Soquel mortgage broker proposes sharp cut in interest rates to give borrowers hope

For 17 years, mortgage broker Ty Ebright made a living by matching lenders with longtime homeowners who encountered financial difficulties and couldn't get bank loans.

[Not buying it]

"Now, Ebright said, few borrowers can qualify for loans, so the pool of buyers has dried up."
Sorry but I'm just not buying it! I know, from personal experience, that loans ARE available if you have a decent down payment and can verify your income. The issue is that home prices in the County (SLV & Watsonville excluded) are unsustainable. If you are lucky enough to find an inhabitable home for around $500,000, and you have a 10% downpayment, you are still looking at a monthly mortgage payment, including property taxes, of around $3,300. Those "middle class" homes were priced around $350,000 in the pre-bubble days.
What drove price appreciation were the risky, subprime loans and now that THAT kind of funding has dried up, home prices will have to be reduced. But there is no equitable solution. To adjust the mortgage downwards for those who could not afford them in the first place is downright punitive.

[rider]

11-12%, 8%, 1%, which is it? This article left my head spinning!... and I keep abreast of what is going on with lending.

On a related note, prices appear to be stabilizing along with great sales volume in Monterey county and Watsonville; the prices have crashed so hard that an investor, with 20% down and a 30-year fixed note, might have a shot at having rental income cover the carrying costs.

This, to me, sets a natural bottom to the market. However, Santa Cruz, Scotts Valley, etc., have seen nowhere near the pain that Monterey county or Watsonville have in terms of price drop.

[Mary]

Sounds like a scheme to charge fees for these transactions. It's kicking these people while they are down. For every interest rate reduction he probably charges enough in fees to make up for the loss of payments.

[Danny Chenoweth]

This guy was one of the worst predatory lenders in town. He was using Santa Cruz as a place to hustle investors into backing his "hard money" central valley loans that no bank would have ever touched. Take anything this guy says with a grain of salt. Everything is a new scam to create a transaction fee. I feel sorry for the people who trusted him with their money, & even worse for the homeowners that he preyed on.

[noob toob]

hmm, how did prices get so high to begin with? could it be that making mortgages available to millions who couldn't afford them increased demand? just a little?

[Laurence Bowser - Aptos]

The topic, not the mortgage broker/banker is pretty interesting in a narrowing market of available mortgage products, narrower qualified or willing buyers in a market which is speeding it's way to creating 12 million homeless former homeowners and a glut of foreclosed homes about to add additional load to already expanding inventories of market rate homes for sale. Both lenders and borrowers have to be willing to agree on sharing the paid of rate/term and loan balance forebearance. No one broker or real estate expert can or could make this happen on a substantial basis. It has to be part of a broad based cooperative venture between FHA/FDIC and Lenders. Stay tuned...

[Laurence Bowser - Aptos]

Not buying it wrote:

"Now, Ebright said, few borrowers can qualify for loans, so the pool of buyers has dried up."
Sorry but I'm just not buying it! I know, from personal experience, that loans ARE available if you have a decent down payment and can verify your income. The issue is that home prices in the County (SLV & Watsonville excluded) are unsustainable. If you are lucky enough to find an inhabitable home for around $500,000, and you have a 10% downpayment, you are still looking at a monthly mortgage payment, including property taxes, of around $3,300. Those "middle class" homes were priced around $350,000 in the pre-bubble days.
What drove price appreciation were the risky, subprime loans and now that THAT kind of funding has dried up, home prices will have to be reduced. But there is no equitable solution. To adjust the mortgage downwards for those who could not afford them in the first place is downright punitive.

Your gut on the market is right on the nose.

[Ty Ebright]

Danny, I have never met you or, heard your name, but I welcome you to come to our office any time to review our procedures and our track record. I can also provide you with hundreds of Borrowers and Lenders who will sing our praises. I welcome your visit so you can better understand the world of private lending. A large part of our loans are in Santa Cruz and very few are in the central valley.

Danny Chenoweth wrote:

This guy was one of the worst predatory lenders in town. He was using Santa Cruz as a place to hustle investors into backing his "hard money" central valley loans that no bank would have ever touched. Take anything this guy says with a grain of salt. Everything is a new scam to create a transaction fee. I feel sorry for the people who trusted him with their money, & even worse for the homeowners that he preyed on.

[Ty Ebright]

Mary, You are incorrect. As of this date, we have never charged the borrower anything to modify the note and drop the interest rate, because of economic hardship. We have recommended hundreds of forebearance agreements to allow payments to resume and stop foreclosures in progress and, never charged the borrower anything for this service. With our new effort to reduce rates, we are are charging a fee to the Borrower that is equal to a minimum of $1000 and a maximum charge of 2 months savings based on the new payment. The Borrowers that we have approached are thrilled at the reduction and surprised that the charges are not higher. The fee may be paid at the maturity of the loan.

Mary wrote:

Sounds like a scheme to charge fees for these transactions. It's kicking these people while they are down. For every interest rate reduction he probably charges enough in fees to make up for the loss of payments.

[Ty Ebright]

I understand your confusion. Our office is recommending that the interest rate be reduced to 8%(down from the original loan interest rate of 11%-12%) if the Loan to Value ratio is less than 90%, based on current value. If the total debt exceeds 90%, based on current value, our office is recommending an interest rate reduction to 1% and, a payment rate based on 3%-8% of the debt, depending on the financial ability of the Borrower. All money in excess of the 1% interest rate will be credited towards principal repayment. The the goal is to keep the Borrower in their home. Foreclosure/eviction is not the answer to this mess.

rider wrote:

11-12%, 8%, 1%, which is it? This article left my head spinning!... and I keep abreast of what is going on with lending.
On a related note, prices appear to be stabilizing along with great sales volume in Monterey county and Watsonville; the prices have crashed so hard that an investor, with 20% down and a 30-year fixed note, might have a shot at having rental income cover the carrying costs.
This, to me, sets a natural bottom to the market. However, Santa Cruz, Scotts Valley, etc., have seen nowhere near the pain that Monterey county or Watsonville have in terms of price drop.

