankers have some common traits that are even more upsetting that the bank itself.

Bankers start young, out of collage in most professions you are aged before having the huge authority bankers used to have. Except for medicine no one gets as much of your personal information as a banker. Bankers have settled for a mediocre income with lots of security, they do not personally take chances. Instead of money bankers have their egos stroked, often causing a false sense of personal importance! Worst yet, I started under the "Old System," if we didn't like you, you didn't get the money!

It's now three decades later, the "Old System" died in 1972, banks haven't dominated the mortgage market since 1974 and have lost most other markets. "Loan Officers" no longer exist, "Loan Officers" use to make decisions, we decided wether or not you get the money, almost no one has that authority anymore. And yet, people still feel their being judged!

The idea of judgement exists because so many incompetent loan originators make their clients feel guilty. You, the client, don't understand you are no longer judged, you haven't been for the last thirty years. Today thanks to civile rights laws, you're not judged, you're weighted! Your credit history is put on the scale, it's nothing personal, you're assigned a number and treated accordingly. Just like your doctor's scale tells your weight.

The bad news is that credit scores are arbitrary. It's true that most people with credit problems have low credit scores, but it's not true that most people with low credit scores have credit problems. Life is arbitrary, my doctor's scale is set so that each pound contains 16 ounces I think 24 oz. would be just about right. The good news is that like my weight we can do something about bad numbers.

There's more good news, like clothes for the pleasingly plump, there's a loan program available for almost everyone. I pay slightly more for my close at the large and tall stores, than the skinny guys pay at Walmart. If you have low credit scores or other high risk factors, you'll pay a little more for the money from a non-conforming lender.

There are some things you can do to avoided that awkward feeling of being judged. First you can make sure your credit is as good as possible, you can determine who you are. Second, always start with a mortgage broker, brokers are paid on commission they get paid to get you the money not to judge you. Third, answer all questions, fully and honestly, but don't over embellish. Many a person has talked themselves out of the money. Fourth, understand there is a difference between discussing facts and condemnation "You didn't make two payments?" is acceptable. "You didn't make two payments! Is not! Don't let your originator condemn you, his job is to get you the money you qualify for. Lastly, you're the judge, is the originator worthy of your business?

Bill

William J Archambault Jr

The Real Estate Investment Institute

©REII

We're Number 1 Nevada has the highest foreclosure rate in the country!

Is my headline, the second one any less true than the first?

News today is what we called "editorial" when I was in school. Both headlines are true. Both headlines are wrong. Both headlines are distorted by a point of view!

An AP article I found on the Druge report said: "The state {NEVADA} had 66,316 filings {NOD's}" WOW, 66,316 that's a lot!!!! But, the sentence goes on: "on 34,417 properties in 2007" So what is the truth? Were there a lot or half a lot?

How many homes were lost? If one reads quickly they get the opinion that it was 66,314! If one reads closely it looks like 34,417! No amount of reading and rereading gets you to the truth about how many homes were lost. Do we have a huge problem? Half a huge problem? Do we have cause for concern?

If you ask any home owner with a delinquent payment it's a huge problem! He's right of course, from his point of view.

If you ask a politician off the record, it's either a huge problem or the latest opportunity. If he can blame the problem on others and buy votes with our money while restricting our rights in the name of protection it is indeed a huge opportunity! On the other hand if he is being blamed regardless of fault, it is indeed a huge problem, and he'll very likely go along with sacrificing our rights and money to be seen as part of the solution.

It's always necessary to take the news with a grain of salt, or maybe a long metric ton, but never more so than during our quadrennial social debauchery! Your rights, your clients rights, your industry is on the line this year.

I, personally see thing as black and white, a battle of good and evil, but this year more than any I can remember includes a battle of good and evil not just between the parties, but also with in the party. If we're not careful we could be left with a choice of two evils!

My point is that the media distorts or totally controls the truth! It's true that Nevada had 66,314 NOD's, but only 34,417 properties were involved, how much less of a problem would it be if we knew how many were actual lost to the bank? If there controlling the truth about foreclosures what else is being distorted?

Bill

William J Archambault Jr

The Real Estate investment Institute

You may want to look at:  (http://activerain.com/action/blogs_admin/(http://biz.yahoo.com/ap/080129/foreclosure_rates.html?.v=4 http://www.realtytrac.com/ )

I received a question from an Active Rain reader. Here is most of my answer.

Yes you were brief, but you've asked some very big questions.

Regarding short sales, banks (all lenders) accept short sales when it is in the BANK'S best interest! If the short sale benafits the home owner that's good, but not the reason the bank took it.

That said, you can always ask. When to ask is another matter. I don't approve of asking in the abstract! I suggest you find a buyer, get an acceptable an offer contingent on the bank accepting a short sale and present that to the bank. If you ask "will you accept a short sale?" before you have an offer and the bank says no, it's very hard to go back to them when you do have an offer.

