Well, it took about 45 days for the bailout bill to open the door for the takeover by the federal government of Fannie Mae and Freddie Mac.  I can’t say that I was particularly surprised at Sunday’s announcement.

As noted in Tami Luhby’s recent article at CNNMoney.com, interest rates have already started to fall as the world markets responded positively to the announcement.  Now, I’m not going to say that’s bad news-for those who are buying a home, it’s just one more great reason to take the leap.  I mean, home prices are down, there are some great homes on the market, and now the interest rates have gotten more favorable.  Heck, I’m the first one to encourage people to buy a home.

I am somewhat concerned about Luhby’s note that the bailout is “aimed at making mortgages easier to obtain and afford.”  Not so many years ago, Congress encouraged lenders to make mortgages available to more people…which eventually led to the recent market downturn.  I’m not sure that opening that door is necessarily the best way to solve the problem long-term despite the fees and restrictons mentioned in the CNNMoney article.

From the beginning, I have believed that in a free market the housing difficulties we have faced would eventually correct themselves-even if it took some rocky times in order to get us there.  Whether this bailout will delay or derail that natural recovery is unknown at this time.

I guess it comes down to this: our economy has been a lot worse.  Yes, I remember the late 70s (despite my unbelievably youthful appearance).  Six percent mortgages may be higher than the rates we saw two years ago, but they’re a far cry from the 15% or more that accompanied the questionable era that brought us-gulp-Gremlins, disco, perms and Smoky & The Bandit.  It goes without saying that we look better, and the fact is, our economy is screaming along in comparison.

For folks in certain U.S. regions that have been mentioned here before (California, Florida, Nevada, Michigan, etc.) life is pretty tough right now.  But there are a lot of great cities (including many right here in the Lone Star State) that aren’t seeing that kind of downturn.

Again, just keep in mind that there are still a lot of reasons to buy a home and there’s more information available to homebuyers than ever before, thanks to the transparency that’s provided by RateWindow™.  And for those looking for long-term investment properties, now is definitely the time to buy, when home prices have lowered and sellers are willing to negotiate.  After all, history has always shown that real estate is the best way to build long-term wealth, provided you do it wisely.

So for now, I’m taking a wait-and-see attitude, keeping my fingers crossed, my hair unpermed, and hoping for the best.  Now if I could just summon the courage to purge the Bee Gee’s out of my CD collection…

This blog is intended for informational/entertainment purposes only and is not meant to provide any financial or legal advice.

Yield Spread Premium (YSP) is hidden in most transactions until the closing statement is presented and home buyers are ready to close escrow and complete the home buying process. Below is an actual scan of a closing statement is which you can see the YSP among all the other fees that are associated with a home purchase.

In this case the YSP was over $3,800, a hefty chunk of change. When talking to the owner this closing statement, they said:

I didn’t even see it, until you brought it to my attention. Since it was never a direct payment, I must have just glossed over it. Worse thing is, I was really good friends with the mortgage broker, and now that you brought this to my attention, I will never look at them the same way. I thought they got all their fees, but now that I know they got this too… Also, why is the YSP not even in a debit column?

If you are unfamiliar with YSP, you can do some research on it at the YSP wiki

An inherent problem with the Yield spread premium is that it’s anti-capitalistic. Typically, the borrower has no idea or does not completely understand how the broker is potentially compensated on the back end and therefore can’t truly price out the service being provided to the borrower. The definition of capitalism is a willing buyer, knowing all the facts and circumstances surrounding a service the buyer is considering purchasing (including how much the service provider is being compensated) makes a choice to use the service provider. Since the borrower typically has no idea or does not understand that the broker could potentially get paid on the back end, they can’t compare terms between brokers.

With RateWindow.com, that $3,800 would have been a rebate to the consumer. RateWindow adds transparency to the mortgage process and still allows the mortgage broker to make a living by providing their services at a flat rate, honest fee. RateWindow provides the consumer with the ability to see what their YSP is, and choose to obtain a higher rate, and therefore a higher YSP (which is rebated to the consumer), or a lower rate and possibly have to bring money to the table in order to get that rate.

Mark Warner, CEO of Realespace was invited to discuss the current state of the mortgage industry and introduce RateWindow to the public

http://www.realestateradiousa.com

The window is open (RateWindow™) to the world of wholesale mortgage rates where the public can’t be manipulated on the cost of their mortgage loan. Mortgage bankers and brokers and real estate agents with vision will join in on this first to market rate pricing engine so they can wear the white hat.

RateWindow™ is quickly moving from concept to reality. Over the next couple days we will be putting the finishing touches on our flagship product and release it as the first transparent mortgage tool.

For and example of the product, make sure you check out the demo.