[Ty Ebright]

The Higher the Risk, the GREATER the INTEREST RATE OFFERRED - The Private Loans, made by our private individual Lenders, were to very high risk Borrowers, who had low or no credit scores, many times in foreclosure and often huge credit card debt. Our 2% initial charge and our relatively low interest rates are a bargain for someone who cannot qualify for a bank loan. Try out 33% Interest on any credit card or -- 18% to a COUNTRY!

http://news.bbc.co.uk/2/hi/business/7694785.s...
Iceland's interest rate up to 18%

Iceland's central bank has raised its key interest rate to 18% as it battles against financial collapse.

The rise comes less than two weeks after Iceland cut rates from 15.5% to 12%. Iceland's prime minister said the country needed another $4bn in loans and had approached the European Central Bank and the US Federal Reserve.

Central bank governor David Oddsson said that he hoped the rise in rates would only last for a short time and added that the move was designed to stabilize the currency. "With the collapse of three banks and the harsh external measures that followed, Iceland's foreign exchange market became paralyzed," the bank said in a statement.

Danny Chenoweth wrote:

This guy was one of the worst predatory lenders in town. He was using Santa Cruz as a place to hustle investors into backing his "hard money" central valley loans that no bank would have ever touched. Take anything this guy says with a grain of salt. Everything is a new scam to create a transaction fee. I feel sorry for the people who trusted him with their money, & even worse for the homeowners that he preyed on.

[Ty Ebright]

Can you get me a bank loan for this case? Value of the home $300,000. No current debt on the home. Borrower has no job, no reserves, and no credit. Borrower needs to borrow $100,000 to start a business and pay off medical bills for their dying daughter. Which Bank will make this loan today? Please give me a choice of three lenders. This is the niche for Private Lending. We did not make loans to help people buy over priced homes. We made loans to help people survive.

Not buying it wrote:

"Now, Ebright said, few borrowers can qualify for loans, so the pool of buyers has dried up."
Sorry but I'm just not buying it! I know, from personal experience, that loans ARE available if you have a decent down payment and can verify your income. The issue is that home prices in the County (SLV & Watsonville excluded) are unsustainable. If you are lucky enough to find an inhabitable home for around $500,000, and you have a 10% downpayment, you are still looking at a monthly mortgage payment, including property taxes, of around $3,300. Those "middle class" homes were priced around $350,000 in the pre-bubble days.
What drove price appreciation were the risky, subprime loans and now that THAT kind of funding has dried up, home prices will have to be reduced. But there is no equitable solution. To adjust the mortgage downwards for those who could not afford them in the first place is downright punitive.

[noob toob]

Ty Ebright wrote:

.... We did not make loans to help people buy over priced homes. We made loans to help people survive.
<quoted text>

LOL good try there Ty, but we are laughing at you and your blatant pseudo-altruistic BS.

[50s local]

noob toob wrote:

<quoted text>
LOL good try there Ty, but we are laughing at you and your blatant pseudo-altruistic BS.

True Noob. Ty, people just aren't that dumb anymore.

[50s local]

Laurence Bowser - Aptos wrote:

The topic, not the mortgage broker/banker is pretty interesting in a narrowing market of available mortgage products, narrower qualified or willing buyers in a market which is speeding it's way to creating 12 million homeless former homeowners and a glut of foreclosed homes about to add additional load to already expanding inventories of market rate homes for sale. Both lenders and borrowers have to be willing to agree on sharing the paid of rate/term and loan balance forebearance. No one broker or real estate expert can or could make this happen on a substantial basis. It has to be part of a broad based cooperative venture between FHA/FDIC and Lenders. Stay tuned...

12million?

[Robert]

Please give our office a call and I can put you in contact with a borrower who yesterday had a rate reduction from 11% to 3%. My office charged nothing for the reduction. Our private lenders realize that now is the time to help the borrowers stay in their homes. Why are you so angry with an idea to reduce the interest rates to the borrowers?

50s local wrote:

<quoted text> True Noob. Ty, people just aren't that dumb anymore.

[Ty Ebright]

Ty Ebright made the above post, not Robert. This was my mistake

[50s local]

50s local wrote:

<quoted text>
12million?

Do the math on the amount of foreclosed homes and average the 3 to 4 per household. What's your number?

[50s local]

Robert wrote:

Please give our office a call and I can put you in contact with a borrower who yesterday had a rate reduction from 11% to 3%. My office charged nothing for the reduction. Our private lenders realize that now is the time to help the borrowers stay in their homes. Why are you so angry with an idea to reduce the interest rates to the borrowers?
<quoted text>

That is simply miraculous. Can you post the term sheet or note with any addendums on that? With the borrower, property and lender blacked out of course...

[David]

I suggest that folks who blatantly disregard Ty's idea of reducing APR on homes to take a look around. Ty's no saint, but I don't think that's the issue here. What he's talking about is how to keep people in their homes. It's pretty simple, really. I've been investing on a small level with him for almost 10 years. I'd certainly rather have a note on a home that's decreased in value, than a worthless portfolio of stock in a mismanaged company in the New York stock exchange. So what if he makes a fee in this process - Monterey Bay Resources is a business.

It's easy to transfer fear and anxiety to a single person. But on closer examination, I don't see Ty with his hand out for bucks in the $700 billion bailout. How come none of the comments have anything to say about those titans of business who now have nothing except the government teat to feed off of. Just wondering....