We need to discuss your houses separably, there is a big difference between your home and your rental. (You might want to read: Bunk, BUnk, BUNk, BUNK )

You will still need to live some where! The cost of your current home with it's negative equity has to be compared to the on going cost of alternative housing. If you sell your home what will a it cost to rent? It's rare but not impossible that you can rent a comparable property for less than your current payment. If you'd consider cutting back your life style why not move back into your first home?

How is your other credit?

If these aren't big enough questions, you ask: "should we hire a REALTOR®?" The ease answer is, not the one who got you into this and didn't sell the house three years ago! Another easy answer is yes you need expert help. The big question is should you list the property? My advice is NO! You can't afford to add 6 to 8% of the value of the property, to your negative equity. You need a broker that will work for you by the hour, like an attorney, because you do need good advice. Be careful just being licensed doesn't mean anyone is capable of solving your problem. Be prepared to pay for good advice and you may need to pay a selling REALTOR® if they produce a buyer.

Bill

William J Archambault Jr

The Real Estate Investment Institute

Do you have a favorite word? Do favorite words influence your life or does your life influence your favorite words?

A favorite word, color, flower, song it all sounds sort of juvenile if not down right childish! Doesn't it?

Have you ever considered why kids have these favorites? I've concluded that child and adult a like, adopt these seemingly frivolous favorites because they are comforting. As adults we too seek comfort and inspiration in these simple things.

My favorite song has to be the Beach Boy's "I Get Around" because it so well describes Lynn Bingham, Tom Guisel, and I in high school and college. It was also contemporary to us. I miss those guys, but the song always reminds me of the good times.

My favorite flower the Tulip. The Tulip always reminds me of digging up those damn bulbs in the fall and replanting them in the spring, something I did for many years with my Mother. Tulips make me feel good.

My favorite color has to be variations of red. My first new car, the only one I ordered to all my personal spec's was Vermilion Red. Brenda and I painted a small, drab bedroom Bright Red once, our daughter was conceived in that room. Red makes me feel good.

Again I don't know if my favorites influenced my life or my life influenced my favorites. (Redundancy is my second favorite word, because it's the way I learn and teach.) I do know that as salesmen, business men, and real estate gurus we're bombarded with negativity each day and our own doubts each night. Little things, pleasant memories can help you feel good, feeling good makes for more sales, more success, feeling good can get you through the tough times!

All of which brings me to my favorite word: FORTUITOUS! My life has been one fortuitous event followed by another. There is opportunity even in adversity if you look for it, if you recognized it! Life is in deed fortuitous! Don't mistake fortuitous for lucky, if a hundred dollar bill blows in your window that's luck, if you use it to publish you first book and sell a million copies that's fortuitous!

Bill

William J Archambault Jr

The Real Estate Investment Institute

I have an idea to help upside down/negative equity home owners.

Congress could have Fannie Mea, Freddie Mac, and Genie Mae to refinance existing loans to 80% of the current value, while subordinating the remaining balance to second position, and recasting it over the remaining term. This could also be extended to non-owner occupied investment properties at a slighter lower LTV, just like new NOO loans.

The new loan at 80% LTV would be secure. The new second even though it exceeds 100% Loan To Value (LTV) would be no less secure if the cost were paid out of, Yield Spread Premium (YSP), Service Release Premium (SRP), Lender Profits, or out of the home owners pocket, than the current first. The subsequent reduction in monthly payments should make the the home more affordable and default less likely.

That's Win (the home owner) Win (the current lender) Win (the new lender) Win (the mortgage brokers) Win (the economy) Win (the entire housing market)!!!!!!!!!

It's a simple solution for many. One man's opinion, but I can see no down side.

Bill

William J Archambault Jr

The Real Estate Investment Institute

Today as we pause in the middle of political debauchery to honor the memory of Martin Luther King, I too dream of equal opportunity, equal housing opportunity! Equal access to security through real estate ownership!

Dr. King talked of people being "stripped of their selfhood and robbed of their dignity by signs stating FOR WHITES ONLY!" Can we be any less offended to day by limiting home ownership to those with "680 FICO's and 20% Down!"

Thomas Jefferson wrote in our Declaration of Independence that "all men are created equal." MLK called for "equal opportunity."

Yet today those politicos that shout the loudest about "equal opportunity" would limit the opportunities of those they proclaim to protect.

Somewhere in time "equal opportunity" has come to mean "equality of out come," Since no one can guarantee success, in deed it's against the laws of nature, positively unnatural, many have mistakenly excepted it to mean "equality of out come."

There is only one way to guarantee equal out come, that is to limit success! To limit opportunity! To limit out come!

To deny the masses the opportunity for home ownership to protect the few is the same perversion that distorts opportunity with out come.

Bill

William J Archambault Jr

The Real Estate Investment Institute

PS: The completed text of Dr. King

http://www.usconstitution.net/dream.html